- Net spending on drugs rose less than 1% in 2017 as new brands and generics contributed less to overall spending growth, according to a new report from health data company Iqvia Holdings Inc.
- Though invoices for pharmaceuticals totaled $453 billion, price concessions such as discounts and rebates meant drug companies realized a more modest revenue of $324 billion. Iqvia noted that in the last half decade, off-invoice discounts and rebates to intermediaries have "increased substantially."
- Conversely, the report found patients' average out-of-pocket costs for dispensed prescriptions has fallen $1.54 since 2013, fueled in part by use of coupons and generics. Last year, the final out-of-pocket costs for dispensed prescriptions were $8.69 on average.
Who's responsible for drug costs? It's a complicated question, and one at the center of a great debate happening across pharma. Middlemen like pharmacy benefit managers (PBMs) blame out-of-pocket costs on the hefty price tags manufacturers put on some of their products. Manufacturers have fired back, arguing that payers are routing savings from discounts and rebates to their bottom lines, rather than to consumers.
Reports like Iqvia's are able to shed some light. Since 2007, for instance, invoice spending has grown 60%, yet net spending — which, again, takes into account various price concessions — rose 36%. Less clear, however, is how those dynamics weigh on patients' wallets.
"This does not help us figure out what's affecting out-of-pocket costs," Walid Gellad, co-director of the University of Pittsburgh's Center for Pharmaceutical Policy and Prescribing, told BioPharma Dive, referring to Iqvia's findings.
That's problematic, given the state of the U.S. health care system. A recent survey conducted by the Federal Reserve Board found 23% of responders said they had to pay out of pocket for a major unexpected medical expense within the previous year. What's more, 42% of these responders indicated that they had debt or unpaid balances connected to those medical expenses.
Iqvia's report determined that final out-of-pocket costs for branded drugs (excluding the use of coupons or generics) sits at about $30 on average, and has for the past five years even as pharmacy prices for brands increased more than 50% over the period.
Coupon use and manufacturer "buy-downs" are partially responsible for those trends, according to Iqvia's report. Yet where rebates and discounts fit in is still fairly opaque.
"Part of what’s happening here around lower net price growth is all these rebates, but the fact that we have rebates is what leads to these high lists prices, which really impacts people who have to pay based off these high list prices," Gellad said.
Importantly, Iqvia's report defines net spending as the money pharmaceutical companies receive for their drugs after price concessions — which is different than what many people typically think of as net spending.