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

Why Retail Pharmacies Still Overcharge Uninsured Patients—And What That Means for Amazon (rerun)

This week, I’m rerunning some popular posts before the holiday week. Click here to see the original post and comments from April 2018. 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 … Continue reading Why Retail Pharmacies Still Overcharge Uninsured Patients—And What That Means for Amazon (rerun)

Meet The Power Buyers Driving Generic Drug Deflation (rerun)

This week, I’m rerunning some popular posts before the holiday week. Click here to see the original post and comments from February 2018. 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 … Continue reading Meet The Power Buyers Driving Generic Drug Deflation (rerun)

The Gross-to-Net Bubble Topped $150 Billion in 2017 (rerun)

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)

Drug Channels News Roundup, June 2018: Fake News from AHIP, Azar Blasts Rebates, Sanofi’s Pricing, Asembia in Vegas, and Justice for Gingers

Summer is here! Before you launch your incredible vacation, please enjoy these super Drug Channels stories: AHIP misrepresents drug spending data HHS Secretary Azar tells Congress about “a system without rebates” Sanofi discloses a major gross-to-net gap and declining drug prices Asembia shares video highlights from Las Vegas Plus: a major social justice win for your humble correspondent. P.S. Follow my daily links to neat stuff at @DrugChannels on Twitter. Recent tweets have covered new drug spending data, M&A news, pharmacy benefit manager (PBM) activities, retail clinics, copay accumulators, track-and-trace, and more. Read more » Copyright © 2006-2018 Pembroke Consulting, … Continue reading Drug Channels News Roundup, June 2018: Fake News from AHIP, Azar Blasts Rebates, Sanofi’s Pricing, Asembia in Vegas, and Justice for Gingers

Who Best Managed the Drug Spending Slowdown in 2017: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?

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?

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

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. 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)

Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit (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)

Drug Channels News Roundup, April 2018: Copay Accumulators, Express Scripts, Pharmacy Pricing, Amazon, and Almost-Pharmacist Jack Nicklaus

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