The 340B Program Climbed to $44 Billion in 2021—With Hospitals Grabbing Most of the Money

Here’s a summer surprise for fans of the 340B Drug Pricing Program: Drug Channels has just obtained the 2021 figures from the Health Resources and Services Administration (HRSA)! Even better, my Freedom of Information Act (FOIA) request was able to pry out detailed purchases by covered entity type.

The data tell a familiar story. For 2021, discounted purchases under the 340B program reached a record $43.9 billion—an astonishing $5.9 billion (+15.6%) higher than its 2020 counterpart. Hospitals accounted for 87% of these skyrocketing 340B purchases.

What’s more, the difference between list prices and discounted 340B purchases also grew, to $49.7 billion (+$7.0 billion). This figure approximates the money collected by 340B covered entities.

340B advocates have been screaming that “drug companies are cutting 340B,” but the data tell a very different story. Only in the U.S. healthcare system can billions more in payments and spreads be considered a cut.

Read on for full details and analysis, including the opportunity to download your very own copy of the raw data from HRSA.

Improving Out-of-Pocket Cost Transparency For Physicians

Today’s guest post comes from Divya Iyer, VP, Strategy and Business Development, Pharma Manufacturer Solutions at GoodRx.

Divya highlights new GoodRx research on the out-of-pocket cost gap between brand-name and generic prescriptions. She discusses the challenges that providers face when having real-time discussions with patients about out-of-pocket costs. Divya then explains how GoodRx partners with pharmaceutical companies to improve cost transparency and communication between patients and providers.

Click here to learn more about how GoodRx helps brand teams engage providers in specific specialties.

Read on for Divya’s insights.

Texas Shows Us Where PBMs’ Rebates Go

Over the weekend, the U.S. Senate passed a massive overhaul of the Medicare Part D program. If passed into law, these changes will have many unintended consequences, but will not address the warped incentives baked into our current rebate system.

This makes it a good time to review the murky, little-seen economics of how commercial plan sponsors and payers access the billions of dollars in manufacturer rebates and fee that are negotiated by their pharmacy benefit managers (PBMs).

Our analyses of new Texas-mandated PBM disclosures reveal that plan sponsors receive most of the rebates, fees, and other payments from manufacturers. However, PBMs retain an unexpectedly large share of these payments—while the patients whose prescriptions generated these funds get almost nothing.

In other words, plans spread around manufacturers’ rebates and fees to offset premiums for all beneficiaries, rather than lower out-of-pocket costs for drugs that plans buy at a discounted price. Perhaps Congress will someday get around to corralling these funds.

Three Technology Tactics for Overcoming Prior Authorization Hurdles

Today’s guest post comes from Karina Castagna, SVP of Access and Adherence at OptimizeRx.

Karina discusses the challenges health care providers and patients face in their quest to secure prior authorizations from payers. She argues that manufacturers adopt an electronic health record-based solution to facilitate access to therapies, from the point of prescription through the point of dispensing at the pharmacy.

To test the efficacy of your market access digital strategy against industry best practices, take the OptimizeRx Market Access Strategy Quiz.

Read on for Karina’s insights.

The Shady Business of Specialty Carve-Outs

Watch out! Plan sponsors are getting even bolder in their attempts to grab financial support intended for patients. The latest scam is called a specialty carve-out.

Here’s the game: A commercial plan eliminates coverage for all specialty drugs. Beneficiaries are then shunted over to a charitable foundation, because they are now disguised as uninsured—at least for specialty drugs. Naturally, the vendor skims a healthy share of the charity’s money.

In addition to the ethical and compliance issues, some vendors raise safety risks by sourcing prescriptions from non-U.S. pharmacies as a backup.

The Orwellian euphemism for this “benefit” design: alternative funding program.

A new survey reveals that an astounding four out of 10 commercial plans are already using, or exploring the use of, these specialty carve-out programs. Yikes.

Read on for an overview of these shady programs—and the many problems they are creating.

Who Will Pay for Prescription Drugs in 2030? (Hint: It’s Us) (rerun)

This week, I’m rerunning some popular posts while I prepare for today's live video webinar: Specialty Drugs Update: Trends, Controversies, and Outlook .

Note that the forecasts below did not account for policy changes that could further reduce pharmaceuticals' share of U.S. healthcare spending.

Click here to see the original post from April 2022.

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The econowonks at the Centers for Medicare & Medicaid Services (CMS) recently released the latest projections for U.S. spending on healthcare. (See links below.) These data provide our first official look at post-pandemic U.S. healthcare spending.

As you will see below, outpatient prescription drugs dispensed by retail and mail pharmacies are projected to remain a small share (8.4%) of total U.S. healthcare spending. What’s more, taxpayers—via Medicare and Medicaid—will continue to crowd out the private insurance market. One bright spot: consumers will account for an ever-smaller share of drug spending.

Thus, the government actuaries expect that pharmaceuticals will not be the key driver of U.S. healthcare spending growth. Will someone tell our elected officials?

Gross-to-Net Bubble Update: 2021 Pricing Realities at 10 Top Drugmakers (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s live video webinar: Specialty Drugs Update: Trends, Controversies, and Outlook .

Click here to see the original post from May 2022.

