Drug Channels delivers timely analysis and provocative opinions on pharmaceutical economics and the drug distribution system. It is written by Adam J. Fein, Ph.D., one of the country's foremost experts on pharmaceutical economics and channel strategy. Drug Channels reaches an engaged, loyal and growing audience of more than 20,000 subscribers. Learn more...

Friday, December 23, 2016

Follow the Dollar: Measuring Who Profits From a Brand-Name Prescription (rerun)

Let's wrap up 2016 with a super popular chart that untangles prescription economics—the perfect present for a curious member of your family.  Click here to see the original post and comments from October 2016.

You should also check out Follow the Dollar: The Movie. See you in 2017!


Now, here’s something I hope you’ll really like!

I recently collaborated with Julie Appleby at Kaiser Health News (KHN) to explain the flow of funds between a pharmaceutical manufacturer and the patient.

The resulting graphic (below) uses a typical brand-name prescription to show the profits earned by key drug channel participants: manufacturers, pharmacy benefit managers (PBMs), wholesalers, and pharmacies. It also illustrates the payer’s net costs and manufacturer’s net price.

KHN’s well-produced design complements the less pretty Rube Goldberg diagram that I shared in Follow the Dollar: The U.S. Pharmacy Distribution and Reimbursement System. The KHN chart may look like a PTCTU*, but it will help you understand the method to the madness.

Thursday, December 22, 2016

How Specialty Pharmacy Is Penetrating Buy-and-Bill Oncology Channels (rerun)

Last week, CMS officially scrapped its ill-conceived Medicare Part B Payment Model "experiment."  That's good news (for now) for oncology practices that buy-and-bill provider-administered drugs. (Click here to follow the buy-and-bill dollar.)

Today's rerun highlights specialty pharmacies' significant role in disrupting this buy-and-bill channel. As a companion article, check out The Decline and Fall of Physician Buy-and-Bill For Specialty Drugs, which shows how higher-cost hospital outpatient settings have been crowding out lower-cost physician offices.

Don't let the CMS move make you complacent. Buy-and-bill will be changing. (Click here to see the original post and comments from July 2016.)


The distribution channel for provider-administered oncology drugs is undergoing significant change—notwithstanding the Centers for Medicare & Medicaid Services’ (CMS) misguided and controversial Part B Drug Payment Model.

As you will see below, pharmacies—via white and brown bagging—have displaced buy-and-bill distribution channels for about one-quarter of oncology products. For the remaining purchases, community oncologists still rely on traditional buy-and-bill wholesale distribution channels. Hospital-based practices, however, are more likely to source products from the hospital’s pharmacy.

This shift has important implications for manufacturers’ channel strategies, specialty pharmacies’ business growth, distributors’ share of channel volume, and the expansion of 340B pricing to non-340B providers. When you eliminate the impossible, whatever remains, however improbable, must be the truth.

Wednesday, December 21, 2016

Why the Walgreens/Prime Deal Could Transform the PBM Industry (rerun)

Yesterday, Fred's Inc. announced its acquisition of 865 Rite Aid stores, thereby clearing the way for the Walgreens-Rite Aid deal to close. Today's rerun reviews Walgreens' new alliance with Prime Therapeutics. Fun fact: This article was the most viewed Drug Channels post of 2016! Click here to see the original post and comments from September2016.



ICYMI: Last week, Walgreens Boots Alliance (WBA) and Prime Therapeutics rolled out a highly innovative partnership. It could have wide-ranging implications for the drug channel’s next phase.

This novel union aligns a pharmacy benefit manager (PBM), retail pharmacy chain, and health plans via joint ownership of a new mail and specialty pharmacy company. If executed properly, it will be a best-of-breed business model that could reshape the PBM and pharmacy industries. For manufacturers, organized customer management just got even more complicated.

The new business could also pose a serious challenge to pure-play PBMs that lack a health insurer partner or an economically-aligned retail dispensing channel. Below, I compare the capabilities of the new business those of the four largest PBMs.

Jim DuCharme, president and CEO of Prime Therapeutics, told me: “The PBM business model needs transforming. Prime wants to have a significant influence on transforming the PBM business before others try to fix it.” I am normally immune to hype, but he could be right. Read on and see if you agree.

Tuesday, December 20, 2016

My Visit to Boots UK: An International Pharmacy Photo Essay (rerun)

This week, I’m rerunning some popular posts. Let’s get ready for Walgreens’ new U.S. beauty strategy by revisiting my holiday photos from a Boots UK store visit. Click here to see the original post and comments from September 2013. (Yes, this is a deep cut from the archives!)



In August, my family and I spent a wonderful 9 days in a surprisingly sunny London. In addition to the usual tourist haunts, I visited a few Boots pharmacies. (Of course I did!) I gained valuable insight into a key overseas pharmacy player that is now part of Walgreens.

Below are my observations on how Boots compares with U.S. drugstore chains. From my photos, you’ll see some similarities but also very intriguing differences. And by publishing this post, I can convert my entire vacation into a business expense. (Shhh, don’t tell the IRS.)

Bonus: I’ve included a photo of my amazing visit to (full-size) Stonehenge. Drug Channels goes to 11!

Monday, December 19, 2016

Partnering with IDNs BioPharma Strategy Summit

Partnering with IDNs BioPharma Strategy Summit
March 1-2, 2017 | Scottsdale, AZ
www.cbinet.com/IDNStrategySpring

As health systems continue to grow and merge to form larger 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 BioPharma Strategy Summit brings together manufacturers and IDNs to discuss tow to create a mutually beneficial partnership for continual care coordination, strategic product management and improved access.

Do Not Miss These Insights:
  • Engaging panels discussing the IDN model of patient care coordination and what it can do to improve the patient experience on behalf of the provider, manufacturer, payer and other stakeholders
  • A luminary showcase around the pros and cons of national specialty pharmacies versus IDN specialty pharmacies
  • Changes in the hospital reimbursement model, focused on quality tied to outcomes measures
  • Effective ways manufacturers can partner with health systems and support their goals
  • And More!

Visit www.cbinet.com/IDNStrategySpring for more information. Drug Channels subscribers will save $400 off the standard registration rate when they use discount code XTG398.*

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

The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.


Friday, December 16, 2016

Things to Watch in 2017's Drug Channels

Well, that was…a year.

Beyond the obvious political shocks, I was quite surprised to find the spotlight shining on our humble little world of channel economics. Not quite as unexpected as last year’s lap dance from Amy Schumer—but pretty close!

I’m pleased to report that Drug Channels had a yuuuuge year. We now have more than 15,000 subscribers, including more than 3,300 @DrugChannels Twitter followers. In 2016, total page views on the site will be almost 900,000—up 25% compared with 2015.

Thank you, dear readers, for welcoming me into your inboxes and browsers. I’ve had fun and hope you did, too. I’m grateful to our many sponsors and guest writers. Special thanks to the brave souls who joined in the spirited discussions below the articles.

