Analysis

President Trump has nominated Scott Gottlieb, M.D., to be the commissioner of the Food and Drug Administration (FDA). I’ve been a big fan of Dr. Gottlieb’s for some time, and think he is an outstanding choice.

In addition to his role overseeing the FDA, Dr. Gottlieb will be a key policy advisor to the Trump administration on drug pricing. As you will see below, Dr. Gottlieb is unusually familiar with the warped incentives in the gross-to-net bubble—the growing spread between a manufacturer’s list price for a drug and the net price to a third-party payer after rebates.

His solution is to migrate brand-name pricing from today’s formulary rebates to up-front discounts. As I explain below, such a shift would radically disrupt the business models and economics of pharmacy benefit managers (PBMs), wholesalers, and pharmacies. I speculate that the change would be negative for the channel.

Right now, most people believe that we’ll continue to muddle along with our Rube Goldberg system. But if Dr. Gottlieb is confirmed as FDA commissioner, then perhaps we will see a black swan event—a massively important yet unexpected break from current practice. Hmmm…

Medicaid and Government Pricing Congress
May 8-10, 2017
Disney’s BoardWalk Inn | Orlando, Florida

Mark your calendar for CBI's Medicaid and Government Pricing 2017 – a dynamic and power-packed program for government pricing professionals!

Between the looming prospect of Obamacare repeal or replacement, the recently released HRSA Final Rule on Calculation of 340B Ceiling Prices and much more, there is no better time to join industry at CBI’s 19th Annual Medicaid and Government Pricing Congress and gain an in-depth understanding of how to face the complexities of this rapidly evolving landscape.

Taking place May 8-10 at the BoardWalk Inn in Orlando, FL, attendees will gain best practices and practical strategies on issues including healthcare policy and politics, drug pricing enforcement, MDRP compliance, 340B, FSS solicitation, gross-to-net and much more. This all-encompassing agenda features tailored tracks, interactive working groups, political keynote address and a State Medicaid Directory panel discussion.

Convene with Leading Government Pricing Experts Representing:

Bristol-Myers Squibb | Former Head of Health and Human Services − Commonwealth of Pennsylvania and the State of Rhode Island | Department of Veterans Affairs | Magellan Rx Management | Apexus | Sunovion Pharmaceuticals | KPMG | Amneal Pharmaceuticals | Huron Consulting Group | Pfizer Inc | Sidley Austin LLP | Sandoz | BDO | Mississippi Division of Medicaid | Acorda Therapeutics, Inc. | Cumberland Consulting Group | Akara Group LLC | AbbVie | Florida Agency for Health Care Administration | Daiichi Sankyo, Inc. | West-Ward Pharmaceuticals | M. Lee Consulting, LLC | Helsinn Therapeutics (U.S.), Inc. | Fresenius Medical Care North America | Johnson & Johnson Health Care Systems Inc. | OIG, United States Department of Veterans Affairs | Oklahoma Health Care Authority | Celgene Corporation | Gilead Sciences, Inc. | Deloitte & Touche LLP | King & Spalding | PBS NewsHour | Department of Health and Human Services, OIG | Arent Fox LLP | PhRMA | Chiesi USA, Inc. | Indivior | McKesson | Plus more!

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*Discount expires 3/24/2017; Discount cannot be combined with other offers or used towards a current registration. Cannot be combined with special category 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.

Johnson & Johnson’s Janssen business unit recently released the 2016 Janssen U.S. Transparency Report. (Free download.)

The report, which provides new disclosures about the company’s activities, is very well done. Below, I offer some observations on Janssen’s pricing and its discussion of the drug channel system.

Notably, Janssen revealed that its average list price increases have been below 10% for at least the past five years. Its average net price increases, however, have been roughly half of the list price increases. For 2016, list-to-net reductions were 35.2%.

The report makes a meaningful contribution to the ongoing debate about the true pricing of prescription drugs and the gap between a manufacturer’s gross (list) prices and the net prices to third-party payers. Every Drug Channels reader should review it.

