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 26,000 subscribers. Learn more...

Tuesday, January 14, 2020

Express Scripts vs. CVS Health: Five Lessons From the 2020 Formulary Exclusions and Some Thoughts on Patient Impact

For 2020, the two largest pharmacy benefit managers (PBMs)—Express Scripts and the Caremark business of CVS Health—have again increased the number of drugs they have excluded from their standard formularies. The 2020 formulary exclusion lists are available below for your downloading pleasure.

Below, I highlight my key takeaways from the 2020 lists:
  • The number of exclusions
  • Management of specialty drugs
  • Indication-based formularies
  • The slow adoption of biosimilars
  • The PBMs’ patient-unfriendly exclusions in the hepatitis C category
Formulary exclusions have emerged as a powerful tool for PBMs to gain additional negotiating leverage against manufacturers. The prospect of exclusion leads manufacturers to offer deeper rebates to avoid being cut from the formulary. Exclusions are therefore a key factor behind falling brand-name net drug prices.

Read on for a look at this year’s exclusions along with some closing thoughts on what exclusions mean for patients.

Monday, January 13, 2020

PBMI’s 25th Annual National Conference

PBMI’s 25th Annual National Conference
March 2-4, 2020 | Rosen Shingle Creek Hotel | Orlando, Florida
www.pbmi.com/AC20

You’re invited to join PBMI for their 25th Annual National Conference. This conference is considered one of the most insightful conferences addressing the challenges of managing drug benefits – and the robust agenda offers education to help employers, health plans, PBMs and other industry stakeholders effectively manage drug benefits for the year ahead.

Drug Channels readers can enter discount code PEM20
to receive $200 off conference registration rates. Register today!

The keynote for this year is Mr. Barry Meier, author and former Pulitzer-winning reporter for The New York Times and two-time winner of the prestigious George Polk Award for Investigative Reporting. He has authored several books, including Pain Killer, which chronicles the rise of the multi-billion-dollar pain management industry and lays bare its excesses and abuses. Mr. Meier’s keynote will dive into the opioid crisis in America today.

Here are some highlights of the event:
  • Earn CE credit for sessions identified with a CE icon*
  • Get the latest, state-of-the-industry news and trends directly from providers, industry organizations, analysts, and consultants
  • Learn about new technologies shaping the industry
  • Hear what some of the nation’s leading PBMs, health plans, and pharmacies are doing to manage drug costs
  • Network with peers facing the same challenges as you
*CE credit available for pharmacists.

You can learn more about the program here. For more information about the conference click here.

Drug Channels readers can enter discount code PEM20 to receive $200 off conference registration rates. Register today!


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

Thursday, January 09, 2020

Surprise! Brand-Name Drug Prices Fell in 2019

Manufacturers recently announced list price increases for many brand-name drugs. The typical increase was about 5%. Judging by recent history, these moderately higher list prices will translate into another year of falling brand-name drug prices in 2020.

This surprising conclusion comes from our analysis of SSR Health data on prices for more than 1,000 drugs. Details below.

SSR Health data reveal that list prices for brand-name drugs rose by about 5% in 2019. However, net prices (after rebates and discounts) decreased by -3.1%. Drug makers discounted their brand-name drug list prices by an average of 45%.

Too many journalists and politicians remain committed to the false narrative of “skyrocketing drug prices.” In 2020, Congress may again take up drug price legislation. Let’s all hope that our country builds its public policies based upon accurate facts and reliable data. Hope has to triumph over experience eventually.

Tuesday, January 07, 2020

Express Scripts + Prime Therapeutics: Our Four Takeaways From This Market Changing Deal

Just before the holidays, Cigna’s Express Scripts business announced a market-changing deal with Prime Therapeutics. Click here to read the press release.

There's been very little written about this transaction, though it has potentially major implications. Below, I share my thoughts on the following topics arising from the deal:
  • Implications for manufacturers and pharmacies
  • The role of the secretive Ascent Health Services
  • What this all means for Walgreens
  • Why the Federal Trade Commission won’t challenge the deal
A few weeks ago, I explained why integrated insurer / PBM / specialty pharmacy / provider organizations are poised to restructure U.S. drug channels. The Express Scripts / Prime deal signals that the channel will continue its amazing pace of reinvention.

The scale, scope, and interconnectedness of today’s market participants make the system increasingly resistant to massive disruption from either external players like Amazon or a government takeover. Like it or not, the channel will continue to gain power and extract profit. Read on and see if you agree.

