Drug pricing

A drug reimbursement denotes a situation where either a drug company is paid by a third party for all or part of a prescription, or where a third party repays the consumer a portion or all of the prescription's price. Various insurance companies may handle the process in different ways, and in some cases it may depend on the drug's manufacturer. A drug reimbursement is often a benefit of a medical insurance plan, though not all plans offer prescription drug benefits.

In cases where the drug manufacturer is reimbursed, the consumer is responsible for doing very little other than going to the location and picking up the medicine. Depending on the plan, the consumer may need to offer some money toward the cost of the prescription known as a co-payment. The pharmacy then handles the rest of the transaction by turning in a claim to the insurance company noting the drug of choice, the prescription, date filled, and other relevant information.

In all markets, there is more than one drug price. This starts with the list or gross price that the manufacture determines at launch. In some free-pricing markets like the US and Germany, payers for the drug may or may not be consulted before launch but in many others access to that market will hinge on a negotiated list price for national access with additional discounts determining the net price which can vary regionally. Once the drug starts its journey on the pharmaceutical value chain, the price of the product can rise and fall before it is eventually linked to a prescription. Even after the physician writes a prescription, in the US, the amount that a patient has to pay and the rebates that flow back through the pharmaceutical value chain continue to resonate after the patient receives the drug.

Likely winners from regulatory change

• Patients: in the US, their position could not get much worse
• Pharmaceutical and biotech companies such as AstraZeneca, GSK or Pfizer

Likely losers from regulatory change

• US pharmacy benefit managers (PBMs) if rebates are eliminated
• US health insurance companies

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Nancy Ella

Editorial Manager

Journal of Pharmaceutical Care & Health Systems