Last night, The Wall Street Journal reported that corporate members of the Health Transformation Alliance (HTA) will direct their member's pharmacy benefit management business to the Caremark business of CVS Health and the OptumRx business of UnitedHealth. See Alliance of Companies Unveil First Steps Aimed at Cutting Health-Care Costs.

HTA includes 38 of the country’s largest corporations. (See a list of the 20 founding companies here.) Many HTA members already use Caremark and OptumRx. These PBMs will retain their role in the drug channel, although with presumably lower margins, more uniform contracts, and greater transparency. Express Scripts, however, risks significant customer losses, because a number of HTA members are Express Scripts customers.

The HTA deal reinforces PBMs continued presence and role in the drug channel. By forming a giant buying group, plan sponsors are choosing to evolve their PBM relationships, not bypass the middleman. That's how markets are supposed to work. Read on for my additional observations on this novel arrangement.

The U.S. Health Care Congress 2017
April 30 – May 3, 2017 | Washington, DC

The U.S. Health Care Congress 2017 agenda has been updated and re-released.

Reserve your seat at the table with decision-makers from all walks of health care including payer, health system, policy, employer, and life sciences organizations who are committed to transforming and improving health care.

Join World Congress April 30 – May 3, 2017 in Washington, DC.

Early rates ends Friday, March 17, 2017. Use promo code DCIPEM for an additional $200 savings off the early rate.

• Click here to download the updated agenda brochure.

• Click here to view the Agenda at a Glance.

• Click here to register.

The U.S. Health Care Congress 2017 will feature:

• 4 Days of Big-Picture Keynote Addresses and Panel Discussions
• 200+ Distinguished Speakers

• 6 Pre-Conference Workshops

• Networking and Exhibit Hall:
• 50+ Exhibit Booths
• 1200+ Domestic and International Participants

• 14 Co-Located Events
• Health Plan and Payer Summit
• Hospital and Health System Summit
• Health System Integration Summit
• Nurse Leadership Summit
• Medicaid and Health Policy Summit
• Bundled Payments Summit
• Payer-Provider Behavioral Health Summit
  
• Destination Health: The Medical Travel Summit USA
• Women's Health Summit
• Data Analytics and Technology Summit
• Network and Contract Management Summit for Providers and Payers
• Employer-Health System Direct Contracting, Worksite Clinics, and Value-Based Partnerships Summit
• Prevention, Wellness, and Disease Management Summit
• Corporate Health-Risk Innovation Summit

Who will be there? Click here to view a sample list of your colleagues who have already reserved their seat. World Congress looks forward to seeing you in DC.

Complete your registration before March 17, 2017 using promo code DCIPEM for an additional $200 savings. For an immediate reservation, call +1 781-939-2400 or reserve online.

*Discount not available on Gov't, workshop only or webcast rates. May not be combined with any other offer.

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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.

ICYMI: Rep. Doug Collins (R-GA) led a 60 minute rant against pharmacy benefit managers (PBMs) in the U.S. House of Representatives. Joining him were congressmen Brian Babin (R-TX), Buddy Carter (R-GA), John J. Duncan, Jr. (R-TN), Dave Loebsack (D-IA), and Austin Scott (R-GA). It’s an enlightening tour through the usual grievances and conspiracy theories about PBMs.

Regular readers know that I have called out PBMs for the potentially warped incentives embedded in rebate practices and the gross-to-net bubble. See, for example, this article and this one.

But the overheated rhetoric on the House floor was truly jaw dropping. Example: Rep. Collins kicked things off in style by claiming that PBMs engage in “monopolistic, terrorist kind of ways that they are dealing with our community pharmacies and independent pharmacies.”

Terrorists? Really?!? I wonder how ISIS feels about this comparison.

Video, transcript, and additional observations below. Enjoy!

