Rebates is a common pricing technique to incentivize innovation in the scientific field, with complex outcomes and interesting history. Payers (including government payers) commonly negotiate discounts (rebates) from manufacturers. In recent years, many European countries have negotiated rebates (in many cases confidential rebates) with an ultimate goal of keeping drug prices low and increasing drug access. Does such confidential rebate improve patient-access at a more affordable price?
Using confidential-rebates has little impact on improving patient-access at more affordable prices, according to a new study from the University of Zurich published in the Lancet.
Introduced in 2012, rebates in Switzerland have been kept secret starting 2019. Carl et.al. investigated all the drugs with and without rebates between January 2012 and October 2020 to understand clinical benefits of drug with rebates, and duration between approval and price determination.
This timely study concludes following
Drugs with rebates may hamper access to drugs and lead to overpayment. Improving transparency on actual drug prices and stronger cooperation between countries could help national authorities to make better informed pricing decisions, and improve access of innovative drugs to patients.
In addition to above mentioned issues related to rebates, the difference between listing price and secretly negotiated price poses complicated analysis issues. We agree with the researchers emphasis on adopting WHO’s resolution on drug pricing transparency.
If history has taught us anything, it is that secret rebates create more problems than they solve in the long term (secrete rebates discussed in the famous Rockefeller’s Standard Oil Co v United States)
Carl, D. L., & Vokinger, K. N. (2021). Patients’s access to drugs with rebates in Switzerland – Empirical analysis and policy implications for drug pricing in Europe. The Lancet Regional Health – Europe. https://doi.org/10.1016/j.lanepe.2021.100050 (Accessed at https://www.thelancet.com/journals/lanepe/article/PIIS2666-7762(21)00027-2/fulltext#%20 )