After Tuesday’s election, House minority leader Nancy Pelosi pointed to “reducing the cost of prescription drugs” as a legislative priority. But addressing patient affordability issues will require more than decrying “high drug prices.” Today, I highlight five implications of these benefit designs on patient affordability, out-of-pocket costs, and perceptions of prescriptions prices. My observations are based on Employer Pharmacy Benefits in 2018: More Tiers, Greater Coinsurance, and Lots of High-Deductible Plans, in which I summarized companies’ 2018 prescription drug coverage for their employees. As I explain below, many aspects of employers’ plans are unfriendly to patients with serious medical conditions … Continue reading Drug Prices After the Midterms: Five Crucial Implications of Pharmacy Benefit Design
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
Autumn is here, and we’ve squirrelled away some great acorns that have fallen from the mighty Drug Channels oak trees: Gilead’s new pricing starts to pop the gross-to-net bubble New fact-based insights on patient out-of-pocket costs and prescription abandonment Cool new stats on hospital-physician vertical integration by specialty The U.S. healthcare crisis will probably never end (Sorry.) Plus, your friendly neighborhood blogger joins the board of 88.5 WXPN, the country’s leading non-commercial Triple A (adult, album, alternative) radio station. P.S. Follow my daily stream of links to neat stuff at @DrugChannels on Twitter.Recent tweets have highlighted rebates, step therapy, PSAOs, … Continue reading Drug Channels News Roundup, September 2018: Gilead’s Price Cuts, Out-of-Pocket Costs, Hospital-Physician Vertical Integration, and WXPN + Me
This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from May 2018. Note that the data from this post were provided to me by the Health Resources and Services Administration (HRSA)! ICYMI, be sure to read yesterday’s New York Times article: A Little-Known Windfall for Some Hospitals, Now Facing Big Cuts The 340B Drug Pricing Program continues to expand at double-digit rates. Our research reveals that these discounted sales hit a record $19.3 billion in 2017. What’s more, we found that since 2014, purchases under the program have … Continue reading EXCLUSIVE: The 340B Program Reached $19.3 Billion in 2017—As Hospitals’ Charity Care Has Dropped (rerun)
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?
Are you ready for a world without rebates? In June, Alex Azar, Secretary of the U.S. Department of Health & Human Services (HHS), summarized his long-range vision for a new drug channel system: “[W]e may need to move toward a system without rebates, where PBMs and drug companies just negotiate fixed-price contracts. Such a system’s incentives, detached from artificial list prices, would likely serve patients far better.” (emphasis added) No one has yet explained what a system without rebates would look like. To facilitate the discussion, I have sketched out a possible new drug channel system that would: Respond to the … Continue reading A System Without Rebates: The Drug Channels Negotiated Discounts Model
Today, drug wholesalers make money from distribution in a straightforward manner: Buy low, sell high, collect early, and pay late. They also profit as brand-name list prices increase. Like other drug channel intermediaries, wholesalers have warped incentives to prefer ever-higher list prices. But what happens to their business model if list prices don’t rise—or even if they decrease? This question is no longer theoretical. Many drug makers—Pfizer, Roche, Novartis, Novo Nordisk, Sanofi, and others—have announced an intention not to raise list prices for 2018 or have rescinded planned increases. Merck has gone further and become the first major manufacturer to … Continue reading Building a New Drug Wholesaler Compensation Model: What Happens as Brand Inflation Slows?
Pharmacies continue to profit from the 340B Drug Pricing Program’s explosive growth. Our latest exclusive analysis finds that about 21,600 pharmacy locations now act as contract pharmacies for the hospitals and other healthcare providers that participate in the 340B program. The total number of locations has grown by 9% over the past 12 months. The five largest retail pharmacy chains—Walgreens, CVS, Walmart, Albertsons/Rite Aid, and Kroger—account for two-thirds of 340B contract pharmacy locations. This growth is unsurprising. The U.S. Government Accountability Office (GAO) has now documented the tremendous profits available to 340B contract pharmacies. See GAO Confirms It: 340B Hospitals … Continue reading Our Exclusive Analysis: Nearly One in Three U.S. Pharmacies Is a 340B Contract Pharmacy; Five Chains Dominate
The United States Government Accountability Office (GAO) has just issued a must-read report on the 340B Drug Pricing Program: Federal Oversight of Compliance at 340B Contract Pharmacies Needs Improvement. Some of the report’s most startling revelations confirm our worst fears about how hospitals and pharmacies are abusing the 340B program. Here are two especially dispiriting findings from the GAO’s analysis: 16 out of 28 hospitals (57%!) did not provide discounted drug prices to low-income, uninsured patients who filled prescriptions at the hospital’s 340B contract pharmacy. Seriously?!? Many 340B contract pharmacies can earn excessive profit margins of 15% to 20% from … Continue reading GAO Confirms It: 340B Hospitals and Contract Pharmacies Profit from Low-Income, Uninsured Patients
I can’t recall any period in my life when our country has been so divided and polarized. So just in time for our nation’s birthday, I’m happy to report some good news. When it comes to healthcare analysis, both Republicans and Democrats can agree on one thing: Drug Channels is the go-to source! Each political party’s major drug pricing policy document draws prominently from our research and writing. See below for the patriotic details of this historic bipartisan validation. Through the Drug Channels Institute, I strive to provide you with fact-based and balanced coverage. I’m proud that your friendly neighborhood … Continue reading Democrats and Republicans Agree: Drug Channels Is Awesome!