Below you’ll find a bonus stocking stuffer: the Drug Channels Update: Things to Watch in 2017 slides from my recent keynote presentation to a group of trade and channel executives from pharmaceutical manufacturers. It’s a sneak peek at some of next year's likely hot topics.

Drug Channels will return in 2017! In the meantime, please enjoy our annual tradition—a video holiday greeting from me and Paula, my wife and business partner.

We wish you and your family a peaceful and healthy 2017,
Adam

Thursday, December 15, 2016

Five Industry Trends for U.S. Drug Wholesalers in 2017

Modern Distribution Management recently published my article 2016 MDM Market Leaders | Top Pharmaceuticals Distributors. It is an excerpt from the 2016-17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

Below, I republish the section highlighting five significant industry trends affecting the U.S. drug wholesaling industry. I think Drug Channels readers will enjoy this summary as we look toward an eventful 2017.

Tuesday, December 13, 2016

New Data Show Prescription Profits Under Pressure at Independent Pharmacies

Time for my annual look at independent pharmacy owners’ business economics, drawn from the recently released 2016 National Community Pharmacists Association (NCPA) Digest, Sponsored by Cardinal Health. Here's the press release: Independent Community Pharmacies Vital to Patient Medication Access, NCPA Digest Finds.

Below, I review our latest estimates on pharmacy economics and margins. The data reveal that independent pharmacy owners are starting to perform poorly. In 2015, the average pharmacist owning a single pharmacy earned about $200,000. It’s the second year in which the average owner’s compensation declined. The number of independent pharmacies and gross margins also are trending downwards.

Surprisingly, the NCPA data also show that independent pharmacies are underperforming with generic substitution.

Read on for my look at pharmacy profits and my advice for pharmacy owners.

Monday, December 12, 2016

The 2nd Annual Government Programs Summit

The 2nd Annual Government Programs Summit
February 27-28, 2017 • Arlington, VA • Sheraton Pentagon City Hotel

Implementation of the AMP Final Rule | Compliance with 340B Regulations | Implications of MDRP | Outline of FSS Requirements for Manufacturers

The 2nd Annual Government Programs Summit provides an opportunity for industry executives to come together for timely discussion around best practices and implementation to navigate this evolving regulatory landscape. Insights from leading pharmaceutical and government organizations in the Medicaid and Government Pricing arena present vital content to develop strategies that ensure compliance and understanding of the AMP Final Rule, 340B regulations, and the future of Government Pricing.

Join your industry peers February 27-28 in Arlington as we bring together multiple stakeholders with different perspectives discussing strategies for responding to regulatory and implementation challenges. As your ecosystem evolves and operating in silos is no longer an option join the conversation, with health plans, MCOs, providers and government agencies all under one roof as we convene a forum with three co-located health care meetings, taking discussions and peer-to-peer learning to a whole new level!


Please visit www.worldcongress.com/govprograms to register or for more information. Those who register will receive a $300 savings when they use promo code DC300.

2017 Topics Discussions Include:
  • Dissect AMP Final Rule FAQs to Reassess Strategies for Implementation
  • Share Implementation Experiences in the Aftermath of the AMP Final Rule
  • Increase Clarity Around the AMP Final Rulings by Collaborating with Peers
  • Work Together to Achieve Success and Create Unity Between Products, Pharmacy, Policy, and Operations in Government Programs
  • Examine a Potential Redesign of MDRP and Suggested Policy Changes
  • Insight, Considerations, and Trends around HRSA and OPA Integrity Provisions
  • Learn from Enforcement Trends Uncovered through Recent LitigationEnsure Implementation and Compliance with 340B Procedures
  • OIG Perspective: Gain First-Hand Insight on the OIG Study Addressing the Impact Part B Rebates Would Have on the Health Care Industry
  • Forecast Discount Liabilities to Ensure Gross to Net Profit
  • Discuss the Pricing and Contracting Implications of Health Care’s Shift from FFS to Value-Based Care and Medicaid Managed Care
  • Pre-Summit Workshop: Understand the Factors and Manage the Surge in State Medicaid Disputes
Visit www.worldcongress.com/govprograms to view the full agenda and to register.


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Thursday, December 08, 2016

Plan Sponsors Like More Transparent PBMs—Yet Not All Choose Transparency

Pharmacy benefit managers (PBMs) are facing unprecedented criticism about their business practices and levels of transparency. Which got me wondering: What do plan sponsors—the PBMs’ customers—think about their PBMs?

For the answer, I turned to Pharmacy Benefit Management Institute (PBMI) 2016 Pharmacy Benefit Manager Customer Satisfaction Report (available for purchase.) It rates 11 PBMs based on feedback from more than 500 plan sponsor customers.

The data show a strong association between a PBM’s perceived transparency and a plan sponsor’s satisfaction. As you will see in the charts below, plan sponsors are more satisfied with PBMs that are more transparent.

Yet the causality of this relationship isn’t entirely clear. Smaller plan sponsors tend to work with smaller PBMs, which are rated more highly on transparency and alignment of goals. Are more transparent PBMs truly better? Or, are we observing a selection effect, whereby plan sponsors with fewer internal resources choose PBMs with different business and profit models? And if PBM transparency is so wonderful, why don’t all plan sponsors insist on it?

Tuesday, December 06, 2016

Novo Nordisk Sheds New Light on PBM Rebates, the Gross-to-Net Bubble, and Warped Channel Incentives

Novo Nordisk just released new data on the channel economics and pricing for its insulin products. See Perspectives from NNI President Jakob Riis on pricing and affordability

Like many manufacturers of relatively undifferentiated products, Novo Nordisk is trapped by a gross-to-net rebate bubble. Its list prices soar, but the net realized price barely budges. Below, I review Novo’s evidence on channel economics and highlight the perverse incentives that keep inflating the bubble.

The debate is heating up about the warped incentives baked into our crazy drug channel. I continue to believe that traditional pricing approaches will not survive. Novo even promised that future list price increases will be "no more than single-digit percentages annually." The change will be disruptive to PBMs, wholesalers, and payers. Who knows? Maybe the patients will benefit, too.

Monday, December 05, 2016

CBI’s 8th Hub and SPP Model Optimization

CBI’s 8th Hub and SPP Model Optimization
February 22-23, 2017 | Philadelphia, PA

Don’t miss the 8th installment of the industry’s must-attend meeting for sharing breakthrough strategies surrounding service model design and enhancement to improve access and outcomes!

CBI’s Hub and Specialty Pharmacy Provider (SPP) Model Optimization boasts exceptional networking opportunities and forward-thinking content from a broad array of stakeholders. Join your peers as you prepare to launch, transition or reboot your corporate or product approach to hub services.

