's Feurstein Fast and Loose With Remicade Pricing Truth

  • by: Robert Goldberg |
  • 04/20/2016
Is telling just some of the facts to make a point contradicted by all of the facts good journalism?  Is it honest?

Here's the headline from Adam Feurstein:

Ignoring Criticism, Drug Companies Still Raising Prices, Making More Money 

"Everyone is screaming about drug prices. They're too damn high! Drug spending is going to bankrupt the health care system. Raising the price of drugs multiple times per year is unconscionable and unsustainable.

How are biotech and pharmaceutical companies responding to all the criticism? They're raising drug prices even more.

And increasingly, nearly all of the surplus revenue generated from those price hikes is staying with the drug companies instead of being extracted by insurers and pharmacy benefits managers in the form of higher rebates, said Leerink Partners analyst Geoff Porges.

"The price increases for established brands across our coverage have been substantial indeed. To the surprise of many investors, it now appears these price increases are likely to flow through to actual sales growth, with such growth more than offsetting any volume weakness in 1Q, and resulting in significant positive revenue surprises for these companies when they report 1Q results," Porges wrote in a research note Wednesday.

In other words: Take that, Hillary Clinton!

Porges analyzed J&J's first-quarter sales results, particularly for its specialty pharmaceutical drugs Simponi, Stelara and Remicade, and found 70%-90% of list price increases taken over the past year are flowing through to reported sales. In some cases, J&J captured 100% of the price increase as sales.

In other words, efforts by insurers and PBMs to negotiate higher discounts or rebates on specialty pharmaceutical products isn't keeping pace with the price increases pushed through by drug and biotech companies. Likewise, politicians ranting about outrageously high drug prices aren't having a moderating effect on industry practices -- at least not yet.

The net result should be better-than-expected sales, Porges said...."

Here's the rest of the story.

If Remicade is reporting 70 percent sales, that's a 30 percent rebate.  Pretty, pretty good considering the drug didn't face biosimilar competition until this year.  Neat trick to turn the percentages around but still 30 percent is a lot.  


Then there is the Remicade rebate picture 

On top of that, as my last blog demonstrated industry-wide a big chunk of revenues -- $100 billion or so -- goes to PBMs, insurers, hospitals, employers. Everyone but patients.

There's a reason for the phrase, "the truth, the whole truth and nothing but the truth."  You see, telling the truth, but not the whole truth and nothing but is considered lying.  


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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