Analysis

This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from May 2018.

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It’s time for Drug Channels’ annual analysis of drug spending. For 2017, we again turn to the annual trend reports from four large pharmacy benefit managers (PBMs)—CVS Health, Express Scripts, MedImpact, and Prime Therapeutics. (See their report links below.)

Below, I compare who’s better and who’s best among the PBMs and share additional observations about the 2017 trends. We offer four key conclusions:

• Drug spending grew by only 1.5% in 2017, continuing a multiyear decline in the growth rate.

• Total drug spending declined at more than 40% of plan sponsors.

• Spending on traditional drugs dropped by mid-single digits.

• For specialty drugs, higher utilization was a much bigger contributor to spending growth than was growth in unit costs.

The 2017 data figures show that PBMs’ negotiating abilities continue to put spending growth in a squeeze box. Unfortunately, the warped incentives of the gross-to-net bubble and plan sponsor cost-shifting mean that patients do not always get on the magic bus and benefit from the low trend figures.

Posted by Drug Channels Institute, an HMP Global company on Wednesday, August 29, 2018

Labels: Costs/Reimbursement, Benefit Design, Specialty Drugs, PBMs

This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from June 2018.

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Time for my annual review of the Fortune 500 list. Every year, this is one of my most popular posts, because it helps us follow the dollar and understand how drug channel intermediaries make money. Our analysis also provides crucial background for understanding the Trump administration's drug pricing blueprint.

Fortune’s 2018 list contains the same seven drug channel companies that the 2017 list did: AmerisourceBergen, Cardinal Health, CVS Health, Express Scripts, McKesson, Rite Aid, and Walgreens Boots Alliance.

Using the Fortune data, I explore the profitability and shareholder returns of the largest public drug wholesalers, chain pharmacies, and pharmacy benefit managers (PBMs). I compare these companies with the Fortune 500’s eleven pharmaceutical manufacturers and with a separate survey of independent pharmacies.

Alas, this may be our final review of the list, because by this time next year two companies—Express Scripts and Rite Aid—may no longer exist as independent public companies. In the meantime, let’s enjoy the crazy complexity of the U.S. drug distribution and reimbursement system.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 28, 2018

Labels: Industry Trends, Pharmacy, Wholesalers, Channel Management, PBMs, Pharmacy Economics

CBI’s 3rd Edition Drug Pricing Transparency Congress
September 27, 2018 | Philadelphia, PA
www.cbinet.com/drugpricing

Have you been keeping up with the various state drug pricing regulations that have been introduced and passed across the nation? Over the past year, states including Oregon, California, Nevada, Maryland, New York, Massachusetts and Vermont – to name a few – have introduced and/or enacted different laws and enforcement initiatives mandating the disclosure of drug pricing increases, introducing restrictions limiting Medicaid drug spending, requiring disclosure of company metrics and expenses, and other related pricing ballot initiatives.

CBI’s 3rd Edition Drug Pricing Transparency Congress convenes key industry stakeholders to discuss how the future of state drug pricing transparency regulations will impact commercialization, reimbursement, pricing and compliance practices.

Register by Friday, September 21, 2018 and
receive $300* off the standard rate with discount code DCP300.

Featured Discussion Topics:

• State Drug Pricing Reporting Requirements and Interpretations — What You Need to Know Now to Ensure Reporting Compliance
• Implications of State Drug Pricing Transparency Laws on Policy
• Operational Best Practices Focused on Governance and Planning for the Future
• Oregon HB 4005 — Reporting Requirements Overview and Update
• California SB-17 — Implementation and Enforcement Update
• The Latest Developments for New York's Medicaid Drug Cap and the Impact of ICER on Drug Pricing
• The Impact of Transparency and Disclosure Legislation on Legal and Compliance Practices
• Federal Legislative Activity Update — Patients First Blueprint Review

Speaker Perspectives

• Brian A. Bohnenkamp, Partner, FDA & Life Sciences Practice, King & Spalding LLP
• Joanne Chan, Assistant General Counsel, Pharmaceutical Research and Manufacturers of America (PhRMA)
• Sarah diFrancesca, Partner, Cooley LLP
• Seth Lundy, Partner, King & Spalding LLP
• Angela Marcucci, Director of Global Policy, Pfizer Inc.
• Kendra Martello, Senior Director, Public Policy, Government Affairs & Public Policy, Mallinckrodt Pharmaceuticals
• William A. Sarraille, Partner, Sidley Austin LLP
• Vince Sampson, Partner, Cooley LLP
• Debbie A. Walters, Vice President, Assistant General Counsel, Pfizer Inc.
• Sabrina Yohai, Vice President, Policy, Access & Value, Corporate Legal, Vertex Pharmaceuticals
• Andrew Parks, Director, KPMG

Don't be left out of the critical conversation. Register by Friday, September 21, 2018 and receive $300* off the standard rate with discount code DCP300.

