Late Friday, the Centers for Medicare and Medicaid Services (CMS) finally released its long-overdue proposed rule regarding Average Manufacturer Price (AMP) under the Patient Protection and Affordable Care Act (PPACA). Savor all of the bureaucratese for yourself in the Proposed Rule.
In the proposed rule, CMS doubles-down on its use of AMP in the Medicaid program and lays more groundwork for Actual Acquisition Cost (AAC) reimbursement methodologies.
Manufacturers should pay close attention to this proposed rule because of its potential impact on trade agreements with wholesalers and pharmacies. CMS is proposing important changes to its interpretation of bona fide service fees, while simultaneously choosing not to clarify key items.
Welcome to the ugly underbelly of healthcare reform!
Yesterday, Larry Marsh at Barclays Capital reported that the much-delayed Department of Veterans Affairs pharmaceutical prime vendor (PPV) contract has been pushed back again, at least until late March.
Below, I take a totally unscientific guess at which wholesaler will win the $4 billion VA contract, given odd rumblings in the wholesale customer markets. And since McKesson provides a steep 5.15% discount to the VA, it’s a good opportunity to chat about the oft-misunderstood cost-minus pricing model.
This month’s selection of noteworthy news stories looks at broader health care cost containment debate.
Depressing news on disease management
A fascinating debate on ACOs
The sad realities of U.S healthcare spending
Plus, watch The Daily Show’s Jon Stewart lob softball questions at Secretary of Health and Human Services Kathleen Sebelius, who does some major pre-State of the Union spinning.
Pharmaceutical Executive just published a fascinating article by my friend Mason Tenaglia called Letting the Facts Get In the Way.
Based on his firm’s analysis of various data sources, Mason provides a spirited defense of co-pay offset programs. He argues that co-pay cards don't increase utilization of higher-cost brand-name drugs and don't reduce generic usage, but do increase adherence.
While the article lacks sufficient details to fully evaluate its empirical claims, it still makes a useful contribution by explaining how and why co-pay offset programs can be a valuable benefit management tool.
Surprisingly, Lipitor share is tracking below historical generic substitution patterns from the past few years, i.e., the brand-name version is losing share faster than a typical generic drug.
The chart below tells the story, which is about as unexpected as an overweight, butter-loving celebrity chef becoming the spokesperson for a manufacturer of diabetes medicine. Oh, wait...
You should check out the new 2011 ICORE Medical Pharmacy and Oncology Trend Report (free download with registration). This 60-page report provides a wealth of interesting data on the specialty drug benefit management.
The ICORE payer data confirms that the specialty pharmacy channel is displacing buy-and-bill in the physician office market. As I discuss below, this shift is occurring via white bagging of specialty drugs.
Buy-and-bill will not end for all physician-infused drugs, but there are substantial pressures for certain therapies. White bagging has important implications for specialty distributors, pharmacy benefit managers (PBMs), and providers.
And if you're a manufacturer planning for a new specialty drug's commercial launch, then you need to be the "channel steward" and design a strategy to ensure patient access supported by appropriately motivated partners.
Here at Drug Channels, we try to keep you informed about important industry news. That's why, in May, I told you about Pharma Sales Reps: The Sitcom, an ABC show called Work It. As far as I know, it's the very first TV comedy about two men who dress as women to land jobs as pharmaceutical sales reps. (Yes, really. That's the show's premise.)
Well, the first episode just aired. The good news? It won't last long based on the reviews:
TV Guide: "insulting to anyone of any gender with half a brain and a lick of taste"
The bad news? The show wasted no time in portraying an ignorant, outdated, and (worst of all) unfunny view of the pharma industry.
The video clip below shows a "sales call" by one of the main characters. Go ahead, waste 2 minutes of your life and see what Hollywood thinks about the pharma industry. Perhaps it will cure your paraskevidekatriaphobia.
Total U.S. expenditures on retail prescription drugs were $259.1 billion, a historically low 1.2% annual increase vs. 2009. Prescription drug expenditures were the slowest growing part of the U.S. health care system, which grew by 3.9%. (See Exhibit 2 of the Health Affairs article.)
The Patient Protection and Affordable Care Act (PPACA) had an impact on the 2010 numbers, although the biggest effects are still to come. Three observations from my number-crunching:
Consumer’s paid a record-low share of U.S. drug expenditures.
CMS paid for almost one-third of drugs, another new record.
Healthcare reform reduced Medicaid expenditures and shifted about $1 billion in Part D costs to the government.
Read on for a detailed look at who paid for prescription drugs in 2010.
This year's report is 134 pages...42 pages longer than the 2010-11 report. It includes expanded coverage of specialty pharmaceuticals, new market data, and more-detailed analyses of reimbursement trends. The 2011-12 report also updates 5 key trends that will affect the market structure and economics of the retail and specialty pharmacy industries.
All information is updated through 2011, including 62 data-packed exhibits. True hardcore Drug Channels readers can savor 183 endnotes (!), most of which have hyperlinks to original source materials.
I'm sure you'll enjoy the latest edition. As a special bonus, see below for a picture of me with the heretofore unacknowledged inspiration behind this new report.
I expect this to be another worthwhile event. Participating speakers come from such companies as Bristol-Myers Squibb, Generation Health, Johns Hopkins HealthCare, Premera Blue Cross, Prime Therapeutics, Savient Pharmaceuticals, and Shire.
CBI is offering a special $400 discount to Drug Channels readers. Just register with Promo code NGQ475. Thanks, CBI!
The exhibit below, one of 62 in my new report, shows my estimates for market share of prescription revenues by company for calendar year 2011. I estimate that the top six dispensing retail and specialty pharmacies—CVS Caremark, Walgreens, Medco Health Solutions, Walmart, Rite-Aid, and Express Scripts—will account for 64% of U.S. pharmacy dispensing revenues in 2011.
The future may look very different, as I explain below.
