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 … Continue reading New Disclosures Show CVS and Express Scripts Can Survive in a World Without Rebates. Are Plan Sponsors Now the Real Barrier to Disruption?
Over the years on Drug Channels, I have explained the two primary reasons a drug’s list price doesn’t reflect what a third-party payer actually spends for that drug: (1) channel intermediaries and providers add markups that account for the costs, profits, and value of the services, and (2) manufacturers provide rebates and discounts to third-party payers. Two recently-released reports confirm the often-overlooked magnitude of provider markups. As you will see below, commercial payers use reimbursement approaches that permit hospitals to inflate specialty drug costs by thousands of dollars per claim when compared with physician offices. This is not about differences … Continue reading Still Possible: Hospitals Overcharge Health Plans for Specialty Drugs
This week, I’m rerunning some popular posts before the holiday week. Click here to see the original post and comments from April 2018. You can also reach this post at www.GrossToNetBubble.com. 😉 In 2017, the gross-to-net bubble—the ever-growing pile of money between a manufacturer’s list price for a drug and the net price after rebates and other reductions—hit a new high. Based on new data from IQVIA, manufacturers of brand-name drugs in 2017 reduced list price revenues by an astonishing $153 billion. Those reductions came primarily from rebates, discounts, and other payments to the drug channel. That figure has grown … Continue reading The Gross-to-Net Bubble Topped $150 Billion in 2017 (rerun)
It’s time for Drug Channels’ annual analysis of drug spending. For 2017, we again turn to the annual trend reports from four large pharmacy benefit managers (PBMs)—CVS Health, Express Scripts, MedImpact, and Prime Therapeutics. (See their report links below.) Below, I compare who’s better and who’s best among the PBMs and share additional observations about the 2017 trends. We offer four key conclusions: Drug spending grew by only 1.5% in 2017, continuing a multiyear decline in the growth rate. Total drug spending declined at more than 40% of plan sponsors. Spending on traditional drugs dropped by mid-single digits. For specialty … Continue reading Who Best Managed the Drug Spending Slowdown in 2017: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?
This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from January 2018. Yesterday, I examined new data showing that employers are receiving an increasing share of the rebate money collected by pharmacy benefit managers. See Employers Are Extracting More of Their Rebate Dollars from PBMs. The data, from a Pharmacy Benefit Management Institute (PBMI) survey, also documented a troubling reality. Employers acknowledged that they are hoarding rebates rather than sharing the savings with the employees whose prescriptions generated the rebate funds. It’s the first time … Continue reading Employers Are Getting More Rebates Than Ever—But Sharing Little With Their Employees (rerun)
This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from January 2018. Let’s kick off 2018 with a Last Jedi-themed look at copay accumulator programs—a benefit design option that I expect to become highly controversial this year. Accumulator programs target specialty drugs for which a manufacturer provides copayment assistance. Unlike conventional benefit designs, the manufacturer’s payments no longer count toward a patient’s deductible or out-of-pocket maximum. As you will see below, plan sponsors—employers and health plans—will save big money because accumulators shift a majority of … Continue reading Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit (rerun)
Baseball season is finally here! Oil up your glove, lace up your cleats, and let’s run the bases around this month’s news stories. Remember: Sometimes you win, sometimes you lose, and sometimes it rains. In this issue: Green Monster: The drug manufacturers that are most vulnerable to copay accumulators Pop Fly: Express Scripts wants to pop the gross-to-net bubble? Foul! Fresh evidence that uninsured consumers pay rip-off cash prices at retail pharmacies Strikeout: My $0.02 on Amazon’s decision not to sell drugs to hospitals Plus, from the diamond to the green: the secret pharmacy history of golf legend Jack Nicklaus. … Continue reading Drug Channels News Roundup, April 2018: Copay Accumulators, Express Scripts, Pharmacy Pricing, Amazon, and Almost-Pharmacist Jack Nicklaus
In 2017, the gross-to-net bubble—the ever-growing pile of money between a manufacturer’s list price for a drug and the net price after rebates and other reductions—hit a new high. Based on new data from IQVIA, manufacturers of brand-name drugs in 2017 reduced list price revenues by an astonishing $153 billion. Those reductions came primarily from rebates, discounts, and other payments to the drug channel. That figure has grown by 10% from the 2016 figure, even though net prices for brand-name drugs grew by only 1.9%. We can no longer ignore the warped incentives created by our bubble buddy. As regular … Continue reading The Gross-to-Net Bubble Topped $150 Billion in 2017
Over the past few weeks, three of the largest pharmaceutical manufacturers—Eli Lilly, Janssen, and Merck—have publicly reported the 2017 gross and net price changes for their U.S. product portfolios, along with average discounts. As far as I know, these are the only manufacturers that have publicly reported these data. See the links below. As you will see, the three companies have provided average discounts from list prices of 42% to 51%. Two of the three companies experienced a year-over-year decrease in average net prices. Payers and PBMs frequently recommend that manufacturers just lower the cost of their drugs. These data … Continue reading Payer Power: Why Eli Lilly, Janssen, and Merck Deeply Discount Their Drug Prices
It’s technically spring here at Drug Channels’ worldwide headquarters in lovely downtown Philadelphia. While the last snowdrifts melt into memory, please enjoy this month’s selection of noteworthy news stories. You’ll learn: Why copay accumulators are making national news How hospitals are doubling cancer drug costs Fun facts about the massive shift to hospital-employed physicians Plus, a joke (I think) about how a major health insurer makes money. P.S. Join the nearly 5,400 people who follow me at @DrugChannels on Twitter. I share links to crucial news and reports that you should know about. Read more » Copyright © 2006-2018 Pembroke … Continue reading Drug Channels News Roundup, March 2018: Copay Accumulators, Cancer Drug Costs, Physician Employment, and Insurer Profits