Monday, January 06, 2020

CBI’s 16th Annual Life Sciences Accounting & Reporting Congress

CBI’s 16th Annual Life Sciences Accounting & Reporting Congress
March 16-19, 2020 | Loews Hotel | Philadelphia, PA
www.cbinet.com/accounting

Regulatory reforms, increased complexity and materiality of rebate/discount agreements, continued M&A deals and a dynamic risk environment have leaders in Finance and Accounting on the front lines of critical business decisions and external reporting.

CBI’s 16th Annual Life Sciences Accounting & Reporting Congress, an important event for finance, accounting and business leaders within life sciences, provides in-depth CPE education and networking with nearly 600 professionals.

Visit www.cbinet.com/accounting for further details and to register. Drug Channels readers will save $300 off the standard rate when they use code RJF938 and register prior to January 31st.*

Hot topics include SEC reporting, R&D financing, product pricing and contracting, critical audit matters, GTN, robotic process automation, valuation, collaborations and licensing, capital creation and allocation, SOX compliance, M&A, corporate tax, new product commercialization, FP&A, cybersecurity and data privacy, carve-outs and divestitures, revenue recognition, forecasting and financial planning, leases, and third-party oversight. You’ll return to the office ready to advance your organization to stay ahead in 2020.

Here’s a snapshot of what to expect, and don’t forget to download the latest agenda here.

EXTENSIVE INDUSTRY KNOWLEDGE SHARING AND BENCHMARKING FROM OVER 100 EXPERTS, INCLUDING:
  • Chad Cohen, CFO, Adaptive Biotechnologies Corp
  • Gina Consylman, CFO, Ironwood Pharmaceuticals
  • Patrick Coyle, CFO, Eisai
  • Gisele Dion, Chief Accounting Officer, Takeda
  • Rita Karachun, Senior VP and Global Controller, Merck
  • Kevin Mackay, VP, Controller and Chief Accounting Officer, Pfizer
  • Steve Rivera, VP, Global Technical Accounting Advisory Services & Policy, J&J
  • Gary Sender, CFO, Nabriva Therapeutics
VALUABLE NETWORKING AND CAREER DEVELOPMENT:
  • 14+ hours of specially designed networking events and receptions
  • Industry-Only Controllers Roundtable
  • Talent Planning, Diversity, Culture & Inclusion Summit
  • 12 Acuity Activities and Topic Intensive Workshops
  • Four company-specific tracks for:
    1. Mid-Large Pharma
    2. Commercial-Stage Biotech
    3. Clinical-Stage Innovators
    4. Device and Diagnostic
INFLUENTIAL INSIGHTS FROM REGULATORS AND AUDIT FIRMS:
  • John Vanosdall, Deputy Chief Accountant, U.S. SEC
  • Kevin Vaugh, Accounting Branch Chief, Office of Life Sciences U.S. SEC
  • Russ Golden, Chairman, FASB
  • PwC, Deloitte, Ernst & Young, KPMG, CFGI and more!
Visit www.cbinet.com/accounting for further details and to register. Drug Channels readers will save $300 off the standard rate when they use code RJF938 and register prior to January 31st.* 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.

Friday, December 20, 2019

How Express Scripts Plans to Disrupt the Emerging Cell and Gene Therapy Channel (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from October 2019. Commercial strategies for the new cell and gene therapies will be a hot topic in the coming years. Revisit this article for a look at how one major insurer / PBM / specialty pharmacy is attempting to pre-disrupt the channel.

Express Scripts is on a roll. ICYMI, it will be taking over Prime Therapeutics' formulary contracting and pharmacy network management. Manufacturer rebates will grow, pharmacy margins will be under more pressure, and the gross-to-net bubble will inflate. 


Get ready for more volatility with the DRUG CHANNELS OUTLOOK: WHAT YOU NEED TO WATCH IN 2020. During last week's event, I even discussed PBM consolidation scenarios for sub-scale players like Prime. Click here to hear what you missed and download the slides.


Cell and gene therapies are poised to transform the treatment of many serious and previously untreatable conditions.

As this new market develops, payers and PBMs are laying the groundwork for disruptive channel models. Below, I examine how Cigna’s Express Scripts business has begun to shape this channel’s development. Its new models show the promise of private market innovation for the financing and commercialization of novel therapies.

These approaches will also shake up existing channels. If payers rub this magic lamp, these innovative channel models would: 1) enhance the role of the vertically-integrated insurer/PBM/pharmacy companies, 2) reduce or eliminate buy-and-bill by providers, and 3) minimize the role of the largest wholesalers. Consider the examples below to be early warnings of change.

FYI: Today’s post is an excerpt from Chapter 6 of our new 2019–20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

Thursday, December 19, 2019

Employers Slowly Warm to Point-of-Sale Rebates—But Must Move Faster for Insulin (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from September 2019. It’s a timely rerun, given rumors that the Senate Finance Committee's Prescription Drug Pricing Reduction Act may add a provision requiring rebates on insulin to be passed along to seniors at the pharmacy counter. Until then, the gross-to-net bubble is alive and well.

