A World Without Rebates: Predictions for How the Channel Will Evolve and Why Drug Prices Will Go Down

Two years ago on Drug Channels, I wrote about a shift from rebates to discounts as a black swan event—a massively important yet unexpected break from current practice. Given recent developments, I believe that we are moving ever closer to a world without rebates. Yet there are many unanswered questions were such a radical shift to occur. As I see it, a world without rebates would force manufacturers to use net price as a competitive weapon. If PBMs and payers behave logically, then drug prices would drop as manufacturers are forced to compete more aggressively for prescriptions. These conclusions are … Continue reading A World Without Rebates: Predictions for How the Channel Will Evolve and Why Drug Prices Will Go Down

My Wall Street Journal Op-Ed: Don’t Blame Drug Prices on ‘Big Pharma’

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 note: I have been reading the WSJ daily since I was 18 years old. It’s a genuine thrill to see my byline on an op-ed in this … Continue reading My Wall Street Journal Op-Ed: Don’t Blame Drug Prices on ‘Big Pharma’

Drug Prices Are NOT Skyrocketing—They’re Barely Growing at All

The IQVIA Institute for Human Data Science today released a new report that reveals important realities about U.S. drug pricing trends. Too many politicians and journalists remain committed to the false narrative of “skyrocketing” and “soaring” drug prices. By contrast, IQVIA data reveal that list prices for brand-name drugs grew by less than 6% in 2018. What’s more, net prices (after rebates and discounts) increased by only 1.5%. The 2018 figures mark the fourth consecutive year that net drug prices have grown by low-single-digit amounts. I recognize that relying on “facts” and “data” has become unfashionable. But I simply don’t … Continue reading Drug Prices Are NOT Skyrocketing—They’re Barely Growing at All

A System Without Rebates: The Drug Channels Negotiated Discounts Model (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from August 2018. This has been the most impactful article that I have ever published on Drug Channels. Review it and get ready for 2019. P.S. You can also find this material at www.WorldWithoutRebates.com. (Yes, we bought that domain!) 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, … Continue reading A System Without Rebates: The Drug Channels Negotiated Discounts Model (rerun)

New Disclosures Show CVS and Express Scripts Can Survive in a World Without Rebates. Are Plan Sponsors Now the Real Barrier to Disruption? (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from August 2018. This rerun explains how and why PBMs are shifting responsibility and blame toward third-party payers. In 2019, we’ll hear much more about how payers’ use of rebates affect patients’ out-of-pocket costs and distort the drug channel. Addressing the problems will require a major rethink of commercial and Medicare Part D pharmacy benefit designs. For my related $0.02 on the politics of “drug prices,” see also Drug Prices After the Midterms: Five Crucial Implications of Pharmacy Benefit Design. P.S. … 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? (rerun)

Building a New Drug Wholesaler Compensation Model: What Happens as Brand Inflation Slows? (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from July 2018. The challenges facing wholesalers have intensified since this article was originally published, in July. Brand-name drug inflation will likely reach historical lows in 2019, and the prospects for a gross-to-net bubble reset are greater than ever. Have executives at the Big Three companies fully grasped the changes coming to the drug wholesaling business model? For more on the industry, see our 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Today, drug wholesalers make money from distribution in … Continue reading Building a New Drug Wholesaler Compensation Model: What Happens as Brand Inflation Slows? (rerun)

GAO Confirms It: 340B Hospitals and Contract Pharmacies Profit from Low-Income, Uninsured Patients (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from July 2018. Expect 340B to stay in the news during 2019. Unfortunately, a sensible, bipartisan legislative fix still seems unlikely. 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: … Continue reading GAO Confirms It: 340B Hospitals and Contract Pharmacies Profit from Low-Income, Uninsured Patients (rerun)

CMS Considers Point-of-Sale Pharmacy DIR: Another Prelude to a World Without Rebates?

Last week, the Centers for Medicare & Medicaid Services (CMS) released a new rule for Medicare Parts B and D. It proposes changes to protected classes, e-prescribing, and other issues. Links and background below. Notably for the Drug Channels audience, CMS also announced that it is considering—but not yet formally proposing—changes to how pharmacy price concessions are handled within Medicare Part D. These payments currently function like pharmacy rebates to Part D plans. They are therefore considered to be direct and indirect remuneration (DIR) and often called “DIR fees.” Thanks to new CMS disclosures, we can now see why pharmacy … Continue reading CMS Considers Point-of-Sale Pharmacy DIR: Another Prelude to a World Without Rebates?

Drug Channels News Roundup, November 2018: Amazon/PillPack Update, Fake News from BCBSA, Drug List Prices in Ads, Part D Plans, and Dan Best

Hope you enjoyed the Thanksgiving holiday! I remain ever-thankful for your support and readership. Now that you’ve stretched your stomach, stretch your mind with some food for thought. In this issue: Amazon starts to expand PillPack’s dispensing capabilities Blue Cross Blue Shield misrepresents drug spending data An excellent analysis of the CMS proposal for advertising drug list prices The patient’s perspective on choosing a Medicare Part D plan Plus, please consider making a donation to the Dan Best Memorial Fund. Details below. P.S. For daily updates on stuff that I am reading, join the more than 6,500 people who follow … Continue reading Drug Channels News Roundup, November 2018: Amazon/PillPack Update, Fake News from BCBSA, Drug List Prices in Ads, Part D Plans, and Dan Best

Drug Prices After the Midterms: Five Crucial Implications of Pharmacy Benefit Design

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