Duplicate discounts cost manufacturers
As drug discount programs have grown rapidly over the past decade, noncompliant discounts have gone from a minor concern to a major issue.
For larger drug manufacturers, noncompliant discounts are a significant source of revenue loss. Some manufacturer estimates place the cost of duplicate discounts for their own companies at hundreds of millions of dollars of lost revenue per year.
For early growth companies, revenue loss caused by noncompliant discounts can even be a threat to the company’s long-term survival. Bringing a new drug to market is a lengthy and costly process, and unexpected losses may not be within the emerging company’s margins to absorb.
Based on our analysis of more than half a million claims that have been reviewed by covered entities using the Kalderos Review tool, we estimate that 6% of requested Medicaid rebates are duplicate discounts with other government-sponsored drug discount programs (primarily 340B).
This is a conservative estimate. Because of lack of data, some duplicate discounts are extremely tough to detect. The true percentage is likely even higher.
Duplicate discounts threaten the drug discount programs that patients rely on
While manufacturers bear the financial costs of duplicate discounts, noncompliance is also bad for the drug discount programs themselves, and by extent, the patients they serve. If major manufacturers become reluctant to participate in drug discount programs because of unpredictable losses, these programs will no longer be sustainable and may no longer be available for vulnerable patients.
Duplicate discounts are a harmful inefficiency in the healthcare system
American healthcare costs are startlingly high compared to those in the rest of the world, and the cost of prescription drugs is no exception. American patients pay more for prescription drugs than any other patients in the world.
These high costs are driven in part by inefficiencies like noncompliant discounts. When manufacturers lose revenues toward discounts they don’t actually owe, it affects the costs of drugs and makes the healthcare system more costly for everyone.