P.S. Yesterday, I posted my $0.02 on the new importation guidance and proposal on @DrugChannels. You can read them here, here, and here.

Did you miss our DRUG CHANNELS OUTLOOK: WHAT YOU NEED TO WATCH IN 2020 webinar? Click here to watch a replay of my 75-minute webinar (including the Q&A). You will also be able to download the slides.

Third-party payers' benefit designs remain a significant barrier to addressing drug costs. Many continue to use the ever-growing rebate dollars of the gross-to-net bubble to offset overall plan costs rather than reducing patient’s out-of-pocket spending.

Point-of-sale (POS) rebates are one possible benefit design solution. POS rebates directly share with patients the discounts that PBMs negotiate with manufacturers.

A recent survey of large employers by the National Business Group on Health (NBGH) suggests this change may be coming. The survey found that about one in five large employers is using point-of-sale (POS) rebates in their pharmacy benefit plans. The survey found that a further 40% of employers are considering POS rebates for 2021 and 2022.

Pharmaceuticals are the only part of the U.S. healthcare system where the difference between list and net prices is monetized as rebates and redistributed by intermediaries to payers. But we’ve seen that moving to a world without rebates may not be possible, given the drug channel’s entrenched interests and payers’ established economics.

POS rebates may therefore be our most realistic chance for addressing the drug costs of patients trapped in the gross-to-net bubble. Commercial payers and Congress (for Medicare Part D) should get started ASAP with POS rebates for insulin—a highly rebated and massively distorted therapeutic category.

Wednesday, December 18, 2019

A CVS Lawsuit Uncovers Three Surprising Revelations about Amazon’s PillPack Strategy (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from June 2019.

This article foreshadowed last week’s announcement about PillPack and Blue Cross Blue Shield Of Massachusetts. More to come from Amazon, but likely less than some have projected.


Did you miss our DRUG CHANNELS OUTLOOK: WHAT YOU NEED TO WATCH IN 2020 webinar? Click here to watch a replay of my 75-minute webinar (including the Q&A). You will also be able to download the slides.

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

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

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

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

Tuesday, December 17, 2019

Here’s How PBMs and Specialty Pharmacies Snag Super-Size Profits from the 340B Program (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from August 2019.

Don’t expect any imminent changes to this situation. My 340B outlook for 2020: Status quo + 25%.


Did you miss our DRUG CHANNELS OUTLOOK: WHAT YOU NEED TO WATCH IN 2020 webinar? Click here to watch a replay of my 75-minute webinar (including the Q&A). You will also be able to download the slides.

Last week, I documented how the biggest independent and PBM-owned specialty pharmacies participate as contract pharmacies within the 340B program. These specialty pharmacies are owned by CVS Health, Cigna (Express Scripts), OptumRx (UnitedHealth Group), Walgreens Boots Alliance/Prime Therapeutics, and Diplomat Pharmacy.

Today, let’s follow the prescription dollar to expose how specialty pharmacies and covered entities profit from 340B prescriptions. We rely on confidential disclosures made to the U.S. Government Accountability Office (GAO).

You’ll see the indisputable prescription math that permits large specialty pharmacies to share in the 340B discounts that covered entities earn. These pharmacies’ profits can be $1,000 per prescription—far exceeding their typical profits from dispensing a third-party-paid prescription.

No wonder PBMs and specialty pharmacies are racing to become 340B contract pharmacies!

For years, hospitals and their lobbyists have been claiming that discounts from the 340B program support care for low-income and uninsured patients. What they don’t say: These discounts are also supporting some of the largest public companies in the U.S.

Monday, December 16, 2019

CBI’s 14th Hubs and SPP Model Optimization Summit

CBI’s 14th Hubs and SPP Model Optimization Summit
February 24-26, 2020 | Loews Philadelphia Hotel | Philadelphia, PA
http://www.cbinet.com/Hubs

Over 1,600 leaders in Patient Access, Brand Management, Reimbursement and Specialty Distribution have benefited from CBI’s Hub and SPP Model Optimization conference series. This flagship event provides insight from key stakeholders including manufacturers, specialty pharmacies, hubs, payers, PBMs, physicians and more. Join your peers at this timely meeting as you prepare to launch, transition or reboot your corporate or product approach to hub services and hear cutting-edge advances driving an all-encompassing and state-of-the-art hub.

Visit www.cbinet.com/Hubs for more information. Drug Channels readers will save $300 off the standard registration rate when they use code SFB765*.