Hear Industry Trailblazers Speak on High-Impact Topics, Including:
  • Industry Pulse on the Specialty Marketplace and the Changing Healthcare Landscape
  • Patient Services Compliance – Zero in on the Top Risk Areas amidst an Era of Ambiguity
  • Specialty Data Discovery Dive – Finding the Missing Link in Your Product’s Value Story
  • Scorecarding Summit – Measuring Hub Performance and Value
  • Advanced SP Contracting Course – Contract Design, Execution of Contract Amendments and Benchmarks to Renegotiate Terms of Agreement
  • Payer Approach and Decision-Making Journey for Specialty Drugs
  • Beyond Prior Authorization – Syncing Stakeholder Interests for Improved Patient Access
  • Insource, Outsource, Hybrid? Utilizing the Best Hub Service Model for Your Product Portfolio and Tap the Top Transition Strategies
Showcasing a dynamic group of key stakeholders from companies including Amgen, Avella Specialty Pharmacy, Bayer Healthcare, Boehringer Ingelheim, CoverMyMeds, GlaxoSmithKline, Intarcia Therapeutics, Lash Group, a part of AmerisourceBergen, MedImpact Healthcare Systems, Nuvera Life Sciences Consulting, Ogilvy CommonHealth Worldwide, Sobi, Sonexus Health, VirMedica and Triplefin, this is an opportunity you can’t afford to miss!

For more information, please download the complete agenda or visit www.cbinet.com/hubs. Drug Channels readers will save $400 off of the standard registration rate when they use discount code FAZ895.*

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


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Wednesday, November 30, 2016

CVS Changes Direction With Surprise OptumRx Deal

Well, CVS Health blinked.

In July 2017, CVS Health’s retail pharmacies will become a preferred retail channel for 90-day prescriptions dispensed to OptumRx’s commercial clients. Here’s the press release: OptumRx and CVS Pharmacy Partner to Expand Consumer Choice, Reduce Costs and Improve Health Outcomes.

The surprise announcement echoes the arrangement that OptumRx established with Walgreens. The new deal signals that CVS is starting to counter Walgreens’ aggressive partnering strategies. OptumRx customers also get to choose which chain will be their preferred 90-day at retail provider.

Below, I provide some context for the agreement and outline CVS Health’s two basic strategic options as it competes with Walgreens. I’m very curious to hear how CVS Health will spin this latest move during its upcoming analyst day, on December 15.

Tuesday, November 29, 2016

Drug Channels News Roundup, November 2016: CVS Caremark, Generic Drugs, Health-System Pharmacies, and the FDA

Hope everyone enjoyed the Thanksgiving holiday! Now that you’ve stretched your stomach, stretch your mind with some food for thought. In this issue:
  • Dispensing oncology practices win their battle with PBM CVS Caremark
  • 2016 was a record year for generic drug approvals (data below)
  • The ASHP’s latest forecast for health system pharmacy
Plus: The FDA approves a new product—with a twist!

P.S. ON SALE! Our 2016 Economic Report on Retail, Mail, and Specialty Pharmacies is now 40% off. The 2017 edition will be released in early February. (FYI: I announced the sale yesterday on @DrugChannels.)

Monday, November 28, 2016

Expanded Access Programs 2017

Expanded Access Programs 2017
March 9-10, 2017 | Washington, DC

The evolving political landscape is transforming and expanding patient access to experimental and unapproved drugs. CBI’s Expanded Access Programs is dedicated to the nuances and intricacies of designing and implementing early access programs. This multi-stakeholder event is focused on U.S. and global models for a variety of access management programs, including, but not limited to:

Expanded Access Programs, Early Access Programs, Compassionate Use Programs, Named Patient Programs and Managed Access Programs.

This is your opportunity to take a deep dive into the implications, prevailing policies, and current industry approaches to expanded access programs. Join industry thought-leaders and share key concepts around providing investigational, pre-launch or end-of-lifecycle drugs to patients for treatment purposes.

Visit www.cbinet.com/expandedaccess for more information.

Drug Channels readers will save $400 off of the standard registration rate when they use discount code EAPDCH.*


*Applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to an existing registration. Offer not valid on workshop only or academic/non-profit registrations.


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Monday, November 21, 2016

CBI’s 12th Life Sciences Trade and Channel Strategies

CBI’s 12th Life Sciences Trade and Channel Strategies
December 13-14, 2016 | Philadelphia, PA
www.cbinet.com/trade

Don’t miss the must-attend event for industry trade, channel, account and pharmacy strategy professionals!

CBI’s Annual Trade and Channel Strategies Conference boasts incomparable networking opportunities and unmatched, forward-thinking content from a broad array of stakeholders.

Drug Channels readers are eligible for a Thanksgiving week discount. Save $400 off of the standard registration rate when you use code MUT953.* Hurry! You must register by Friday, November 25th!

Can’t Miss Keynotes Featuring:
  • Adam J. Fein, Ph.D., President, Pembroke Consulting, Inc.; Author, Drug Channels
  • William Roth, Founding Partner, Blue Fin Group

Industry Trailblazers Speak on High-Impact Topics Transforming Trade Strategy, Including:

Pharmacy and Wholesale Business Economics | Organized Commercial Customers | Payers’ Channel Management Strategies | Government Regulations and Policy | Shift to IDNs and HMOs | Network Strategies and Distribution Trends | Pharmacy and Provider Models | Valeant/WBA Relationship | Reimbursement | Site-of-Care Reform | Vertical Integration | Globalization | Channel Considerations for Brands, Generics, Specialty and Biosimilar Products | Serialization | Co-Pay Programs

Over 50 participating companies thus far:

AbbVie | Alcon | Alexion | Alkermes | AmerisourceBergen | Amgen | Astellas | AstraZeneca | Bayer HealthCare | Biogen Idec | Blue Fin Group | Boehringer Ingelheim | Bracco Diagnostics | Bristol Myers Squibb | BTG International | Daiichi Sankyo | Depomed | Diplomat | Eli Lilly | Elwyn Pharmacy Group | Emmaus Life Sciences | FFF Enterprises | Genentech | Gilead | Goldman & Sachs | Hospital of the University of Pennsylvania | Indivior | Jazz Pharmaceuticals | Johnson & Johnson | Lilly USA | Mallinckrodt | Merck | Mylan | Novartis | PDX | Pembroke Consulting | Pfizer | Purdue Pharma | Radius Health | Relypsa | Rx Sourcing Strategies | Sanofi| Smith Drug Company | Sunovion | Takeda | Teva | Texas Oncology | Therigy | UCB | ZS Pharma

For more information, please download the complete agenda or visit www.cbinet.com/trade.

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


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Thursday, November 17, 2016

A Post-Election Projection: The 2025 Payer Market for Prescription Drugs

In Latest CMS Forecast Shows Big Drug Spending Growth Through 2025, I examined the July 2016 drug spending forecasts from the Centers for Medicare & Medicaid Services (CMS).

Alas, last week’s election exploded these projections. Today, I analyze CMS’s official pre-election insights about payment for outpatient prescriptions drugs in 2025. I then speculate on how these figures might change under the new administration, which wants to repeal and replace the Affordable Care Act (ACA). Based on the most well-known Republican proposals, I project a rebound in the employer-sponsored market compared with the CMS baseline projections.

