Six Reasons Why the Rebate Rule Failed—And What’s Next

Yesterday, we all awoke to the unexpected news that the Department of Health & Human Services (HHS) withdrew its plans to reform rebates in federal programs. The world without rebates has been delayed—perhaps indefinitely. Below, I highlight six key policy and political factors behind this decision. I also discuss winners and losers among drug channel participants. The underlying problems of the the gross-to-net bubble remain. As H.L. Mencken observed: “There is always a well-known solution to every human problem—neat, plausible, and wrong.” Get ready for a slew of drug pricing policy proposals that perfectly fit these criteria. Read more » … Continue reading Six Reasons Why the Rebate Rule Failed—And What’s Next

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

This morning, the White House withdrew its proposed rule to reform the rebate system in federal programs. I am surprised by the timing, which likely has more to do with politics than policy. Tomorrow, I’ll post some reflections on this unexpected news.  In the meantime, today’s rerun is a reminder of what’s still at stake in reforming rebates within the U.S. drug channel .  Click here to see the original post and comments from April 2019. You can also reach this post at www.GrossToNetBubble.com. 😉 The gross-to-net bubble—the ever-growing pile of money that sits between a manufacturer’s list price for a drug and … Continue reading The Gross-to-Net Bubble Reached a Record $166 Billion in 2018 (rerun)

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

This week, I’m rerunning some popular posts during the holiday week. Click here to see the original post and comments from February 2019. 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 … Continue reading How Health Plans Profit—and Patients Lose—From Highly-Rebated Brand-Name Drugs (rerun)

Drug Channels News Roundup, June 2019: PBM Spread Pricing, Rebate Walls, Reforming Part D, and Not-So-Smart Bulbs

Happy 243rd birthday, America! Before you launch your July 4 festivities, Drug Channels offers some fireworks of its own: Surprising PBM spread pricing profits in Massachusetts plans Eli Lilly explains rebate walls for specialty drugs MedPAC suggests Part D changes—and endorses a well-known Drug Channels term! Plus, the funniest video that I have ever seen. P.S. @DrugChannels on Twitter now has more than 7,700 followers. See why by following my daily musings and cool links. Read more » Copyright © 2006-2019 Pembroke Consulting, Inc. d/b/a Drug Channels Institute. Drug Channels® is a registered trademark of Pembroke Consulting, Inc. This Feed … Continue reading Drug Channels News Roundup, June 2019: PBM Spread Pricing, Rebate Walls, Reforming Part D, and Not-So-Smart Bulbs

CVS, Express Scripts, and the Evolution of the PBM Business Model

Over the next week, CVS Health and Cigna will hold their annual investor days. (Links below.) They will offer business and financial overviews of their diverse companies, including an update on the outlook for their pharmacy benefit managers (PBMs). It’s a tough time to be a PBM. Compensation models are shifting, due to increased scrutiny by payers, regulators, and politicians. Plan sponsors are more sophisticated and seek greater pass-through of rebates, admin fees, and other manufacturer-provided revenues. Network spreads are under pressure, while specialty pharmacy dispensing accounts for a growing share of profits. Plus, the entire drug channel system could … Continue reading CVS, Express Scripts, and the Evolution of the PBM Business Model

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 Road to 2020: Understanding the Regulatory Timeline for Part D Rebate Reform

The Department of Health & Human Services (HHS) keeps signaling that it wants to move us toward a world without rebates. Right now, it is evaluating comments on its proposal to remove rebates from federal programs. HHS wants to implement this rule in time for the January 1 start of the 2020 Medicare Part D plan year. I would like, if I may, to take you on a journey through the 2019 regulatory timeline for both Part D and the proposed rule. As you will see, there is still a viable—but narrow—window for regulatory reform of rebates. Despite our assessment, … Continue reading The Road to 2020: Understanding the Regulatory Timeline for Part D Rebate Reform

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