The Journal of the American Medical Association (JAMA) recently published Estimated Changes in Manufacturer and Health Care Organization Revenue Following List Price Reductions for Hepatitis C Treatments by Sean Dickson and Ian Reynolds. The paper purports to show that manufacturers’ net revenues increased following a decrease in three drugs’ list prices.
However, the paper contains a significant computational error: The authors do not properly calculate the 340B ceiling price. Consequently, the authors’ calculations are inaccurate and their conclusions are erroneous. As we might expect, a manufacturer’s revenue per-patient doesn’t increase when list prices decline and net prices remain constant.
Below, I explain how to compute a drug’s ceiling price under the 340B Drug Pricing Program. I then illustrate the crucial mathematical error in the JAMA paper. I also briefly highlight a few other errors and omissions in the paper.
The paper’s serious and irredeemable flaws imply that readers will be significantly misinformed about drug prices and the 340B program. You may or may not agree with me about the 340B program. But I hope you will concur that respected academic journals should publish truthful and accurate information.
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