But never forget a truism of the projection business: A good forecaster is not necessarily smarter than everyone else—he merely has his ignorance better organized.

Tuesday, November 15, 2016

Genentech’s Shocking $2 Billion 340B Revelation

ICYMI, the Roche Group recently made a startling disclosure: For the first half of 2016, the 340B Drug Pricing Program accounted for 18% of Genentech’s volume.

I estimate that at that rate, hospitals and other 340B-covered entities claimed discounts on about $3.4 billion in purchases annually from Genentech. With profit margins averaging 58%, that figure translates into about $2 billion in financial benefits.

Where did the money go? Who benefited from these funds? Did financially needy patients have to pay their Part B coinsurance for 340B-purchased drugs from Genentech? We have no idea, because hospitals and their lobbyists fight any call for them to disclose or account for how they use their 340B profits.

I suspect that the Trump administration will take a dim view of the lack of transparency and excesses that have occurred in the 340B program. Expect significant change in 2017 and beyond.

Monday, November 14, 2016

Specialty Therapies 2017

Specialty Therapies 2017
January 26-27, 2017 | Las Vegas, NV

Head to Las Vegas this January to share and learn strategies for managing the high cost of specialty therapies management. Through thought-provoking sessions, panels and keynotes, take your organization to the next level in 2017!

What topics are on tap for Specialty Therapies 2017?
  • Optimizing value-based contracting strategies
  • Improving integration of medical and pharmacy benefits
  • Analyzing the effect of specialty therapies on alternative payment models
  • Considering the impact of PCSK9 inhibitors
  • Reducing costs and improving quality through implementing clinical pathways
  • Ensuring access to high-cost specialty drugs through coupons and co-pays
  • Analyzing the role of IDNs in generating specialty data
  • Considering orphan drugs and the reinvention of specialty pharmacy
PLUS! Don’t miss a Keynote from CMS on the Oncology Care Model.

For more information, please download the complete agenda or visit www.cbinet.com/specialtytherapies. Drug Channels readers will save $400 off of the standard registration rate when they use discount code FKD639.*

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


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Friday, November 11, 2016

Will President Trump Eliminate The DSCSA?

Today’s guest post comes from Dirk Rodgers, a Regulatory Strategist for Systech International and author of the great RxTrace blog.

For those don’t know, the Drug Quality and Security Act (DQSA) was signed into law by President Obama on November 27, 2013. Title II of DQSA, the Drug Supply Chain Security Act (DSCSA), outlines steps for building an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.

In today’s essay, Dirk speculates about the future of the DSCSA under the new administration. He provides a useful framework for thinking about a crucial new uncertainty facing the drug channel. Pay particular attention to his third possibility.

Dirk is my go-to source for information on the DSCSA. If you want to get smarter on track-and-trace, then click here to subscribe to RxTrace. Bonus: Drug Channels readers get a special discount when they use coupon code DCNOV16.

Thursday, November 10, 2016

CVS Drugstore Profits Suffer as Walgreens Partners

Here we go again.

On Tuesday CVS Health lowered its profit outlook, due partly to “the projected loss of more than 40 million retail prescriptions related to marketplace changes, including new retail pharmacy networks that are excluding CVS Pharmacy drugstores.” Its stock closed down 12%, before bouncing back slightly in yesterday’s post-Trump healthcare rally.

CVS Health placed the blame squarely on Walgreens Boots Alliance (WBA), which has aligned with Prime Therapeutics and displaced CVS retail pharmacies from the TRICARE retail network.

Call it competitive judo: Walgreens has used the strength of CVS Health’s integrated PBM/retail model against the CVS retail pharmacy business.

The lesson? Don’t bet against Stefano Pessina, our global channels overlord and executive vice chairman and chief executive officer of WBA. Read on for my analysis of the latest pharmacy showdown.

Post-election trivia question: In 2010, which former drug wholesale CEO (and future U.S. ambassador?) encouraged Donald Trump to run for President? Answer below!

Tuesday, November 08, 2016

Behind Diplomat Pharmacy’s Plunge: A Primer on DIR Fees in Medicare Part D

Last week, Diplomat Pharmacy became the latest high-profile drug channel company to see its shares take a high-profile dive. The specialty pharmacy’s stock dropped by 45%, falling below the IPO offering price. Look out below!

Diplomat’s management pinned the blame squarely on direct and indirect remuneration (DIR) fees paid to Medicare Part D plans. Below, I highlight the key concerns that Diplomat outlined. By reader request, I also provide a primer on DIR fees, whose impact was apparently unexpected by investors.

The rhetoric and controversy over DIR fees once again pits pharmacies against PBMs. Who will take the DIRect hit?

Monday, November 07, 2016

Reimbursement and Contracting Conference

Reimbursement and Contracting Conference
February 28 – March 1, 2017 | Philadelphia, PA

CBI’s Reimbursement and Contracting conference provides a platform for bio/pharmaceutical manufacturers looking to unravel complexities associated with reimbursement, pricing strategies and commercial contracting. As pricing pressures and competition continue to mount, reimbursement, pricing and contract teams must navigate evolving landscapes to developing competitive pricing strategies. Join experts to discuss the latest on Medicare Part B Payment Models, value-based contracting, specialty drug pricing, 340B, partnering with ACOs, value frameworks and payer mergers!

Key Insights and Takeaways:
  • Identify current trends in reimbursement and contracting
  • Operationalize resources to streamline pricing and contracting structures and processes
  • Investigate Medicare Part B Payment Model Impact on ASP and Value-Based Purchasing
  • Understand how pricing in various government programs is impacted by the evolving complexity of managed market contracts
  • Align pricing projections with payer coverage while maintaining patient affordability
  • Discuss the role of the 340B program and its impact on prescription drug prices
  • Explore market trends in specialty products and biosimilars to develop contracts for long-term success
  • Gain strategies for properly linking discounts and rebates with value and outcomes

Drug Channels readers will save $400 off the standard registration rate when they use discount code GGS588.* Visit www.cbinet.com/contracting for more information or view conference preview.

*Discount expires January 31, 2017; applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to an existing registration. Offer not valid on workshop only or academic/non-profit registrations.


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Friday, November 04, 2016

An Important Correction to Yesterday’s Post

Oops.

I made a significant error in yesterday’s article. Sorry about that. After 10 years and more than 1,400 posts, I guess I was due for a major brain fart.

Basically, I counted the rebate twice, thereby incorrectly making it appear that payers were paid when an EpiPen prescription is dispensed. That’s not what CVS Health’s white paper illustrated.

EpiPen: What You Need to Know shows the following trends:
  • The average wholesale price (AWP) for EpiPen 2-pack increased by 143%, from about $300 in 2013 to $730 in 2016.
  • The final payer cost—which deducts rebates, discounts and the beneficiary’s copayment—increased by only 38%, from about $160 in 2013 to $220 in 2016.
Based on these data, CVS can legitimately claim that it “significantly reduced the impact of 3 years of EpiPen price increases” (for patients with flat copayments).