The Centers for Medicare & Medicaid Services (CMS) recently released its updated forecasts for national health expenditures. See the Health Affairs article: National Health Expenditure Projections, 2016–25: Price Increases, Aging Push Sector To 20 Percent Of Economy. (Available for free to subscribers and to others for purchase.)

These new data don’t account for any changes in policy or the law, such a repeal of the Affordable Care Act (ACA). They do, however, show drug spending growth below that of CMS’s July 2016 projections. The updated forecasts predict that through 2025, drug spending will grow at roughly the same rate as will total U.S. healthcare spending.

By 2025, the U.S. is expected to have spent about $597 billion annually on outpatient prescription drugs. Just seven months ago, the 2025 figure was projected to $615 billion. Below, I also review drug spending projections by payer. CMS expects that drug spending will account for a stable share of private insurance, but a bigger part of Medicare spending.

Note that these projections will be revised when the law changes. For now, we have only CMS’s vision. Reality will render its own opinion soon.

Our mild winter is almost over! Celebrate the imminent return of spring with our selection of noteworthy news stories. In this issue:

• Business trends for specialty pharmacy owners

• The new Specialty Pharmacy Patient Choice Award

• Pharmacy benefit managers find a powerful friend

Plus, some droll health insurance humor! (Is there any other kind?)

P.S. Remember to follow me on Twitter @DrugChannels for daily tweets on cool and intriguing stuff.

eyeforpharma Oncology Market Access & Pricing 2017
June 15-16, 2017
Le Meridien | Philadelphia, PA

In an increasingly complex and fragmented healthcare space, isn’t it time for true innovators to take control?

Against the back drop of increased pricing pressure, the next few years in Oncology will be volatile. But with volatility comes great opportunity- especially for Pharmaceutical companies ready to step from the periphery to the centre of the healthcare stage. Pharma can- and should lead stakeholders towards mutually beneficial outcomes and drive the decision making processes that will both outline oncology’s future and redefine the healthcare system.

The shift from volume to value has brought the adoption of alternative payment models, increased payer involvement, increased spending on oncology therapeutics, a shift in drug distribution, integrated delivery systems… the list is endless. Meeting the needs of cancer patients is now down to successful navigation of a complex, fast-evolving market place.

The answer to this existential crisis is multi-stakeholder buy-in, but with pharma firmly at the helm. We need to embrace more collaboration, transparency and payer/patient engagement. eyeforpharma’s Oncology Market Access & Pricing Summit will show you how. Download the full agenda here.

In June, after the dust from ASCO has settled, with expert insights from Julie Locklear, VP, EMD Serono; Kevin Fitzpatrick, CEO, CancerLinQ; Bryon Wornson, VP, Pfizer; Ariella Evenzahav, Head, Takeda; Lou Sanquini, VP, Healthagen Aetna and many more…eyeforpharma will be addressing the key strategic points in more detail, including:

• Expert insights on how to move value from theory to reality
• Ways to change market place dynamics and develop stronger patient, payer and HCP partnerships
• Guidance on how to connect reimbursement with value and win over your stakeholders

Join eyeforpharma at a provocative and complete gathering for commercialization, market access and pricing leaders in Oncology to find out how Pharma can deliver leadership-based value, satisfy payers and drive better outcomes across the board.

Access the full agenda here.

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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.

In 2016, specialty drugs became an even bigger part of the pharmacy industry. We estimate that in 2016, retail, mail, long-term care, and specialty pharmacies dispensed about $115 billion in specialty pharmaceuticals. Specialty drugs accounted for 28% of the pharmacy industry’s prescription dispensing revenues.

Below is our exclusive list of the 15 largest pharmacies, ranked by estimated revenues from dispensing specialty pharmaceuticals. This year’s expanded list includes specialty pharmacies owned by pharmacy benefit managers (PBMs), health plans, retail chains, and wholesalers. A further five pharmacies are independent companies—for now.

Lace up and get ready to slug it out with our latest update on the booming specialty market.