Explaining Price
Drugmakers keep actual pricing details close to guard their position in negotiations with commercial insurers and government health plans like Medicaid. There is no centralized catalog of U.S. list prices or rebates for medicines.
That drug executives at the San Francisco conference allowed even a glimpse into their actual pricing strategies reflects the intensity of the new attention being paid to their practices.
In meetings at the event, investors pressed pharmaceutical executives for more transparency about pricing, said Les Funtleyder, a portfolio manager for E Squared Asset Management, which holds shares in Pfizer and Lilly.
“What they really want to know is, are you thinking about this issue?” he said of the investors. “They are looking for an acknowledgement on the management team’s part.”
E Squared expects the new scrutiny will have an impact, projecting that drugmakers will raise U.S. list prices by 4% to 6% in 2016, less than half the rate in 2015.
The candor of some individual pharmaceutical executives follows earlier messaging by industry advocates. In a November blog post, the industry’s main lobbying group PhRMA reported that list prices grew 13% in 2014, but actual prices increased only 5%.
U.S. health insurers say that even accounting for discounts, drug prices are rising at an unsustainable rate, and they are pressuring drugmakers for cuts.
“Whether it’s a gross number, or a net number, it is still astronomical,” said Daniel Hilferty, chief executive of Independence Blue Cross, which operates in Pennsylvania and New Jersey.
