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Prescription Drug Pricing Hearing: Is The Senate Probing In The Wrong Place? | Forbes

The media has constructed a straw man of sorts when repeating the mantra of the “relentless rise of prescription drug prices.” That growth has not been so relentless in recent years. This is due in large part to the increased pressure on net prices as a result of rebates. So while list prices exhibit an inexorable rise, net prices have stagnated during the last few years.

Last week, during a Senate hearing on prescription drug prices, chief executives from seven large pharmaceutical firms each offered arguments in defense of the ways in which they set prices, citing the fact that high rebates nullified for the most part the increases in list prices. The executives hammered home the point that net price increases have become stagnant due to the growing gross to net bubble.

However, the recent proliferation of high deductible health plans has led to patients paying a larger share of prescription drug costs. And while rebates are lowering the cost of drugs paid for by health plans, pharmacy benefit managers, and employer sponsors of health insurance, rebates aren’t helping patients; at least not as far as their out-of-pocket spending is concerned, as co-insurance is usually calculated on the basis of list and not net prices.

Naturally, for politicians their constituents’ out-of-pocket spending is what matters most. If constituents cannot afford prescription drugs – whether because they’re uninsured, under-insured, or insured with substantial co-payments – the public outcry will be aimed at the drug companies for “high prices.”

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Prescription Drug Pricing Hearing: Is The Senate Probing In The Wrong Place?.

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