Net Drug Prices Are Falling, Even as List Prices Increase

January 30, 2019, 8:04 PM UTC

The net prices of drugs are falling even while list prices increase, as big pharma companies are offering more rebates—or discounts—to middlemen.

Companies are incentivized to give prescription managers rebates so that their drugs will be given perks like lower patient co-pays, The Wall Street Journal reports. These rising rebates means the overall net cost of drugs is going down.

This is despite the fact that rising prices have been a chronic issue in the U.S.: just after the new year, three dozen drugmakers raised prices on more than 250 prescription drugs.

But with the rebates, the net cost is decreasing. Whether the patient ever sees these savings is debatable, but research shows the net price growth of drugs dropped 4% between 2016 and 2018, according to the WSJ.

“We continue to see the need for increased rebates, particularly in the U.S., across our portfolio,” Novartis chief executive Vas Narasimhan told the WSJ. “Almost every medicine has some level of rebating.”

The sentiment is similar at other companies—including Pfizer Inc., Allergan PLC, and Sanofi SA, which all reported flat or falling net prices.