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Time for Drug Channels’ annual update on pricing at the largest pharmaceutical manufacturers. This year’s review includes 10 companies: Eli Lilly and Company, Genentech, GlaxoSmithKline, Janssen, Merck, Novartis, Novo Nordisk, Sanofi, Takeda, and UCB. You can find links to each company’s data below.

When rebates and discounts were factored in, brand-name drug prices declined—or grew slowly—in 2021. Consistent with our previous analyses, rebates and discounts reduced the selling prices of brand-name drugs to less than half of their list prices.

What’s more, average net drug prices have declined for the past five years—though a few companies had net price gains or slower declines in 2021.

As I have pointed out many times, pharma industry perma-critics refuse to accept that brand-name drug prices are falling—or that prescription drug spending is a small and stable portion of overall U.S. healthcare expenditures. That’s why I refer to them as drug pricing flat earthers (#DPFE).

As famous economist John Maynard Keynes reportedly said: “When the facts change, I change my mind.” What will the DPFEs do?

DCI’s Top 15 Specialty Pharmacies of 2021—And Three Factors That Will Reshape 2022 (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s live video webinar: Specialty Drugs Update: Trends, Controversies, and Outlook .

One update to the list below: CVS Health has quietly purchased AmerisourceBergen's US Bioservices specialty pharmacy.

Click here to see the original post from May 2022.

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In Drug Channels Institute’s list of the top 15 pharmacies of 2021, we show that central-fill, mail pharmacies operated by large PBMs and health insurers have displaced retail chains as the largest prescription drug dispensers by revenues.

To complement that broader ranking, we present below our exclusive and updated list of the top 15 pharmacies based on specialty drug dispensing revenues in 2021. You will see that PBMs and insurers retained their dominance over specialty dispensing.

But as I explain below, 2022 will be a year of transition. Significant volume will shift to the larger players, as Centene plots its exit, Walgreens’ specialty pharmacy business collapses, and manufacturers’ 340B contract pharmacy restrictions continue.

This week, I’m attending Asembia’s Specialty Pharmacy Summit. In a future article, I’ll violate Vegas code and tell you what happened.

Warped Incentives Update: The Gross-to-Net Bubble Exceeded $200 Billion in 2021 (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s live video webinar: Specialty Drugs Update: Trends, Controversies, and Outlook .

ICYMI, the unimplemented rule to reform rebates in Medicare Part D remains the ultimate budget gimmick. More than $122 billion in "savings" (offsets) from the current drug pricing reconciliation legislation comes from blocking rebate reform—which never even happened.

Click here to see the original post from March 2022.

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Time for Drug Channels Institute’s annual update on the gross-to-net bubble—the ever-growing dollar gap between sales at brand-name drugs' list prices and their sales at net prices after rebates and other reductions.

We estimate that the gross-to-net bubble reached $204 billion for patent-protected brand-name drugs in 2021. If we include brand-name drugs that have lost patent protection and face competition from generic equivalents, the bubble was even higher, at $236 billion.

Pharmaceuticals are the only part of the U.S. healthcare system in which the difference between list and net prices is monetized as rebates and redistributed via intermediaries to payers. This bubble reflects—and drives—both patients’ affordability problems, intermediaries' warped incentives, and politicians’ misunderstandings of U.S. drug prices.

Read on for our latest data—and a reminder why SpongeBob SquarePants remains a fixture on Drug Channels.

The Top Pharmacy Benefit Managers of 2021: The Big Get Even Bigger (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s live video webinar: Specialty Drugs Update: Trends, Controversies, and Outlook.

Click here to see the original post from April 2022.

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The highly-consolidated PBM market notched another year of increased concentration.

Consider Drug Channels Institute's latest estimates of pharmacy benefit manager (PBM) market share, shown in the chart below. For 2021, we estimate that the three biggest PBMs accounted for 80% of total equivalent prescription claims. Significant business relationships among the largest companies continue to shift market share.

As I explain below, the prospects for market disruption remain low, so the controversial warped incentives of the rebate system will continue to distort the drug channel.

The New Hub Features Improving Patient Assistance

Today’s guest post comes from Ian Ocilka, Senior VP of Client Solutions at ConnectiveRx.

Ian shares an overview of The Evolving Role of Hubs and Patient Services, his recent presentation at Informa Connect's Hub and Specialty Model East conference in June.

Click here to watch Ian’s full presentation.

Read on for Ian’s insights.

Drug Channels News Roundup, July 2022: CVS vs. NACDS, ICER Impact, Biosimilar Boom, Deductible Doubts, and Alto Pharmacy (and me)

Cut through the steamy summer haze with our refreshing selection of articles and insights. In this issue:

• CVS disassociates itself from its chain pharmacy association

• Payers are paying attention to ICER

• Benefits of the biosimilar boom

• A fantastic takedown of health insurance deductibles

Plus, I join the Advisory Board of Alto Pharmacy.

P.S. Join my nearly 30,000 (!) LinkedIn followers for daily links to neat stuff. You can also find my daily posts at @DrugChannels on Twitter, where I have more than 14,700 followers.

Join me next week for my new live video webinar, Specialty Drugs Update: Trends, Controversies, and Outlook, on July 29, 2022, from 12:00 p.m. to 1:30 p.m. ET. I’ll cover market trends, payer strategies, channel developments, key trends that will help you plan for the future, and more. Click here for details and registration info.