New Powerful Programming for 2020!
  • Two Inclusive Summits:
    • Compliant Patient Assistance and Programs
    • Building Your Hub — Smart Launch Strategies and Leading Commercialization Frameworks
  • Three In-depth Workshops:
    • Access and Affordability — Copay Accumulators Impact on Patients and Manufacturers
    • Specialty Pharmacy/Manufacturer Contract and Service Compliance
    • Field Reimbursement Teams — Join the Mission to Overcome Patient Access Barriers through Reimbursement Support
  • Three Tracks of Tailored Content:
    • Leverage Specialty Data for Hub Efficiency and Value
    • Hub Model Optimization to Streamline and enhance Processes
    • Reimbursement and Access Considerations for Innovative Therapies
Featured Speakers include:
  • Eric D. Hargan, Deputy Secretary, Department of Health and Human Services (HHS)
  • Fran Castellow, MSEd, President, Operations, Patient Advocate Foundation
  • Greg Shapiro, Assistant U.S. Attorney, Chief of Affirmative Civil Enforcement Unit, U.S. Attorney’s Office, District of Massachusetts
  • Kelly Allison, Vice President of Patient Access, Rare Disease, Horizon Therapeutics
  • Elizabeth Anderson, Vice President, Healthcare, Technology & Distribution, Evercore ISI
  • Marc Appel, CEO, Orange Grove Bio
  • Shannon Ashmon, MBA, Senior Manager, Oncology Access and Reimbursement, Eisai US
  • Tami Carten, Executive Director, Market Access, Braeburn
  • Dana Dickens, Director, Specialty Pharmacy Channel, Sobi
  • Bill Goodson, Director Patient Access and Reimbursement Services, Eisai US
  • Noah Holmes, Senior Director, Patient Services, Relypsa
  • Casey Horton, CFE, Director, Life Sciences Governance Risk Management and Compliance, Navigant
  • Kristyn Klear, Senior Manager, Access, Eisai US
  • Esther Langer, Director, Trade and Distribution Operations, Sobi
  • And more!

Visit www.cbinet.com/Hubs for more information. Drug Channels readers will save $300 off the standard registration rate when they use code SFB765*.

*Offer 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, December 12, 2019

Insurers + PBMs + Specialty Pharmacies + Providers: Will Vertical Consolidation Disrupt Drug Channels in 2020?

The largest insurers, PBMs, and specialty pharmacies have now combined into vertically-integrated organizations. As I explain below, these companies have also been rapidly integrating with healthcare providers.

I also provide an updated look at these companies and highlight strategies that they are using—or could use—to control the channel. I believe that these insurer / PBM / specialty pharmacy / provider organizations are poised to restructure U.S. drug channels by exerting greater control over patient access, sites of care/dispensing, and pricing.

If they can effectively coordinate their sprawling business operations, they will pose a substantial threat of disruption to the existing commercial strategies of pharma companies.

Will they succeed by better managing care and costs, or merely by extracting higher profits from our convoluted system?

I’ll be discussing vertical consolidation and a range of other hot topics tomorrow in my exclusive live webinar: DRUG CHANNELS OUTLOOK: WHAT YOU NEED TO WATCH IN 2020. I hope you can join me. If you register but can't make it this Friday, you'll receive a link to watch a replay.

Tuesday, December 10, 2019

Latest CMS Data: Drug Spending is Not Skyrocketing; Hospitals and Physicians Dominate Healthcare Costs

Last week, the econowonks at the Centers for Medicare & Medicaid Services (CMS) released the 2018 National Health Expenditure (NHE) data, which measures all U.S. spending on healthcare. Links below.

Some drug spending highlights:
  • For 2018, spending on outpatient prescription drugs grew by 2.5%—below the spending growth rate on hospitals, physician services, and overall national healthcare costs. 
  • CMS significantly lowered its previously reported drug spending figures by billions after incorporating new data on manufacturers’ rebates. 
These latest CMS data also highlight why the policy debate over healthcare spending is so unbalanced. Too many people—including politicians, journalists, and a certain billionaire—have committed to a false narrative of “skyrocketing” drug spending. I must again note that demonizing pharmaceuticals as the prime driver of U.S. healthcare spending is simply wrong, as you will see below.

Unfortunately, the share and amount that Americans are forced to pay of prescription drug spending is much greater than that of other healthcare services. This circumstance derives from benefit designs, not drug prices. See what you think in our pretty charts below.


Drug Channels Institute will host an exclusive live webinar, Drug Channels Outlook: What You Need to Watch in 2020, on Friday, December 13, 2019, from 12 p.m. to 1:00 p.m. ET. Get ready for what will certainly be another year of change for U.S. healthcare. CLICK HERE TO LEARN MORE AND SIGN UP.

If you register but can't make it this Friday, you'll receive a link to watch the replay.