Texas Shows Us Where PBMs’ Rebates Go (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s live video webinar: Drug Channels Outlook 2023.

Click here to see the original post and comments from August 2022.

---

Over the weekend, the U.S. Senate passed a massive overhaul of the Medicare Part D program. If passed into law, these changes will have many unintended consequences, but will not address the warped incentives baked into our current rebate system.

This makes it a good time to review the murky, little-seen economics of how commercial plan sponsors and payers access the billions of dollars in manufacturer rebates and fee that are negotiated by their pharmacy benefit managers (PBMs).

Our analyses of new Texas-mandated PBM disclosures reveal that plan sponsors receive most of the rebates, fees, and other payments from manufacturers. However, PBMs retain an unexpectedly large share of these payments—while the patients whose prescriptions generated these funds get almost nothing.

In other words, plans spread around manufacturers’ rebates and fees to offset premiums for all beneficiaries, rather than lower out-of-pocket costs for drugs that plans buy at a discounted price. Perhaps Congress will someday get around to corralling these funds.

The Inflation Reduction Act: Three Unintended Consequences for Biosimilars, Health Plans, Providers, and Pharmacies (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s live video webinar: Drug Channels Outlook 2023.

Click here to see the original post and comments from September 2022. During Friday’s webinar, I’ll be sharing my updated thoughts about the IRA’s impact on manufacturers, Part D plans, and patient behavior.

---

By now, you have already read innumerable articles explaining what’s in the new Inflation Reduction Act of 2022 (IRA; P.L. 117-169).

Today, I want to highlight three significant—and presumably unintended—drug channel consequences from the hastily-passed IRA legislation. These include disruption to the now-booming biosimilar market, the prospects of physician/hospital vertical integration that will raise commercial healthcare costs and expand 340B, and the need for complex new processes to administer the IRA's lower pharmacy reimbursements.

I can only barely scratch the surface in this article, so feel free to share your own thoughts in the comments below or on social media.

At this point in our country’s history, you might think Congress would have learned the immutable law of 730-page bills: Legislate in haste, repent at leisure.

Health Insurance Startup CEOs’ Sky-High Compensation Figures Are Deceiving

Today’s guest post comes from Leslie Small, Managing Editor, and Jinghong Chen, Reporter, at Health Plan Weekly, published by AIS Health, the journalism division of Managed Markets Insight & Technology, LLC. (MMIT).

Leslie and Jinghong discuss the terms of health insurance startups CEOs’ compensation packages. They explain why the reported CEO total compensation numbers are deceiving.

Access the full findings from AIS’ Healthcare Executive Compensation Survey here.

Read on for Leslie’s and Jinghong’s insights.

Small Pharmacies Walk Away from Medicare Part D’s 2023 Preferred Networks

In yesterday’s post, I highlighted the largest pharmacy chains that will participate in the 2023 Medicare Part D prescription drug plans (PDP).

Today, I update our annual analyses of how smaller pharmacies will participate as preferred cost sharing pharmacies via the pharmacy services administrative organizations (PSAOs) that represent them in negotiations with plans.

As you will see below, the largest PSAOs will move further away from preferred networks in 2023. What's more, plans from Aetna, Humana, WellCare, and UnitedHealthcare will not have any independent pharmacies participating via PSAOs as preferred pharmacies.

Below we provide details about the PSAOs owned by the three major wholesalers—AmerisourceBergen, Cardinal Health, and McKesson—along with information about AlignRx, the largest independent PSAO. There are some differences in strategy, as you will see from our handy scorecard below. However, smaller pharmacies’ near-total rejection of preferred networks shows that the more the PBMs talk, the less independents can take.

What else is ahead for 2023? Find out during my upcoming live video webinar, Drug Channels Outlook 2023, on December 16, 2022, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

CVS, Walgreens, and Walmart Keep Position in 2023 Part D Preferred Networks—While Kroger Bails Over its Express Scripts Blowup

In Preferred Pharmacy Networks in 2023’s Medicare Part D Plans: Cigna, CVS Health, Humana, UnitedHealthcare, WellCare, and More, I highlighted how those networks have taken over the world of stand-alone Medicare Part D prescription drug plans (PDP) and become a major presence in Medicare Advantage prescription drug (MA-PD) plans.

Today, I examine the seven largest retail chains’ 2023 participation in the 22 major 2023 Part D preferred networks that the eight largest plan sponsors will offer. As always, I offer you a handy table for scoring each chain’s participation and changes from 2022 to 2023.

As you’ll see, Kroger’s decision to exit Express Scripts commercial pharmacy networks has had negative ramifications for its Part D position. Kroger will be out-of-network—not just non-preferred—in the major Part D networks for which Express Scripts acts as the PBM. That will be  a key factor behind its $1+ billion revenue hit.

Speaking of 2023, please join me for my upcoming live video webinar, Drug Channels Outlook 2023, on December 16, 2022, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

Developing a Channel Strategy that Optimizes Gross-to-Net

Today’s guest post comes from Deepak Thomas, Founder and CEO of PHIL Inc.

