Analysis

Last Thursday, the Centers for Medicare & Medicaid Services (CMS) shocked everyone with a proposal altering a small part of the 340B Drug Pricing Program. CMS proposed reducing reimbursement for certain Medicare Part B drugs purchased by 340B-eligible hospitals: from Average Sales Price (ASP) plus 6% to ASP minus 22.5%. Hospitals will also have to identify 340B claims with a new modifier.

Below, I highlight the most important 13 pages of CMS’s 664-page proposal. I also offer some observations and commentary on the proposal.

For context, I also include the new background memo for today’s House Energy and Commerce Committee hearing: Examining HRSA’s Oversight of the 340B Drug Pricing Program. The memo highlights the many negative findings from government watchdog agencies.

Like it or not, change may finally be coming to the out-of-control 340B program. Let’s hope Congress can get the program refocused on genuine safety-net providers and financially needy patients.

CBI’s Life Sciences Outcomes-Based Contracting Summit
October 3-4, 2017 | Philadelphia, PA
www.cbinet.com/OutcomesContracting


CBI’s 2nd Annual Life Sciences Outcomes-Based Contracting Summit 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.

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

• Gain an understanding of the risk-sharing challenges from the payers perspective, featuring Michael Sherman, MD, Sr. Vice President and Chief Medical Officer of Harvard Pilgrim Health Care
• Bridge the gap between real-world evidence and health economics outcomes research
• Manage legal, compliance and regulatory concerns surrounding value-based contracts
• Examine the benefits and challenges of outcomes-based contracts for target population (orphan/rare disease) therapies
• Translate successful European managed entry agreements into actionable opportunities for the U.S. marketplace
• Discuss the challenges and rewards of co-developing drugs and diagnostics for enhanced outcomes
• And more!

Be the first to view the complete agenda, then register today using promo code DCR400 for this limited time savings of $400* off.

*Discount offer valid through 8/14/17; applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to existing registration. Offer not valid on workshops only or academic/non-profit 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.

For a follow-up to The Booming 340B Contract Pharmacy Profits of Walgreens, CVS, Rite Aid, and Walmart, let’s examine covered entities’ contract pharmacy networks in the 340B Drug Pricing Program.

Many covered entities have relatively small 340B contract pharmacy networks. However, some have built large networks seemingly designed not to help needy and uninsured patients, but to enrich hospitals and pharmacies.

The top 10 hospitals, listed below, have built mega-networks averaging 277 pharmacies. The largest retail chains and pharmacy benefit managers (PBMs) are active participants in these networks. That’s right: PBMs have joined the 340B party!

Yesterday, the House Energy and Commerce Committee announced a July 18 hearing: Examining HRSA’s Oversight of the 340B Drug Pricing Program. Also below, I pose four questions that committee members should consider about 340B contract pharmacy mega-networks.

Pharmacies continue to ride the 340B Drug Pricing Program’s explosive growth.

Our latest exclusive analysis finds that nearly 20,000 pharmacy locations now act as a contract pharmacy for the hospitals and other healthcare providers that participate in the 340B Program. Fewer than 3,000 pharmacy locations were in the program in 2010.

Large retail pharmacy chains' rapid expansion (per the fourth chart below) into 340B suggests superior profits.
Every year, I question the economics behind this astounding growth. How many prescriptions do contract pharmacies provide at discounted prices to uninsured, underinsured, and low-income patients? Are pharmacies engaged in profit-sharing agreements with 340B hospitals? Are they earning fees that far exceed fair market value standards? Who is really benefiting from the contract pharmacy boom?

Medicaid Drug Rebate Program Summit 2017
September 11-13, 2017
Marriott Magnificent Mile | Chicago
www.knect365.com/MDRP

Medicaid Drug Rebate Program Summit 2017 is a platform to:

• Network with 600+ government officials, industry leaders, and pharma executives
• Gain insights on the upcoming 340B Drug Ceiling Price and Civil Monetary Penalties Final Rules
• Address the potential implications of “repeal and replace” on Medicaid
• Hear lessons learned following the implementation of the AMP Final Rule

Earn CPE and CLE Credits!

