Analysis

Last week, I documented that nearly half of U.S. pharmacies now participate in the 340B Drug Pricing Program. Below, we update our exclusive analysis of the biggest specialty pharmacies within 340B.

The four largest specialty pharmacies are owned by CVS Health, Cigna’s Express Scripts business, UnitedHealth Group’s OptumRx business, and Walgreens Boots Alliance/Prime Therapeutics.

As you will see below, these specialty pharmacies have dramatically increased their participation in the 340B program. Hospitals are the primary 340B covered entities that engage with these specialty pharmacies.

We estimate that specialty pharmacy dispensing accounted for nearly one-third of PBMs’ total gross profits in 2019. Consequently, the 340B program is a significant and growing component of profitability for these large, for-profit, publicly traded companies.

Later this week, I’ll examine how patients with commercial and Medicare Part D insurance are subsidizing the super-sized 340B profits of these companies.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 21, 2020

Labels: 340B, Pharmacy, Specialty Drugs, PBMs

It’s time for our annual look at the 340B Drug Pricing Program’s booming pharmacy component.

Our exclusive analysis of government data finds that 28,000 pharmacy locations—almost half of the U.S. industry—now act as contract pharmacies for the hospitals and other healthcare providers that participate in the 340B program. Over the past 12 months, the number of pharmacies in the program has grown by more than 3,300 locations.

As you will see below, multi-billion-dollar, for-profit, publicly traded pharmacy chains—Walgreens, CVS, Walmart, Rite Aid, Kroger, and Albertsons—continue their unchecked 340B expansion.

Despite this astonishing growth, the contract pharmacy component does not have—and has never had—a regulatory infrastructure. That’s because the subregulatory notice that created contract pharmacies wasn’t subject to any rulemaking procedures. Eli Lilly recently challenged this notice, which forced the government to concede that its own pharmacy guidance is “not legally enforceable.”

As you review our analysis, ponder why manufacturers still comply with HRSA’s non-binding guidance—and why investors remain unconcerned with the risks of public companies’ participation in the out-of-control 340B program.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 14, 2020

Labels: Hospitals, 340B, Health Care Policy, Pharmacy

Today’s guest post comes from Rick Fry, Senior Vice President of Commercial Solutions and Jason Zemcik, Senior Director of Product Management at TrialCard.

Rick and Jason outline their view of the crucial issues in the new proposed rule from Centers for Medicare and Medicaid Services (CMS) regarding copay accumulator adjustment programs. They preview the public comments that TrialCard expects to submit to CMS.

Please visit TrialCard’s copay accumulator program resources to learn more about mitigating copay accumulator programs. Contact sales@trialcard.com to discuss solutions for your organisation.

Read on for Rick’s and Jason’s insights.

Posted by Drug Channels Institute, an HMP Global company on Friday, July 10, 2020

Labels: Guest Post, Sponsored Post

This week (Monday through Thursday), I’m rerunning some popular posts. Click here to see the original post and comments from April 2020.

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In Drug Channels Institute's list of the top 15 pharmacies of 2019, we show that many of the largest U.S. pharmacies are now central-fill mail and specialty pharmacies operated by PBMs and insurers.

To complement that broader ranking, we present below our exclusive list of the top 15 pharmacies based on specialty drug dispensing revenues. Consistent with our previous analyses, PBMs and insurers have retained their dominance over specialty drug channels, while smaller pharmacies are facing increased competition and profit pressures.

I see upside for specialty pharmacies in the aftermath of the pandemic. This growth will come at the expense of provider-administered drug channels. I expect the top companies’ share will increase in 2020, due to mergers and business transitions among the largest PBMs. However, the increasing role of government payers may create opportunities for smaller pharmacies.

This Friday, I’ll discuss how COVID-19 will affect the specialty pharmacy market during the first of my two live video webinars.

Posted by Drug Channels Institute, an HMP Global company on Thursday, July 9, 2020

Labels: Mergers and Acquisitions, Industry Trends, Pharmacy, Specialty Drugs, PBMs

This week (Monday through Thursday), I’m rerunning some popular posts. Click here to see the original post and comments from April 2020.

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The U.S. economy is in a medically-induced coma. Unemployment is soaring. Companies are teetering on the brink of bankruptcy. It is unclear when our lives will return to their pre-pandemic state.

One thing seems apparent: As people lose jobs and health insurance, Medicaid enrollment will jump, perhaps by as much as 20% to 30%. This will have profound implications for the drug channel.

Today, I focus on how this increase will affect retail pharmacies and pharmacy benefit managers (PBMs). Below, I review Medicaid enrollment trends, how states manage prescriptions, and the factors driving the coming boom in Medicaid enrollment.

