Good Day BIO: Net drug prices drop, but PBMs keep list prices up

New analysis tells the truth about drug prices, while new research highlights the need for biotech climate solutions. (708 words, 3 minutes, 32 seconds)

While net drug prices drop, patients pay more thanks to health plans and PBMs 

Drug list prices grew less than inflation last year, while net prices—the amount drug manufacturers actually receive—dropped by 8.7%, says a new analysis from Drug Channels Institute.

The key finding: The annual increase in U.S. drug list prices—what patients pay when they’re in their health plan’s deductible—was below 5% over the last four years, finds the analysis. Meanwhile, the change in net prices (revenue after rebates and discounts) drug developers receive for brand-name drugs dropped over the last seven years and was negative over the last five. After adjusting for inflation, net prices actually fell by 8.7% last year, Drug Channels Institute says.

Why it matters: Media and politicians who push drug price controls should understand U.S. prices are stable. If health plans and pharmacy benefit managers (PBMs) passed net prices to patients, patients would pay less out-of-pocket for their medicine.

How do PBMs impact drug prices? PBMs, often owned by insurers, take rebates from drug manufacturers in exchange for including the manufacturers’ products in the formulary of covered drugs. PBMs are supposed to use rebates to lower drug prices for patients, but research shows that’s not happening.

A lock on the market: “Three insurance company PBMs control 80% of patients’ medicines and use their market power to get tens of billions of dollars in discounts on medicine, but don’t share the savings,” according to Dan Durham, BIO Senior Health Policy Advisor.

Can the problem be fixed? The Pharmacy Benefit Manager Transparency Act, which BIO supported, would require PBMs to pass on discounts they receive to patients. This and other legislation proposed in the past could be revived in the current Congress.

BIO has supported PBM reform designed to keep patient's out-of-pocket costs reasonable—read more.

More Health News: 

FDA: FDA approved many new drugs in 2022 that will improve the lives of patients and consumers
“In 2022, CDER approved 37 new drugs never before approved or marketed in the U.S., known as “novel” drugs, as noted in our annual New Drug Therapy Approvals report. We also approved drugs in new settings, such as for new uses and patient populations,” writes Patrizia Cavazzoni, M.D., Director of FDA’s Center for Drug Evaluation and Research (CDER).

New climate records increase urgency of biotech solutions

Alarming new climate records highlight the need for biotech solutions, ASAP.

Worrying numbers: 2022 was the fifth-warmest year recorded—approximately 1.2°C higher than in 1850-1900 and close to 2016’s all-time record, says Monday’s report by the EU’s Copernicus Climate Change Service. And today, researchers announced the ocean heat content set a record in 2022, eclipsing the consecutive records of the previous three years.

La Niña’s staying power: 2022 was the third in a row featuring a La Niña weather pattern. Consecutive La Niñas are unusual, but climate change may be changing that pattern. La Niñas may have contributed to California’s 2021 drought, says a new report by the American Meteorological Society (AMS).

It’s playing out in California: The atmospheric river causing catastrophic flooding in California is more likely as human-induced climate change warms oceans, says Climate.gov. And climate change is encouraging greater extremes, say AMS and others.

“Atmospheric greenhouse gases continued to increase in 2022,” to 417 ppm for carbon dioxide and 1,894 ppb for methane, “the highest levels for over 2 million years for carbon dioxide and over 800,000 years for methane,” says the Copernicus report.

Biotech can play a part in reducing emissions that drive climate change—from animal feed that lowers methane emissions to solutions to convert food waste and biomass into low-carbon sustainable fuels.

When it comes to addressing climate, “you’ve got to have a more robust suite of solutions, and it’s going to involve innovation and technology in the biologic space,” says Nick Shipley, BIO EVP and Chief Advocacy Officer.

More Agriculture and Environment News: 

The New York Times: A dispute over corn appears unresolved between Mexico and the U.S.
“The issue appears to have faded into the background behind more pressing concerns like energy, security and migration … But corn seems to be still on Mr. López Obrador’s mind. During a news conference on Monday ahead of his meeting with President Biden, the Mexican leader addressed some of the disputes affecting both countries. ‘Who disagrees, for example, with the fact that the consumption of G.M.O. corn should be banned?’ Mr. López Obrador said.”

President Biden’s Wednesday: Back at the White House with nothing official on the schedule.

What’s Happening on Capitol Hill: The House is scheduled to discuss several abortion-related measures. The Senate is not in session.