Analysis

Deflation in generic drug prices dragged down second quarter earnings for drug wholesalers and generic manufacturers. Here’s a useful summary from The Wall Street Journal, which captures the grim marketplace realities in Falling U.S. Generic Drug Prices Hurt Manufacturers, Wholesalers. Yesterday, Mylan's earning release noted "high-single-digit erosion expected in North America."

Below, I review the state of the generic drug market. As you will see, the overall market for mature generic drugs is deflating by about 10% per year. Many generic drugs have dropped significantly in price over the past four years.

Surprisingly, the prices for about one in five generic drugs remain elevated. Scott Gottlieb, M.D., the new head of the Food and Drug Administration (FDA), has prioritized actions that should squeeze the remaining generic inflation out of the system. I expect generic drug deflation to continue—and possibly accelerate—over the next 12 to 24 months.

Payers and consumers will be the ultimate winners, but the drug channel faces significant disruption. In the meantime, let’s all hope that these price declines don’t trigger shortages if generic drug makers flee this sinking market.

Posted by Drug Channels Institute, an HMP Global company on Thursday, August 10, 2017

Labels: Average Manufacturer Price (AMP), Generic Drugs, Costs/Reimbursement, Health Care Policy, Wholesalers, Drug Shortages, Marketing

Yesterday,The Wall Street Journal published an intriguing article by Jonathan Rockoff titled Behind the Push to Keep Higher-Priced EpiPen in Consumers’ Hands.

The article includes a graphic attributed to me (cited as Pembroke Consulting). It shows that the drug channel—pharmacy benefit managers (PBMs), wholesalers, and pharmacies—receive more than $37 in gross profit for a brand-name drug with a $300 list price. PBMs capture about half of this amount.

The WSJ article doesn’t describe how I arrived at the figures. But now you, Drug Channels reader, will get the inside scoop.

Below, I go inside the box and trace these crucial computations. They determine the revenues and profits of the drug channel participants that operate between a brand-name drug maker and the patient. I also reveal how the figures affect the net prescription cost for a third-party payer.

As with many things, you'll have to observe the system to figure out the superposition.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 8, 2017

Labels: Costs/Reimbursement, Benefit Design, Pharmacy, Wholesalers, Channel Management, PBMs, Pharmacy Economics

CBI’s PAP Legal Update
September 25-26, 2017 | Arlington, VA
www.cbinet.com/PAPUpdate

PAP Legal Update 2017 - Please join the patient assistance and access community for this critical update meeting which will provide important insight into key legal issues, including recent advisory opinions from the OIG, developments in the changing healthcare and regulatory landscapes, and opportunities for industry collaboration in the face of an increased need for risk mitigation. Learn more here.

Compelling Discussions, Pivotal Insights and Interactive Sessions for Forward-Thinking Compliance

• Hear an analysis of recent OIG advisory opinions related to PAPs
• Examine the legal and enforcement environment impacting the relationships between manufacturers and 501(c)(3)s
• Hear insights from advocates on efficient and effective PAPs and identify ways to strengthen your PAP with stakeholder engagement
• Improve brand image and messaging for PAPs in the era of public scrutiny
• Discuss policies for reducing risks associated with working with Medicare and Medicaid patients
• Remain compliant with design and development of co-pay assistance programs

Download the complete agenda here. Visit www.cbinet.com/PAPUpdate for further details and to register. Drug Channels readers will save $300 off of the standard registration rate when they use code RKN333.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rate or non-profit rates. Other restrictions may apply.

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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 7, 2017

Labels: Sponsored Post

This week, the two largest pharmacy benefit managers (PBMs)—Express Scripts and the CVS/caremark business of CVS Health—released updates to their 2018 formulary exclusion lists. They are available below for your downloading pleasure.

For 2018, Express Scripts was more aggressive, expanding its list to 159 excluded products. At CVS Health, however, the total number of excluded remained steady. The Prime Therapeutics list won’t be available until September, but it will apparently exclude more drugs that either of its PBM peers.

Read on for my 2018 head-to-head comparison, including comments on inflammatory conditions, multiple sclerosis, epinephrine, biosimilars, and more. I also review the reported savings from formulary exclusions. I conclude with some questions about patients. Remember them?

If I have missed anything important, please comment below.

Posted by Drug Channels Institute, an HMP Global company on Thursday, August 3, 2017

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

The Medicare Payment Advisory Commission (MedPAC), the independent agency that advises Congress on the Medicare program, recently released its June 2017 Data Book: Health Care Spending and the Medicare Program. The report is a 201-page wonktastic data dump. Chapter 10 focuses on prescription drugs.

In 2015, the most recent year available, Part B spending on drugs reached $25.7 billion. Hospital outpatient sites now constitute more than one-third of Medicare spending and have been crowding out physician offices. Part B payments to physician practices are growing much more slowly than payments to hospitals.

For some time, I have been tracking the evolution of the buy-and-bill system for provider-administered drugs. These new data confirm my predictions that physician offices’ will account for a declining share of the buy-and-bill market. Still unknown: Is this good or bad for patients?

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 1, 2017

Labels: Hospitals, Physicians, Benefit Design, Average Sales Price (ASP), Specialty Drugs, Buy-and-Bill

CBI’s 5th Annual Coupon and Copay
September 14-15, 2017 | Philadelphia, PA
www.cbinet.com/CouponAndCopay

Exclusive Offer – Register by 8/25/2017 and save $500*

Use discount code COUPDC

In the midst of a turbulent healthcare system, with drug prices continuing to escalate, patient affordability and access programs have become more critical than ever. Coupon and copay programs are one of the most effective tools for life sciences manufacturers to minimize patient out of pocket costs, while driving access and adherence.

