Thread by @DrugChannels

FYI: A clarification 🧵on a misleading new @medicarepayment chart of brand-name drugs in #Medicare Part D.

Many have misunderstood these data & misrepresented the findings, which say nothing about net drug prices.

Read on for my explanation of what’s really going on.

1/14

Background: MedPAC seemed to show that in Part D, brand-name drug prices “net of rebates” grew by 7.5% per year from 2010 to 2020

But this chart is not what it appears to be…

drugch.nl/3Kq5j5S

2/14

Summary: Contrary to some claims, we can't conclude anything about net prices from the chart above.

In fact, Medicare Part D's "net brand-name drug prices" (as defined by MedPAC) can be increasing, while net prices received by manufacturers can be decreasing.

Here's why.

3/14

Reminder: a drug’s *net price* = actual revenues that a manufacturer earns from a drug = list price minus rebates, discount, and other reductions

See drugch.nl/3D0FIOV

4/14

MedPAC computes prices using “net spending” = gross spending net of manufacturer rebates

But net spending ≠ manufacturer revenues b/c it:
- Includes #pharmacy DIR (set by plans)
- Omits #340B discounts on Part D scripts
- Excludes coverage gap discounts

5/14

There is evidence that Part D plans have inflated gross spending by (1) raising pharmacy payments, and then (2) clawing back excess payments with higher pharmacy DIR (per p 5)

Thus, MedPAC’s computation overstates net spending—and misleads about manufacturers’ net prices

6/14

MedPAC also overlooks #340B discounts: Up to 100% & often stacked on Part D rebates.

For 2020, gross 340B Rx sales were ~$25 B+ via pharmacies

Thus, a drug can have a *negative net price* in Part D, but MedPAC’s net spending figure will imply a high (positive) price.

7/14

MedPAC also appears to have excluded coverage gap discounts, which reduce manufacturers' net prices in Part D

BRG estimates CGD = $17.6 B for 2020 drugch.nl/3rfHYfZ

A big omission for brand-name drugs with high list prices!

(Anyone have a better source of CGD $$?)

8/14

Some (@charlesornstein @MarkMiller_DC) incorrectly believe MedPAC’s chart contradicts data on declining net drug prices

https://twitter.com/charlesornstein/status/1517200732369338368

But as I show above, MedPAC did *not* study drugs’ net prices or manufacturers’ net revenues

9/14

Oddly, @MarkMiller_DC also claimed that “industry…dismisses list prices as irrelevant”

https://twitter.com/MarkMiller_DC/status/1517935818932998145

Seriously?!? I and others often explain why patients shouldn’t be exposed to undiscounted list price of prescriptions

10/14

What’s more, I personally discussed the #GrossToNetBubble, #PBM rebates, and patients’ out-of-pocket costs with Mark and his patron @JohnArnoldFndtn in 2018 🤷‍♂️

Maybe read my 2019 @WSJ opinion piece?

drugch.nl/3KxfHJc

11/14

Perhaps MedPAC commissioner and Part D expert @DusetzinaS can comment on the opaque methodology behind MedPAC’s figures and whether “gross spending net of manufacturer DIR” really equals manufacturers’ net prices.

(I don't think so.)

12/14

P.S. Multiple sources—including manufacturers’ reports to investors—show average net brand-name prices are declining.

Thus, it seems as if drug pricing flat earthers #DPFE misrepresented an incomplete, irrelevant study to support preconceived ideas. Not evidence based!

13/14

🖐️🎤

14/14