MSD puts best foot forward in drug pricing debate
MSD, known as Merck in North America, has taken a pre-emptive step in the drug pricing debate by releasing its list price changes to the public. The move towards greater transparency on pricing is one of various methods that pharmaceutical companies are using to deflect criticism away as the debate over pricing begins to get particularly acute.
Since Donald Trump has taken office, a number of executive orders have been passed and all of which based upon things that Trump promised before coming to office. The pharmaceutical industry did not escape Trump’s blunderbuss, with him stating that pharmaceutical companies have been “getting away with murder”. Pharmaceutical companies are now worriedly looking over their shoulder and trying to deflect any major criticisms before they land.
MSD have chosen the method of highlighting how much it has discounted drug prices and how to detach that from the list price change. For instance, the table released by MSD displays ‘List Price Change’, ‘Net Price Change’ and ‘Average Discount %’ over MSD’s US product portfolio. In 2016, this is displayed as a list price increase of 9.6%, with a net price change of 5.5% and an average discount of 40.9%.
The last column of the table particularly focuses of discounts that were provided on the US products, with a steady increase in numbers over time – increasing from 27.3% in 2010 to 40.9% in 2016. It is an attempt to deflect criticism by pointing out the MSD has been actively and increasingly discounting drug prices over time.
A statement released alongside the drug price list, from Adam Schecter, president of global human health at MSD, reads: “The price conversation over the past year has been driven and dominated by the justified public outrage in response to companies that hiked prices by triple digits, or had a business model based primarily on price increases. That is not true of Merck – and, to give credit to others, that is not true for many other innovative, R&D-based drug companies either.”
He continues, “Merck has increased prices, and in our view, we have been responsible in our approach. But we want to allow the public to judge for themselves by providing information for people to better understand our pricing practices – including the rebates and discounts that we provide to payers (insurers, pharmacy benefit managers, the government).”
Clearly there is an attempt to distance MSD from those that have ‘hiked prices by triple digits’, with the underlying hint that MSD is not in same league as Mylan or Valeant. Being able to concentrate the debate upon certain companies, instead of ‘R&D-focused companies’, would allow some of the bigger companies to side-step the potential backlash.
Whether this will work or not is debateable, Trump is already proving to be unpredictable and the groundswell of public support against the price increases from the pharmaceutical industries shows little sign of abating. Johnson & Johnson plan to release its drug pricing increases, presumably in similar fashion to MSD, in February. The other tactic is one such as Allergan and Novo Nordisk have taken – to commit to single digit price increases.
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