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There’s an old saw among journalists that if you can find three examples of a phenomenon, you can declare a trend.
Under that standard, I’d like to announce a new trend: companies walking away from drug-price transparency.
Last year, Novartis stopped reporting list- and net-price changes across its portfolio. I noted on Monday that similar data has disappeared from the Novo Nordisk Annual Report. Now, Merck has dropped its 10-K — the SEC filing that serves as an annual report — and it has removed longstanding language about its average rebate levels and mention of an accompanying pricing transparency report.**
There’s the three. There’s the trend.
Today, I’d like to talk through three reasons why such efforts are fading. Tomorrow, I’ll give three reasons why companies should continue the practice. My view is that these are good and useful efforts, but I want to give a realistic take on what may be happening.
Here’s why pricing-transparency reports may no longer be needed:
Transparency is an ESG-adjacent topic, and interest in ESG is waning. Companies aren’t just cutting pricing-transparency efforts. They seem to be providing less details around broader social topics, period.
Novartis, for example, is no longer reporting any metrics associated with the Sustainability Accounting Standards Board, which had been a kind of gold-standard list of “stuff companies should be telling people.” That pricing has been folded in to this broader trend is not a surprise.
The educational value of pricing data is no longer needed. If you look at the way that pricing transparency reports were initially presented to the media and other stakeholders, it was clear that they were, in part, designed to inform around a critical point: There is a huge gap between list prices and net prices (generally flat or falling) and within that gap there were all kinds of PBM shenanigans.
It seems hard to believe it now, but that argument was not particularly well understood in 2017 when Merck released its first Pricing Action Transparency Report. But the environment has shifted, and it may no longer be necessary to make that same point, year after year, especially when product mix changes could muddy trend data.
It’s a pain in the ass. Gathering portfolio-wide list- and net-price data is not trivial. Net-price data has to be gathered and calculated for every brand, and then it needs to be weighted to give an accurate picture of the whole enterprise.
The numbers themselves are not descriptive enough to make investment decisions upon and they weren’t required by any regulator or oversight authority, so there wasn’t a clear and immediate payoff for all that hard work.
Are those good reasons to step away from transparency? That’s an eye-of-the-beholder thing. As I mentioned, I’m skeptical, and I’ll make the counter-point tomorrow.
But regardless of whether you want to put a value judgment on it, it’s clearly a trend.
** Again, it’s possible that these disclosures will appear in some other format at some other time. If that’s the case, I’ll correct the record and amplify those numbers.
***
I would be remiss if I didn’t point out that this trend is not universal: UCB just released its Integrated Annual Report, and that company continues to present list- and net-price changes across its portfolio.
Here’s how they broke down:
Net price change: -7.8%
List price change: 5%
Rebates, discounts and fees as a share of gross sales: 54%
In theory, I should write a lot more about PBM reform today.
There was the hearing yesterday, and there was a fair amount of inside-the-Beltway chatter on What It All Means, with some coverage highlighting everyone’s legitimate desire to get this over the finish line and some coverage underlining a different reality: there’s no vehicle to get the provisions to a vote.
I’m going to err on the side of reality today. I don’t see how this moves any time soon, and while the topic isn’t going away, I don’t want to waste your time with the politics.
ELSEWHERE:
I thought this was low-key fascinating: CMS just put out an infographic on how it selects medicines for “negotiation.” About 95% of the content is basic stuff, but the hypothetical they used emphasized that a medicine with multiple FDA approvals would be handled as a single “qualifing single-source drug.” This probably isn’t a surprise — it’s how CMS treated Novo’s insulins in the 2026 year and Ozempic/Wegovy/Rybelsus in the 2027 year — but it’s worth pointing out that CMS’ broad definition of “drug” is at the heart of Novo’s lawsuit over the IRA.
Yesterday, someone accused me of over-indexing on 340B a touch. I really wanted to prove him wrong by not including a single 340B link today. And then I saw this white paper from Third Way on the impact of 340B and hospital markups on the health care system. Maybe tomorrow will be 340B free!
This, from thinkboi Nikhil Krishnan, is the best joke I’ve seen on LinkedIn in a long time. What can I say? I live for the wonky stuff.
Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations.
To learn more about how Reid Strategic can help you, email Brian Reid at brian@reidstrategic.com.
