PBMs and the Battle Over Patient Support Funds:Accumulators, Maximizers, and Alternative Funding (NEW Live Video Webinar)

Dr. Adam J. Fein, CEO of Drug Channels Institute (DCI) and the author of Drug Channels, invites you to join him for a new video webinar:

PBMs and the Battle Over Patient Support Funds:
Accumulators, Maximizers, and Alternative Funding
This event will be broadcast live on
Friday, June 23, 2023, from 12:00 p.m. to 1:30 p.m. ET.

This page describes the event and explains how to purchase a registration. The webinar will be broadcast from the Drug Channels studio in beautiful downtown Philadelphia.

This event is part of The Drug Channels 2023 Video Webinar Series.

WHAT YOU WILL LEARN

As expensive specialty therapies come to dominate drug spending, pharmaceutical manufacturers are paying a growing share of patents’ out-of-pocket costs for these prescriptions. At the same time, plans and PBMs are turning to novel—and often controversial—benefit design tools that access manufacturers’ patient support spending.

Join Dr. Fein as he helps you and your team deepen your understanding of this complex subject and its crucial implications for drugmakers, payers, PBMs, and patients. During the event, Dr. Fein will cover a wide range of topics, including:

• What’s driving patients’ out-of-pocket obligations

• Trends in the value of manufacturers’ financial assistance

• Copayment offset programs vs. patient assistance programs (PAPs)

• Conventional pharmacy benefit management tactics

• The new tools that offset specialty drug costs: copay accumulators, maximizers, and alternative funding programs

• The latest market data on adoption of the new spending drug management tools

• Prescription economics of copay accumulators, maximizers, and alternative funding programs

• How PBMs profit from—and are challenged by—the new tools

• Plan sponsor perspectives

• State and federal legislation over pharmacy benefits

• Major lawsuits between manufacturers and vendors

• Outlook for specialty drug spending management

• Controversies and unresolved questions

• And more!

PLUS: During the webinar, Dr. Fein will give participants an opportunity to unmute themselves and ask live questions. The webinar will last 90 minutes to accommodate audience questions.

As always, Dr. Fein will clearly distinguish his opinions and interpretations from the objective facts and data. He will draw from exclusive information found in DCI's 2023 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Read on for full details on pricing and registration.

PRICING OPTIONS

You can register for this unique educational opportunity for only $380 per viewing device. Within 24 hours of your purchase, you will receive an email from Zoom with a unique link to access the live event.

We are offering substantial discounts for multiple registrations from the same organization. We know that many of you may be working remotely, so rates for multiple registrations are as low as $265 per device—a 30% savings. An unlimited number of people may watch at one physical location if they can watch from a single device. Please note that a device at a single physical location may not stream, share, or project our webinar to other sites. Each device at a physical location requires its own registration.

Click here to order. All discounts will be automatically computed based on the number of registrations you enter in your cart. (You can reset the cart by entering 0 in the quantity field.)

PBMs and the Battle Over Patient Support Funds:
Accumulators, Maximizers, and Alternative Funding

Please contact Paula Fein (paula@drugchannels.net) if you have any questions. If you purchase access for multiple devices, we will contact you for a list of your participants and their email addresses. Or, download this spreadsheet and email your registrants’ information to Tamra Feldman (admin@drugchannels.net).

Click here to register for the full Drug Channels 2023 Video Webinar Series

Payment can be made with all major credit cards (Visa, MasterCard, American Express, and Discover) or via PayPal. Click here to email us if you would like to pay by corporate purchase order or check.

IMPORTANT THINGS TO KNOW

• Watch and listen via any device with a web browser (computer, iPad, iPhone/Android, etc.) There is no access via telephone.

• We use Zoom technology for this webinar. Every registrant will receive an email from Zoom with a link to watch the event. This link is unique to the registrant and can only be accessed once. We recommend that every registrant download the Zoom client software/app.