To avoid confusion, I have removed yesterday’s post because it is not reliable.

WHAT I GOT RIGHT

1) The CVS analysis changes significantly when patients have high deductibles. In those situations, the patient buys an EpiPen based upon its list price. The PBM and plan profit by collecting a rebate that is not reflected in the retail price, per the discussion in The Insurance Rip-Off At The Heart Of The EpiPen Scandal. We'll be hearing much more about cost-sharing and deductibles in coming months.

2) Senator Bernie Sanders' obsession with list prices is economically illiterate and misleading. The published list price does not equal the net price paid, as the EpiPen example illustrates. Our current drug channel system encourages ever-higher list prices—even when the net amount received by a drug maker is stable or even declining. That's why understanding the flow of funds and benefit designs is important before going on a twitter rant.

3) My tweet still stands: “Hey @SenSanders: List price increases for #insulin go to insurers and #PBMs, not #drug makers.”

More to come: Senator Sanders and Representative Elijah Cummings have just asked the Department of Justice and the Federal Trade Commission to investigate three insulin makers for alleged collusion on list prices. See this Pharmalot story.

Monday, October 31, 2016

What McKesson’s Profit Warning Means for Manufacturers and Pharmacies

On Friday, McKesson sharply lowered its outlook for future profits. Its stock closed down 23%, erasing more than $8 billion of market capitalization. Ouch.

The wholesale industry’s problems have been building for some time. From McKesson’s earnings call, I have interpreted some of its most revealing statements, which illuminate the key challenges facing wholesalers:
  • Why wholesalers want brand-name drug prices to go up—and the negative impact of slowing inflation
  • A sell-side price war started by...AmerisourceBergen?
  • The factors pressuring wholesalers' profits from specialty pharmacies
McKesson has a plan to recapture its lost profits from customers and manufacturers. Don’t say you weren’t warned when McKesson and its peers come asking for more money.

Friday, October 28, 2016

Follow the Dollar: The Movie!

The Biotechnology Innovation Organization (BIO) has just released "Understanding Your Drug Costs: Follow the Pill," a short and informative video that explains the factors behind a consumer's costs at the pharmacy.

It's a more user-friendly cartoon version of the chart that appears in Follow the Dollar: Measuring Who Profits From a Brand-Name Prescription.

Video below. It's worth a few minutes of your time. Grab some popcorn and enjoy!

Thursday, October 27, 2016

Drug Channels News Roundup, October 2016: Gross-to-Net Bubble, Part D Rebates, EpiPen, and McKesson

Boo! Time for my Halloween-themed roundup of Drug Channels news stories. In this issue:
  • Scary! The gross-to-net bubble for insulin
  • Shocking! Reality check on Medicare Part D rebates
  • Spooky! Five things to Know About the EpiPen Settlement
Plus: Got a spare $22.5 million? Great! Then you can snag McKesson CEO John Hammergren’s secure eight-acre, 23,000-square-foot compound. Savor the video below and get ready to bid on November 15.

P.S. Watch out, Kim Kardashian! @DrugChannels now has nearly 3,100 followers on Twitter. You can follow along for daily tweets on cool studies and news that you might have missed.

Tuesday, October 25, 2016

Walgreens Plays to Win: Our Exclusive Analysis of 2017's Part D Preferred Pharmacy Networks

In a previous exclusive analysis (Preferred Pharmacy Networks Are Back in 85% of the 2017 Medicare Part D Plans), I highlighted how preferred pharmacy networks will dominate next year’s Medicare Part D prescription drug plans (PDP).

Today, I examine pharmacy participation in the 2017 Part D preferred networks. Our analysis shows some pharmacies getting more selective about plan participation.
  • For the first time, Walgreens is the most active participant in the major preferred networks. Walmart has pulled back, and CVS and Rite Aid are barely participating as preferred pharmacies.
  • The pharmacy services administration organizations (PSAOs), which represent independent pharmacies, appear to be engaged selectively with some plans. Independents are completely absent from almost half of the major plans.
I knocked on more than a few doors to collect this bagful of sweet data. Read on as we empty it to see which plans look sweet—and which might be tricks.

Monday, October 24, 2016

Real World Data for Competitive Advantage Summit

Real World Data for Competitive Advantage Summit
December 13-14, 2016 • Philadelphia, PA
Visit Website | Request Brochure

As advanced analytical methods and large data sets of treatment effectiveness become more readily available, the life science industry is primed to fine-tune its portfolio. Whether it’s acquiring post-launch data for safety and adherence results, or utilizing evidence to navigate the regulatory and pricing landscape, real world data is a vital tool.

World Congress’ Real World Data for Competitive Advantage Summit highlights specific application of use cases for commercial optimization in the life sciences. This two-day educational event features an expert speaking faculty delivering information through in-depth presentations, interactive panel discussions, and intensive case studies, maximizing takeaways for those in attendance. In addition, ample networking time allows for the forging of mutually beneficial relationships to enhance patient outcomes and technology advancement.

Top Reasons to Attend:
  • Learn from specific, innovative real world data use cases and apply insights to help you expand your commercial efforts
  • Assess the value of an analytical Center of Excellence and its benefit for internal teams
  • Network with senior data professionals on how to collaborate on common challenges such as interoperability of electronic health records
  • Gain perspective from alternative sources, such as health systems and regulatory authorities in order to understand partnership potential and expanded acceptance criteria, respectively
  • Discuss how real world data fits into value chain development
  • Hear a case study from IBM Watson on their revolutionary health IT

Please visit www.worldcongress.com/realworlddata to register or for more information.

Drug Channels readers who register will receive a $300 savings when they use promo code DC300.


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Thursday, October 20, 2016

The Top Specialty Drug Distributors in 2015

The Big Three wholesalers—AmerisourceBergen, Cardinal Health, and McKesson—will soon report their latest quarterly earnings. Expect specialty drugs to be a hot topic.

About $134 billion in specialty drugs was sold via wholesale distribution in 2015. The chart below presents our estimates of market share by parent company and, where relevant, the division of that company. I also explain wholesalers’ three major customer groups for specialty drugs.

Like specialty dispensing, the distribution market is highly concentrated. But wholesalers face significant challenges in capturing the value and profits from the booming specialty drug market, particularly for patient-administered, pharmacy-dispensed specialty drugs. Specialty’s rapid growth will prevent the market from going to the dogs, but it’s certainly getting ruff.

Tuesday, October 18, 2016

Employer Pharmacy Benefits in 2016: More Specialty Drug Cost-Shifting Means More Problems for Patients

It’s time for our annual analysis of the Kaiser/HRET 2016 Employer Health Benefits Survey, which you can read online for free. The survey delves into employer-sponsored health coverage at 2,000 companies. In the charts below, I summarize employers’ 2016 pharmacy benefits by examining (1) cost-sharing tier structures, (2), average copayments, by formulary tier, and (3) type of cost-sharing (coinsurance and copayment).

