In a bid to make its drug pricing practices more transparent big pharma firm Merck has released a report detailing its price hikes between 2011 and 2016.
Though prices are increasing quickly, so are the rebates and discounts the company is paying out.
Things aren’t that simple however.
The increasingly competitive market for branded drugs has led to greater bargaining power from middlemen and insurers but the savings that are negotiated may not reduce costs for patients.
Merck’s report showed:
- The list price for drugs has risen year-over-year from 7.4 percent in 2010 to 9.6 percent in 2016.
- However, the net price change, which takes into account rebates, discounts and returns, has increased at more modest rates of 3.4 percent in 2010 and 5.5 percent in 2016.
- The average discount given across its US product portfolio has dramatically increased from 27.3 percent in 2010, to 40.9 percent in 2016.
- From 2010–2016, the company spent more than $50bn on research and development (R&D).
Merck’s R&D spending distances the company from the likes of Turing and Valeant Pharmaceuticals, companies that merely repackage existing, older drugs for substantial profit.
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Merck is the first big pharma to release this type of pricing transparency report, but Johnson & Johnson has also indicated they will publish details on drug pricing and R&D costs later this year.
As more companies follow suit, a clearer picture of pharma pricing practices will emerge, hopefully making the debate over drug pricing regulations more data-driven.