• Within one day of purchasing a registration, each registrant will receive an email from Zoom with a link to access the event and add it to their calendar. Every registrant will also receive reminder emails from Zoom one week, one day, and one hour before the event.

• This event is part of The Drug Channels 2023 Video Webinar Series. If you have already purchased the full series, then you should have received an email from no-reply@zoom.us with your unique link to access the June event.

• Purchase of the webinar series includes a replay video of Drug Channels’ March 31, 2023, webinar Discount Cards, Cost-Plus Pharmacies, and PBMs: Trends, Controversies, and Outlook. Within 24 hours of purchasing the 2023 series, you will receive an email from Zoom with a link to access that video replay.

• Organizations that purchased corporate access for The Drug Channels 2023 Video Webinar Series will receive a custom, branded signup link so employees can easily register. We will automatically refund payments from anyone at a company with corporate access who purchases a single registration using their corporate email account.

• Unfortunately, we are unable to offer refunds.

Rite Aid’s PBM Strategy: Will Hope Triumph Over Experience?

ICYMI, Rite Aid recently released the financial results for its most recent fiscal quarter, which ended on May 29. Rite Aid’s pharmacy benefit manager (PBM) business, Elixir, continues to flail in an increasingly challenging market.

I’ve long been skeptical of Rite Aid’s PBM strategy. As you will see below, last quarter’s results further validated my skepticism. Synergies with the company’s retail pharmacy business are minimal—and shrinking.

Rite Aid’s management team does seem committed to fixing and then growing the business. But as I see it, the company should either unload Elixir before it loses even more value or join with a larger company that can offer a viable platform for success.

I’m sure many investors wish that Amazon would simply buy Rite Aid and solve their pain.

On the other hand, free advice is often worth what you paid for it. Read on and see what you think the company should do.

Five Top Drugmakers Reveal List vs. Net Price Gaps (Plus: The Trouble With Insulin Prices)

Time for our annual update on pricing at five of the largest pharmaceutical manufacturers—Eli Lilly, Janssen, Merck, Novartis, and Sanofi. You can find links to each company’s data below.

When rebates and discounts were factored in, drug prices declined—or grew slowly—in 2019. Consistent with our previous analyses, rebates and discounts reduced the selling price of brand-name drugs to about half of their list prices.

This growing disparity between list and net prices continues to inflate the gross-to-net bubble. As the companies’ insulin data illustrate below, the bubble raises costs for patients who are not always benefiting from lower net selling prices.

These data also highlight the lunacy of inflationary rebates that are based on a government pricing metric that approximates a brand-name drug's list price. This is what Senator Charles Grassley (R-IA) has proposed in the Prescription Drug Pricing Reduction Act of 2020. Legislation should shield patients from the excesses of the gross-to-net bubble while enhancing the competitive pressures that are reducing drug prices. Is that too much to ask?

Coronavirus Industry Impact Survey: Winners and Losers (Part 3)

Today is the final installment of our three-part investigation into the coronavirus’ ultimate impact on the drug channel.

Below, I examine expectations about how the coronavirus will affect the public’s perception of various industry participants. We explore what our survey respondents said about:

• Pharmacies
• Pharmaceutical manufacturers
• Hospitals
• Wholesalers
• Pharmacy benefit managers and plan sponsors
• Insurance companies.

In these early stages of this crisis, my crystal ball is as cloudy as yours. Let’s hope that the country will stabilize within a few months. I may then rerun the survey to determine how (if at all) everyone’s perspective has changed.

New Disclosures Show CVS and Express Scripts Can Survive in a World Without Rebates. Are Plan Sponsors Now the Real Barrier to Disruption? (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from August 2018.

This rerun explains how and why PBMs are shifting responsibility and blame toward third-party payers. In 2019, we'll hear much more about how payers' use of rebates affect patients' out-of-pocket costs and distort the drug channel. Addressing the problems will require a major rethink of commercial and Medicare Part D pharmacy benefit designs. For my related $0.02 on the politics of "drug prices," see also Drug Prices After the Midterms: Five Crucial Implications of Pharmacy Benefit Design.