This year’s results highlight the growing discrepancy between diseases that can be treated with traditional drugs and those that require specialty drugs. Traditional therapy classes that treat larger patient populations have multiple generic drug options and fixed dollar copayments.

By contrast, employers continue shifting the cost of specialty prescriptions to their beneficiaries. Patients taking specialty drugs face economically-debilitating coinsurance—in some cases with no limit on out-of-pocket expenses. These benefit designs essentially discriminate against the very few patients undergoing intensive therapies for such chronic, complex illnesses as cancer, rheumatoid arthritis, multiple sclerosis, and HIV. But isn’t insurance supposed to help when things go really wrong?

Read on for full details along with some lovely tiers/tears puns.

Monday, October 17, 2016

ACO Population Health Congress

ACO Population Health Congress
December 8-9, 2016 | Tampa, FL
www.cbinet.com/ACO

CBI’s ACO Population Health Congress conference offers payers and providers the opportunity to discover solutions for day-to-day challenges, improve the health of members and enhance models to quantify improvement and outcomes. As the ACO model shifts from fee-for-service to value-based care models, it is critical for ACOs to understand population health management and value-based networks in order to improve coordination of care and health outcomes. Discover tactical strategies, gain policy insights and benchmark with industry experts to develop solutions to improve population health and achieve operational excellence.

Gain Comprehensive Insights on:
  • Implications of MACRA Proposed Rule on ACO Operations
  • Patient registry refinement and clinical integration hierarchies to successfully define populations and accurately report quality measures
  • Post-acute, coordinated care initiatives to reduce hospital admissions, readmission, ED utilization and variations in care
  • Proactive outreach to noncompliant patients and automated patient outreach programs to decrease cost of care downstream
  • New methods for reviewing contracts to assist in quantifying risk and determining potential benefits of switching ACO models
  • Best practices to enhance patient experience and improve outcomes through patient engagement and coordinated care
Case Study Spotlight:
  • Leaving the Next Generation ACO Model – Financial and Operational Implications
  • Remove Barriers and Reduce Unnecessary Hospital Utilization to Improve Beneficiary Health

Visit www.cbinet.com/ACO for more information. Drug Channels readers will save $200 off the standard registration rate when they use discount code QZM698.*

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


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Friday, October 14, 2016

Follow the Vial: The Buy-and-Bill System for Distribution and Reimbursement of Provider-Administered Outpatient Drugs

By reader request, below is a channel flow chart illustrating the buy-and-bill process for provider-administered drugs. It complements Follow the Dollar: The U.S. Pharmacy Distribution and Reimbursement System, which focuses on patient-administered outpatient drugs.

This post is adapted from Section 3.1.2. of our The 2016–17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Friendly reminder: Discounted pricing for the report ends today!

Thursday, October 13, 2016

Follow the Dollar: Measuring Who Profits From a Brand-Name Prescription

Now, here’s something I hope you’ll really like!

I recently collaborated with Julie Appleby at Kaiser Health News (KHN) to explain the flow of funds between a pharmaceutical manufacturer and the patient.

The resulting graphic (below) uses a typical brand-name prescription to show the profits earned by key drug channel participants: manufacturers, pharmacy benefit managers (PBMs), wholesalers, and pharmacies. It also illustrates the payer’s net costs and manufacturer’s net price.

KHN’s well-produced design complements the less pretty Rube Goldberg diagram that I shared in Follow the Dollar: The U.S. Pharmacy Distribution and Reimbursement System. The KHN chart may look like a PTCTU*, but it will help you understand the method to the madness.

Tuesday, October 11, 2016

Specialty Product Data Strategies

CBI’s Specialty Product Data Strategies
December 14, 2016 | Philadelphia, PA
www.cbinet.com/specialtydata

Have you seen the agenda for the Specialty Product Data Strategies meeting yet? Being held on December 14th in Philadelphia, this is the pharma/bio industry’s only data summit devoted to specialty product returns with cutting-edge case studies and forward thinking presentations.

Featuring trailblazing insights from executives representing AstraZeneca, Bayer Healthcare Pharma, Biogen, Blue Fin Group, Therigy and ValueCentric, this meeting is poised to showcase how to strategically contract, analyze and utilize specialty data to illustrate value.

Topics at a Glance:
  • Contracting Considerations – Acquisition and Collection of Specialty Product Data
  • Decision-Making Journey for Coverage of Specialty Products
  • Analyzing Specialty Pharmacy Data Sets
  • Understanding FMV – Industry’s Going Rate for Specialty Product Data
  • Integrated Delivery Network (IDN) – Specialty Pharmacy’s Role in the Delivery and Documentation of Improved Patient Outcomes
  • Emergence of Specialty Pharmacy Data within Integrated Healthcare Systems – A Patient-Centered Model
  • Tap Specialty Product Data to Propel Commercial Success and Enhance the Patient Experience
For more information, download the complete agenda. You can register online at www.cbinet.com/specialtydata Drug Channels readers will save $200 off of the standard registration rate when they use discount code JHQ838.*

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


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Thursday, October 06, 2016

Walgreens’ TRICARE Win: Tracking WBA’s Aggressive Preferred Network Deal Strategy

ICYMI: Walgreens Boots Alliance (WBA) has been lining up a broad range of preferred network agreements. In its latest move, Walgreens will unexpectedly displace CVS this December in the retail network for TRICARE, the healthcare program for uniformed service members, retirees, and their families. Click here to read the announcement. I provide additional details below.

TRICARE is the latest in a string of deals engineered by Stefano Pessina, our global channels overlord and executive vice chairman and chief executive officer of WBA. In case you’ve lost track, I summarize Walgreens’ recent preferred pharmacy arrangements with Express Scripts, OptumRx, Prime Therapeutics, UnitedHealthcare, and Valeant.

WBA appears to be sacrificing profits for volume. The scope and diversity of the deals, however, clearly reflects WBA’s previously articulated industry-wide partnering strategy. It also provides an intriguing contrast with CVS Health’s closed system approach.

Read on and be impressed.

Wednesday, October 05, 2016

EXCLUSIVE: Preferred Pharmacy Networks Are Back in 85% of the 2017 Medicare Part D Plans

The Centers for Medicare & Medicaid Services (CMS) just released the initial data on the 2017 Medicare Part D plans. Our exclusive analysis reveals that preferred cost sharing pharmacy networks are back.

For 2017, 85% of Medicare Part D regional prescription drug plans (PDP) will have a preferred network. That’s comparable to the figures from the past three years.

Below, I provide historical data on preferred networks’ growth and then identify 2017’s top plans. The two largest companies—UnitedHealthcare and Humana—offer only preferred networks for 2017. Both companies are also offering co-branded plans with retail chains: United Healthcare with Walgreens, and Humana with Walmart.

Such narrow pharmacy networks—either preferred or limited models—are now an unstoppable and widely accepted element of benefit design. Pharmacies will continue to see their prescription profit margins terminated. In a future post, I’ll be back to examine which chains and independents are participating in the preferred networks.

