JAMA: Withdraw This Flawed and Inaccurate Article About the 340B Program and Drug Prices

The Journal of the American Medical Association (JAMA) recently published Estimated Changes in Manufacturer and Health Care Organization Revenue Following List Price Reductions for Hepatitis C Treatments by Sean Dickson and Ian Reynolds. The paper purports to show that manufacturers’ net revenues increased following a decrease in three drugs’ list prices. However, the paper contains a significant computational error: The authors do not properly calculate the 340B ceiling price. Consequently, the authors’ calculations are inaccurate and their conclusions are erroneous. As we might expect, a manufacturer’s revenue per-patient doesn’t increase when list prices decline and net prices remain constant. Below, … Continue reading JAMA: Withdraw This Flawed and Inaccurate Article About the 340B Program and Drug Prices

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)

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

New 340B Health Reports Confirms the Program’s Size—But Double-Dips on Hospitals’ Community Benefit Obligations

340B Health, which lobbies for hospitals that participate in the 340B Drug Pricing Program, recently issued an eye-opening member survey. It found that 340B Health’s member hospitals reported total 340B discounts of $15.3 billion. (Details below.) Hmm. That’s pretty darn close to our estimate of $14.9 billion, shown in 340B Program Purchases Reach $24.3 Billion—7%+ of the Pharma Market—As Hospitals’ Charity Care Flatlines. It looks like 340B Health has perhaps inadvertently validated our computations of the program’s size. The 340B Health report also claims to show evidence that hospitals are properly using 340B funds. In reality, the report merely affirms … Continue reading New 340B Health Reports Confirms the Program’s Size—But Double-Dips on Hospitals’ Community Benefit Obligations

340B Health Gets It Wrong … Again

This week, Drug Channels published our annual update on the growth of the 340B Drug Pricing Program. See 340B Program Purchases Reach $24.3 Billion—7%+ of the Pharma Market—As Hospitals’ Charity Care Flatlines. Right on cue, 340B Health, which lobbies for hospitals that participate in the 340B program, immediately issued its annual rebuttal of the Health Resources and Services Administration (HRSA) data that we used. 340B Health was particularly distressed that our analyses “focused on 340B sales instead of discounts.” Below, you will see that when the program is measured using 340B Health’s suggested approach, it accounted for 9% to 11% … Continue reading 340B Health Gets It Wrong … Again

EXCLUSIVE: 340B Program Purchases Reach $24.3 Billion—7%+ of the Pharma Market—As Hospitals’ Charity Care Flatlines

The 340B Drug Pricing Program continues to expand at double-digit rates. According to our government contacts, discounted 340B purchases hit a record $24.3 billion in 2018. That figure is an astonishing 26% higher than its 2017 counterpart. What’s more, we have found that since 2014, purchases under the program have grown at an average rate of 28% per year. By comparison, manufacturers’ net drug revenues have grown at an average rate of below 5% over the same period. Consequently, the 340B program has grown to account for at least 7% to 8% of the total U.S. drug market. Nearly all … Continue reading EXCLUSIVE: 340B Program Purchases Reach $24.3 Billion—7%+ of the Pharma Market—As Hospitals’ Charity Care Flatlines

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