P.S. Drug Channels was sad to hear about the passing of Stephen Hillenburg, creator of SpongeBob Squarepants.

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Last week, the two largest pharmacy benefit managers (PBMs)—CVS Health and Express Scripts—both stated that rebates now account for a small part of their profits. The companies therefore strongly implied that they could survive in a world in which PBMs did not participate in the flow of funds from a brand-name manufacturer to a plan sponsor. Below, I unpack the new disclosures, which move us materially closer to a new model.

Hmm. The two biggest PBMs and at least one major manufacturer (Pfizer) have now implied a willingness to change. So what’s to stop massive drug channel disruption?

CVS Health perhaps inadvertently identified the real barrier to a system without rebates: employers and health plans. As you will see below, CVS Health disclosed for the first time the massive gross-to-net bubble within its commercial book of business. The new information confirms that plan sponsors are hoarding rebates rather than sharing the savings with the employees whose prescriptions generated the rebate funds.

If we really do migrate to a system without rebates, PBMs’ reportedly minimal profits from rebates mean they could escape drug channel disruption unscathed. The focus will now turn to the plan sponsors that are absorbing rebate dollars. Whether plan sponsors realize it or not, they are the next target.

Copay Accumulator Update: Widespread Adoption As Manufacturers and Maximizers Limit Patient Impact (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from September 2018.

BTW, my personal Independence Blue Cross “platinum” health plan just added copay accumulator adjustment! Click here to see the evidence.

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In January, I alerted you to an important new benefit design trend in Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit. It is by far the most widely read article ever published on Drug Channels.

New data from Zitter Health insights (ZHI) suggest that these programs are widely used. Nearly one-third of commercially-insured lives are enrolled in plans that have implemented copay accumulator adjustment or closely-related copay maximizers. (We explain the benefit design math behind maximizers below.)

ZHI also found that a surprising number of plans are already set up to use these programs, but have not done so yet. And many more are planning implementation for 2019 and beyond. Check out the full data below.

Manufacturers have stepped up with more financial support to shield patients from the worst aspects of these benefit designs. This support further inflates the gross-to-net bubble. Plan sponsors’ use of maximizers instead of accumulators has also blunted the impact on patients.

Accumulators, maximizers, and large copay support programs are inefficient solutions to flaws in the U.S. drug channel system. Alas, it looks like they are all now a common—but possibly not even fully utilized—feature of the benefit design landscape.

Copay Accumulator Update: Widespread Adoption As Manufacturers and Maximizers Limit Patient Impact

In January, I alerted you to an important new benefit design trend in Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit. It is by far the most widely read article ever published on Drug Channels.

New data from Zitter Health insights (ZHI) suggest that these programs are widely used. Nearly one-third of commercially-insured lives are enrolled in plans that have implemented copay accumulator adjustment or closely-related copay maximizers. (We explain the benefit design math behind maximizers below.)

ZHI also found that a surprising number of plans are already set up to use these programs, but have not done so yet. And many more are planning implementation for 2019 and beyond. Check out the full data below.

Manufacturers have stepped up with more financial support to shield patients from the worst aspects of these benefit designs. This support further inflates the gross-to-net bubble. Plan sponsors’ use of maximizers instead of accumulators has also blunted the impact on patients.

Accumulators, maximizers, and large copay support programs are inefficient solutions to flaws in the U.S. drug channel system. Alas, it looks like they are all now a common—but possibly not even fully utilized—feature of the benefit design landscape.

New Disclosures Show CVS and Express Scripts Can Survive in a World Without Rebates. Are Plan Sponsors Now the Real Barrier to Disruption?

Last week, the two largest pharmacy benefit managers (PBMs)—CVS Health and Express Scripts—both stated that rebates now account for a small part of their profits. The companies therefore strongly implied that they could survive in a world in which PBMs did not participate in the flow of funds from a brand-name manufacturer to a plan sponsor. Below, I unpack the new disclosures, which move us materially closer to a new model.

