TY - JOUR
T1 - Estimating Drug Costs
T2 - How do Manufacturer Net Prices Compare with Other Common US Price References?
AU - Mattingly, T. Joseph
AU - Levy, Joseph F.
AU - Slejko, Julia F.
AU - Onwudiwe, Nneka C.
AU - Perfetto, Eleanor M.
N1 - Funding Information:
Conflict of interest T Joseph Mattingly II has received funding from ALK, Inc. and Bristol Myers Squibb for research unrelated to this study, and consulting fees for advisory boards from Summit Therapeutics and Paratek Pharmaceuticals, also unrelated to this study. Joseph F. Levy receives postdoctoral fellowship support from Merck & Co. Inc. Julia F. Slejko has received funding for research from Takeda Pharmaceuticals USA, Inc., Novartis Pharmaceuticals Corporation, and PhRMA Foundation, unrelated to this study, as well as consulting fees from Pfizer, Inc., also for work unrelated to this study. Nneka C. Onwudiwe has no conflicts of interest, however wishes to add the following statement: ‘This article reflects the views of the author and should not be construed to represent the FDA’s views or policies’. Eleanor M. Perfetto has no conflicts of interest to disclose.
Funding Information:
T Joseph Mattingly II has received funding from ALK, Inc. and Bristol Myers Squibb for research unrelated to this study, and consulting fees for advisory boards from Summit Therapeutics and Paratek Pharmaceuticals, also unrelated to this study. Joseph F. Levy receives postdoctoral fellowship support from Merck & Co. Inc. Julia F. Slejko has received funding for research from Takeda Pharmaceuticals USA, Inc., Novartis Pharmaceuticals Corporation, and PhRMA Foundation, unrelated to this study, as well as consulting fees from Pfizer, Inc., also for work unrelated to this study. Nneka C. Onwudiwe has no conflicts of interest, however wishes to add the following statement: ?This article reflects the views of the author and should not be construed to represent the FDA?s views or policies?. Eleanor M. Perfetto has no conflicts of interest to disclose. All authors declare that they received no financial support for this study.
Publisher Copyright:
© 2018, The Author(s).
PY - 2018/9/1
Y1 - 2018/9/1
N2 - Background: Drug costs are frequently estimated in economic analyses using wholesale acquisition cost (WAC), but what is the best approach to develop these estimates? Pharmaceutical manufacturers recently released transparency reports disclosing net price increases after accounting for rebates and other discounts. Objective: Our objective was to determine whether manufacturer net prices (MNPs) could approximate the discounted prices observed by the U.S. Department of Veterans Affairs (VA). Methods: We compared the annual, average price discounts voluntarily reported by three pharmaceutical manufacturers with the VA price for specific products from each company. The top 10 drugs by total sales reported from company tax filings for 2016 were included. The discount observed by the VA was determined from each drug’s list price, reported as WAC, in 2016. Descriptive statistics were calculated for the VA discount observed and a weighted price index was calculated using the lowest price to the VA (Weighted VA Index), which was compared with the manufacturer index. Results: The discounted price as a percentage of the WAC ranged from 9 to 74%. All three indexes estimated by the average discount to the VA were at or below the manufacturer indexes (42 vs. 50% for Eli Lilly, 56 vs. 65% for Johnson & Johnson, and 59 vs. 59% for Merck). Conclusions: Manufacturer-reported average net prices may provide a close approximation of the average discounted price granted to the VA, suggesting they may be a useful proxy for the true pharmacy benefits manager (PBM) or payer cost. However, individual discounts for products have wide variation, making a standard discount adjustment across multiple products less acceptable.
AB - Background: Drug costs are frequently estimated in economic analyses using wholesale acquisition cost (WAC), but what is the best approach to develop these estimates? Pharmaceutical manufacturers recently released transparency reports disclosing net price increases after accounting for rebates and other discounts. Objective: Our objective was to determine whether manufacturer net prices (MNPs) could approximate the discounted prices observed by the U.S. Department of Veterans Affairs (VA). Methods: We compared the annual, average price discounts voluntarily reported by three pharmaceutical manufacturers with the VA price for specific products from each company. The top 10 drugs by total sales reported from company tax filings for 2016 were included. The discount observed by the VA was determined from each drug’s list price, reported as WAC, in 2016. Descriptive statistics were calculated for the VA discount observed and a weighted price index was calculated using the lowest price to the VA (Weighted VA Index), which was compared with the manufacturer index. Results: The discounted price as a percentage of the WAC ranged from 9 to 74%. All three indexes estimated by the average discount to the VA were at or below the manufacturer indexes (42 vs. 50% for Eli Lilly, 56 vs. 65% for Johnson & Johnson, and 59 vs. 59% for Merck). Conclusions: Manufacturer-reported average net prices may provide a close approximation of the average discounted price granted to the VA, suggesting they may be a useful proxy for the true pharmacy benefits manager (PBM) or payer cost. However, individual discounts for products have wide variation, making a standard discount adjustment across multiple products less acceptable.
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U2 - 10.1007/s40273-018-0667-9
DO - 10.1007/s40273-018-0667-9
M3 - Article
C2 - 29752675
AN - SCOPUS:85046788845
SN - 1170-7690
VL - 36
SP - 1093
EP - 1099
JO - PharmacoEconomics
JF - PharmacoEconomics
IS - 9
ER -