June 9, 2017

As the debate over high drug prices has intensified, drug makers have attempted to shift focus away from the increasing prices they set towards the price concessions (rebates) that they negotiate with pharmacy benefit managers (PBMs), entities that work on behalf of employers, unions, health plans, and government programs that offer prescription drug coverage. Indeed, some manufacturers even argue that increasing drug prices are somehow caused by or correlated with rebates. The Pharmaceutical Care Management Association (PCMA) commissioned Visante to study this issue and this expanded analysis shows that there is no correlation between rebate levels and price increases.

View the Study

Major findings

Drug Manufacturers Raise Prices Even When Rebates are Low in Major Drug Categories

Large list price increases for rheumatoid arthritis drugs and anticonvulsants—two categories with relatively low rebates—have resulted similarly high net price increases for those medications after rebates are deducted.

Rebates Unrelated to the Launch Prices of New Drugs

In addition to price increases on existing drugs, higher launch prices on new medications have also contributed to rising prescription costs, however these trends are not correlated with drug rebate levels negotiated by PBMs.

Among the top 200 brand drugs by 2016 sales, the launch prices for drugs introduced from 2012 to 2016 were double the launch prices for those introduced prior to 2012.

While rebates for the second drug introduced into a competitive class are higher than the first drug’s rebate 72% of the time, the chance of the second drug having a higher launch price than the first drug is only 50%.

No Correlation Between Increasing Prices Set by Drug Makers and Rebates for Top 200 Drugs

Based on an analysis of price growth and estimated rebate levels for the top brand 200 drugs by 2016 U.S. sales, we find no correlation between the prices that drug makers set on individual drugs and the rebates that they negotiate with PBMs on those products.