Tuesday, May 25, 2021

Drug Channels News Roundup, May 2021: 340B & PBMs, Benefit Design Problems, Overworked Pharmacists, Hospitals Keep Grabbing Physicians, and New Patent Games

Summer unofficially begins this weekend! Let’s turn up the heat with these sizzling news bites straight from the Drug Channels grill:
  • Cardinal Health delivers fresh evidence of PBM profiteering from 340B contract pharmacies
  • Pharma critics dare to acknowledge that benefit designs actually matter
  • Pharmacists at retail chains are really stressed out
  • Hospitals’ takeover of the physician market continues
Plus, more troubling patent news for owners of intellectual property.

P.S. Join the nearly 11,800 followers of my daily links to neat stuff at @DrugChannels on Twitter. You can also follow me on LinkedIn.

Simplify the specialty pharmacy challenge, Cardinal Health

As I have explained, the current operation of the 340B Drug Pricing Program permits large, public pharmacy and insurance companies to profit inappropriately from 340B discounts at the expense of patients and covered entities.

The latest evidence comes from a Cardinal Health webinar, which highlighted a rural hospital’s 340B arrangement with its contract pharmacy. Slide 7 (reproduced below) shows that PBM administrative and dispensing fees absorbed 35% of the total 340B funds earned by this hospital.

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According to Cardinal Health, the PBM earned $1,430 per prescription. That’s totally outrageous.

Unfortunately, it’s also consistent with my follow-the-dollar math from How Hospitals and PBMs Profit—and Patients Lose—From 340B Contract Pharmacies. High 340B profits let hospitals pay inflated fees to their pharmacy partners, which earn margins well above what a patient’s insurance company usually pays.

I remain mystified as to how anyone could see these figures and still oppose the reasonable reform and modernization of the 340B program.

Correlation Between Changes in Brand-Name Drug Prices and Patient Out-of-Pocket Costs, JAMA Network Open

At last! A group of hospital-employed physicians MDs "discover" that benefit designs with coinsurance and deductibles expose insured patients to undiscounted list Rx prices. A key implication: Patients shouldn’t pay full price for drugs sold to insurers and PBMs at deep discounts.

The authors have long track records of criticizing pharmaceutical manufacturers, so it’s refreshing to see them acknowledge the negative consequences of today’s pharmacy benefit designs.

That’s why I can't decide what's more irritating about this article:
  • The arrogant claims of discovering something that has been well known and widely discussed for years
  • The brazen “straw man” mischaracterization of those who have been highlighting these issues

Pharmacist Workload Survey, State of Ohio Board of Pharmacy

Yikes! Most Ohio pharmacists at large chain drugstores and supermarket pharmacies disagree that they have "adequate time to complete [their] job in a safe and effective manner." See our analysis in the chart below. The full report (linked above) contains more scary statistics.

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BTW, DCI's own analyses show that chain drugstores have become larger and busier than other dispensing formats. The number of 30-day equivalent prescriptions dispensed per chain drugstore location grew by 60% from 2010 to 2020. Equivalent prescriptions per location at independent pharmacies have also increased, but more slowly than other retail dispensing formats. For details, see Exhibit 34 in our 2021 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Recent Changes in Physician Practice Arrangements: Private Practice Dropped to Less Than 50 Percent of Physicians in 2020, American Medical Association

The latest American Medical Association data shows that nearly 40% of U.S. physicians are now directly employed by hospitals or have practices owned by hospitals. Here’s a key summary chart:

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Physicians who are employed by a health system can be mandated or encouraged to send patients to the health system’s in-house pharmacy. As I noted last week, pharmacy locations owned by healthcare providers now account for nearly 40% of all accredited specialty pharmacy locations.

U.S. Under Pressure To Suspend Marvel IP So Developing Nations Can Create Own Wolverines, The Onion

The Onion, America’s Greatest News Source, highlights more troubling patent news. Perhaps a new Logan Act?

More seriously, I concur with The Wall Street Journal’s recent editorial, which argued that President Biden’s decision to endorse a patent waiver for Covid vaccines and therapies “may be the single worst presidential economic decision since Nixon’s wage-and-price controls.”

‘Nuff said.

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