There is the sticker price, and then there’s the actual amount you paid after bargaining with the dealer about discounts. For pharmaceuticals, the media typically reports on list prices which are analogous to the “sticker price” for cars. The net price is what matters, and it is the price that includes discounts and rebates. The key question here is how successful Medicare Part D plans are at negotiating prices down from the list price.
Ippolito & Levy (2023), have written a paper to address this question. They used 2007-2019 data from SSR Health on drug prices and rebates and from Medical Expiture Panel Survey (MEPS) data on drug usage.
These data are used to compare the relative sizes of rebates for brand drugs based on the number of patients who use the drug and are covered under Medicare Part D.
The negative correlation between the net-to list price ratios was found [Medicare market shares] MMS in the last years of our sample. A significant 4.6% increase in MMS was observed in 2019, with a 10% increase. [95% CI: 2.1%, 7.1%] The net-to list ratio has fallen. Difference-in-differences showed net-to-list price ratios of drugs with above median MMS fell relative to those with below median MMS. In 2019,…
