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 22,000 subscribers. Learn more...

Thursday, August 16, 2018

2019 Express Scripts Formulary Exclusions: Hepatitis C Changes Show Why the Drug Channel Must Change, Too

Last week, Express Scripts released the 2019 updates to its formulary exclusion lists. They are available below for your downloading pleasure. Unfortunately, CVS Health won’t release its list until October.

For 2019, Express Scripts was more aggressive than ever, expanding its list to more than 240 excluded products. For the first time, it excluded products in two specialty categories: HIV antiretrovirals and Factor VIII recombinant products. It also added a new exclusion in multiple sclerosis.

Oddly, Express Scripts has made a patient unfriendly change to the hepatitis C category. It has excluded AbbVie’s Mavyret, the market share leader with a low list price. Instead, it added Merck’s Zepatier, whose list price was recently cut but can’t treat all types of hepatitis C. Consequently, the 2019 preferred formulary will force at least one in four patients to use the products with high list prices and high rebates. Many patients will end up incurring much higher out-of-pocket costs. Incredibly, Express Scripts advocates copay cards as a fix!

To me, the hepatitis C formulary change are further evidence of the warped incentives of our gross-to-net bubble. Payers benefit from a low net price, and PBMs gain from high list prices with high rebates (though less than we once thought). Meanwhile, patients get stuck making out-of-pocket payments based on the higher list price. Is this any way to run a drug channel?

Tuesday, August 14, 2018

New Disclosures Show CVS and Express Scripts Can Survive in a World Without Rebates. Are Plan Sponsors Now the Real Barrier to Disruption?

Last week, the two largest pharmacy benefit managers (PBMs)—CVS Health and Express Scripts—both stated that rebates now account for a small part of their profits. The companies therefore strongly implied that they could survive in a world in which PBMs did not participate in the flow of funds from a brand-name manufacturer to a plan sponsor. Below, I unpack the new disclosures, which move us materially closer to a new model.

Hmm. The two biggest PBMs and at least one major manufacturer (Pfizer) have now implied a willingness to change. So what’s to stop massive drug channel disruption?

CVS Health perhaps inadvertently identified the real barrier to a system without rebates: employers and health plans. As you will see below, CVS Health disclosed for the first time the massive gross-to-net bubble within its commercial book of business. The new information confirms that plan sponsors are hoarding rebates rather than sharing the savings with the employees whose prescriptions generated the rebate funds.

If we really do migrate to a system without rebates, PBMs’ reportedly minimal profits from rebates mean they could escape drug channel disruption unscathed. The focus will now turn to the plan sponsors that are absorbing rebate dollars. Whether plan sponsors realize it or not, they are the next target.

Monday, August 13, 2018

CBI’s Life Sciences Outcomes-Based Contracting Summit

CBI’s Life Sciences Outcomes-Based Contracting Summit
October 3-4, 2018 | Philadelphia, PA

Exclusive Offer for Drug Channels Readers:
Register Now to SAVE $400* using discount code OUT400

CBI’s 3rd Annual Life Sciences Outcomes-Based Contracting Summit is the ideal platform to discuss best practices for value optimization and price alignment with health outcomes data and provides critical strategies into the process of outlining, structuring and negotiating risk-sharing agreements between bio/pharma manufacturers and payers.

This timely event will address the continuous challenges the industry faces to lower drug costs and increase patient access, all while demonstrating the value of their drugs to insurers by providing best practices and key insights from thought-leaders regarding the nuances surrounding outcomes-based contracting.

Gain critical insights from distinguished speaking faculty, including those representing AstraZeneca, Novartis Pharmaceutical Corporation, Aetna, University of Portsmouth, Center of Medicine in the Public Interest, BeiGene, Ltd., University of Washington Medicine Health System, Bristol-Meyers Squibb and more.

Join CBI for Solutions-Oriented Sessions, Powerful Payer Insights and Illuminating Case Studies:
  • Overview of over 60 published outcomes-based innovative contracts
  • Pinpoint how AstraZeneca and Aetna have succeeded in creating outcomes-based contracts
  • Explore new conditional reimbursement models with real-world versus real-time performance data
  • Implement contracts to define, measure, report and create payment mechanisms for value-based arrangements
  • Hear how payers perceive value-based agreements that involve rebates versus those with refunds
  • And more!
  • Plus, join us for the Pre-Conference Workshop: Playbook for the Construction & Deployment of Outcomes-Based Innovative Contracting
Download the complete agenda, then register using promo code OUT400 to receive $400 off* the standard rate.

 *Expires 10/2/18; applies to standard rate only and cannot be combined with other offers or applied to existing registration.

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

Friday, August 10, 2018

Redefining Digital Health: How a Different Approach Can Get Manufacturers Closer to Patients

Today’s guest post comes from Mary Roberts, Vice President of Business Development at EnvoyHealth, a subsidiary of Diplomat.

Mary describes the next generation of patient services and explains how manufacturers can use new digital health tools to get closer to patients.

Visit envoyhealth.diplomat.is/innovative to learn more about using technology to enhance patient services and differentiate brands.

Read on for Mary’s insights.