A Universal Continuing Legal Credits (CLE) Certificate of Attendance will be applied for the State of Illinois. Continuing Professional Credits (CPE) will be provided in accordance with the National Association of State Boards of Accountancy (NASBA). State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. All credits will be provided following the conclusion of the conference.

Get guidance from key federal officials to ensure compliance on government program mandates

• Medicaid Reform in the Trump Era – Scott W. Atlas, MD, David and Joan Traitel Senior Fellow of the Hoover Institution, Stanford University; Member, Hoover Institution’s Working Group on Health Care Policy
• MDRP: Once a Good Idea, Now Not “Good Enough” – Jeff Myers, President and Chief Executive Officer, Medicaid Health Plans of America
• Part I: General Overview of the Medicaid Drug Rebate Program: History, Core Elements, and Manufacturer Requirements and Part II: Understand How to Calculate Critical Price Types Such as AMP, URA, Best Price, Base Line AMP – Miree Lee, Principal at M. Lee Consulting LLC
• Authorized Generics Price Calculations – John Gould, Partner at Arnold & Porter Kaye Scholer LLP
• Fireside Chat: External Counsel – Moderated by John Shakow, Partner at King & Spaulding, with KPMG, Arnold & Porter Kaye Scholer LLP, Sidley Austin, and Hogan Lovells

This week, I’m rerunning some popular posts while I'm on vacation. Click here to see the original post and comments from May 2017.

This post is especially timely given President Trump’s draft Executive Order. In Section 4, the Order directs Secretary Price to ensure that the program benefits "the lower income or otherwise vulnerable Americans for which the program was intended." Shortly after the article below was published, I discovered that the 340B program has been growing by more than 30% annually. (See The 340B Program Hits $16.2 Billion in 2016; Now 5% of U.S. Drug Market.) It's time to moderninze the 340B Drug Pricing Program.

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Last Friday, I had the privilege of meeting with Secretary of Health and Human Services (HHS) Tom Price. I was invited to meet with Secretary Price for one of his listening sessions with industry experts and stakeholders. I appreciated the opportunity to share my perspectives.

In our meeting, I highlighted four ways that the 340B Drug Pricing Program is raising drug costs. I then offered eight specific recommendations for improving the program by addressing the widespread channel distortions the program has caused.

Read on for the recommendations and a summary of my comments to Dr. Price.

I have no idea if my suggestions will have any impact. Regardless, your friendly neighborhood blogger enjoyed spending time among some Washington insiders.

This week, I’m rerunning some popular posts while I'm on vacation. Click here to see the original post and comments from April 2017.

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Yesterday probably didn’t turn out as well as Cardinal Health had expected.

The good news: The company announced the acquisition of Medtronic's Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses for $6.1 billion in cash.

The bad news: Cardinal sharply lowered its outlook for future profits from its pharmaceutical distribution business.

The company cited lower generic drugs prices and “sell-side" pressure from pharmacy customers as two primary causes of its financial woes. Wall Street was unhappy: Cardinal stock closed down a whopping 11%. McKesson and AmerisourceBergen stocks fell in sympathy.

Cardinal Health’s projected profit downturn illuminates a dilemma facing drug wholesalers:

• Generic buying consortia of wholesalers and pharmacies have reduced wholesalers’ acquisition costs for generic drugs

• Independent pharmacies—the most profitable customers of wholesalers—are successfully using their own buying groups to extract lower prices from wholesalers

Independent pharmacies have been backed into a corner—and have responded by pushing back against their wholesale suppliers. Cardinal’s warning highlights the coevolution of profits within the pharmacy channel ecosystem. Expect wholesalers to be increasingly desperate to make up these lost funds.

This week, I’m rerunning some popular posts while I'm on vacation. Click here to see the original post and comments from May 2017.

