Thursday, January 31, 2019

Drug Channels News Roundup, January 2019: Part D Plan Profits, Hospitals vs. Drugs, and BS in Healthcare

L.A. vs. New England! Youth vs. experience! Kale vs. chowdah! Yes, it’s time for a weekend of blow-out commercials, occasionally interrupted by a football game.

Before you start training to gorge at your Super Bowl-party, tackle this month’s selection of notable news stories, intercepted for you from the Drug Channels gridiron.
  • Touchdown: The little-known ways that plans profit from Medicare Part D
  • Trick play: Hospital care vs. prescription drugs: My best tweet ever!
  • Offensive lines: A must-read guide to BS in healthcare
Plus, we here at Drug Channels have just released our 2019 media kit. Check it out and let us know how we can help you appear on the site.

P.S. Follow my curated links to cool stuff at @DrugChannels on Twitter.

The $9 Billion Upcharge: How Insurers Kept Extra Cash From Medicare, The Wall Street Journal

The Wall Street Journal published this fascinating look at the excess profits earned by plans in the Medicare Part D program. The article provides a readable overview of how Part D works, along with the warped incentives that exist within the program’s design. Careful readers will come away with an understanding of why Part D plans want higher list prices but dislike pass-through rebates.

Here’s the key chart from the article:

[Click to Enlarge]

For a general business audience, the WSJ article wisely avoids the uber-wonky term “direct and indirect remuneration” (DIR). But DIR is crucial to the profit story. Instead of a news article, those of us who love jargon may prefer how the Centers for Medicare & Medicaid Services (CMS) explains this topic: “The risk-sharing construct established under Part D by statute allows sponsors to retain as plan profit the majority of all DIR that is above the bid-projected amount.” (source)

You read my summary of Part D bidding problems in the “BLOWING BUBBLES” section of Will CMS Pop the Gross-to-Net Bubble in Medicare Part D With Point-of-Sale Rebates? The Journal also somehow neglected to mention SpongeBob Squarepants.

Hospital Care vs. Prescription Drugs, Total Spending and Consumer Out-of-Pocket, 2017 , @DrugChannels

In December, I published CMS Confirms It (Again): Minimal Drug Spending Growth, While Hospital and Physician Spending Keep Going.

I thought that a key point about consumers’ out-of-pocket spending was underappreciated. So the next day I tweeted the chart below with this comment:
People who claim to want "affordable #drugs" should focus on (or at least acknowledge) the crazy discrepancy in patients' out-of-pocket exposure to the costs of prescription #drugs vs. hospital care.
[Click to Enlarge]

This tweet turned out to be my most liked and most retweeted one ever.. I’m reposting it in this month’s news roundup because many readers don’t follow @DrugChannels on Twitter.

Detecting BS in Health Care, Leonard Davis Institute of Health Economics

You really MUST read this clever and hilarious paper by Wharton professors Lawton Burns and Mark Pauly.

2019 Media Kit, Drug Channels Institute

And now for some shameless self-promotion! The 2019 Drug Channels Media Kit provides an overview of Drug Channels, our traffic, and opportunities for sponsored guest and event posts.

Email my business partner (and wife) Paula Fein ( to find out how you can reach our large and engaged audience.

[Click to Download]

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