Analysis

This morning, the White House withdrew its proposed rule to reform the rebate system in federal programs. I am surprised by the timing, which likely has more to do with politics than policy. Tomorrow, I'll post some reflections on this unexpected news.
In the meantime, today's rerun is a reminder of what's still at stake in reforming rebates within the U.S. drug channel
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Click here to see the original post and comments from April 2019. You can also reach this post at www.GrossToNetBubble.com. ;)

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The gross-to-net bubble—the ever-growing pile of money that sits between a manufacturer’s list price for a drug and the net price after rebates and other reductions—reached another high last year.

Drug Channels Institute developed the term gross-to-net bubble to describe the speed and size of growth in the total value of manufacturers’ gross-to-net reductions.

We estimate that in 2018, the total value of gross-to-net reductions for brand-name drugs was $166 billion. As you will see below, that figure doubled over the preceding six years. Below, I also highlight the various elements that fill the bubble. About two-thirds of total gross-to-net reductions come from rebates paid to third-party payers.

The gross-to-net bubble reflects—and drives—many of the problems with U.S. drug pricing. However, recent movement toward a world without rebates suggests that we may soon hear this bubble pop.

This week, I’m rerunning some popular posts during the holiday week. Click here to see the original post and comments from February 2019.

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My Wall Street Journal op-ed (Don’t Blame Drug Prices on ‘Big Pharma’) has received a lot of attention.

Especially notable was a letter to the editor from American Health Insurance Plans (AHIP). It claims that “the savings that insurance providers negotiate are returned directly to consumers through lower premiums and out-of-pocket costs."

Don’t believe this misleading half-truth. It distorts the primary argument of my WSJ op-ed: Patients often pay full price for drugs that are sold to insurers at deep discounts.

Below, to show you why, I follow the dollar for an expensive, highly rebated brand-name drug used by a consumer with a high-deductible health plan. As you will see, the consumer pays more than twice the true discounted price of the drug. Meanwhile, the health plan pockets a large rebate.

That's the uncomfortable reality of the gross-to-net bubble that AHIP wants to hide. Insurers may not use rebates to lower the out-of-pocket costs for the patient whose prescription generated the rebate. And at the same time, AHIP indignantly blames "the prices drugmakers set." We all deserve better.

This week, I’m rerunning some popular posts. Click here to see the original post and comments from January 2019—complete with now-dated Bird Box references!

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Oral generic drugs keep getting cheaper. The Food & Drug Administration (FDA) has intensified the generic industry’s competitive pressures with record drug approvals. The FDA’s actions, combined with the negotiating leverage of the large generic purchasing organizations, led to 2018’s persistent double-digit deflation in manufacturers’ selling prices for oral generic drugs.

Below, we update our analysis of these generic drug mega-buyers.

We estimate that for 2018, the three largest buyers accounted for more than 90% of total U.S. generic drug purchases from manufacturers. In 2019, acquisitions and contract switches will shift market share among these groups, but not diminish their impact. It's no surprise that manufacturers lose their minds when seeing these monster firms.

There are now fewer therapeutic areas with excess inflation, so future price reductions will be smaller. What’s more, some generic manufacturers have signaled their intention to exit highly competitive generic drug categories in which prices have dropped. Look for oral generic prices to stabilize—and possibly rise—over the next 12 to 18 months. Perhaps the blindfolds will come off?

P.S. Portions of this post have been adapted from our forthcoming 2019 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. We'll be taking this updated and expanded edition out of our bird box on March 5!

PBMI’s 2019 Specialty Rx Forum
September 10, 2019 | JW Marriott Minneapolis Mall of America | Minneapolis, MN
www.pbmi.com/srx19

In 2021 specialty pharmacy is expected to grow to $500 billion. Specialty drug spend is also expected to reach upwards to 60% of total drug spend. Healthcare stakeholders are not only challenged by the costs and increased utilization of specialty medications, but also by the uncertainty and complexity of specialty pharmacy.

