Pharmaceutical Pricing Practices, Utilization and Costs - Meeting Summary. 2. Why Different Purchasers Pay Different Prices for Prescription Drugs--Anna Cook, Ph.D.

01/01/2004

Dr. Cook explained that the manufacturers of brand-name drugs charge each purchaser the highest price they can and that different purchasers have different price sensitivity.

In general, the more ability a purchaser has to drive market share toward the utilization of particular products, the more willing a brand-name drug manufacturer is to offer thatpurchaser rebates or discounts. PBMs, HMOs, and other purchasers get rebates because they can influence the utilization of drugs by applying a formulary to a broad patient base. Hospitals, clinics, and HMOs that purchase drugs directly from manufacturers get rebates because they can influence the prescribing patterns of doctors. Cash-paying customers do not have the ability to drive market share and therefore do not get rebates or discounts.