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Drug Middlemen Create "Perverse Incentive" for Higher List Prices



(p. B1) The Department of Health and Human Services is scrutinizing the system of rebates and discounts paid to middlemen as medicine flows from manufacturers to patients. Those middlemen, such as drug wholesalers, pharmacies, and pharmacy-benefit managers, are often compensated as a percentage of a drug's list price. That creates a perverse incentive for higher list prices throughout the system.


. . .


Pfizer , which made headlines earlier this month by pausing a slate of planned price increases due to White House criticism, sounds ready for reform. Chief Executive Ian Read on a conference call with analysts last week predicted that rebates are "going away" over the long term. Mr. Read added that the larger gaps between list and net prices amounted to a "subsidy" for companies in the drug supply chain and blamed those subsidies for the relatively weak sales of certain lower-priced versions of blockbuster drugs.



For the full commentary, see:

Charley Grant. " HEARD ON THE STREET; Skies Darken for Drug Middlemen." The Wall Street Journal (Wednesday, Aug. 8, 2018): B1.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Aug. 7, 2018.)







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