Eli Lilly says it's cutting an average of 50% off list prices—and its price hikes don't work

Heightened pressure from pharmacy benefit managers and increased competition among drugmakers are taking a big bite out of Eli Lilly's list-price hikes—an 11-percentage-point bite, on average, the company said in a new report.

After raising list prices an average of 14% in 2016, and wheeling and dealing with payers, Eli Lilly netted an overall price increase of 2.4%, the company said in a new report. That's a major comedown from 2015, when a 16.3% average increase yielded a net rise of 9.4%.

Lilly joined pharma peers Johnson & Johnson and Merck in unveiling its high-level pricing data, as part of a summary of its annual report. On average, the company says discounts have grown to 50% over the last 5 years, up from 28% in 2012.

What’s causing that increase? Lilly says more competition among drugmakers to win coverage, a change in its product portfolio, and hardball negotiations with PBMs. Mandatory government discounts that have grown “significantly” since the Affordable Care Act went into law in 2010 are also playing a role, according to the company.

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The Indianapolis drugmaker's report comes on the heels of Merck's and J&J's similar disclosures. Each of those companies has felt the sting of payer pressure in recent years, the disclosures show. On average, J&J said it hasn’t raised prices above a single-digit percentage—a pledge Allergan CEO Brent Saunders famously made in September—dating back to 2012. J&J paid out $11 billion in rebates and discounts in 2016 and realized a 3.5% average net price increase, the company said.

Merck reported that its average rebates and discounts grew to 40% in 2016, up from 27% in 2010. The company realized a 5.5% price gain throughout its portfolio last year, negotiated down from a 9.6% average list price increase.

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However, each company pushed back on a recent request from the Interfaith Center on Corporate Responsibility for more detailed pricing information. That group wants to see drug-specific pricing data, a request stymied by many top drugmakers.

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The companies are reporting their pricing and rebate data as debate continues to intensify over the role PBMs play in U.S. drug costs. Shortly after a high-profile dust-up between Gilead Sciences and Express Scripts on the topic, Sen. Ron Wyden. D-Ore., unveiled legislation aimed at lifting “the veil of secrecy” behind drug rebates.