Drug Channels News Roundup, December 2024: Crazy Medicare Reimbursements, Independents Grow (Really!), AFP Risks, Pharmacy History, GLP-1 Jokes, and Two Cool Dudes

Happy New Year, everyone! It’s been a huge year for Drug Channels Institute (DCI).

In January, HMP Global acquired DCI. Thanks to our new friends at HMP, we will hold the Drug Channels Leadership Forum. This landmark event will take place in March 2025 in Miami. (If you haven’t done so yet, click here to request an invitation.)

Once again, I thank you, dear readers, for welcoming Drug Channels into your inboxes, browsers, and apps. I’m proud of the diverse and thoughtful audience who follows and comments on our unique content. The DCI community now includes more than 100,000 subscribers and followers from all parts of the industry. To stay in touch, you can sign up for an email subscription or follow me on LinkedIn.

We’ve enjoyed bringing you our perspectives and curated links in 2024. We hope that you had fun engaging with us and the DCI community.

Wishing you and your family health and happiness,
Adam and the DCI team

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In this issue:

• Unexplainable pharmacy reimbursements in Medicare Part D

• Surprise! There are more (not fewer) independent pharmacies

• Plan risks from shady alternative funding programs

• A brief but enlightening history of pharmacy from 1385 to today

• Jim Gaffigan jokes about GLP-1s

Plus, a fun photo of two cool (but familiar) dudes.

Did you miss the Drug Channels Outlook 2025 video webinar? No worries! Just sign up to watch the replay and download the full slide deck.

Who Will Pay for Prescription Drugs in 2032: Four Takeaways from the New Government Forecasts (rerun)

This week, I’m rerunning some popular posts while I prepare for today’s Drug Channels Outlook 2025 live video webinar. (If you sign up before 12 p.m. ET, you can attend the live event.) Click here to see the original post.

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The econowonks at the Centers for Medicare & Medicaid Services (CMS) recently released the latest projections for U.S. spending on healthcare. (See links below.) These data provide the latest official look at how the Inflation Reduction Act (IRA) will affect U.S. healthcare spending.

As you will see below, CMS projects that outpatient prescription drugs dispensed by retail and mail pharmacies will remain a small share of total U.S. healthcare spending. The Inflation Reduction Act’s changes to the Medicare Part D program, along with coming demographic shifts, will have a significant impact on future spending by government programs and consumers.

Nonetheless, taxpayers—primarily via Medicare and Medicaid—will continue to dominate the employer-sponsored insurance market. Like it or not, vertically integrated insurers, PBMs, specialty pharmacies, and providers will continue to prosper.

White Bagging Update 2024: Providers’ Pushback Preserves Buy-and-Bill (rerun)

This week, I’m rerunning some popular posts while I prepare for tomorrow’s Drug Channels Outlook 2025 live video webinar. During the webinar, I'll share some thoughts on how vertical integration will affect the buy-and-bill channel.

Click here to see the original post from September 2024.

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Time for DCI’s annual update on the channels for provider-administered drugs. Below, I review the latest data on 2024 trends and compare them to the pre-pandemic figures.

For 2024, payers report that specialty pharmacies—via white and clear bagging—have displaced buy-and-bill for a meaningful share of commercial covered lives utilizing provider-administered oncology drugs. However, provider pushback has limited specialty pharmacies' share gains, so that buy-and-bill remains the most common channel for these products.

Payers’ adoption of white bagging—and provider’s push back—reflect the ongoing battle for oncology margin in U.S. drug channels. Let’s hope that patients don’t get caught in the crossfire.

P.S. Today’s article is adapted from Chapter 3 of DCI’s forthcoming 2024-25 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, which will be available to preorder next week at special introductory pricing.

Follow the 340B Prescription Dollar: How PBMs Profit from 340B Contract Pharmacies (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s Drug Channels Outlook 2025 live video webinar. During the webinar, I'll provide an update the 340B program, which continues to defy gravity. Click here to see the original post.

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In my recent The 340B Drug Pricing Program: Trends, Controversies, and Outlook video webinar, I provided an update on the economics of the 340B program, reviewed the multiple controversies surrounding the program’s operations, discussed state and federal legislation, and analyzed how the Inflation Reduction Act of 2022 (IRA) will alter the 340B market.

