Drug Channels News Roundup, October 2018: Amgen, Walgreens, Rite Aid’s PBM, Drug Price Ads, and Buy-and-Bill Murray

Boo! Time for my Halloween bag of Drug Channels news stories. This issue’s tricks and treats: Shocking! The gross-to-net bubble for Amgen’s PCSK9 product magically vanishes—and my $0.02 appears Creepy! Stefano Pessina of Walgreens Boots Alliance shares startling thoughts about Amazon, ABC, and more Scary! Shareholders vote today on whether Rite Aid should amputate its PBM Spooky! The Wall Street Journal conjures up a frightfully funny editorial about the drug channel Plus, the Centers for Medicare & Medicaid Services summons Buy-and-Bill Murray for its latest foray into Part B reform. P.S. Join the zombie horde who shamble after me at … Continue reading Drug Channels News Roundup, October 2018: Amgen, Walgreens, Rite Aid’s PBM, Drug Price Ads, and Buy-and-Bill Murray

Updated Part B Data: Hospitals Are Displacing Physician Offices Even Faster Than We Thought

The Medicare Payment Advisory Commission (MedPAC), the independent agency that advises Congress on the Medicare program, recently released its latest annual report: June 2018 Data Book: Health Care Spending and the Medicare Program. It’s a charming, 216-page data romp through all aspects of Medicare. Chapter 10 focuses on prescription drugs. This year’s report provides new and revised details about the locations where Part B buy-and-bill spending occurs. As you will see below, physician offices account for a smaller share of spending than what we previously reported. Hospital outpatient departments account for a higher share. What’s more, the new MedPAC data … Continue reading Updated Part B Data: Hospitals Are Displacing Physician Offices Even Faster Than We Thought

Still Possible: Hospitals Overcharge Health Plans for Specialty Drugs

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

The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption

Last Friday, the U.S. Department of Health & Human Services (HHS) released American Patients First, a report billed as “The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.” This administration’s blueprint offers a thoughtful diagnosis of U.S. drug pricing along with the unintended consequences and warped incentives of our drug channel system. The report also proposes a very long list of more than 50 regulatory and legislative fixes. It therefore doesn’t translate to quick action or simple sound bites. Many people are discounting the plan as no big deal and therefore underestimating how radically the system could … Continue reading The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption

The Mysteries of Pass-Through Status: Why Medicare and Seniors Are Now Paying More for Lower-Cost Biosimilars at Hospitals

An unanticipated combination of government policy changes has led to a truly bizarre circumstance: The Medicare program and individual Medicare patients are paying more for lower-cost biosimilars. Further, hospitals are earning windfall profits from these lower-cost biosimilars, though physician offices can’t access the same financial benefits. Sound bonkers? You bet. To understand this strange turn of events, I delve into the vagaries of Medicare Part B reimbursement and the recently implemented outpatient prospective payment system (OPPS) rule for drugs acquired under the 340B Drug Pricing Program. As I explain below, the Centers for Medicare & Medicaid Services (CMS) recently made … Continue reading The Mysteries of Pass-Through Status: Why Medicare and Seniors Are Now Paying More for Lower-Cost Biosimilars at Hospitals

Drug Channels News Roundup, March 2018: Copay Accumulators, Cancer Drug Costs, Physician Employment, and Insurer Profits

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

Specialty Distributors’ Customer Mix Changes As Physician Buy-and-Bill Fades

In A Lesson from McKesson: How Specialty Pharmacy Growth Is Hurting Wholesalers, I explained the challenges to wholesalers’ profits from the growth of patient-administered specialty pharmacy drugs. Today, I provide a complementary look at the changing customer mix of wholesalers’ specialty distribution businesses for provider-administered drugs. As you will see below, the latest data show that specialty distributors’ revenues from independent physician offices and clinics have eroded significantly. These customers now account for less than half of specialty distributors’ business. This change mirrors the ongoing disruption of the buy-and-bill market, where higher-cost hospital outpatient settings have been crowding out lower-cost … Continue reading Specialty Distributors’ Customer Mix Changes As Physician Buy-and-Bill Fades

Remicade: A Case Study in How U.S. Pricing and Reimbursement Curb Adoption of Biosimilars (rerun)

This week, I’m rerunning some popular posts during the pre-holiday week. Click here to see the original post and comments from September 2017. This post is good reminder that biosimilar products have unanticipated channel dynamics. CMS’s policy change will further alter the 2018 market. Effective January 1, 2018, each biosimilar will have its own J-code. See Final Policy, Payment, and Quality Provisions in the Medicare Physician Fee Schedule for Calendar Year 2018. Drug Channels will return on January 3. Until then, have a great holiday and happy new year! The Centers for Medicare & Medicaid Services (CMS) has just released … Continue reading Remicade: A Case Study in How U.S. Pricing and Reimbursement Curb Adoption of Biosimilars (rerun)

Remicade: A Case Study in How U.S. Pricing and Reimbursement Curb Adoption of Biosimilars

The Centers for Medicare & Medicaid Services (CMS) has just released the Average Sales Prices (ASP) reimbursement data for the fourth quarter of 2017. You can download the drug pricing files here. Below, I use these data to explore the reimbursement and payer dynamics behind the relatively slow adoption of Inflectra, the first biosimilar of Remicade. The introduction of Renflexis, a second biosimilar, will offer additional insights about pricing and channel strategies. The U.S. biosimilar market is highly underdeveloped compared with our European counterparts. As this case study shows, it’s pretty, pretty, pretty hard to launch a biosimilar. Read more … Continue reading Remicade: A Case Study in How U.S. Pricing and Reimbursement Curb Adoption of Biosimilars

New Part B Buy-and-Bill Data: Physician Offices Are Losing to Hospital Outpatient Sites

The Medicare Payment Advisory Commission (MedPAC), the independent agency that advises Congress on the Medicare program, recently released its June 2017 Data Book: Health Care Spending and the Medicare Program. The report is a 201-page wonktastic data dump. Chapter 10 focuses on prescription drugs. In 2015, the most recent year available, Part B spending on drugs reached $25.7 billion. Hospital outpatient sites now constitute more than one-third of Medicare spending and have been crowding out physician offices. Part B payments to physician practices are growing much more slowly than payments to hospitals. For some time, I have been tracking the … Continue reading New Part B Buy-and-Bill Data: Physician Offices Are Losing to Hospital Outpatient Sites