Prices paid by Veterans Affairs were the lowest and were 50% to 60% below list prices.
There is a large variation in the prices of branded drugs paid by insurers and other payers. Over the 10-year period of 2010 to 2019, net prices, like those in Medicare Part D have diverged substantially from list prices and are now much closer to the published prices paid by the Veterans Affairs Administration and those included in the Federal Supply Schedule. This is the finding of a recent study published in the Value in Health Journal, a journal published by The Professional Society for Health Economics and Outcome Research (ISPOR).
Investigators found that prices paid by Veterans Affairs were the lowest and were 50% to 60% below list prices. Published Federal Supply Schedule prices averaged about 68% of the list prices in physician-administered markets and 66% in pharmacy-dispensed markets.
Prices in Medicare Part B, which include rebates, were 21.4% lower than list prices in 2019, which was similar to the 23.5% gap in 2010. The invoice prices paid by pharmacies differed averaged no more than 3.7% below list prices in any year measured.
“We observed meaningful differences across the drug prices paid by a variety of payers. In part, this reflects the fact that list prices have grown more rapidly than the net payments, on average. This is particularly evident for payments to manufacturers and those made by Part D insurers in the pharmacy-dispensed market. By the end of our sample, commercially negotiated Part D prices were broadly similar to the government-negotiated VA and FSS price schedules,” investigators wrote.
In this analysis, investigators assessed 708 pharmacy-dispensed products with 3,360 unique NDC numbers and 123 physician-administered drugs with 385 unique NDC numbers. They analyzed publicly-available data on branded drug prices from several sources—prices paid by Medicare (Parts B and D), the Veterans Affairs Administration, those included in the Federal Supply Schedule, invoice prices paid by pharmacies described in National Average Drug Acquisition Costs, list prices, and payments ultimately received by drug makers—to illustrate how prices vary across the U.S. market and how these relationships changed from 2010 to 2019.
Investigators found there were meaningful differences across the drug prices paid by payers. This, they wrote, reflects the fact that list prices have grown more rapidly than the net payments. By the end of the study, commercially negotiated Medicare Part D prices were broadly similar to the government-negotiated VA and FSS price schedules.