New Analysis Finds Nearly 50% of Brand Medicine Spending Goes to the Supply Chain and Others

Nearly half of total spending on brand medicines – the sum of all payments made at the pharmacy or paid on a claim to a health care provider – went to the supply chain and other entities in 2018, according to a new analysis from Berkeley Research Group (BRG). Innovative biopharmaceutical companies that research, develop and manufacture medicines retained just 54% of total point-of-sale spending on brand medicines. The share of spending received by other stakeholders increased from 33% in 2013 to 46% in 2018.

“This data reaffirms that we need to look at the entire supply chain in order to solve patient affordability challenges,” said Stephen J. Ubl, president and chief executive officer of PhRMA. “We need to fix the misaligned incentives in the supply chain, including the broken rebate system, to ensure patients benefit at the pharmacy counter from the significant discounts and rebates.” 

According to the BRG analysis, the share of total spending on brand medicines that biopharmaceutical companies retain has been steadily declining as rebates and discounts have increased. Between 2015 and 2018, the amount innovative biopharmaceutical companies retained from the sale of brand medicines increased, on average, 2.6% annually, in line with inflation. In this same timeframe, companies brought nearly 200 new innovative treatments and cures to patients.

Read the full press release.