Hmm. The two biggest PBMs and at least one major manufacturer (Pfizer) have now implied a willingness to change. So what’s to stop massive drug channel disruption?

CVS Health perhaps inadvertently identified the real barrier to a system without rebates: employers and health plans. As you will see below, CVS Health disclosed for the first time the massive gross-to-net bubble within its commercial book of business. The new information confirms that plan sponsors are hoarding rebates rather than sharing the savings with the employees whose prescriptions generated the rebate funds.

If we really do migrate to a system without rebates, PBMs’ reportedly minimal profits from rebates mean they could escape drug channel disruption unscathed. The focus will now turn to the plan sponsors that are absorbing rebate dollars. Whether plan sponsors realize it or not, they are the next target.

Amazon Buys PillPack: Six Pharmacy and Drug Channel Implications

It’s official! After more than a year of speculation and rumors, Amazon has entered the pharmacy business with its acquisition of PillPack, a small mail pharmacy. Consider this move to be the end of the beginning for the pharmacy industry's evolution.

The stock prices of pharmacies and pharmacy benefit managers (PBMs) predictably plunged yesterday as everyone freaked out. CVS Health, Walgreens Boots Alliance, and Rite Aid collectively lost more than $11 billion in stock market value.

Below, I offer my initial observations on the transaction and its impact.

But let’s all keep some perspective here. This is a small first step that will let Amazon begin growing a pharmacy dispensing business.

We are still a long, long way from a fundamental restructuring of the complex U.S. drug channel. The incumbents still have opportunities to defend their position, capture value from internet technologies, and streamline distribution. However, the prospects of a retail pharmacy shakeout over the next 10 years have just increased.

Why Retail Pharmacies Still Overcharge Uninsured Patients—And What That Means for Amazon (rerun)

This week, I’m rerunning some popular posts before the holiday week. Click here to see the original post and comments from April 2018.

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Consumer Reports recently published a fascinating survey of pharmacies’ cash prices for five common generic drug prescriptions.

The results were startling. Prescription prices ranged from $66 to $1,351—a nearly 2,000% difference. The big three retail drugstore chains—CVS, Walgreens, and Rite Aid—consistently had higher average prices compared with those of other pharmacies. Independent pharmacies had some of the lowest prices, but also some of the highest prices.

Our analysis of prescription profits highlights the pharmacy industry’s unfortunate pricing strategy for cash-pay prescriptions. Average profit margins ranged from $8 to $264 per prescription for the five drugs. We can only hope that consumers didn’t pay the pharmacies’ sky-high cash prices.

The results expose the insane soak-the-poor mentality baked into the U.S. pharmacy industry’s historical pricing models. The data also highlight the potential pharmacy opportunity for Amazon.

P.S. Before other states follow Maryland and pass laws against price gouging by generic manufacturers, perhaps they should take a closer look at the behavior of their own states’ pharmacies.

Why Retail Pharmacies Still Overcharge Uninsured Patients—And What That Means for Amazon

Consumer Reports recently published a fascinating survey of pharmacies’ cash prices for five common generic drug prescriptions.

The results were startling. Prescription prices ranged from $66 to $1,351—a nearly 2,000% difference. The big three retail drugstore chains—CVS, Walgreens, and Rite Aid—consistently had higher average prices compared with those of other pharmacies. Independent pharmacies had some of the lowest prices, but also some of the highest prices.

Our analysis of prescription profits highlights the pharmacy industry’s unfortunate pricing strategy for cash-pay prescriptions. Average profit margins ranged from $8 to $264 per prescription for the five drugs. We can only hope that consumers didn’t pay the pharmacies’ sky-high cash prices.

The results expose the insane soak-the-poor mentality baked into the U.S. pharmacy industry’s historical pricing models. The data also highlight the potential pharmacy opportunity for Amazon.

P.S. Before other states follow Maryland and pass laws against price gouging by generic manufacturers, perhaps they should take a closer look at the behavior of their own states’ pharmacies.

