Pharmaceutical Pricing Practices, Utilization and Costs - Meeting Summary. 1. Prescription Drug Coverage, Spending, Utilization, and Prices: Report to the President--Jack Hoadley, Ph.D.

01/01/2004

Dr. Hoadley highlighted findings from the April 2000 DHHS report Prescription Drug Coverage, Spending, Utilization, and Prices: Report to the President (which is available online at aspe.hhs.gov/health/reports/drugstudy). The DHHS report documents, to the extent possible, the complex arrangements by which prices for prescription drugs are determined at different levels of the pharmaceutical distribution chain: drug manufacturers, wholesalers, retailers, insurers, PBMs, pharmacies, and consumers. As illustrated in Figure 1, different purchasers pay different prices for the same brand-name prescription drug. Cash-paying customers--i.e., individuals for whom there is no third-party payment at the point of sale--pay higher prices than do Federal facilities and agencies, insurers and PBMs, and others. These customers, who include Medicare beneficiaries with poor or no prescription drug coverage, are among the people least able to afford high prescription drug prices.

Figure 1
Prices Paid by Different Purchasers for a Brand-Name Drug
(Illustrative Example with Prices Based on Composite of Several Brand-Name Drugs).

Source: Jack Hoadley, Ph.D., Office of the Assistant Secretary for Planning and Evaluation (ASPE), DHHS. Presentation to ASPE Conference on Pharmaceutical Pricing, Utilization, and Costs, Washington, DC, Aug. 8-9, 2000.