• Our Pricing Practices: Under the Microscope

    Year two of our pricing transparency report shows we continue to price responsibly.
    Adam Schechter, president, Global Human Health, 2010 – 2018

    Published February 2018

    Last year, Merck was the first pharmaceutical company to publish a multi-year report about our pricing practices, including the rebates and discounts we provide to payers in the United States. We did this to help people better understand our practices and the importance of rebates and discounts in looking at the overall drug pricing picture. We also said we would continue providing that information each year.

    Our Pricing Transparency Report for 2017 is now available. The average discount rate across our U.S. product portfolio, after rebates, discounts and returns are taken into account, was 45.1 percent in 2017, and the average annual net price across our portfolio declined by 1.9 percent. The 2017 figures reflect specific in-year dynamics, including the impact of loss of patent protection for three major Merck medicines.

    These data points for 2017, and the years before that, show that Merck continues to be responsible in our approach, and that the competitive marketplace for pharmaceuticals is working.

    In fact, growth in spending on retail prescription drugs in the United States was 1.3 percent in 2016, its lowest rate in recent years. And over time, spending on all prescription medicines (branded and generic) has remained at less than 15 percent of total health expenditures in the United States.

    Even so, health care spending overall is increasing. Overall health care spending is predicted to grow to 20 percent of the nation’s Gross Domestic Product (GDP) by 2025. In addition, the out-of-pocket costs paid by consumers for health care services are projected to increase each year through 2025. These trends are not sustainable and must be addressed.

    We know that medicines and vaccines need to be a part of the solution, and that we, as a pharmaceutical company, have to do better at finding ways to help our customers plan for and afford the inventions that we bring forward.

    You can learn more about some of the specific things we are doing on this page. But ultimately, reducing spending on medicines alone will never be enough to address the increasing cost of health care.

    More importantly, we know that the interventions we have today in our medicine cabinets and on our hospital shelves are not enough – cancer deaths are expected to cost the United States an estimated $148 billion in lost productivity by 2020. We have to ensure that the overall system continues to reward companies like Merck that invest billions each year in the quest to invent new medicines and vaccines that have the promise to provide better health for generations to come.

    Merck is continuing to do our part to improve access and affordability, and to address the broader affordability issues in our health system – while never relenting in our pursuit to invent new medicines that address critical unmet medical needs in areas such as cancer and infectious diseases. Here are a few examples:

    • Merck invested over $7 billion in R&D in 2017 and more than $60 billion since 2010.
    • In 2017, we introduced our first biosimilar in the United States at a list price of 35 percent below the list price of its reference product.
    • We support the role of generic drug manufacturers in providing low cost products once intellectual property rights have expired, and we advocate for policy changes in the United States to speed access to generic drugs and increase generic competition.
    • Both in the United States and globally, we are working with a broad range of stakeholders to help develop and advance innovative financing and payment models with the objective of improving access.
    • In the United States, where patients share in the cost of their health care, we have programs to help eligible patients who cannot afford their medications.

    Learn more about our actions to support Access and Affordability