In the video excerpt below, I walk through a brief history of 340B contract pharmacies. I then document how five multi-billion-dollar, for-profit, publicly traded pharmacy chains and pharmacy benefit managers (PBMs)—Cigna (via Express Scripts), CVS Health, UnitedHealth Group (via OptumRx), and Walgreens, Walmart—continue to dominate the 340B contract pharmacy market. I conclude with a “follow the dollar” example of 340B prescription economics with contract pharmacies.

If this clip whets your appetite for more, register to watch a replay of the full 90-minute video webinar from June.

You can also check out our recent data deep dive: Hospitals Are Relying More on PBMs to Manage Manufacturers' 340B Contract Pharmacy Restrictions: DCI's 2024 Market Analysis.

Click here if you can’t see the video below.

PBM Power: The Gross-to-Net Bubble Reached $334 Billion in 2023—But Will Soon Start Deflating (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s Drug Channels Outlook 2025 live video webinar. Click here to see the original post.

As you reread the article below, note that some manufacturers have already announced wholesale acquisition cost (WAC) list price declines for 2025.

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Last week, the Federal Trade Commission (FTC) released its interim report on pharmacy benefit managers (PBMs). The report’s unsubtle subtitle revealed how the agency views PBMs: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. ICYMI, the FTC's report relied extensively on the Drug Channels Institute's (DCI's) 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

PBMs’ negotiating leverage against pharmaceutical manufacturers has been a key factor inflating the gross-to-net bubble—the ever-growing dollar gap between sales at brand-name drugs’ list prices and their sales at net prices after rebates, discounts, and other reductions.

For 2023, DCI estimates that the total value of manufacturers’ gross-to-net reductions for all brand-name drugs was $334 billion. (As we describe below, our latest estimates make a crucial change in the presentation of these figures compared with previous editions.)

Multiple forces are poised to pop the gross-to-net bubble for high-list/high-rebate products. This will force PBMs to further evolve their business models, while challenging plan sponsors and the FTC to follow the dollars.

Alas, patients remain caught in the drug channel's murky waters. I still can’t predict when SpongeBob SquarePants departs from Drug Channels—although I wish him a happy 25th birthday!

Humira Biosimilar Price War Update: Should We Be Glad that CVS Health and Express Scripts Are Using Private Label Products to Pop the Gross-to-Net Bubble? (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s Drug Channels Outlook 2025 live video webinar. Click here to see the original post. During Friday's webinar, I’ll share some updated thoughts on biosimilars and PBM’s private label products.

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The Humira biosimilar market just took another step forward—but remains far from its ideal state.

Last week, Cigna’s Express Scripts announced that it that will follow CVS Health’s CVS Caremark business and remove Humira from its largest commercial formulary in favor of multiple biosimilars.

Below, we review the 20 products competing with Humira—including four private-label products marketed by in-house subsidiaries owned by CVS Health and Cigna.

As you will see below, CVS Health’s formulary actions led to rapid uptake of a low-list-price biosimilar. Express Scripts’ 2025 strategy will also drive biosimilar adoption, although its pricing strategy is more problematic.

But what’s really going to bake your noodle later: Would the largest PBMs have popped the gross-to-net bubble for Humira if they hadn’t been able to profit from the switch?

Four Revelations from Minnesota’s First 340B Transparency Report

It’s time to pay attention to the money behind the 340B curtain.

Minnesota just released the industry‘s first ever mandated financial report on the 340B Drug Pricing Program. Below, I do a wicked deep dive into the data and highlight crucial implications about spending, profits, pharmacies, plans, patients, program integrity, and more.

There are important limitations to these data. But Minnesota’s report marks a valuable first step on the yellow brick road to the wonderful world of transparency. I suspect similar reports are gonna be popular.

And don't forget to put on your ruby slippers and hear from Doctor of Thinkology Adam J. Fein. During next week’s Drug Channels Outlook 2025 live video webinar, he'll tell you what's ahead for the program that continues to defy gravity.

Drug Channels News Roundup, November 2024: Employers & Their PBMs, Medicaid vs. 340B, U.S. Drug Prices, and Dr. G Shops for Health Plans

Happy Thanksgiving, everyone! Before you stretch your stomach, stretch your mind with our extra-stuffed helping of food for thought. In this issue:

• Intriguing data on how employers oversee their PBMs

• State Medicaid programs carve out PBMs—and get a 340B windfall

• Are U.S. drug prices really higher than other countries?

