What did the Senate investigation find about how the market works?
Manufacturers 'shadow-priced' within hours of each other; PBMs demanded rebates rising from single digits to 60%+; Novo's board voted down a price decrease because it would reduce PBM revenue — a system that rewarded rising list prices while patients on deductibles paid them in full.
The Grassley-Wyden report found that manufacturers engaged in "shadow pricing": Novo Nordisk and Sanofi raised insulin prices sometimes within hours or days of each other. PBMs, rather than resisting, demanded bigger rebates, which rose from single digits in 2013 to 60% or more for large accounts, while administrative fees climbed to around 5% of list price. Because PBM revenue was tied to list prices, both sides benefited from high list prices even as net prices were lower. Executives at Lilly and Novo were aware that PBMs earn money from rebates and fees, and Novo's board voted down a proposed price decrease over concerns about reduced PBM revenue. The report concluded the system rewarded rising list prices, which uninsured patients and those with deductibles paid in full.