As such, CBI's flagship Coupon and Copay conference, taking place September 14-15 in Philadelphia, PA, serves as the life sciences industry’s foremost event devoted exclusively to manufacturer-driven coupon and copay programs. Join the best of the best in life sciences and discover pioneering strategies to maximize ROI by leveraging these powerful discount opportunities.

The 2017 agenda boasts a diverse, experienced faculty from Otsuka Pharmaceuticals, United Healthcare Pharmacy, Healthwell Foundation, Coherus Biosciences, BioPlus Specialty Pharmacy, Community Health Network, UVA Cancer Center and many more!

Don't miss your chance to unite with leading innovators in copay design to discuss the future of patient assistance and access:

• Hear multi-stakeholder perspectives on the future of assistance and access for patients needing high-cost specialty therapies
• Discuss key analyses (abandonment, redemption, competitive offerings) used to improve the value of copay programs
• Identify new challenges in an evolving environment including deductible reset, LOE, real-time measurement for launches, distribution channel, OIG risk, denial conversion and e-coupons
• Navigate the OIG modifications on contributions to charitable patient programs
• Learn more about copayment assistance funds for Medicare patients
• Alignment of offer strategy with contracting efforts to avoid “double-dipping” of rebate and copay offerings
• Consider strategies for fast tracking prior authorization and copay assistance for specialty prescriptions to increase speed to therapy

Register Today!

*Discount offer valid through 8/25/2017; applies to standard rates only and may not be combined with other offers, categories, 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, July 31, 2017

Labels: Sponsored Post

Cut through the steamy summer haze with our refreshing selection of articles and insights. In this issue:

• CVS drugstores aim for a healthier look

• Anthem dissects specialty pharmacy management

• Takeaways from an Insys employee’s guilty plea over prior authorization

• Profiling pharmacies inside supermarkets and mass merchants

Plus, The Onion reports on the launch of generic internets following patent loss. Scary!

P.S. Follow @DrugChannels on Twitter for my daily curated selection of news and commentary.

Posted by Drug Channels Institute, an HMP Global company on Thursday, July 27, 2017

Labels: Specialty Drugs, Channel Management, Benefit Design, Pharmacy

Let’s revisit the Walgreens Boots Alliance—Rite Aid deal. Instead of an acquisition, the revised transaction calls for Walgreens Boots Alliance (WBA) to buy 2,186 Rite Aid stores and three distribution centers for $5.2 billion. WBA will also pay a $325 million termination fee to Rite Aid.

If the deal receives regulatory approval, Rite Aid will shrink to a multi-regional pharmacy chain with about half as many stores. It will, however, hold onto EnvisionRx, the pharmacy benefit manager (PBM) that it acquired in 2015.

Unfortunately, EnvisionRx remains a small, struggling regional PBM with limited growth. Its revenues in 2017 have been declining. There also appears to be no material synergies between Rite Aid’s retail pharmacy business and its Envision PBM.

Last week, Rite Aid disclosed that it will use $4.9 billion of its $5.5 billion windfall to repay debt. (Pro forma financials below.) Given the performance troubles that I outline below, I wonder whether investors will trust the current management team to spend the cash wisely.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 25, 2017

Labels: Mergers and Acquisitions, PBMs, Narrow Networks, Pharmacy, Pharmacy Economics

PBMI 2017 Specialty Rx Forum
September 12, 2017
Hyatt Regency Hotel | Downtown Chicago

You’re invited to join PBMI for its first regional Specialty Rx Forum in downtown Chicago at the Hyatt Regency Hotel. This one-day meeting is focused on discussing what's keeping plan sponsors up at night—specialty drug trend.

PBMI has gathered speakers representing different perspectives on the specialty drug industry including senior leaders from the largest PBMs, national employers, specialty drug manufacturers, and specialty pharmacies.

Check out the Agenda-at-a-Glance.

Register now!

Take advantage of lowest rates before they expire. Early bird rates end 8/1!

For more information about the Forum and sponsorship opportunities, please contact Linda DeChant at ldechant@pbmi.com.

PBMI looks forward to seeing you!

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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, July 24, 2017

Labels: Sponsored Post

Drug Store News (DSN) has just released its latest rundown of the top pharmacy retailers in the mightily-titled PoweRx 50. (Links below.)

I recommend the PoweRx list to anyone who competes with, sells to, or otherwise interacts with retail pharmacy chains. This useful resource also provides brief profiles of most organizations.

Below, I show DSN's top 25 retailers. This year, CVS Health tops the DSN list, with $60.8 billion in retail prescription sales. Colorado-based chain Pharmaca Integrative Pharmacy is no. 50, with $73 million in prescription sales—0.1% of CVS Health’s retail revenues.

Note that the DSN list is not a complete look at the U.S. pharmacy industry. It excludes many large mail and specialty pharmacies. It also inconsistently (and IMHO, inaccurately) aggregates independently-owned pharmacies by wholesaler and buying group. I highlight how the list differs from our broader but shorter list shown in The Top 15 U.S. Pharmacies of 2016.

Posted by Drug Channels Institute, an HMP Global company on Thursday, July 20, 2017

Labels: Channel Management, Industry Trends, Pharmacy