Join PBMI and other healthcare stakeholders for a dynamic and interactive one-day event at PBMI’s 2019 Specialty Rx Forum on September 10, 2019.

The agenda covers a wide variety of topics such as:

• New drugs in the specialty pipeline
• Managing hemophilia
• Cost savings through specialty generics and biosimilars
• Lower net-cost drugs
• Enhancing the patient experience through technology and data devices
• Getting the most out of specialty contracts
• And more.

Check out the full program here.

Early bird rates for this event end July 12, 2019.

Exclusive Offer for Drug Channels readers:

Drug Channels readers can use discount code SRX19 to extend the early bird rate through August 23, 2019! Do you have colleagues who would also like to attend? Feel free to extend this offer to them too.

Click here to register. If you register after July 12th, use discount code SRX19 at checkout to get the early bird rate.

Do you have questions, or are you interested in sponsoring this event? Contact Linda DeChant at ldechant@pbmi.com.

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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.

National Association of Specialty Pharmacy 7th Annual Meeting and Expo
September 9-12, 2019 | Washington, D.C.
www.naspmeeting.com

Join the National Association of Specialty Pharmacy (NASP) at its 7th Annual Meeting and Expo September 9-12 at the Marriott Wardman Park in Washington, D.C.

The Annual Meeting and Expo hosts over 1,200 specialty pharmacy stakeholders including senior executives, pharmacy directors, staff pharmacists, consultants and other management-level personnel from specialty pharmacy providers, infusion pharmacies, pharma/biotech manufacturers, institutional pharmacies, managed care organizations, data management and analytic organizations, group purchasing organizations, distributors and suppliers to the industry.

Benefits of Attending:

• Network with industry stakeholders and exhibitors
• Earn continuing education credits
• Share best practices in specialty pharmacy
• Participate in wellness initiatives and fundraisers
• Interact with thought leaders and industry experts
• Extend clinical and practical pharmacy knowledge
• Attend the Women in Specialty Pharmacy Luncheon
• Present original or encore research

In addition to the activities listed above, the following workshops will be offered on September 12:

• The 4th annual Specialty Pharmacy Law Conference delivers valuable insight into the current legal and regulatory requirements, and complexities associated with operating today’s specialty pharmacy. Attendees can receive continuing legal education credits as well as pharmacist continuing education (CE) credits.
• The 3rd annual Certification in Specialty Pharmacy Exam Preparatory Course covers all essential topics to prepare pharmacists interested in taking the CSP exam. CE credit is available for completing the course.
• NASP hosts the 2nd annual Home Infusion Workshop, in partnership with National Home Infusion Association, to provide attendees with a unique opportunity to learn more about the regulatory, legal, operational and clinical complexities of the home infusion industry.

The NASP Education Committee welcomes submission of original or encore research relevant to specialty pharmacy, outcomes related to specialty pharmacy products or services provided by specialty pharmacies. Accepted abstracts will be presented at the NASP Annual Meeting and Expo and published online in the PubMed-indexed Journal of Drug Assessment. Submit your research today.

Secure your spot at the NASP 2019 Annual Meeting and Expo by registering today!

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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.

Happy 243rd birthday, America! Before you launch your July 4 festivities, Drug Channels offers some fireworks of its own:

• Surprising PBM spread pricing profits in Massachusetts plans

• Eli Lilly explains rebate walls for specialty drugs

• MedPAC suggests Part D changes—and endorses a well-known Drug Channels term!

Plus, the funniest video that I have ever seen.

P.S. @DrugChannels on Twitter now has more than 7,700 followers. See why by following my daily musings and cool links.

Last week, a judge in Rhode Island issued a decision in CVS Pharmacy, Inc. v. John Lavin. Briefly: CVS had sued Lavin, who had been a senior vice president responsible for CVS Caremark's retail network contracting. Lavin had left CVS to work for Amazon’s PillPack business. CVS successfully argued that Lavin had violated the terms of his non-compete agreement

Below, you’ll find links for the public documents in the case.