Janssen’s New Transparency Report: A Peek Behind the Drug Pricing Curtain Raises Troubling Questions About Rebates

Johnson & Johnson’s Janssen business unit just released its 2017 Janssen U.S. Transparency Report. (Free download.) This is the second annual edition of the report, which provides a comprehensive look at Janssen’s commercial activities.

Most notably, Janssen reveals that the list price for its pharmaceutical products grew by 8.1% in 2017. Its average net prices, however, declined in 2017 by 4.6%. Janssen paid $15 billion in rebates and discounts, which subtracted 42% from its list prices. Kudos to Janssen for providing so much disclosure.

Below, I review some key takeaways from this valuable report. We’re left with some key unanswered questions, however: Did patients’ out-of-pocket costs for Janssen’s drugs also decline in 2017? Which entities in the drug channel benefited most from the $15 billion in payments?

I suspect that patients didn’t share fully in the benefit of Janssen’s ever-growing payments. That’s precisely the problem with the gross-to-net bubble.

The CVS-Aetna Deal: Five Industry and Drug Channel Implications

Surprise? CVS Health and Aetna announced their long-rumored merger. Relevant links below.

This transaction will create a healthcare organization with significant market share in the pharmacy, pharmacy benefit management (PBM), and health insurance businesses. There could be many potential opportunities for new consumer-oriented offerings. Finding the consumer value in this multi-headed $221 billion behemoth will be a major challenge.

Read on for my initial thoughts on the deal and what it means for PBMs, manufacturers, and pharmacies. I also highlight some of the implementation challenges.

Feel free to add your own thoughts on this mega-deal in the comments below. (Yes, you can comment anonymously.)

Generic Deflation Roils the Channel—And Will Get Worse

Deflation in generic drug prices dragged down second quarter earnings for drug wholesalers and generic manufacturers. Here’s a useful summary from The Wall Street Journal, which captures the grim marketplace realities in Falling U.S. Generic Drug Prices Hurt Manufacturers, Wholesalers. Yesterday, Mylan's earning release noted "high-single-digit erosion expected in North America."

Below, I review the state of the generic drug market. As you will see, the overall market for mature generic drugs is deflating by about 10% per year. Many generic drugs have dropped significantly in price over the past four years.

Surprisingly, the prices for about one in five generic drugs remain elevated. Scott Gottlieb, M.D., the new head of the Food and Drug Administration (FDA), has prioritized actions that should squeeze the remaining generic inflation out of the system. I expect generic drug deflation to continue—and possibly accelerate—over the next 12 to 24 months.

Payers and consumers will be the ultimate winners, but the drug channel faces significant disruption. In the meantime, let’s all hope that these price declines don’t trigger shortages if generic drug makers flee this sinking market.

What’s In, What’s Out: The New 2018 CVS Health and Express Scripts Formulary Exclusion Lists (Plus: A Sneak Peek From Prime)

This week, the two largest pharmacy benefit managers (PBMs)—Express Scripts and the CVS/caremark business of CVS Health—released updates to their 2018 formulary exclusion lists. They are available below for your downloading pleasure.

For 2018, Express Scripts was more aggressive, expanding its list to 159 excluded products. At CVS Health, however, the total number of excluded remained steady. The Prime Therapeutics list won’t be available until September, but it will apparently exclude more drugs that either of its PBM peers.

Read on for my 2018 head-to-head comparison, including comments on inflammatory conditions, multiple sclerosis, epinephrine, biosimilars, and more. I also review the reported savings from formulary exclusions. I conclude with some questions about patients. Remember them?

If I have missed anything important, please comment below.

The Weird and Wild Gross-to-Net Adventures of EpiPen and Its Alternatives (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2017 Specialty Pharmacy Summit. Click here to see the original post and comments from January 2017.

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Last week delivered significant announcements that will shake up the market for epinephrine auto-injector pens. CVS began promoting a lower-cost EpiPen alternative. Small pharma company Kaléo relaunched the AUVI-Q. Meanwhile, Mylan’s new generic EpiPen continued to gain traction.

