In this special edition of Fact Check Friday, we’re focusing on why disclosing discounts and rebates negotiated between payers and biopharmaceutical manufacturers won’t help patients or lower out-of-pocket costs.
MYTH: Disclosure of negotiated discounts and rebates would lower patient costs.
FACT: Economists and experts warn disclosing negotiated discounts and rebates could increase patient costs.
In the competitive marketplace for medicines, large, powerful pharmacy benefit managers (PBMs) negotiate significant discounts and rebates with manufacturers. While aggregate information on discounts is available from investment reports and in many companies’ financial statements, negotiations for specific medicines are kept confidential. In fact, agreements between payers and hospitals and hospitals and suppliers are also not publicly disclosed – and for good reason.
According to the Congressional Budget Office (CBO), there is no reason to believe the disclosure of discounts and rebates is necessary or would lower prices. Not only is this information unnecessary, but it could also disrupt competition in the marketplace for medicines. CBO reports that as a result, disclosure could ultimately increase the prices patients pay for their life-saving medicines.
The CBO isn’t alone in its summation. Economists at the Federal Trade Commission (FTC) have also indicated that disclosure of proprietary pricing information would not lower patient costs and could lead to increased prices. In a letter to the New York Legislature in 2009, the FTC’s Office of Policy and Planning, Bureau of Competition and Bureau of Economics cautioned that disclosure of pricing information would jeopardize the competitive market and remove incentives to provide discounts and additional rebates and “[…] may increase pharmaceutical prices.”
The bottom line is private negotiations between PBMs and manufacturers drive our competitive marketplace and provide patients with access to a broad range of innovative medicines and foster the development of new treatments and cures patients desperately need.
Learn more at www.phrma.org/cost.
Holly Campbell Holly Campbell is a deputy vice president of public affairs at PhRMA focusing on the cost and value of medicines. Prior to joining PhRMA, Holly worked for large and small public relations firms where she provided strategic communications counsel, media relations and partnership expertise to health care and pharmaceutical clients. In her free time, she enjoys taking barre classes, trying new restaurants and spending time with Boss and Poppy, her rescue pups.