[nabdab]

This is hitting the nail right on the head. People are blaming “greedy Pharma companies” but at the same time companies are taking lower and lower net prices while the rebates that the purchasers are taking home are absolutely absurd rebates.

I get it, some people don’t feel phama companies should still be able to profit on a drug invented 50years ago. But I just can’t take any discussion about that serious when we are also in an environment where the purchasers take literally twice the profits on all drug sales without having invested a penny in research or having spent a penny in production distribution or marketing.

They eat up all that money all by abusing their position of “representing the buyers”, but at the same time since their rebates are percentage cuts they are just pushing pharma companies to increase prices over and over again.

The American model is rotten and someone has to stop the madness.

[Zelphyr]

Genuine question: what's the purpose of raising the wholesale prices like this if so few people, if anyone, are paying that pirce? Is it so they can claim a higher tax deduction? Because, honestly, I don't see how that's much better.

[pkaye]

The drug companies are trying to price differentiate. They want to charge the insurance company a lot more but not make the end user feel the pinch of the copay that makes them consider alternatives. Its kind of like on business trips, people spend a lot more than they usually do because its not their money.

Being in dialysis, I take a bunch of medicines. One was very expensive buy the drug company put lots of effort to make sure I got the copay reimbursed. Again they were after the insurance money and were willing to reimburse 10% of an inflated cost. After the patent expired and generics were available, my copay went down by 90%.

[s1artibartfast]

It is more complicated than that. Pharma companies dont get paid by insurance companies. They must go through federally mandated pharmacy benefit managers. The benefit managers keep the rebate, but charge list prices, so they have an incentive to drive up both

[pkaye]

In my own experience I got a drug company to directly reimburse me the copay. They didn't care about the middle man, just proof that it was their medicine.

[s1artibartfast]

But you nor your hospital paid the pharma company, they paid the PBM

[pkaye]

I don't know how the money is divided but I do know the drug manufacturer (I think mine was Pfizer) seemed all too happy to reimburse my copay up to $6000/year. I get a feeling they make a substantial amount of profit.

[hristov]

Nobody is required to give out rebates to pharmacy benefit managers and the like. That is a problem the pharma companies created by themselves. The pharmas can drop their list prices and stop rebates tomorrow if they really wanted.

[jVinc]

If you where a pharmacy benefits manager, and you where sitting across two different potential drug makers and one says "I'll let you have it at 30$!" and the others says "I'll let you have it at 120$ with a 50% rebate!" which one do you think you'd take?

The forces at play in the pharma/PBM negotiation leads to price increases instead of price competition because the PBM effectively sits on both sides of the table. They want high rebates and they don't care about list-prices as long as they can take back a bit cut of them. This is why you see rebates reaching levels close to 70%. Imagine if you sent a guy to negotiate a car purchase for you, and that guy was looking at taking 70% of the net you pay through rebates from the car dealership. Do you honestly think he would be looking for the cheapest deal?

[s1artibartfast]

No they cant. The pharmacy benefit managers would drop the products and it is illegal for the manufactures to sell direct to hospitals