Wednesday, September 25, 2019

Drug Channels News Roundup, September 2019: Amazon + 340B, UnitedHealthcare vs. Hospitals, A Naughty 340B Hospital, Generic Drug Prices, and Hotels

Autumn is here! Curl up with your favorite pumpkin-spiced blog and savor these stories plucked from the Drug Channels patch:
  • Amazon targets 340B
  • UnitedHealthcare shows how providers increase drug prices
  • Another 340B hospital behaves badly
  • The downsides of deflating generic drug prices
Plus, upscale hotel or hospital: Can you tell the difference? (I couldn’t.)

P.S. Join the nearly 8,200 people who follow @DrugChannels on Twitter. My recent tweets have highlighted Amazon’s formulary, Walmart Health, PBM regulation, uninsured, drug price forecasts, CBO scoring, and more.

LilaRx, Equiscript

Equiscript administers contract pharmacy arrangements for covered entities in the 340B Drug Pricing Program. The company has appeared on the 2018 Inc. 5000 list. That’s not surprising given the explosive growth of 340B contract pharmacies, per Walgreens, CVS, and Walmart Lead the 25,000 Pharmacies Now Profiting From the 340B Program.

Here’s the intriguing new development: Equiscript has partnered with Amazon’s PillPack business to create LilaRx. This service works exclusively with PillPack as the 340B contract pharmacy for home delivery of prescriptions for eligible patients. Here’s how the company describes the business:
“340B Covered Entities must have a contract pharmacy arrangement with our pharmacy fulfillment partner, PillPack, and a LilaRx 340B program administration agreement with Equiscript in order to participate.”
PillPack has been working with Equiscript since 2017 (before Amazon acquired PillPack). The new LilaRx service shows that Amazon’s ambitions may extend to grabbing some of the oversize profits earned by 340B contract pharmacies.

Administering Specialty Drugs Outside Hospitals Can Improve Care and Reduce Costs by $4 Billion Each Year, UnitedHealthcare

UnitedHealthcare shows that compared with other sites of care, hospitals raise drug spending by overcharging the healthcare system. Here’s a sample of the results included from the link above:

[Click to Enlarge]

Some claim that only manufacturers set drug prices. From the payer’s perspective, that’s simply not true. As these data illustrate, channel intermediaries and providers add markups that account for the costs of their services and their profits. That’s one reason manufacturers’ revenues are lower than the prices that a payer sees.

Hence, "drug spending" ≠ manufacturer revenues. Politicians typically ignore this crucial fact. Elizabeth Rosenthal explained in The New York Times why no one goes after profit-seeking hospitals: That Beloved Hospital? It’s Driving Up Health Care Costs.

‘UVA Has Ruined Us’: Health System Sues Thousands Of Patients, Seizing Paychecks And Claiming Homes, Kaiser Health News

This great piece of investigative journalism examines the shameful behavior of the University of Virginia Health System. This nonprofit hospital aggressively sued workers in low-wage jobs, seized state tax refunds, and dunned patients for legal fees and interest. What’s more, the articles notes that UVA had “the most restrictive eligibility guidelines for patient financial assistance of any major hospital system in Virginia.”

Sadly, this situation has become all too common among large nonprofit hospitals, which have fundamental obligations to provide charity care and other community benefits.

I’m also disappointed to see that UVA is a 340B disproportionate share hospital (340B ID: DSH490009). It earns millions from the 340B Drug Pricing Program. Many nonprofit hospitals double-count 340B discounts to meet their hospitals’ community benefit requirements. See New 340B Health Reports Confirms the Program’s Size—But Double-Dips on Hospitals’ Community Benefit Obligations.

UVA has graciously agreed to cut back on lawsuits against patients—but only after Kaiser Health News exposed the hospital system’s behavior. Gee, thanks.

A dire scarcity of drugs is worsening, in part, because they are so cheap, The Economist

This disturbing article highlights the unintended consequences of ever-lower prices for generic drugs. It’s a troubling twist on generic drug deflation. Scary stuff.

For a look at the biggest U.S. generic drugs buyers, see The Big Three Generic Drug Mega-Buyers Drove Double-Digit Deflation in 2018. Stability ahead? Updated 2019 market share figures will appear in Exhibit 27 of our forthcoming our 2019–20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors
Is This a Hospital or a Hotel?, The New York Times

This fun quiz from The New York Times provides 12 pictures and asks you to guess whether they are hotels or hospitals. It’s an intriguing look at how hospitals spend the billions of (non)profits that they earn.

My score was a dismal 6 out of 12. See if you can do better.

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