*Offer expires September 21, 2018; applies to standard rates only and may not be combined with other offers, category rates, and promotions or applied to an existing registration.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Posted by Drug Channels Institute, an HMP Global company on Monday, August 27, 2018

Labels: Sponsored Post

We’re wrapping up one of newsiest summers in recent memory. As you send the kids back to school, savor this curated collection of curiosities, combed from the now-empty Drug Channels beach:

In this issue:

• An Ohio audit provides unprecedented data about pharmacy benefit manager (PBM) profits

• New revelations about rebates in Medicare Part D. (Bonus: AHIP discovers that rebates actually exist!)

• Congress has tough questions for 340B contract pharmacies

• How Amazon Business is drilling into the dental supplies market

Plus, an unexpectedly straightforward PBM news story that is clear enough to watch with your kids.

P.S. Join the more than 6,200 people who follow my daily musings and neat links at @DrugChannels on Twitter.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 21, 2018

Labels: Costs/Reimbursement, 340B, Pharmacy, Medicaid, PBMs, Medicare Part D

CBI’s 13th Annual Value-Based Oncology Management Summit
October 10-11, 2018 | Scottsdale, AZ
www.cbinet.com/VBO

As cancer care costs continue to soar, innovations in oncology care management and payer-provider payment reform remain a critical imperative for key stakeholders. Now in its 13th year, CBI’s Value-Based Oncology Management Summit convenes payers, providers, PBMs, manufacturers and specialty pharmacies to examine current trends/challenges and share best practices to control costs, reduce variation in care and improve patient outcomes.

REGISTER TODAY!

Drug Channels readers will save $400 off the standard registration rate when they use discount code FZK768*

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In-Depth Sessions and Discussions Include:

• Demystify current trends in value-based oncology payment and reimbursement models
• Examine the future of (CAR)-T cell therapy and cost effectiveness
• Explore the use of biosimilars in cancer treatment – Consider how biosimilars contribute to treatment options, efficiencies and expanded access to cancer therapies
• Assess the impact of oncology value partnerships with managed care plans
• Leverage real-world data and observational insights to understand and assess value-based care performance
• Advance palliative care models – Empower patients to make informed treatment decisions

REGISTER TODAY!

Visit www.cbinet.com/VBO for more information, or download the full agenda today. Drug Channels readers will save $400 off the standard registration rate when they use discount code FZK768*.

*Discount expires October 10, 2018; applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to an existing registration. Offer not valid on workshop only or academic/non-profit registrations.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Posted by Drug Channels Institute, an HMP Global company on Monday, August 20, 2018

Labels: Sponsored Post

Last week, Express Scripts released the 2019 updates to its formulary exclusion lists. They are available below for your downloading pleasure. Unfortunately, CVS Health won’t release its list until October.

For 2019, Express Scripts was more aggressive than ever, expanding its list to more than 240 excluded products. For the first time, it excluded products in two specialty categories: HIV antiretrovirals and Factor VIII recombinant products. It also added a new exclusion in multiple sclerosis.

Oddly, Express Scripts has made a patient unfriendly change to the hepatitis C category. It has excluded AbbVie’s Mavyret, the market share leader with a low list price. Instead, it added Merck’s Zepatier, whose list price was recently cut but can’t treat all types of hepatitis C. Consequently, the 2019 preferred formulary will force at least one in four patients to use the products with high list prices and high rebates. Many patients will end up incurring much higher out-of-pocket costs. Incredibly, Express Scripts advocates copay cards as a fix!

To me, the hepatitis C formulary change are further evidence of the warped incentives of our gross-to-net bubble. Payers benefit from a low net price, and PBMs gain from high list prices with high rebates (though less than we once thought). Meanwhile, patients get stuck making out-of-pocket payments based on the higher list price. Is this any way to run a drug channel?

Posted by Drug Channels Institute, an HMP Global company on Thursday, August 16, 2018

Labels: Costs/Reimbursement, Benefit Design, Specialty Drugs, PBMs

Last week, the two largest pharmacy benefit managers (PBMs)—CVS Health and Express Scripts—both stated that rebates now account for a small part of their profits. The companies therefore strongly implied that they could survive in a world in which PBMs did not participate in the flow of funds from a brand-name manufacturer to a plan sponsor. Below, I unpack the new disclosures, which move us materially closer to a new model.

