Drug Channels News Roundup, September 2018: Gilead’s Price Cuts, Out-of-Pocket Costs, Hospital-Physician Vertical Integration, and WXPN + Me

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

Updated Part B Data: Hospitals Are Displacing Physician Offices Even Faster Than We Thought

The Medicare Payment Advisory Commission (MedPAC), the independent agency that advises Congress on the Medicare program, recently released its latest annual report: June 2018 Data Book: Health Care Spending and the Medicare Program. It’s a charming, 216-page data romp through all aspects of Medicare. Chapter 10 focuses on prescription drugs. This year’s report provides new and revised details about the locations where Part B buy-and-bill spending occurs. As you will see below, physician offices account for a smaller share of spending than what we previously reported. Hospital outpatient departments account for a higher share. What’s more, the new MedPAC data … Continue reading Updated Part B Data: Hospitals Are Displacing Physician Offices Even Faster Than We Thought

EXCLUSIVE: The 340B Program Reached $19.3 Billion in 2017—As Hospitals’ Charity Care Has Dropped (rerun)

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)

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

Drug Channels News Roundup, July 2018: Amazon’s med-surg business, Naughty 340B hospitals, GoodRx pricing data, and CVS’s musical controversy

The lazy days of summer are here. Take some time off from the gross-to-net bubble and enjoy my curated collection of timely articles. This month: A must-read Q&A on Amazon’s healthcare products distribution business A new GAO study discovers that more than one in five 340B hospitals provides minimal charity and uncompensated care Fresh data from GoodRx about the crazy variability in pharmacies’ prescription prices Plus, The Wall Street Journal publishes some hard-hitting journalism about the controversial hold music played at CVS pharmacies. P.S. Join the more than 6,000 people who follow my daily musings and neat links at @DrugChannels … Continue reading Drug Channels News Roundup, July 2018: Amazon’s med-surg business, Naughty 340B hospitals, GoodRx pricing data, and CVS’s musical controversy

Specialty Pharmacies and PBMs Penetrate the 340B Program—And How Manufacturers Should Respond

In two recent Drug Channels articles, I have documented the phenomenal growth in pharmacies participating in the 340B Drug Pricing Program and the superior profits that pharmacies earn from the program. Today, I turn to the less well-known role of specialty pharmacies and pharmacy benefit managers, which are now significant participants as 340B contract pharmacies. Below, we present our first exclusive analysis of how independent and PBM-owned specialty pharmacies have deepened their relationships with hospitals and other 340B covered entities. We estimate that nearly 10% of all specialty prescriptions are dispensed by 340B contract pharmacies, which makes this channel one … Continue reading Specialty Pharmacies and PBMs Penetrate the 340B Program—And How Manufacturers Should Respond

Our Exclusive Analysis: Nearly One in Three U.S. Pharmacies Is a 340B Contract Pharmacy; Five Chains Dominate

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

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

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

EXCLUSIVE: The 340B Program Reached $19.3 Billion in 2017—As Hospitals’ Charity Care Has Dropped

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 grown at an average rate of 29% per year. By comparison, manufacturers’ net drug sales grew at an average rate of less than 5% over the same period. Consequently, the 340B program has grown to account for at least 6% of the total U.S. drug market. Here’s another uncomfortable fact: Nearly all of the billions in 340B discounts have accrued to hospitals. Yet … Continue reading EXCLUSIVE: The 340B Program Reached $19.3 Billion in 2017—As Hospitals’ Charity Care Has Dropped

The Mysteries of Pass-Through Status: Why Medicare and Seniors Are Now Paying More for Lower-Cost Biosimilars at Hospitals

An unanticipated combination of government policy changes has led to a truly bizarre circumstance: The Medicare program and individual Medicare patients are paying more for lower-cost biosimilars. Further, hospitals are earning windfall profits from these lower-cost biosimilars, though physician offices can’t access the same financial benefits. Sound bonkers? You bet. To understand this strange turn of events, I delve into the vagaries of Medicare Part B reimbursement and the recently implemented outpatient prospective payment system (OPPS) rule for drugs acquired under the 340B Drug Pricing Program. As I explain below, the Centers for Medicare & Medicaid Services (CMS) recently made … Continue reading The Mysteries of Pass-Through Status: Why Medicare and Seniors Are Now Paying More for Lower-Cost Biosimilars at Hospitals