Half-off sale at Eli Lilly as drug rebating climbs to 51% in 2017

Eli Lilly
Eli Lilly released a report detailing 2017 pricing trends, notably disclosing that discounts have grown to 51% of list prices. (Eli Lilly)

Eli Lilly has been among the pharma companies most affected by tough pharmacy negotiations in recent years, and in 2017, the drugmaker offered more than half off its U.S. list prices in the form of rebates and discounts, according to its latest pricing report. 

That's an average discount across its portfolio, and it's featured in a new disclosure of net and list prices. Lilly took U.S. list price hikes of 9.7% in 2017, on average, the report said. After rebates and discounts, the price increases came to 6%. The company discounted more than half of its list prices, or 51%, up from 50% in 2016.

In diabetes, Lilly said mandatory government discounts have resulted in U.S. insulin prices that are "among the lowest in the world, and lower than developed markets with single-payer, direct-purchase models." It did not disclose pricing for its own insulin offerings, however. Major insulin players have come under fire for list-price increases in recent years and face class actions from patients and payers.

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Last year, Eli Lilly, Johnson & Johnson and Merck each started offering portfolio-level pricing details as the drug industry has come under growing scrutiny. Pharma companies have said growing rebates to pharmacy benefit managers are driving prices up, while PBMs say their negotiating saves billions and that drugmakers set their own prices. 

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

Last year, Lilly reported that it took average list price hikes of 14% in 2016; the hikes shrank to net increases of 2.4% due to negotiations.

Pricing scrutiny is no unfamiliar concept for pharma watchers. At this year's J.P. Morgan Healthcare Conference in San Francisco, Lilly CEO David Ricks said the industry should push for reform in 2018 because there are "people who are in power who understand that tricky balance, that fragile balance between reward for innovation and access." He's among a group of industry voices who have called for patients to directly benefit from tough pharmacy negotiations. 

In recent weeks, leading insurers UnitedHealth and Aetna have pledged to pass on their drug rebates to some patients.

In its own 2017 drug pricing transparency report, Johnson & Johnson said it offered up $15 billion in discounts in 2017 and that its average net prices fell by 4.6%. Merck reported that its prices after discounts slipped 1.7% in 2017.

RELATED: Trump, Azar say a plan for drug prices is coming in 'about a month' 

Meanwhile, President Donald Trump said last week that he plans a "major news conference" on drug pricing in "about a month." It's unclear what approach the administration will take to reduce drug prices, but several officials—including new HHS Secretary Alex Azar, a former Lilly exec—have highlighted the role of middlemen in recent weeks.

President Trump has pledged to lower drug prices on numerous occasions before and since taking office, famously saying pharma is "getting away with murder" last year. But since the end of 2016, prices for more than 2,500 meds have increased by at least 10%, according to a Thursday tweet by former CMS administrator Andy Slavitt.