It’s a good time to revisit the EpiPen situation and see what it tells us about U.S. pharmaceutical industry pricing. After last week’s announcements, there are now four key products, each with its own list price and rebate arrangements:

• An EpiPen with a $608 list price and rebates to pharmacy benefit manages (PBMs)

• An EpiPen with a $300 list price, but no rebates

• Adrenaclick, an alternative product with a $110 cash price at CVS pharmacies

• Auvi-Q, another alternative, with a $4,500 (!) list price

As I explain below, these variations wonderfully illustrate the warped incentives embedded in our crazy drug channel. Will we make progress in popping the gross-to-net bubble?

Janssen Reveals and Explains Its List and Net Drug Pricing

Johnson & Johnson’s Janssen business unit recently released the 2016 Janssen U.S. Transparency Report. (Free download.)

The report, which provides new disclosures about the company’s activities, is very well done. Below, I offer some observations on Janssen’s pricing and its discussion of the drug channel system.

Notably, Janssen revealed that its average list price increases have been below 10% for at least the past five years. Its average net price increases, however, have been roughly half of the list price increases. For 2016, list-to-net reductions were 35.2%.

The report makes a meaningful contribution to the ongoing debate about the true pricing of prescription drugs and the gap between a manufacturer’s gross (list) prices and the net prices to third-party payers. Every Drug Channels reader should review it.

The Weird and Wild Gross-to-Net Adventures of EpiPen and Its Alternatives

Last week delivered significant announcements that will shake up the market for epinephrine auto-injector pens. CVS began promoting a lower-cost EpiPen alternative. Small pharma company Kaléo relaunched the AUVI-Q. Meanwhile, Mylan’s new generic EpiPen continued to gain traction.

It’s a good time to revisit the EpiPen situation and see what it tells us about U.S. pharmaceutical industry pricing. After last week’s announcements, there are now four key products, each with its own list price and rebate arrangements:

• An EpiPen with a $608 list price and rebates to pharmacy benefit manages (PBMs)

• An EpiPen with a $300 list price, but no rebates

• Adrenaclick, an alternative product with a $110 cash price at CVS pharmacies

• Auvi-Q, another alternative, with a $4,500 (!) list price

As I explain below, these variations wonderfully illustrate the warped incentives embedded in our crazy drug channel. Will we make progress in popping the gross-to-net bubble?

EpiPen, Channel Economics, and the Great PBM Rebate Debate

For better or worse, Mylan’s EpiPen controversy has started an intriguing dialogue about my favorite subject: the economics of U.S. drug channels. Many news stories have tried to explain how a prescription drug’s list price differs from the ultimate net price paid by insurers and the government. A few brave souls have even dug into the role of such intermediaries as pharmacy benefit managers (PBMs), wholesalers, and pharmacies.

Below, I highlight aspects of the EpiPen story that raise crucial questions about our healthcare system, including: Who benefits from big gross-to-net spreads in drug prices? How do benefit design and payer decisions alter channel economics? Are patients benefiting from manufacturer’s rebates to PBMs? How (if at all) should manufacturers alter their pricing strategies?

And I wonder: Will we look back on the EpiPen incident as the beginning of the end for manufacturers’ gross-to-net drug pricing models and PBMs’ traditional role in the flow of rebates?

Seven Takeaways from the New 2017 CVS Health and Express Scripts Formulary Exclusion Lists

This week, the two largest pharmacy benefit managers (PBMs)—Express Scripts and the CVS/caremark business of CVS Health—released their 2017 formulary exclusion lists. They are available below for your downloading pleasure.

For 2017, Express Scripts made relatively few changes to its list, which has fewer products than it 2016 list. CVS Health, however, expended its list to 154 products, compared with 124 products last year. CVS also got much more aggressive with specialty drugs.

Read on for my head-to-head comparison, including comments on such high-profile specialty categories as hepatitis C, inflammatory conditions, biosimilars, and more.