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Half of US spending on brand medicines went to supply chain in 2018

A study has revealed that in 2018, almost half of the spending on brand medicines went to the supply chain and other entities in the US.

According to new research, nearly 50 percent of total spending in the US on brand medicines went to the supply chain and other entities in 2018.

…the share of total spending on brand medicines that biopharmaceutical companies retain has been steadily declining”

The study, conducted by the Berkeley Research Group (BRG), reveals that innovative biopharmaceutical companies that research, develop and manufacture medicines retained 54 percent of total point-of-sale spending on brand medicines. The share of spending received by other stakeholders also increased from 33 percent in 2013 to 46 percent in 2018, increasing from $24.7 billion to $48.6 billion.

“This data reaffirms that we need to look at the entire supply chain in order to solve patient affordability challenges,” said Stephen Ubl, president and chief executive officer of Pharmaceutical Research and Manufacturers of America (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.” 

The analysis highlights that 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, finds the report, the amount that innovative biopharmaceutical companies retained from the sale of brand medicines increased by an average of 2.6 percent annually, in line with inflation. In this same timeframe, nearly 200 new innovative treatments were brought to patients.

Additionally, nearly half of the increase in the total amount spent on brand medicines went back to payers during this same time period. Twenty percent went to hospitals, pharmacies and other health care providers, which is the same amount that went to biopharmaceutical companies that research, develop and manufacture medicines.

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