Hmm. The two biggest PBMs and at least one major manufacturer (Pfizer) have now implied a willingness to change. So what’s to stop massive drug channel disruption?

CVS Health perhaps inadvertently identified the real barrier to a system without rebates: employers and health plans. As you will see below, CVS Health disclosed for the first time the massive gross-to-net bubble within its commercial book of business. The new information confirms that plan sponsors are hoarding rebates rather than sharing the savings with the employees whose prescriptions generated the rebate funds.

If we really do migrate to a system without rebates, PBMs’ reportedly minimal profits from rebates mean they could escape drug channel disruption unscathed. The focus will now turn to the plan sponsors that are absorbing rebate dollars. Whether plan sponsors realize it or not, they are the next target.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 14, 2018

Labels: Gross-to-Net Bubble, Costs/Reimbursement, Health Care Policy, Benefit Design, PBMs, Marketing

CBI’s Life Sciences Outcomes-Based Contracting Summit
October 3-4, 2018 | Philadelphia, PA
www.cbinet.com/OutcomesContracting

Exclusive Offer for Drug Channels Readers:

Register Now to SAVE $400* using discount code OUT400

CBI’s 3rd Annual Life Sciences Outcomes-Based Contracting Summit is the ideal platform to discuss best practices for value optimization and price alignment with health outcomes data and provides critical strategies into the process of outlining, structuring and negotiating risk-sharing agreements between bio/pharma manufacturers and payers.

This timely event will address the continuous challenges the industry faces to lower drug costs and increase patient access, all while demonstrating the value of their drugs to insurers by providing best practices and key insights from thought-leaders regarding the nuances surrounding outcomes-based contracting.

Gain critical insights from distinguished speaking faculty, including those representing AstraZeneca, Novartis Pharmaceutical Corporation, Aetna, University of Portsmouth, Center of Medicine in the Public Interest, BeiGene, Ltd., University of Washington Medicine Health System, Bristol-Meyers Squibb and more.

Join CBI for Solutions-Oriented Sessions, Powerful Payer Insights and Illuminating Case Studies:

• Overview of over 60 published outcomes-based innovative contracts
• Pinpoint how AstraZeneca and Aetna have succeeded in creating outcomes-based contracts
• Explore new conditional reimbursement models with real-world versus real-time performance data
• Implement contracts to define, measure, report and create payment mechanisms for value-based arrangements
• Hear how payers perceive value-based agreements that involve rebates versus those with refunds
  
• And more!
• Plus, join us for the Pre-Conference Workshop: Playbook for the Construction & Deployment of Outcomes-Based Innovative Contracting

Download the complete agenda, then register using promo code OUT400 to receive $400 off* the standard rate.

*Expires 10/2/18; applies to standard rate only and cannot be combined with other offers or applied to existing registration.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Posted by Drug Channels Institute, an HMP Global company on Monday, August 13, 2018

Labels: Sponsored Post

Today’s guest post comes from Mary Roberts, Vice President of Business Development at EnvoyHealth, a subsidiary of Diplomat.

Mary describes the next generation of patient services and explains how manufacturers can use new digital health tools to get closer to patients.

Visit envoyhealth.diplomat.is/innovative to learn more about using technology to enhance patient services and differentiate brands.

Read on for Mary’s insights.

Posted by Drug Channels Institute, an HMP Global company on Friday, August 10, 2018

Labels: Guest Post, Sponsored Post

Over the years on Drug Channels, I have explained the two primary reasons a drug’s list price doesn’t reflect what a third-party payer actually spends for that drug: (1) channel intermediaries and providers add markups that account for the costs, profits, and value of the services, and (2) manufacturers provide rebates and discounts to third-party payers.

Two recently-released reports confirm the often-overlooked magnitude of provider markups.

As you will see below, commercial payers use reimbursement approaches that permit hospitals to inflate specialty drug costs by thousands of dollars per claim when compared with physician offices. This is not about differences in patient care. It’s about hospitals adding big markups to drug costs.

Meanwhile, commercial insurers complain about “drug prices,” going so far as to publish misleading data about drug spending. Yet insurers conveniently forget to mention their own role in allowing powerful providers inflate drug spending. As evidenced by the proposed outpatient prospective payment system (OPPS) rule, the Secretary (of Health and Human Services) does not disavow any knowledge of site-neutral payments.

Posted by Drug Channels Institute, an HMP Global company on Wednesday, August 8, 2018

Labels: Hospitals, Costs/Reimbursement, 340B, Average Sales Price (ASP), Benefit Design, Physicians, Specialty Drugs, Buy-and-Bill, Channel Management