Plus, Dr. Glaucomflecken gets us ready for the open enrollment season.

P.S. Join my nearly 60,000 LinkedIn followers for daily links to neat stuff along with thoughtful and provocative commentary from the DCI community.

Coming soon: Drug Channels Outlook 2025, our biggest live video webinar of the year. Join Adam J. Fein, Ph.D., on December 13, 2024, from 12:00 p.m. to 1:30 p.m. ET., as he helps you and your team get ready for 2025 by outlining key issues and uncertainties that will surely affect your planning. Click here to learn more and sign up.

Addressing Gaps in Access: Strategies to Optimize Your Prescription Journey

Today’s guest post comes from Catherine Wood Hill, SVP of Marketing at PHIL.

Catherine reviews the prescription lifecycle from the perspectives of patients, providers, and manufacturers. She explains how manufacturers can support patients with clear comunication about their prescriptions. Catherine then outlines five strategies to help providers have more informed conversations with patients.

To learn more, watch for PHIL’s on-demand webinar: Improving Access, Coverage, and GTN with Digital Hubs.

Read on for Catherine’s insights.

Large Chains’ Position in 2025’s Part D Pharmacy Networks: Supermarkets Take the Lead in a Shrinking PDP Market

In Medicare Part D in 2025: Preferred Pharmacy Networks Fade in a Collapsing PDP Market, I documented the Inflation Reduction Act’s (IRA) disruption to Medicare Part D prescription drug plans (PDPs).

Today, we examine the seven largest retail chains’ participation in the 12 major 2025 Part D networks that the five largest plan sponsors will offer. As always, we provide you with a handy table for tallying each chain’s participation and changes from 2024 to 2025.

As you’ll see, Albertsons and Publix are the only major retail chains that will be participating in all of the major PDP’s preferred and open pharmacy networks. Walmart and Walgreens will maintain strong participation, while CVS will pull back. Low-income subsidy (LIS) beneficiaries, whose ranks expanded due to the IRA, will continue to have no financial advantage for using a preferred pharmacy.

In a future post, we’ll delve into how smaller pharmacies will participate in the 2025 Part D plans, by examining the pharmacy services administrative organizations (PSAOs).

Speaking of 2025, please join Adam J. Fein, Ph.D., for his upcoming live video webinar, Drug Channels Outlook 2025, on December 13, 2024, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

From Integration to AI: The Data-Driven Future of Market Access

Today’s guest post comes from Kala Bala, SVP, Enterprise Access & Data Expertise, MMIT, a Norstella company and Dinesh Kabaleeswaran, SVP, Advisory Services at MMIT, a Norstella company.

The authors outline the challenges that manufacturers face when integrating internal and external datasets to build market access and commercialization strategies. They argue that unified datasets and the addition of AI-driven analytics tools can improve decision making throughout a drug’s life cycle.

Click here to learn more about NorstellaLinQ, an integrated data asset that combines claims, labs, and EMR data with forecasting, clinical, payer, and commercial intelligence.

Read on for their insights.

Medicare Part D in 2025: Preferred Pharmacy Networks Fade in a Collapsing PDP Market

Uh oh. As I predicted, the stand-alone Medicare Part D prescription drug plans (PDP) market is vanishing.

For 2025, DCI’s exclusive analysis of Center for Medicare & Medicaid Services’ (CMS) data reveals that the number of PDPs will drop to a historic low. What’s more, the share of plans with a preferred cost sharing pharmacy network will fall to its lowest rate in more than 10 years. Check out the distressing charts below and our review of the remaining national players (Aetna, Cigna, Humana, UnitedHealthcare, and WellCare).

The destruction of the Part D market marks yet another unintended consequence of the Inflation Reduction Act of 2022 (IRA). The IRA makes PDPs less economically viable and will drive even more seniors into Medicare Advantage Prescription Drug (MA-PD) plans—despite the challenges facing those plans. The 2025 decline will occur even after CMS gifted $7 billion to PDPs to prevent a complete collapse of the 2025 market. 

Legislate in haste. Repent in leisure.

What else should you expect for 2025? Find out during my upcoming live video webinar, Drug Channels Outlook 2025, on December 13, 2024, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up. As always, we are offering special discounts if you want to bring your whole team.