Wednesday, August 08, 2018

Still Possible: Hospitals Overcharge Health Plans for Specialty Drugs

Over the years on Drug Channels, I have explained the two primary reasons a drug’s list price doesn’t reflect what a third-party payer actually spends for that drug: (1) channel intermediaries and providers add markups that account for the costs, profits, and value of the services, and (2) manufacturers provide rebates and discounts to third-party payers.

Two recently-released reports confirm the often-overlooked magnitude of provider markups.

As you will see below, commercial payers use reimbursement approaches that permit hospitals to inflate specialty drug costs by thousands of dollars per claim when compared with physician offices. This is not about differences in patient care. It’s about hospitals adding big markups to drug costs.

Meanwhile, commercial insurers complain about “drug prices,” going so far as to publish misleading data about drug spending. Yet insurers conveniently forget to mention their own role in allowing powerful providers inflate drug spending. As evidenced by the proposed outpatient prospective payment system (OPPS) rule, the Secretary (of Health and Human Services) does not disavow any knowledge of site-neutral payments.

Monday, August 06, 2018

CBI's West Coast Real-Time Benefit Check & ePrior Authorization Summit

West Coast Real-Time Benefit Check & ePrior Authorization Summit
October 17-18, 2018 | San Francisco, CA

CBI’s West Coast Real-Time Benefit Check & ePrior Authorization Summit convenes stakeholders, including manufacturers, specialty pharmacies, PBMs, health plans, solution providers and prescribers to discuss and share best practices regarding electronic patient service technology and speed to therapy. With constant innovations in electronic patient services (ePA, FHIR, HL7, RTPBI), the integration and implementation of this technology is imperative to drive patient access to therapy.

Join the conversation and participate in open discussions with your peers to discuss workflow improvements, firsthand experiences with system integration and the latest advancements in ePA and RTBC. Drug Channels readers will save $400 off the standard registration rate when they use discount code SGK838.*

Critical Topics for Peer-To-Peer Benchmarking:
  • Discuss clinical and operational factors to consider when implementing portal PA solutions with medical specialty drugs
  • Hear how to streamline electronic benefit verifications and prior authorization solutions into a hub model
  • Examine how to configure interoperability in a local/regional health setting and recent efforts within the FHIR/HL7 standards
  • Understand how to work more efficiently between specialty pharmacies, providers and payers to manage patient therapy
  • Discuss alert fatigue, additional clicks, and how to avoid prescriber burnout
  • Address considerations for enrollment standards in hubs and specialty pharmacies

Visit www.cbinet.com/eBenefit for more information, or download the full agenda today. Drug Channels readers will save $400 off the standard registration rate when they use discount code SGK838*

*Discount expires October 17, 2018; 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.

Thursday, August 02, 2018

A System Without Rebates: The Drug Channels Negotiated Discounts Model

Are you ready for a world without rebates?

In June, Alex Azar, Secretary of the U.S. Department of Health & Human Services (HHS), summarized his long-range vision for a new drug channel system:
“[W]e may need to move toward a system without rebates, where PBMs and drug companies just negotiate fixed-price contracts. Such a system’s incentives, detached from artificial list prices, would likely serve patients far better.” (emphasis added)
No one has yet explained what a system without rebates would look like.

To facilitate the discussion, I have sketched out a possible new drug channel system that would:
  • Respond to the HHS vision for a “system without rebates”
  • Remove/decrease the reliance on list price as a component of intermediary compensation
  • Use negotiated discounts as an alternative to the current system of retrospective rebates
  • Require manufacturers to negotiate for desirable market access
You can download The Drug Channels Negotiated Discounts Model below.

Please note that I am not advocating for this approach. I am merely exploring one way that a system without rebates could be implemented. I hope you find it helpful for your strategic planning.

As always, I welcome feedback on how to improve and refine this model. Either leave comments below or email me. Enjoy!

Tuesday, July 31, 2018

Drug Channels News Roundup, July 2018: Amazon’s med-surg business, Naughty 340B hospitals, GoodRx pricing data, and CVS’s musical controversy

The lazy days of summer are here. Take some time off from the gross-to-net bubble and enjoy my curated collection of timely articles. This month:
  • A must-read Q&A on Amazon’s healthcare products distribution business
  • A new GAO study discovers that more than one in five 340B hospitals provides minimal charity and uncompensated care
  • Fresh data from GoodRx about the crazy variability in pharmacies’ prescription prices
Plus, The Wall Street Journal publishes some hard-hitting journalism about the controversial hold music played at CVS pharmacies.

P.S. Join the more than 6,000 people who follow my daily musings and neat links at @DrugChannels on Twitter. Recent tweets have tackled biosimilars, specialty pharmacy, copay accumulators, drug pricing, health policy news, and much more.

Monday, July 30, 2018

CBI’s PAP Legal Update Forum

CBI’s PAP Legal Update Forum
September 25-26, 2018 | Arlington, VA

Join CBI this fall at the PAP Legal Update Forum to delve into the nuances of compliance for patient assistance programs, address new copay card legislation, analyze critical areas of risk within the Anti-Kickback Statute, and explore strategies for effective risk management and compliance monitoring to optimize and ensure patient access.

