Drug spending where the money goes.

Byline: Anthony Vecchione

The results of a new study find that almost half of spending on brand medicines in the United States goes to pharmacy benefit managers (PBMs), hospitals, health insurers, the government and others and not to biopharmaceutical companies.

The report from the Berkeley Research Group (BRG) shows that between 2013 and 2018, the amount of money spent on brand drugs that supply chain components and other entities retained for themselves has grown to about 46 percent of total spending.

In contrast, the portion of the spending that actually goes to the biopharmaceutical companies that spend billions to discover, develop and produce those medicines continues to decline, to about 54 percent of the revenue in 2018.

Dean Paranicas, president and chief executive officer of the HealthCare Institute of New Jersey (HINJ), a trade association that serves as the voice for the state's leading research-based biopharmaceutical and medical technology companies, said the analysis underscores a key point.

"This powerful new evidence confirms that what patients pay for their brand medicines is not being determined by the companies that develop and manufacture those drugs," Paranicas said. "We need to look at the whole picture, including the complex marketplace and supply chain, when considering how to lower costs for the patient."

Paranicas pointed out that middlemen not patients are increasingly benefiting from the substantial discounts offered by drug companies.

"Brand drug companies offer $166 billion in discounts annually, which unfortunately are being absorbed by PBMs and other actors within the supply chain who use a drug's list price instead of the discounted price to determine a patient's copay and deductible," he added. "If shared with patients, as the manufacturers intend, these discounts would provide significant and immediate relief to patients,"...