Here at WaveData we keep a close eye on the number of concessions granted to individual products each month and have been doing so since they were launched in November 2010. We have always assumed the Category M is the primary source of concessions and of the linked shortages, but this month Charles Joynson, WaveData MD, has taken a closer look to see if this is correct.
From the graph it does appear that Category M products get most of the concessions, which is probably due to the fact that Category M prices are used to modulate the profit made by Pharmacists and they are consequently pushed down much harder than the reimbursement prices for the other Categories.
There appears to be a series of waves in the number of Category M products granted concessions, with a two year buildup followed by a four year decline. We are now on the third year of a decline period, so we can expect the number of concessions, if this rule holds true, to decline from it’s 2025 876 total, to something slightly less in 2026. Then, if the previous history is replayed, the number of concessions in 2027 will jump to over 1400 for the whole year.
Of course concessions mask the true issue which is the unprofitability of many generics. When we looked at products where the average market price exceeded the drug tariff price we found a much greater number (over 200 per month), and the number was even larger when we factored in the cost of dispensing (over 1200 per month).