Deepak explains how a manufacturer’s net revenues are affected when that manufacturer helps patients access, afford, and adhere to medication therapy. He provides three suggestions for building a channel strategy to optimize gross-to-net while also improving clinical, financial, and operational outcomes.

Click here to learn about PHIL’s access and commercialization solutions.

Read on for Deepak’s insights.

Drug Channels News Roundup, November 2022: Mark Cuban vs. Elon Musk, Lessons from Semglee, Gen Z vs. Pharmacy Careers, 340B Transparency, and I ♥ the 90s

I hope everyone enjoyed the Thanksgiving holiday! Now that you’ve stretched your stomach, stretch your mind with some food for thought. In this issue:

• Mark Cuban schools Elon Musk on PBMs

• Market access lessons from Semglee

• Gen Z rejects the pharmacy career path

• A potent call for 340B transparency

Plus, get ready to love the ‘90s again!

P.S. Join my more than 34,000 LinkedIn followers for daily links to neat stuff. If you haven't quit Twitter, you can also find my daily posts at @DrugChannels on Twitter, where I have more than 15,500 followers.

Please join me for my upcoming live video webinar, Drug Channels Outlook 2023, on December 16, 2022, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

Engage Specialists in Their Workflow With GoodRx Provider Mode

Today’s guest post comes from Bansi Nagji, President of Healthcare at GoodRx.

Bansi explains how GoodRx Provider Mode delivers a prescription savings flow that offers health care professionals (HCPs) efficient access to the information they need at critical moments of care.

Click here to learn how GoodRx Provider Mode can help manufacturers reach and engage HCPs.

Read on for Bansi’s insights.

Behind the GoodRx-Express Scripts Partnership: How PBMs Profit from Discount Cards in Pharmacy Benefits

Last week, GoodRx announced that it would become the exclusive prescription discount card provider for the commercial beneficiaries of Cigna’s Express Scripts. Links below.

The rise of discount card pricing within pharmacy benefit plans is a positive development. Patients get access to market prices that can  be lower than their PBM’s contracted rate. All out-of-pocket spending with a discount card counts toward a patient's deductibles, and all prescription activity gets captured.

However, I suspect few people understand that placing discount cards within the pharmacy benefit enables a PBM to monetize a new fee stream from the card vendor. Below, I walk through this booming business and highlight some of the conflicts and contradictions underneath the coconuts.

I’ll cover what’s next for PBMs and discount cards during my upcoming live video webinar, Drug Channels Outlook 2023, on December 16, 2022, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

Cell and Gene Therapy Roundup: What the Road to Success Looks Like

Today’s guest post comes from Lung-I Cheng, Vice President of Cell & Gene Therapy at AmerisourceBergen.

Lung-I discusses advancements in cell and gene therapy and explains how to tackle the challenges facing manufacturers, providers, and patients.

Click here to learn about AmerisourceBergen’s Cell and Gene Therapy solutions for biopharma companies, providers, and patients.

Read on for Lung-I’s insights.

Drug Channels Outlook 2023 (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 live video webinar:

Drug Channels Outlook 2023
Friday, December 16, 2022
12:00 p.m. to 1:30 p.m. ET.

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

WHAT YOU WILL LEARN

Join Dr. Fein as he helps you and your team get ready for 2023 by outlining key issues and uncertainties that will surely affect your planning. This event can be both a capstone of your annual learning and a touchpoint for the future. Dr. Fein will draw from exclusive information found in DCI’s industry economic reports.

During the event, Dr. Fein will share his latest thinking on a wide range of topics, including:

• Update on the retail pharmact market

• The Medicare Part D Redesign

• What's next for the Inflation Reduction Act of 2022

• Vertical integration and consolidation trends

• PBM industry developments and government actions

• Disruption from discount cards and cash-pay pharmacies

• Predictions for biosimilar Humira competition

• The latest on copay accumulators and maximizers

• Likely 340B Drug Pricing Program developments

• Hospitals and health systems in the pharmacy channel

• The primary care M&A boom

• And more!

As always, Dr. Fein will clearly distinguish his opinions and interpretations from the objective facts and data. 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.

After the event, every registrant will receive a link to download the complete slide deck and have an opportunity to watch a replay of the live event.

Read on for full details on pricing and registration.

The Consolidated Drug Channel and Cash-Pay Drugs: My Podcast with a16z's Julie Yoo

I recently joined Julie Yoo on Bio Eats World, a podcast from legendary venture capital firm Andreessen Horowitz (also known as "a16z"). Julie is a General Partner at Andreessen Horowitz.

We chatted about the current state of the U.S. drug channel, the roles and controversies around pharmacy benefit managers (PBMs), GoodRx, Mark Cuban’s cost-plus pharmacy, the 340B Drug Pricing Program, and much more. I also shared some thoughts on opportunities for entrepreneurs in such a consolidated space. The episode is about 36 minutes long.

The podcast audio is embedded below, along with links to the episode on major podcast platforms.

Enjoy!

P.S. Let me know if you’d like to see more audio/podcast content on Drug Channels.