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May
10

Explaining pharmacy pricing, part 3

Here’s the thing about “list” prices for drugs – the more accurate definition of AWP is “Ain’t What’s Paid.”

The REAL price is what is paid AFTER rebates and other discounts are applied.

That’s why the current media frenzy over drug prices is just dumb; it doesn’t account for the impact of rebates on the actual price you pay.

Reality is, actual prices paid for brand drugs went up by a measly 0.3% in 2018. Consumers benefited from rebate sharing as well, as the average price they paid for brand drugs didn’t go up last year.

That said, the fastest growing part of drug spend is specialty medications, drugs that are injected or for critical diseases such as cancer, hepatitis C, HIV, and autoimmune diseases.

Specialty medications only accounted for 2.2% of all prescriptions, but almost half of total drug spend.

What does this mean for you?

  • Across the board, drug price increases are negligible…for those payers that capture rebates.
  • Rebates are key – if you are not capturing rebates, the price you pay for brand drugs is much higher than it could/should be.
  • Pay very close attention to specialty meds.

IQVIA has an excellent and quite detailed report on drug price and utilization trends – available here.


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Joe Paduda is the principal of Health Strategy Associates

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