Summer officially starts this weekend!
Consider doing a few of your lifting sets (or work meetings) outside.
The healthier you are, the longer you’ll be able to read our news roundups, so everybody wins!
In this issue: Extra: The Process of Filling a Pharmacy Prescription
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2026 Biosimilars Report, Cardinal Health
Despite the projected $232 billion opportunity for biosimilars over the next decade, only 10% of biologics losing exclusivity have a biosimilar in development.
Biosimilar development is a business, and there are several factors that make biosimilars a more difficult market to enter such as price erosion, reimbursement uncertainty, and development barriers.
The Inflation Reduction Act—that legislators passed with seemingly little consideration for the impact to biosimilar development—further worsened these factors by reducing the economic attractiveness of developing biosimilars.
The result is a leaky biosimilar funnel, with manufacturers becoming increasingly selective about where they invest.
While the missed savings for payers are striking, this is more about patient access to treatments that remain higher even after patents expire.
Biosimilar development is a business, and there are several factors that make biosimilars a more difficult market to enter such as price erosion, reimbursement uncertainty, and development barriers.
The Inflation Reduction Act—that legislators passed with seemingly little consideration for the impact to biosimilar development—further worsened these factors by reducing the economic attractiveness of developing biosimilars.
The result is a leaky biosimilar funnel, with manufacturers becoming increasingly selective about where they invest.
[Click to Enlarge]
While the missed savings for payers are striking, this is more about patient access to treatments that remain higher even after patents expire.
Specialty Pharmacy Accreditation: DCI’s Exclusive Analysis Reveals a Market at an Inflection Point, Drug Channels
A recent Drug Channels Institute analysis found that hospitals have become significant participants in the specialty pharmacy industry, increasing from 15% of accredited specialty pharmacies in 2017 to 28% in 2025.
This offers hospitals some major strategic benefits like access to 340B pricing, which is a huge incentive as we covered in Vertical Integration Lessons: The Economics and Strategies of Hospital-Owned Specialty Pharmacies.
I’m sure it was a coincidence that growth accelerated just as manufacturers started restricting 340B pricing at external contract pharmacies.
This offers hospitals some major strategic benefits like access to 340B pricing, which is a huge incentive as we covered in Vertical Integration Lessons: The Economics and Strategies of Hospital-Owned Specialty Pharmacies.
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I’m sure it was a coincidence that growth accelerated just as manufacturers started restricting 340B pricing at external contract pharmacies.
Authorized Generics as a Manufacturer Response to the Medicaid Rebate Cap Removal, JAMA
After the American Rescue Plan Act of 2021 removed the cap on Medicaid rebates, AstraZeneca decided to launch an authorized generic (AG) of their blockbuster product Farxiga.
This JAMA study compares how state Medicaid agencies reacted to the AG launch based on whether they used a managed care organization (MCO) or fee-for-service (FFS) to implement Medicaid.
The result is a useful natural experiment that highlights the warped incentives of the drug channel.
Differences in reimbursement incentives largely explain the utilization gap between the brand and authorized generic products.
The state sets rates for MCOs based on gross drug spending. MCOs incentives are aligned with gross prices, so they more often drove prescriptions to the lower gross cost AG.
FFS programs, by contrast, retain rebate dollars directly and therefore focus on net spending. That made the high-rebate/high-list brand-name product economically preferable.
Consequently, Medicaid programs using MCOs paid millions more because they were optimized for lowest gross costs instead of net costs.
This JAMA study compares how state Medicaid agencies reacted to the AG launch based on whether they used a managed care organization (MCO) or fee-for-service (FFS) to implement Medicaid.
The result is a useful natural experiment that highlights the warped incentives of the drug channel.
[Click to Enlarge]
Differences in reimbursement incentives largely explain the utilization gap between the brand and authorized generic products.
The state sets rates for MCOs based on gross drug spending. MCOs incentives are aligned with gross prices, so they more often drove prescriptions to the lower gross cost AG.
FFS programs, by contrast, retain rebate dollars directly and therefore focus on net spending. That made the high-rebate/high-list brand-name product economically preferable.
Consequently, Medicaid programs using MCOs paid millions more because they were optimized for lowest gross costs instead of net costs.
The Value of Medicines in the U.S., Johnson & Johnson
The current U.S. drug pricing debate assumes we can have European prices with American access.
However, different healthcare systems make different choices on medications based on what they value.
This brief from Johnson & Johnson Innovative Medicine quantifies how the U.S. has chosen faster access and earlier launches in return for the high drug prices. Canada and European countries have lower prices, but wait longer for access to new drugs and have more limited coverage.
To paraphrase Ben Franklin: Those who would give up essential innovation to purchase a little temporary discount, deserve neither innovation nor low prices.
Every system reflects tradeoffs. Policymakers can choose where they want to sit on the seesaw—but they cannot enjoy all of the benefits from both sides simultaneously.
Something else to consider: Even with the higher prices the U.S. pays for drugs, the net drug spending is still perfectly in line with other countries as a percentage of total healthcare costs.
However, different healthcare systems make different choices on medications based on what they value.
This brief from Johnson & Johnson Innovative Medicine quantifies how the U.S. has chosen faster access and earlier launches in return for the high drug prices. Canada and European countries have lower prices, but wait longer for access to new drugs and have more limited coverage.
To paraphrase Ben Franklin: Those who would give up essential innovation to purchase a little temporary discount, deserve neither innovation nor low prices.
Every system reflects tradeoffs. Policymakers can choose where they want to sit on the seesaw—but they cannot enjoy all of the benefits from both sides simultaneously.
[Click to Enlarge]
Something else to consider: Even with the higher prices the U.S. pays for drugs, the net drug spending is still perfectly in line with other countries as a percentage of total healthcare costs.
The Process of Filling a Pharmacy Prescription, LinkedIn
Not everyone knows all the work going on in the background for filling a prescription, so I put together a visual summary of the process.
The next time you're waiting at the pharmacy, remember that counting pills is usually the fastest part of the job.
The next time you're waiting at the pharmacy, remember that counting pills is usually the fastest part of the job.
[Click to Enlarge]
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