At the last major DC showdown with big pharma, we learned a crucial fact about US drug prices. It's sure to come up again this week.

Business Insider | 2/25/2019 | Emma Court
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Key executives of seven top drugmakers will testify about drug prices at a US Senate committee hearing on Tuesday. Last time a top pharma CEO faced tough questions about drug prices, we learned about a crucial feature of US drug prices called rebates.

Drug rebates are a common business practice in the US. Drugmakers pay them and other discounts to get health insurers and pharmacy-benefit managers to cover their medications.

Rebates - US - Drug - Prices

But rebates have also been blamed for driving too-high US drug prices.

The practice became more widespread because of a forgotten 1990s class action lawsuit brought by mom and pop pharmacies, according to one expert, Scott Gottlieb, who now leads the US Food and Drug Administration.

CEOs - Drug - Companies - Pfizer - Merck

CEOs from top drug companies like Pfizer and Merck will be in the hot seat on Tuesday, when they're set to testify before US Senators at a hearing about high drug prices.

The last time a top pharma executive faced tough questions from members of Congress about prices, we learned something crucial about how US drug prices work — and it's likely to inform Tuesday's hearing.

Mylan - Price - EpiPen - Reaction - Treatment

Back in 2016, Mylan had raised the price of its lifesaving EpiPen allergic reaction treatment more than 500% over several years, sparking public outcry.

Hauled before lawmakers that fall, Mylan CEO Heather Bresch said that Mylan wasn't reaping much of the financial benefits of those price increases. Instead, she said Mylan had to give industry middlemen large discounts and after-the-fact rebates. Of the more than $600 that an EpiPen two-pack cost that year, Mylan made just about $100, after things like rebates, she said.

Drug - Rebates - Feature - US - Health

Drug rebates are a common feature of the US health system, used by drugmakers in negotiations with middleman to get their medicines covered by health insurers. Rebates have also been blamed for driving up the cost of drugs in the US. And...
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