Tuesday, June 25, 2024

Drug Channels News Roundup, June 2024: Cordavis Humira Update, OptumRx’s New Biosim Biz, Generic Drugs' Wild Ride, IRA Predictions, and Dr. G on Med School

Happy 248th birthday, America! Before you launch your July 4 festivities, Drug Channels offers some fireworks of its own:
  • CVS Health’s Cordavis is winning the Humira biosimilar battle
  • Meet NUVAILA, OptumRx’s new biosimilar procurement business
  • The acquisition cost revolution hits a speedbump following NADAC volatility
  • Five predictions about the IRA’s impact on the drug channel
Plus, Dr. Glaucomflecken wonders why physicians don't learn about U.S. medicine’s economic realities.

P.S. Join my nearly 57,000 LinkedIn followers for daily links to neat stuff along with commentary from the Drug Channels community. Note that we will soon migrate our social media activity to the Drug Channels Institute LinkedIn page.

Top exceutives from Cencora, Eli Lilly, Optum Rx, and Walgreens will be headlining the inaugural Drug Channels Leadership Forum. Attendance will be limited, so click here to request an invite for our March 2025 event.

Humira (adalimumab) TRx Market Share Breakdown, Deutsche Bank

The latest data show that CVS Health’s Cordavis strategy for Humira biosimilars is winning in the market. Per an analysis of IQVIA data by James Shin from Deutsche Bank, the two versions of Humira from Cordavis now have 22.7% of the total Humira prescription market. That’s 4.5 times as much as all other biosimilars combined.

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My social media post on this subject generated nearly 500 reactions and over 100 comments—including an observation from a young go-getter named Mark Cuban.

As I described in January’s review of PBMs’ 2024 formularies, CVS Caremark began excluding Humira from most (but not all) of its major commercial formularies on April 1. Its 2024 Advanced Control Specialty Formulary now contains three preferred options:
  • Hyrimoz, the high-list-price Humira biosimilar from Sandoz
  • Hyrimoz, the low-list-price Humira biosimilar from Cordavis
  • adalimumab-adaz, the unbranded, low-list-price Humira biosimilar from Sandoz
On its Choice and Standard Opt Out commercial formularies, CVS Caremark also offers a co-branded Humira sourced via Cordavis and supplied by the manufacturer of the reference product (AbbVie). The co-branded product is not technically a biosimilar.

FYI, Express Scripts recently added its own private label Humira biosimilar. Boehringer Ingelheim is supplying the product, which is being marketed by Evernorth’s Cayman Island-based Quallent Pharmaceuticals subsidiary.

That’s two PBMs…

NUVAILA, U.S. Patent and Trademark Office

…and OptumRx makes it three?

UnitedHealth Group’s OptumRx business appears to be joining its PBM peers with NUVAILA, a new biosimilar procurement business and private label manufacturer of generic drugs.

Optum Health Solutions, the OptumRx subsidiary located in Ireland, filed a trademark application for a business that will perform the following activities:
“Procurement, namely purchasing pharmaceuticals for others; Pharmaceutical commercialization services, namely, procuring biosimilar pharmaceuticals and selling pharmaceuticals to wholesale pharmaceutical distributors”

“Custom manufacture of pharmaceutical products; Custom manufacture of generic prescription drugs”
Despite what you may have heard, vertical integration has not gone out of style. Take a look at Section 12.3.1. of DCI’s 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers for our updated analyses of vertical integration within U.S. drug channels—and a rundown of how to make money doing it.

Hat tip to Eric Percher at Nephron Research for highlighting this filing.

New drops in prescription drug costs means NADAC is cool (again), 46Brooklyn

Acquisition cost revolution for retail pharmacy just hit a major speed bump.

ICYMI, the National Average Drug Acquisition Cost (NADAC) pricing benchmark crashed during April and May—but bounced back in June. The chart below shows an index of NADAC pricing for generic drugs using figures computed by 46Brooklyn and Nephron Research.

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NADAC, which measures pharmacies’ invoiced acquisition costs, dropped when an unnamed large chain reportedly began providing its data. According to Myers & Stauffer, the accounting firm that collects NADAC for the federal government, a recent methodology change did not trigger the volatility.

As required by the Centers for Medicaid & Medicare Services (CMS), all states and the District of Columbia have now adopted an acquisition cost benchmark for pharmacy ingredient cost reimbursement in fee-for-service Medicaid programs. (Some states use their own survey rather than NADAC.)

We discuss the strengths and weaknesses of NADAC in Section 12.3.4. of DCI’s 2024 pharmacy/PBM report.

One weakness for payers: NADAC excludes off-invoice discounts, rebates, and price concessions that pharmacies can receive from wholesalers, buying groups, and manufacturers. These off-invoice discounts are generally small for single-source brand-name drugs but large for multisource generic drugs. Consequently, a pharmacy’s gross profit per prescription are typically higher than the published dispensing fees, which average about $11 per prescription.

Hence, profits at retail pharmacies can drop with more accurate and complete measurement of drug acquisition costs. That’s why the Congressional Budget Office estimated that mandatory NADAC survey participation would save money for the federal government.

The National Association of Chain Drug Stores (NACDS) and the National Community Pharmacists Association (NCPA) have accused CMS of “arbitrary and capricious” changes to NADAC. This letter lays the groundwork for legal challenges if NADAC does not continue to rebound.

Expect more battles over the computation and definition of “acquisition cost” as the cost-plus revolution rolls on.

Navigating the Inflation Reduction Act's Impact on Drug Pricing and Health Care, First Report Managed Care

In my Drug Channel Implications of the Inflation Reduction Act video webinar, I explained the intended and unintended consequences of the Inflation Reduction Act of 2022 (IRA) for the commercial market and drug channel participants.

This First Report Managed Care article highlights five of my predictions along with commentary from other industry experts:
  • Medicare Part D plans may prefer drugs with high list prices and high rebates.
  • The standalone prescription drug plan (PDP) market will shrink as Part D enrollment increasingly shifts to Medicare Advantage.
  • Pharmacies could face cash flow challenges.
  • Transparency into the 340B Drug Discount Program will increase, presenting operational complications.
  • Physician practice consolidation will accelerate.
For more, register to watch a replay of the full 90-minute video webinar from April.

The US Healthcare System, Dr. Glaucomflecken

Dr. Glaucomflecken, the funniest physician on the internet, wonders why medical education doesn’t prepare physicians for the realities of the U.S. Healthcare system. Just wait until they learn about the drug channel!

Click here if you can’t see the video below.

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