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Last week, the pharmacy benefit manager (PBM) Express Scripts and the online discount card company GoodRx partnered on a new program called Inside Rx. The program provides point-of-sales discounts to uninsured patients on at least 40 brand-name drugs from eight manufacturers. Click here to read the press release.

This innovative partnership is the latest attempt to offer direct-to-consumer discounts that pop the gross-to-net bubble—at least for uninsured patients. Below, I delve deep inside Inside Rx. I explain:

• How uninsured patients benefit
• What’s in it for manufacturers, Express Scripts, and GoodRx
• Which pharmacies are in the program’s narrow network
• The surprises on the drug list
• How inside Rx compares with CVS Health’s Reduced Rx program

Depending on your position in the drug channel, you will feel either joy, sadness, fear, disgust, or anger as this new program rolls out. Please feel free to emote in the comments below.

Partnering with IDNs BioPharma Strategy Summit
August 16-17, 2017 | Philadelphia, PA
www.cbinet.com/IDNStrategy

As health systems continue to grow and consolidate to form major Integrated Delivery Networks (IDNs), manufacturers are tasked with learning how to best contract with, and sell to, these evolving systems to ensure product success.

With conflict of interest policies in place and restricted access to physicians, manufacturers are changing their sales approach to better reach and engage these new customers. CBI’s Partnering with IDNs Strategy Summit convenes manufacturers and IDNs to discuss how to create a mutually beneficial partnership that contributes to continual care coordination, strategic product management and enhanced access.

A Dialogue-Driven Forum Providing Next-Generation Approaches:

• Forecast the 2- and 5-year outlook for IDNs and the overall healthcare ecosystem
• Understand the impact of current biologic and biosimilar legislation and regulations on Healthcare Information Technology (HIT) used by integrated delivery networks
• Gain insight into how drug choice impacts speed-to-fill and how specialty pharmacy stewardship affects patient outcomes
• Choose the right partners for your brand and identify the key decision-makers
• Learn how to overcome the challenges of limited access to physicians in certain networks
• Discuss what becoming more “customer-centric” actually means for manufacturers
• Hear best practices and opportunities for measuring success in the IDN channel

All New For 2017! – Five Expert Case Studies from IDNs:

• Establishing the Partnerships with IDNs to Affect the Patient Journey and Outcomes
• Jerry Buller, Director, Specialty Pharmacy Services, Vanderbilt University Medical Center

• Optimize Patient Care through Integration and Collaboration
• Scott Canfield, PharmD, Clinical Programs Manager, Specialty Pharmacy, Johns Hopkins Home Care Group

• Gain Insights into Provider Care Coordination and Population Health Management
• William T. Lee, D.Ph, MPA, FASCP, Pharmacy System Director, Carilion Clinic Healthcare System

• From Diagnosis to Delivery – Disruptive Innovation in a Specialty Pharmacy
• JoAnn Stubbings, BSPharm, MHCA, Assistant Director, Specialty Pharmacy Services, Ambulatory Care Pharmacy Department, University of Illinois at Chicago College of Pharmacy

Visit www.cbinet.com/IDNStrategy for more information. Drug Channels readers will save $400 off the standard registration rate when they use code BHN554*

*Discount may not be combined with other offers, category rates, promotions, or applied towards an existing registration. Offer not valid on workshop only or academic/nonprofit registrations. 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.

Yesterday we got some pre—July 4th fireworks.

Walgreens Boots Alliance (WBA) announced a deal to buy 2,186 Rite Aid stores and three distribution centers for $5.2 billion. Rite Aid will also get the option to source generic drugs via the wonderfully named Walgreens Boots Alliance Development (WBAD) organization. Click here to read the press release.

With a potential FTC battle looming, WBA made the debt-laden Rite Aid an offer that it couldn’t refuse.

Before you head off for the long holiday weekend, please enjoy these thoughts on the new transaction along with commentary on Fred’s and the drug wholesalers.