Monday, October 03, 2016

Life Sciences Trade and Channel Strategies 2016

CBI’s 12th Annual Life Sciences Trade and Channel Strategies Conference
December 13-14, 2016 | Philadelphia, PA

It’s a wild and crazy time in the drug channel. Get ready for 2017 by joining me at CBI’s 12th Trade and Channel Strategies conference, being held this December in beautiful Philadelphia, PA.

I will kick things off with a keynote address called Drug Channels Update—Things to Watch in 2017. I’ll update everyone on hot topics and identify key strategic issues for the year ahead. As usual, we’ll end the first day with the renowned Trade Throwdown: Battle of the Experts. REMINDER: This is the only CBI event where I present!

CBI’s annual event is one of the industry’s premier events focused on bio/pharma trade, channel, and key account management. Use discount code PKJ933 to save $400.

Read on for more details from CBI. Or just click here to register now. Hope to see you in December!

Tuesday, September 27, 2016

NEW: The 2016–17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors

I am pleased to announce our new The 2016–17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, available for purchase and immediate download.
We’re offering special discounted pricing if you order before October 14, 2016!

This report offers the most complete examination of the pharmaceutical distribution industry’s economics, market structure, growth rates, forces of change, and interactions with the U.S. healthcare system.

See below for more info and some behind-the-scenes tidbits. Happy reading!

Monday, September 26, 2016

Real World Evidence & Market Access USA 2016

Eyeforpharma’s Real World Evidence & Market Access USA 2016 Summit
November 9-10, 2016 | Philadelphia

Innovative drugs, with ever-improving outcomes, are the future of any pharma company.

But for most of us, our ability to form partnerships and develop new value propositions in a patient-centric world are now just as important – if not more so. With external stakeholder pressures building, the focus has shifted to developing key partnerships in a patient-centric world.

The transition from volume to value is well underway. Eyeforpharma’s Real World Evidence & Market Access USA 2016 Summit is designed around this transition. Companies seek to find, create, and deliver value so that pharma, payers, providers and ultimately patients can benefit. Of course, it all starts with good leadership, and good evidence – the two pillars of Eyeforpharma’s Real World Evidence & Market Access USA 2016 Summit, now in its 6th year.

With two targeted tracks – dedicated to high-level managed markets, pricing & HEOR strategy, and next-generation real world data technologies – this annual gathering aims to give experts a platform to shape the future of access in pharma, bringing everyone to the table from patients to payers and providers. Exclusive panel debates will bring pharma face-to-face with its key stakeholders, while insightful case studies from Lilly, Novartis, GSK, Pfizer and BMS will ensure attendees go back to their jobs with a deeper, more intelligent understanding of the solutions to the industry’s biggest challenges.

Save a place at this unmissable summit for you and your team today. Use discount code 4639CHANNELS for a $300 discount on registration.

Eyeforpharma looks forward to seeing you in Philly this November!


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Thursday, September 22, 2016

Drug Channels News Roundup, September 2016: Walgreens Specialty Pharmacy, CVS Caremark, Drug Spending, Theranos, and an EpiPen joke

Autumn is almost here! Curl up with your favorite extra hot skim grande Pumpkin Spice blog and savor our latest seasonal harvest of Drug Channels news:
  • Walgreens Specialty Pharmacy tells us a teeny bit about its business
  • Dispensing oncology practices battle PBM CVS Caremark
  • The uncertain forecast for drug spending and gross-to-net pricing
  • A fascinating peek behind the downfall of Elizabeth Holmes and Theranos
Plus, Jimmy Kimmel tells an EpiPen pricing joke at the Emmys. Can’t wait for him to riff on AMP!

P.S. Join our nearly 3,000 @DrugChannels followers on Twitter for my daily tweets about intriguing and insightful stuff from the interwebs.

Tuesday, September 20, 2016

2015’s Fastest-Growing, Private Specialty Pharmacies (From the Inc. 5000)

Time for our annual review of the latest Inc. 5000 list, the magazine’s annual ranking of the fastest-growing private companies in the United States. The list offers a valuable snapshot of the dynamic specialty pharmacy industry.

We have identified 12 specialty pharmacies on the 2016 list, which is based upon revenue growth from 2012 to 2015. Annual revenues range from $17 million to $1 billion. The pharmacies and key stats are listed below. Average revenues in 2015 sped ahead by an eye-popping 63%.

Given specialty pharmacies’ growth prospects, there’s a fast and furious market for the buying and selling of specialty pharmacy companies. Two companies below are prime targets. Investment bankers: Start your engines!

P.S. Today's post will help you get tuned up for next week’s National Association of Specialty Pharmacy (NASP) annual meeting. I’ll be there—wearing my black muscle t-shirt, of course!

Monday, September 19, 2016

8th Federal Pricing and Reporting – VA * DoD * PHS

CBI’s 8th Federal Pricing and Reporting – VA * DoD * PHS
November 16-17, 2016 | Philadelphia, PA

At the 8th Federal Pricing and Reporting Summit, gain strategies to achieve contracting excellence and compliance with the “Big Four” federal programs. Join the hundreds who have benefited over the years and gain invaluable learnings to stay profitable in this low-margin, highly complex market.

New this year, customize your conference experience by choosing from breakout sessions:
  • Federal Supply Schedule Pricing, Calculations and Program Intricacies
  • Acquisitions and Divestitures - Buyer and Seller Requirements and Considerations
  • Dual Pricing vs. Single Pricing - Understand When to Use and How to Implement
  • TRICARE Dispute Resolution, Calculations and Refund Management
This meeting features a dynamic group of speakers with government updates from the Department of Veteran Affairs, VA Office of Inspector General, DoD DLA Troop Support, and Former DoD Pharmacoeconomic Center. Plus! Practical strategies and guidance from Acorda Therapeutics, Amneal Pharmaceuticals, Bayer Healthcare, Chiesi, Eisai, Eli Lilly, Genentech, Horizon Pharmaceuticals, Pfizer, King & Spalding, Sidley Austin and Dave Rice Group.

For more information, please download the complete agenda or visit www.cbinet.com/fedpricing. Drug Channels readers will save $400 off of the standard registration rate when they use discount code DTB637.*

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


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Wednesday, September 14, 2016

EpiPen, Channel Economics, and the Great PBM Rebate Debate

For better or worse, Mylan’s EpiPen controversy has started an intriguing dialogue about my favorite subject: the economics of U.S. drug channels. Many news stories have tried to explain how a prescription drug’s list price differs from the ultimate net price paid by insurers and the government. A few brave souls have even dug into the role of such intermediaries as pharmacy benefit managers (PBMs), wholesalers, and pharmacies.

Below, I highlight aspects of the EpiPen story that raise crucial questions about our healthcare system, including: Who benefits from big gross-to-net spreads in drug prices? How do benefit design and payer decisions alter channel economics? Are patients benefiting from manufacturer’s rebates to PBMs? How (if at all) should manufacturers alter their pricing strategies?

