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

Payer Power: Why Eli Lilly, Janssen, and Merck Deeply Discount Their Drug Prices

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

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

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

UnitedHealthcare’s Point-of-Sale Rebate Announcement: What’s Next?

Did I just hear the gross-to-net bubble deflate a little bit? This week, UnitedHealthcare announced that it would provide point-of-sale (POS) rebates to 7 million people enrolled in its fully insured commercial group benefit plans. Click here to read the press release. UnitedHealthcare’s action is a big win for patients, though not (yet) a black swan event for pharmacies and pharmacy benefit managers (PBMs). As I explain below, it’s a small but significant move that will trigger new questions about drug prices, patients’ out-of-pocket costs, and channel economics. I’m sure that SpongeBob SquarePants, honorary mascot of the gross-to-net bubble, is … Continue reading UnitedHealthcare’s Point-of-Sale Rebate Announcement: What’s Next?

NEW: The 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers

I am pleased to announce our new our 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, available for purchase and immediate download. Click here to download a free report overview (including the Table of Contents and a List of Exhibits) Click here to read the press release We’re offering special discounted pricing if you order before March 10, 2018! The 2018 edition has been thoroughly updated, revised, and expanded. This latest edition contains the most current financial and industry data along with information about the strategies and market positions of the largest companies. Many sections and chapters have … Continue reading NEW: The 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers

Exclusive Express Scripts Data: Most People Have Very Low Out-Of-Pocket Prescription Costs

In New Express Scripts Data: The Drug Spending Slowdown Is Real, I analyzed the latest drug trend report from pharmacy benefit manager (PBM) Express Scripts. To complement our earlier analysis, Express Scripts was kind enough to provide Drug Channels with an exclusive analysis showing the distribution of out-of-pocket costs for nearly 26 million people. Despite consumer surveys complaining about “high drug prices,” the reality is that most people don’t pay much for their prescriptions. In 2017, about 95% of people with commercial insurance had less than $40 per month in out-of-pocket prescription costs. About half of them paid nothing, because … Continue reading Exclusive Express Scripts Data: Most People Have Very Low Out-Of-Pocket Prescription Costs

New Express Scripts Data: The Drug Spending Slowdown Is Real

Last week, Express Scripts released its 2017 Drug Trend Report. (Free download.)  Consider it an early Valentine’s Day present for pharma wonks like your friendly neighborhood blogger. The latest data confirm the slowdown in drug spending. For 2017, drug spending increased by only 1.5% for Express Scripts’ commercial plan sponsors. What’s more, drug spending declined for nearly half of commercial payers. Medicare, Medicaid, and exchange plans also saw very modest increases. Below, I dive deep into the data on cost and utilization growth. By now, there can be no debate that pharmacy benefit costs are growing more slowly than every … Continue reading New Express Scripts Data: The Drug Spending Slowdown Is Real

Meet The Power Buyers Driving Generic Drug Deflation

Wholesalers and retailers have deepened their relationships via generic purchasing consortia—and generic drug makers are feeling the pain. Example: Novartis’ Sandoz business unit reported that its fourth-quarter 2017 sales dropped by 17% “due to increased industry-wide pricing pressure and continued customer consolidation.” (source) Below, we examine the four generic drug mega-buyers behind this pressure: Red Oak, Walgreens Boots Alliance, McKesson and ClarusOne, and Express Script’s EconDisc. We estimate that in 2017, these four organizations accounted for an astounding 90% of total U.S. generic drug purchases from manufacturers. Read on for our market share estimates, business profiles, and the outlook for … Continue reading Meet The Power Buyers Driving Generic Drug Deflation

Employers Are Getting More Rebates Than Ever—But Sharing Little With Their Employees

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 that I’ve seen such an admission from plan sponsors. Consider the data below as confirmation of the warped incentives caused by the gross-to-net bubble—the growing spread between … Continue reading Employers Are Getting More Rebates Than Ever—But Sharing Little With Their Employees