Tuesday, July 27, 2021

Drug Channels News Roundup, July 2021: Stingy Hospitals, Biosimilars & Part B, Hep C Drug Prices, Costco vs. Part D, and MBA Funny Business

Let’s cut through the summer haze with our refreshing breeze of articles and insights. In this issue:
  • The top 10 stingiest hospitals
  • Medicare Part B's savings from biosimilars 
  • What happened to hepatitis C drug costs and rebates?
  • Costco beats Medicare Part D
Plus, math madness with Duke’s Fuqua business school.

P.S. Please join the more than 12,000 consumers of my daily commentary and links to neat stuff at @DrugChannels on Twitter. You can also find me on LinkedIn, where I have more than 19,000 followers.

Community Benefit: Winning Hospitals 2021, Lown Institute

For each of about 2,400 private, non-profit hospitals, the Lown Institute compared spending on charity care and community investment to the value of its non-profit tax exemption. Per the methodology: “Hospitals that dedicated at least 5.9 percent of overall expenditures to charity care and meaningful community investment were considered to have spent their fair share.”

Meet the shameful 2021 winners:

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The Lown Institute’s analysis shows that many of these hospitals spend little on community benefit spending—and are hundreds of millions of dollars below the 5.9% benchmark.

Some extra irony: Most of the hospitals on this list are also 340B covered entities. Some, Like Brigham and Women’s Hospital, also appeared in a Wall Street Journal expose: Hospitals Often Charge Uninsured People the Highest Prices, New Data Show.

It’s distressing to see so many multi-billion dollar nonprofit hospitals dodge their fundamental obligations to provide charity care and other community benefits. For additional context, see New 340B Health Reports Confirms the Program’s Size—But Double-Dips on Hospitals’ Community Benefit Obligations.

Analysis of Prescription Drugs for the Treatment of Hepatitis C in the United States, Milliman

Check out this great Milliman study on hepatitis C drug pricing, costs, and rebates. Here’s the key chart from the report:

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The good news:
  • Gross costs have declined by -39%, due to the adoption of drugs with lower list prices.
  • Net costs have fallen even further (-78%), due to deep rebates from list prices. The average gross-to-net discount was -67%.
The bad news: As you can see in the report’s Figure 4, many plans and PBMs still choose the high-list-price/high-rebate versions of these drugs. This raises patients’ out-of-patient costs. I discussed these warped incentives in Why Part D Plans Prefer High List Price Drugs That Raise Costs for Seniors.

Health Care Spending and the Medicare Program (July 2021), MedPAC

The Medicare Payment Advisory Commission (MedPAC), the independent agency that advises Congress on the Medicare program, provides another lesson in the benefits of competition.

Chart 10-5 of its 2021 data book provides fresh evidence of biosimilars’ impact on drug spending. There have been substantial drops in Medicare Part B’s payment rate for provider-administered drugs that face biosimilar competition. The originator has either (1) slashed prices, or (2) lost share to lower-priced biosimilars.

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As I noted last fall, the biosimilar market is finally beginning to fulfill its promise. See The Booming Biosimilar Market of 2020.

BTW, the MedPAC report is a treasure trove of useful and fascinating data. Highly recommended!

Comparison of Spending on Common Generic Drugs by Medicare vs Costco Members, JAMA Internal Medicine

More drug channel pricing insanity!

This clever study found that cash-pay generic prescriptions from Costco were often cheaper than Medicare Part D plan payments to pharmacies. In the study’s sample of 184 drugs, Part D’s hypothetical overspending was $4.3 B for 2017 and 2018.

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The study ignored direct and indirect (DIR) fees paid by pharmacies to plans, so it’s theoretically possible that Part D did a bit better than these results imply.

But if not, then these results are absolutely bonkers.

Launch Prices for New Drugs Have Doubled Since 2005, Fuqua School of Business

As you can see from the headline above, the PR flacks at Duke’s Fuqua School of Business recently trumpeted an academic paper co-authored by one of its professors: Does Medicare Reimbursement Drive Up Drug Launch Prices?

Apparently, the professors “discovered” that WAC list prices for certain Medicare Part B drugs have doubled since 2005. Their analysis ignored rebates and discounts.

But can you guess what else has doubled since 2005?

Tuition for a Fuqua MBA!

Here are the annual tuition rates excluding room, board, and other fees: I guess irony isn’t on the syllabus.

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