You can read all about it here.

Participate in compelling discussions led by expert speakers:
  • Examine the Impact of Legal Actions and Developments Related to Patient Assistance Programs
  • Analyze PAP Critical Risk Areas within the Anti-Kickback Statute (AKS), False Claims Act (FCA) and Other Key Laws
  • Redefine Relationships between Manufacturers and 501(c)3 Foundations
  • Dissect Evolving State Copay Card Legislation in California, Massachusetts and Rhode Island
  • Tackle Critical Challenges in Providing Assistance for Rare Disease and Specialty Therapeutics Patients
  • Build Effective Strategies to Balance Patient Centricity and Compliance in Patient Access
  • Implement Robust Compliance Monitoring Programs for PAPs
Visit www.cbinet.com/papupdate for further details and to register. Drug Channels readers will save $300 off the standard rate when they use discount code YHX639 and register prior to August 24th.*

CBI looks forward to seeing you there!

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rate or non-profit 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.

Tuesday, July 24, 2018

Building a New Drug Wholesaler Compensation Model: What Happens as Brand Inflation Slows?

Today, drug wholesalers make money from distribution in a straightforward manner: Buy low, sell high, collect early, and pay late. They also profit as brand-name list prices increase. Like other drug channel intermediaries, wholesalers have warped incentives to prefer ever-higher list prices.

But what happens to their business model if list prices don’t rise—or even if they decrease?

This question is no longer theoretical. Many drug makers—Pfizer, Roche, Novartis, Novo Nordisk, Sanofi, and others—have announced an intention not to raise list prices for 2018 or have rescinded planned increases. Merck has gone further and become the first major manufacturer to reduce the list price of a brand-name, patent protected product, albeit for a product with minimal sales. And for the first time, there is a serious attempt to pop the gross-to-net bubble and build a system without rebates.

Below, I analyze what this could mean for the Big Three drug wholesalers—AmerisourceBergen, Cardinal Health, and McKesson. I explain some of the problems that arise when wholesalers are compensated based on a brand-name drug’s list price. I then suggest an alternative approach that would reshape wholesalers’ economics. It appears that even the wholesalers’ trade association supports some sort of new model.

Given what’s happening, it’s clearly time for some ch-ch-ch-ch-changes.

Monday, July 23, 2018

CBI’s 11th Hub and SPP Model Optimization

CBI’s 11th Hub and SPP Model Optimization
September 12-13, 2018 | San Diego, CA

In order to keep up with the escalating challenges associated with rebooting or maintaining your hub model, your organization requires novel and innovative strategies for customizing your products and services. CBI has once again gathered the pioneers in the industry to share practical strategies for advancing patient services, enhancing program effectiveness and driving speed to therapy.

Join CBI in San Diego, CA for the 11th installment of the Hub and SPP Model Optimization Summit on September 12-13. You can read all about it here.

Visit www.cbinet.com/hubswest for further details and to register. Drug Channels readers will save $300 off the standard rate when they use discount code TJC549 and register prior to August 17th.*

Conference Highlights Include:
  • Discover how to best streamline the information generated by the hub back to the manufacturer
  • Review the overall end-to-end experience from the physician and patient perspective in e-prescribing, prior authorization and dispensing workflows
  • Discuss the impact of DIR Fees on practice-based pharmacies
  • Examine best practices on the development and administration of a third-party monitoring and oversight program
  • Understand the consequences of narrow channel medication distribution on patient adherence in post-acute care
  • Gain an understanding for how to consolidate specialty distribution data
  • Use EHR technologies to determine formulary, launch electronic prior authorizations and streamline fills at retail pharmacies and through mail-away hubs

PLUS! Don't miss the heart-wrenching Keynote Address from former NFL great Rolf Benirschke, current CEO of Legacy Health Strategies.

Visit www.cbinet.com/hubswest for further details and to register. Drug Channels readers will save $300 off the standard rate when they use discount code TJC549 and register prior to August 17th.*

CBI will see you there!

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rate or non-profit 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, July 18, 2018

Specialty Pharmacies and PBMs Penetrate the 340B Program—And How Manufacturers Should Respond

In two recent Drug Channels articles, I have documented the phenomenal growth in pharmacies participating in the 340B Drug Pricing Program and the superior profits that pharmacies earn from the program.

Today, I turn to the less well-known role of specialty pharmacies and pharmacy benefit managers, which are now significant participants as 340B contract pharmacies. Below, we present our first exclusive analysis of how independent and PBM-owned specialty pharmacies have deepened their relationships with hospitals and other 340B covered entities.

We estimate that nearly 10% of all specialty prescriptions are dispensed by 340B contract pharmacies, which makes this channel one of the fastest-growing components within the 340B program. Despite this growth, pharmaceutical manufacturers have limited transparency into the behavior of these 340B contract pharmacies. Drug makers therefore pay 340B discounts on prescriptions for which they also pay commercial, Medicare Part D, and managed Medicaid rebates.

Below, we explain why manufacturers should have access to the prescription-level data that would permit the identification of 340B claims. Playing Where’s Waldo? for 340B claims is no way for this multi-billion dollar program to operate.