Tuesday, February 23, 2021

Drug Channels News Roundup, February 2021: Accumulator Problems, Humana + ESI, White Bagging Battles, Buy-and-Bill Economics, and Pharmacy Hero Dave Marley

Let’s melt away this foul February with our monthly selection of scorching news from around the drug channel. In this issue:
  • Payers confess: Patients lose from copay accumulators
  • Humana joins the Express Scripts GPO
  • Hospitals vs. PBMs over specialty pharmacy white bagging
  • Let’s all follow the Buy-and-Bill Dollar!
Plus, entrepreneurial pharmacy owner Dave Marley demonstrates the power of innovation.

P.S. Join the more than 11,000 followers of my daily links to neat stuff at @DrugChannels on Twitter. You can also join my more than 15,000 followers on LinkedIn.

Copay Accumulators: Shifting Cost Of Care From Plan Sponsors To Patients?, MME

Wow. In a startling survey, pharmacy and medical directors from 24 insurers (representing 229 million covered lives) have actually admitted that copay accumulators are bad for patients.

Survey highlights:
  • About 60% of payers strongly agree that accumulators have the potential to shift costs from plan sponsors to patients.
  • A majority (54%) of payers agree accumulators could adversely impact patient medication adherence.
  • Approximately one out of four payers strongly agrees that accumulators could have the potential to discourage appropriate utilization of specialty therapies.
Despite these responses, more than half of payers believe that cost containment strategies should not limit patients’ ability to receive access to appropriate care. Huh?

These discouraging results reinforce my cynicism about payers’ true motivations for this patient-unfriendly benefit design. Nonetheless, adoption of copay accumulators continues to roar ahead. (See Copay Accumulator and Maximizer Update: Adoption Accelerating As Pushback Grows.)


Humana to Join Cigna Drug-Buying Group for Some Members, Bloomberg

This Bloomberg scoop highlights the ever-growing consolidation of PBMs’ negotiating power.

In April 2021, Humana will begin sourcing formulary rebates for its commercial health plans via Ascent Health Services, Express Scripts’ secretive, Switzerland-based group purchasing organization (GPO). Humana’s fully insured commercial and ASO medical membership accounted for just under 12% of its non-military medical membership as of December 31, 2020.

Ascent already handles rebate negotiations for Express Scripts’ PBM business, Prime Therapeutics, and Kroger Prescription Plans. For background, see Express Scripts + Prime Therapeutics: Our Four Takeaways From This Market Changing Deal.

Re: UnitedHealthcare Coverage Policies, American Hospital Association

The battle for specialty drug margin rages on.

Payer-owned specialty pharmacies—via white, brown, and clear bagging—are trying to displace buy-and-bill distribution channels for provider-administered specialty drugs. Such moves would boost profits for PBM-owned specialty pharmacies, which focus primarily on patient-administered products. For background, see Specialty Pharmacy Keeps Disrupting Buy-and-Bill—and COVID-19 Will Accelerate It.

Hospitals naturally want to retain the often enormous mark-ups on these products. Hence, the American Hospital Association wrote to CMS to “express deep concerns” about UnitedHealthcare’s white bagging policies for provider-administered specialty drugs.

This clash of the vertically integrated titans has been brewing for years. More to come.

Follow the Dollar Part II: Understanding the Cost of Brand Medicines Administered to Commercially Insured Patients in Hospital Outpatient Departments, PhRMA

This valuable new PhRMA white paper explains the follow-the-dollar math for buy-and-bill products at hospitals. See page 15 (reproduced below). It illustrates how a 340B hospital can earn three times what the manufacturer earns from a provider-administered product. (The paper also shows a non-340B example.)

[Click to Enlarge]

This paper will help you understand why hospitals fight any reforms to the 340B Drug Pricing Program—and lobby against white bagging. The examples are highly consistent with Ronny Gal’s outstanding analysis of hospitals’ massive markups. Check out the eye-popping figures shown in the Drug Channels January 2021 news roundup.

Medicure Enters the US Online Pharmacy World with Acquisition of Marley Drug, PR Newswire
Sometimes, the little guy wins big.

Dave Marley has just sold Marley Drug, the independent pharmacy he founded in 2003, to Medicure Pharma. Marley Drug generated $1.7 million in profits on revenues of $7.0 million.

I’ve known Dave for almost 10 years. He is a true entrepreneur who has always been willing to push back against the industry’s received wisdom. Dave spotted the business opportunity for a low cost, mail-order generic drug program targeted at employers and health plans. Crucially, his business didn’t depend on PBMs.

Check out this profile of the business, along with lovely photos of Dave and Elizabeth Marley: Marley Drug changes ownership as experiment in how consumers purchase prescription drugs .

Dave is also a great human. The Marleys have already started sharing their success by funding a charitable trust for Second Harvest Food Bank and the Bethesda Center for the Homeless

Congratulations, Dave!

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