JAMA: Withdraw This Flawed and Inaccurate Article About the 340B Program and Drug Prices

The Journal of the American Medical Association (JAMA) recently published Estimated Changes in Manufacturer and Health Care Organization Revenue Following List Price Reductions for Hepatitis C Treatments by Sean Dickson and Ian Reynolds. The paper purports to show that manufacturers’ net revenues increased following a decrease in three drugs’ list prices. However, the paper contains a significant computational error: The authors do not properly calculate the 340B ceiling price. Consequently, the authors’ calculations are inaccurate and their conclusions are erroneous. As we might expect, a manufacturer’s revenue per-patient doesn’t increase when list prices decline and net prices remain constant. Below, … Continue reading JAMA: Withdraw This Flawed and Inaccurate Article About the 340B Program and Drug Prices

The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption

Last Friday, the U.S. Department of Health & Human Services (HHS) released American Patients First, a report billed as “The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.” This administration’s blueprint offers a thoughtful diagnosis of U.S. drug pricing along with the unintended consequences and warped incentives of our drug channel system. The report also proposes a very long list of more than 50 regulatory and legislative fixes. It therefore doesn’t translate to quick action or simple sound bites. Many people are discounting the plan as no big deal and therefore underestimating how radically the system could … Continue reading The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption

Generic Deflation Roils the Channel—And Will Get Worse

Deflation in generic drug prices dragged down second quarter earnings for drug wholesalers and generic manufacturers. Here’s a useful summary from The Wall Street Journal, which captures the grim marketplace realities in Falling U.S. Generic Drug Prices Hurt Manufacturers, Wholesalers. Yesterday, Mylan’s earning release noted “high-single-digit erosion expected in North America.” Below, I review the state of the generic drug market. As you will see, the overall market for mature generic drugs is deflating by about 10% per year. Many generic drugs have dropped significantly in price over the past four years. Surprisingly, the prices for about one in five … Continue reading Generic Deflation Roils the Channel—And Will Get Worse