The Five Facts About Drug Pricing HHS (and the media) Missed

  • by: Robert Goldberg |
  • 03/10/2016
HHS’s report on drug pricing has been hailed as an yet more evidence of “skyrocketing” drug prices according to many reporters.
They should have taken the time to read the entire report instead of the press release.  Facts are stubborn things, even if a press release ignores them or if media outlets like Fierebiotech Emily Wasserman or WSJ reporter Stephanie Armour.  Here are 5 such data points that they and others in the media could have gleaned from the study and a short Google search instead of spending time getting quotes from Peter Bach.
1. Drugs as a percentage of personal health spending has remained the same since 2009 (12 percent) and is projected to increase at a rate that does not boost that percentage much. 

2.  It uses personal health spending vs total health spending to inflate the percentage devoted to drugs.  Drugs are 9.3 percent of total spending vs 11.8 percent of personal health spending

3.Drug pricing is less than 5 percent of total increase in spending.  New medicines contributed $20.3 billion to growth in 2014, including $11.3 billion from four new hepatitis C treatments as nearly ten times as many patients were treated in 2014 than in 2013.   Prices for branded products rose in 2014 at an average rate of 13.5% on an invoice basis, but were reduced to 7-8% taking into account off-invoice discounts and rebates which offset most of the increases.  (Medicines Use and Spending Shifts. Report by the IMS Institute for Healthcare Informatics. 2015)

4.Which means rebates as a percent of drug prices has grown faster than drug spending.

5  HHS claims that drug spending is additive but in fact it has reduced the rate of overall spending, as the CBO and other research outlets has shown.


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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