And I wonder: Will we look back on the EpiPen incident as the beginning of the end for manufacturers’ gross-to-net drug pricing models and PBMs’ traditional role in the flow of rebates?

Monday, September 12, 2016

Pharmaceutical Strategies for Value-Based Contracting Summit

Pharmaceutical Strategies for Value-Based Contracting Summit
Managing Customer Expectations When Designing Outcome-Based Contracts
October 24 - 25, 2016 • Alexandria, VA • Westin Alexandria

Customers continue to evolve traditional contracting structures and strategies as the health care market dynamics shift towards value-based care. World Congress’s Pharmaceutical Strategies for Value-Based Contracting Summit convenes executives within pharmaceutical and biotechnology companies to discuss best practices and tactical solutions in contracting with customers in today’s value-based system. Executives will hear the “How” from their peers as well as customers including payers, PBMs, providers, and manufacturers on leveraging partnerships and technology to develop contracts based on transparency and accountability.

This year’s summit brings you an exclusive contracting workshop dedicated to giving you practical take-aways for establishing your value proposition and determining what measures and metrics should be monitored to ensure optimal contract performance. Learn innovative approaches and strategies that will allow you to meet customer expectations and minimize risk.


Please visit www.worldcongress.com/valuebased to register or for more information. Those who register will receive a $300 savings when they use promo code DC300.

2016 Topics Discussions Include:
  • Examine how new market dynamics, delivery systems, and customers have changed traditional contracting structures and strategies
  • Determine what measures and metrics should be monitored after executing a contract to ensure optimal contract performance from both parties
  • Hear about the implication of the new MACRA regulations for all health care stakeholders
  • Understand how new value-based payment models for payers and providers are impacting the way manufacturers need to approach pricing and contracting with their customers
  • Identify emerging data metrics payers are seeking when contracting with manufacturers
  • Analyze new business models manufacturers are implementing to get a seat at the table and successfully interact with a value-based health care delivery system
  • Discuss considerations taken into account when designing an outcome-based contract
  • Hear payers’ definitions of an “overpriced drug” and how that impacts contract negotiations
  • Explore what extent of risk partners are expecting manufacturers to take
  • Examine the implications of indication-based pricing models on the design of a value-based contract
  • Evaluate the nuances of contracting with a PBM vs. another type of payer
  • Learn how physicians’ and administrators’ influence on prescriptions impact formulary access across different patient care points within an IDN


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Wednesday, September 07, 2016

Why the Walgreens/Prime Deal Could Transform the PBM Industry

ICYMI: Last week, Walgreens Boots Alliance (WBA) and Prime Therapeutics rolled out a highly innovative partnership. It could have wide-ranging implications for the drug channel’s next phase.

This novel union aligns a pharmacy benefit manager (PBM), retail pharmacy chain, and health plans via joint ownership of a new mail and specialty pharmacy company. If executed properly, it will be a best-of-breed business model that could reshape the PBM and pharmacy industries. For manufacturers, organized customer management just got even more complicated.

The new business could also pose a serious challenge to pure-play PBMs that lack a health insurer partner or an economically-aligned retail dispensing channel. Below, I compare the capabilities of the new business those of the four largest PBMs.

Jim DuCharme, president and CEO of Prime Therapeutics, told me: “The PBM business model needs transforming. Prime wants to have a significant influence on transforming the PBM business before others try to fix it.” I am normally immune to hype, but he could be right. Read on and see if you agree.

Tuesday, September 06, 2016

Outcomes-Based Contracting Summit

CBI’s Outcomes-Based Contracting Summit
October 17-18, 2016 | Philadelphia, PA
www.cbinet.com/outcomescontracting

Are you prepared to navigate the intricacies of value-based contracting? Mark your calendar for CBI’s Outcomes-Based Contracting Summit for Life Sciences on October 17-18th, 2016 where you will examine how performance- and value-based contracts are structured and negotiated. You won’t find a better platform to discuss value optimization and price alignment with health outcomes data.

Join our expert faculty to:
  • Learn how to draft and negotiate win-win RSAs with payers
  • Examine the pros and cons of outcomes-based contracts for specialty and rare disease therapies
  • Bridge the gap between real-world evidence and health economics outcomes research
  • Translate successful European managed entry agreements into actionable opportunities for the U.S marketplace
  • Manage legal, compliance and regulatory concerns surrounding value-based contracts
The faculty members tackling the hard-hitting topics in our agenda include:

Eli Lilly, Sunovion Pharmaceuticals, Rite Aid Corporation, EMD Serono, Aetna, Daiichi Sankyo, AstraZeneca, Novo Nordisk and many others!

PLUS! CLE & CPE Credits Available (pending approval)!

Visit www.cbinet.com/outcomescontracting for more information. Drug Channels readers will save $300 off of the standard registration rate when they use discount code EZQ567.

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


The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Friday, September 02, 2016

The Specialty Pharmacy Accreditation Boom Continues (rerun)

This week, I’m rerunning some popular posts, so I can finish the forthcoming 2016-17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from March 2016.

For 2015, retail, mail, and specialty pharmacies dispensed about $98 billion in specialty pharmaceuticals. Though market share was concentrated among the top companies, even I can’t count the total number of pharmacies dispensing specialty drugs, since any pharmacy can designate itself a “specialty pharmacy.”

A useful proxy for the number of active specialty pharmacies comes from our exclusive analysis of the two primary pharmacy accreditation organizations. We found nearly 400 pharmacy locations than had specialty pharmacy accreditation. As the second chart below shows, the number of accredited specialty pharmacies is still booming.

Specialty pharmacy accreditation is becoming the promised land for pharmacies that want to participate in the networks developed by manufacturers and third-party payers. As more pharmacies can prove that they are special, will that mean that no one is?

Thursday, September 01, 2016

New OIG Report Shows Hospitals’ Huge 340B Profits from Medicare-Paid Cancer Drugs (rerun)

This week, I’m rerunning some popular posts, so I can finish the forthcoming 2016-17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from December 2015

For our most current estimates of 340B market size, see Reality Check: 340B is 4% (not 2%) of the U.S. Drug Market—And Growing Quickly.

The Office of Inspector General (OIG) has just released another eye-opening report on the 340B drug discount program: Part B Payments For 340B-Purchased Drugs. (Free download)

The report documents how 340B-eligible hospital outpatient departments earn tremendous profits from the Medicare Part B program. Physician offices, which also receive Part B reimbursements, are not as fortunate.

The OIG focuses on how the Medicare program could save money by sharing in these mega-profits. But as my summary chart below shows, Medicare appears to be providing incentives for shifts in cancer care treatment locations.

As usual, we don’t know if needy patients are benefiting from hospitals’ excess Medicare 340B profits. The OIG even reminds us three times in its report: “The 340B statute does not restrict how covered entities may use these funds.” Unfortunately, the Health Resources and Services Administration’s recent Omnibus Guidance didn’t bother to require that hospitals use 340B funds help the neediest patients access valuable medicines. Money, so they say, is the root of all evil today.