Which PBM Best Managed Drug Spending in 2018: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?

It’s time for our annual Drug Channels’ examination of drug spending reports. For 2018, we again aim our magnifying glass at the annual trend reports from four large pharmacy benefit managers (PBMs): CVS Health, Express Scripts, MedImpact, and Prime Therapeutics. (See their report links below.) The other large PBMs—Humana and OptumRx (UnitedHealth)—provide no public transparency into their performance. Using these data, which account for most of the commercial market, we detect the following key trends for 2018: Once again, we find that drug spending is not skyrocketing—contrary to what you often hear from journalists and politicians. Spending grew by about … Continue reading Which PBM Best Managed Drug Spending in 2018: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?

Express Scripts Launches a New Formulary for a World Without Rebates. Will Plan Sponsors and Drug Makers Play Along? (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2019 Specialty Pharmacy Summit. This is an especially timely rerun. Believe it or not, Express Scripts’ 2019 formulary prefers Eli Lilly’s high-list/high-rebate Humalog insulin over the authorized generic version that is being sold at a 50% lower list price. The authorized generic will be preferred only on Express Scripts’ Flex Formulary, which has very low adoption.  Bottom line: Many plans still crave rebate dollars. Sorry, patients with deductibles and coinsurance. The gross-to-net bubble lives on!  Click here to see the original post and comments from November 2018. Express Scripts has … Continue reading Express Scripts Launches a New Formulary for a World Without Rebates. Will Plan Sponsors and Drug Makers Play Along? (rerun)

My Wall Street Journal Op-Ed: Don’t Blame Drug Prices on ‘Big Pharma’ (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2019 Specialty Pharmacy Summit. Click here to see the original post and comments from February 2019. Yesterday, The Wall Street Journal published my op-ed: Don’t Blame Drug Prices on ‘Big Pharma’. The article text is pasted below for those who don’t subscribe. I wrote this piece for a general business audience, though my arguments about rebates and patient out-of-pocket costs will be familiar to regular readers of Drug Channels. Alas, I had to omit such insider terms as gross-to-net bubble, direct and indirect remuneration, and SpongeBob SquarePants. A personal … Continue reading My Wall Street Journal Op-Ed: Don’t Blame Drug Prices on ‘Big Pharma’ (rerun)

The Gross-to-Net Bubble Reached a Record $166 Billion in 2018

The gross-to-net bubble—the ever-growing pile of money that sits between a manufacturer’s list price for a drug and the net price after rebates and other reductions—reached another high last year. Drug Channels Institute developed the term gross-to-net bubble to describe the speed and size of growth in the total value of manufacturers’ gross-to-net reductions. We estimate that in 2018, the total value of gross-to-net reductions for brand-name drugs was $166 billion. As you will see below, that figure doubled over the preceding six years. Below, I also highlight the various elements that fill the bubble. About two-thirds of total gross-to-net … Continue reading The Gross-to-Net Bubble Reached a Record $166 Billion in 2018

Drug Channels News Roundup, March 2019: The Insulin Gross-to-Net Bubble, HHS Blasts Rebates, a New 340B Report, and Theranos

Spring has finally reached our worldwide headquarters here in lovely downtown Philadelphia. (See photo at right.) Before your allergies kick in, please inhale this month’s selection of noteworthy news stories: Eli Lilly discloses the bonkers gross-to-net economics for Humalog insulin John O’Brien of HHS blasts the current drug pricing system The Community Access National Network’s 340B Commission releases an excellent new report—and you can read my testimony, too! Plus, a compelling new HBO documentary delves further into the sordid tale of Elizabeth Holmes and Theranos. P.S. Join the more than 7,200 people who follow my comments and links at @DrugChannels … Continue reading Drug Channels News Roundup, March 2019: The Insulin Gross-to-Net Bubble, HHS Blasts Rebates, a New 340B Report, and Theranos

A World Without Rebates: Predictions for How the Channel Will Evolve and Why Drug Prices Will Go Down

Two years ago on Drug Channels, I wrote about a shift from rebates to discounts as a black swan event—a massively important yet unexpected break from current practice. Given recent developments, I believe that we are moving ever closer to a world without rebates. Yet there are many unanswered questions were such a radical shift to occur. As I see it, a world without rebates would force manufacturers to use net price as a competitive weapon. If PBMs and payers behave logically, then drug prices would drop as manufacturers are forced to compete more aggressively for prescriptions. These conclusions are … Continue reading A World Without Rebates: Predictions for How the Channel Will Evolve and Why Drug Prices Will Go Down

Employers Are Absorbing Even More Manufacturer Rebates from Their PBMs

The likelihood of a radical restructuring of the U.S. drug channel has never been greater. A serious effort exists to remove or decrease the role of rebates. Today, we shed light on one crucial aspect of the current rebate system: how employer-sponsored health plans access the billions of dollars in manufacturer rebates that are negotiated by their pharmacy benefit managers (PBMs). For this analysis, we rely on the Pharmacy Benefit Management Institute’s (PBMI) excellent new reports. As you will see, employers are receiving an increasing share of the rebate money collected by pharmacy benefit managers. However, employers’ rebate agreements with … Continue reading Employers Are Absorbing Even More Manufacturer Rebates from Their PBMs

How Health Plans Profit—and Patients Lose—From Highly-Rebated Brand-Name Drugs

My Wall Street Journal op-ed (Don’t Blame Drug Prices on ‘Big Pharma’) has received a lot of attention. Especially notable was a letter to the editor from American Health Insurance Plans (AHIP). It claims that “the savings that insurance providers negotiate are returned directly to consumers through lower premiums and out-of-pocket costs.” Don’t believe this misleading half-truth. It distorts the primary argument of my WSJ op-ed: Patients often pay full price for drugs that are sold to insurers at deep discounts. Below, to show you why, I follow the dollar for an expensive, highly rebated brand-name drug used by a consumer … Continue reading How Health Plans Profit—and Patients Lose—From Highly-Rebated Brand-Name Drugs

Express Scripts Confirms It (Again): Minimal Growth in Drug Spending and Prescription Costs

Last week, Express Scripts released its 2018 Drug Trend Report. (Free download.) As you will see below, drug spending is not “skyrocketing” or “soaring.” All payer types experienced extremely low growth in pharmacy benefit spending. Average net (post-rebate) drug costs declined. These data also shed light on specialty drug spending. Greater use of specialty medications—not cost increases—was the most significant driver of spending. The latest Express Scripts data confirm the cost and spending slowdown that I have highlighted in previous Drug Channels articles. I’ll ask again: Can someone please alert the media and our elected officials? Meanwhile, the report dodges … Continue reading Express Scripts Confirms It (Again): Minimal Growth in Drug Spending and Prescription Costs

My Wall Street Journal Op-Ed: Don’t Blame Drug Prices on ‘Big Pharma’

Yesterday, The Wall Street Journal published my op-ed: Don’t Blame Drug Prices on ‘Big Pharma’. The article text is pasted below for those who don’t subscribe. I wrote this piece for a general business audience, though my arguments about rebates and patient out-of-pocket costs will be familiar to regular readers of Drug Channels. Alas, I had to omit such insider terms as gross-to-net bubble, direct and indirect remuneration, and SpongeBob SquarePants. A personal note: I have been reading the WSJ daily since I was 18 years old. It’s a genuine thrill to see my byline on an op-ed in this … Continue reading My Wall Street Journal Op-Ed: Don’t Blame Drug Prices on ‘Big Pharma’