I also highlight three surprising disclosures that arose in the decision. These shed light on PillPack’s contracting strategy with payers, its not-quite-disruptive plans for pharmacy benefit management, and its alleged attempts to get retail pharmacy reimbursement rates.

We’re all expecting Jeff Bezos to pull a rabbit out of his hat, but Amazon’s disruption may be different—and take longer—than many people expect.

CBI’s 5th Annual 340B Manufacturer Summit
August 20-21, 2019 | Alexandria, VA
www.cbinet.com/340BManufacturer

Given the increasing industry uncertainty and complex market dynamics, ensuring 340B program integrity has never been more paramount. Later this summer, CBI’s 340B Manufacturer Summit will bring you solutions to the most pressing challenges.

Visit www.cbinet.com/340B for further details and to register. Drug Channels readers will save $300 off the standard rate when they use discount code EYA692 and register prior to July 19th.*

Benefit from Interactive Discussions and Benchmarking with Multi-Stakeholder Perspectives Addressing:

• 340B program developments and anticipated future rulings
• 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties (CMP) regulation
• Impact of HHS proposed reform and significance of the final rule
• Best practices for preventing revenue leakage
• Covered entity and contract pharmacy challenges and strategies for collaboration
• Relevant case studies showcasing manufacturer successes and lessons learned

Can’t Miss Spotlight Session: Critical Updates on Government Initiatives within 340B

• Delivered by Jeff Lucas, Health Policy Advisor, United States Senate

Plus, Choose Between Two In-Conference Workshops:

• 340B Boot Camp — A 101 Primer on Program Intricacies and Regulatory Guidance
• Senior-Level Think Tank— Best Practices to Improve Compliance and Prevent Revenue Leakage

Download the agenda here and prepare to return to the office armed with critical updates and valuable takeaways.

2019 is a year for change for the 340B program. It is essential now more than ever that manufacturers are ensuring compliance amid the integrity of the program being called into question. Join CBI to ensure that you are equipped with best practices for what the future holds.

Visit www.cbinet.com/340B for further details and to register. Drug Channels readers will save $300 off the standard rate when they use discount code EYA692 and register prior to July 19th.*

CBI will see you there!

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates, clinic/hospital rates, non-profit rates other offers. 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.

340B Health, which lobbies for hospitals that participate in the 340B Drug Pricing Program, recently issued an eye-opening member survey. It found that 340B Health’s member hospitals reported total 340B discounts of $15.3 billion. (Details below.)

Hmm. That’s pretty darn close to our estimate of $14.9 billion, shown in 340B Program Purchases Reach $24.3 Billion—7%+ of the Pharma Market—As Hospitals’ Charity Care Flatlines. It looks like 340B Health has perhaps inadvertently validated our computations of the program’s size.

The 340B Health report also claims to show evidence that hospitals are properly using 340B funds.

In reality, the report merely affirms that hospitals are spending money to meet their fundamental legal and statutory community benefit obligations. Any money from 340B discounts shouldn’t be double-counted to meet hospitals’ fundamental spending requirements.

This latest report therefore again highlights the need for transparency and accountability to ensure that billions in 340B discounts are shared with the patients whose prescriptions generated those funds.

The professional prognosticator EvaluatePharma recently released its World Preview 2019, Outlook to 2024 report, which projects prescription drug sales and R&D activity in the U.S. and abroad. (The report is free with site registration.)

You’ll find predictions for the ten best-selling U.S. drug products on page 24. Below is my handy summary chart comparing the 2024 list along with each product’s 2018 sales. For fun, I have also compared the 2018 actual sales with EvaluatePharma’s projections from 2013.

The figures should make us all humble about our ability to project the future. For many products, the EvaluatePharma figures sharply underestimated actual growth rates from 2013 to 2018. The projections to 2024 show that growth will accelerate, which to me suggests an overestimation of future growth. Notably, EvaluatePharma predicts that Humira will retain its sales lead, despite forthcoming biosimilar competition.

These projections, while useful, remind us of another valuable lesson: Good forecasters may not be smarter than everyone else—they merely have their ignorance better organized.