Drug company rebates and discounts have always been an opaque aspect of the US pharma industry. There is little transparency in how much drug companies pay in rebates and discounts. Indications are it is annually in the tens of billions of dollars for the industry and growing. Price concessions can significantly vary by individual company depending on the portfolio mix and individual therapy class competition facing each drug. Also, growing rebates and drug discounts are greatly affecting biopharma company margins, illustrating the managed care influence of PBMs.
This white paper looks at the growing trend of rebates and discounts by addressing the following questions:
a) How much do selected companies pay in rebates and discounts (and by type)?
b) What are the reasons for this growing trend in rebates and discounts?
c) What are the implications for pharma companies on commercial decisions caused by paying greater rebates and discounts?
d) What implications this trend has on the applications of HEOR and real world evidence to support value-based drug pricing?
Markets work much more efficiently when key economic signals such as prices are easily known by all key healthcare stakeholders and decision-makers on both the demand and supply side. This is true for pharma companies as well. They need to better understand how to manage rebates and discounts, while also developing a broader view of the effect on patients and the healthcare system. The use of advanced analytics, coupled with the application of newer databases and technologies such as AI/ML are needed to generate insights to guide better decisions on the use of rebates, discounts, and other price concessions.
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