As I explain, many (but not all) retail pharmacies will benefit from Medicaid growth. PBMs, however, will not fare as well. Read on and see if you agree.

Posted by Drug Channels Institute, an HMP Global company on Wednesday, July 8, 2020

Labels: COVID-19, Industry Trends, Pharmacy, Medicaid, PBMs, Health Insurance Exchanges, Pharmacy Economics

This week (Monday through Thursday), I’m rerunning some popular posts. Click here to see the original post and comments from February 2020.

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Pharmacy-related price concessions in Medicare Part D—known as pharmacy DIR fees--have grown faster than most people realize.

We estimate that these payments reached $9.1 billion in 2019. This figure indicates that about 18% of total Medicare Part D rebates are now paid by pharmacies, not manufacturers. Details below.

To address concerns about how these fees are computed, the Centers for Medicare & Medicaid Services (CMS) has proposed some minimal transparency requirements for monitoring the metrics behind DIR fees. I suspect that the proposal will have no near-term impact on slowing the growth trends.

Our long time readers know that I’ve been skeptical about pharmacy owners’ claims regarding the impact of DIR fees. But it does now appear that these payments have become a significant economic burden. When the facts change, I change my mind. What do you do?

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 7, 2020

Labels: Direct and Indirect Remuneration (DIR), Pharmacy, PBMs, Medicare Part D, Pharmacy Economics

This week (Monday through Thursday), I’m rerunning some popular posts. Click here to see the original post and comments from March 2020.

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Next week, Drug Channels Institute will release our 2020 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. It’s the 11th edition of our popular and comprehensive examination of the entire drug pricing, reimbursement, and dispensing system.

The exhibit below—one of 203 in our new report—provides a first look at the 15 largest pharmacies, ranked by total U.S. prescription dispensing revenues for calendar year 2019. I also highlight business developments that shifted market share among the biggest players.

As you will see, pharmacy industry prescription dispensing revenues reached a record $446 billion in 2019. Revenues were highly concentrated due to the rapid growth of large specialty pharmacies and the multiple transactions that we discuss throughout our report.

For a sneak peek at the complete report, click here to download a free pre-publication draft overview (including the table of contents and a list of exhibits). We’re offering special discounted pricing if you order before March 22, 2019.

Posted by Drug Channels Institute, an HMP Global company on Monday, July 6, 2020

Labels: Mergers and Acquisitions, Industry Trends, Pharmacy, Specialty Drugs, PBMs

Happy 244th birthday, America! Before you declare your (socially-distanced) independence, get up close and personal with these Drug Channels fireworks:

• CVS launches a new GPO for its PBM

• CMS rethinks copay accumulators

• Here’s how GoodRx makes money

• Supermarkets face pharmacy challenges

Plus, powerful and important comments from Ken Frazier, CEO of Merck.

P.S. Join the more than 9,500 followers of my curated links to neat stuff at @DrugChannels on Twitter. My recent tweets have highlighted: Amazon’s activities, PillPack’s bad reviews, 340B outrages, rebate reform redux, biosimilar pricing, managed Medicaid market shares, drug pricing, blockchain hype, and the warp speed vs. hyperspace debate.

Posted by Drug Channels Institute, an HMP Global company on Wednesday, June 24, 2020

Labels: Average Manufacturer Price (AMP), Group Purchasing Organizations (GPOs), Co-pay Offset Programs, Health Care Policy, Benefit Design, Discount Cards, Pharmacy, Copay Accumulator Adjustment, PBMs

It’s time for our annual Drug Channels examination of PBM drug spending reports. For 2019, we again aim our magnifying glass at the annual trend reports from the largest pharmacy benefit managers (PBMs): CVS Health, Express Scripts, and Prime Therapeutics. (See their report links below.)

Once again, we find that commercial drug spending did not race higher—contrary to what you keep hearing from journalists and politicians. Spending rose by less than 3% in 2019, continuing a multiyear trend of slow growth. At some plan sponsors, total drug spending even declined. For specialty drugs, higher utilization—not drug costs—was again the biggest factor driving specialty spending growth.

Notably, clients of Prime Therapeutics fared worse than those of Express Scripts and CVS Caremark. Below, I explain three factors behind Prime’s underperformance. Its third place finish highlights why the PBM industry continues to consolidate.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, June 16, 2020

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

Today’s guest post comes from Julia Phillips, VP, Pharma Accounts & Enablement at CoverMyMeds.

Julia discusses how medication access challenges can negatively impact brand-name drugs.

For more, check out this overview of CoverMyMeds' technology solutions that enhance patients’ access: Enabling Medication Access Through Technology.

Read on for Julia’s insights.

Posted by Drug Channels Institute, an HMP Global company on Friday, June 12, 2020

Labels: Guest Post, Sponsored Post