A Holiday Greeting Dance from Drug Channels

Dear Drug Channels reader,

Wow. It’s hard to believe that another crazy, busy year is already coming to an end.

Thank you for welcoming me into your inboxes and browsers. I’ve had fun writing about 2014’s unexpected, unusual, and fascinating developments. I’m grateful to our many sponsors and guest writers. (Email Paula if your company wants to publish a guest post.) Special thanks to the brave souls who joined in the often-spirited discussions below the articles.

2014 was another big growth year for Drug Channels. We now have about 10,000 subscribers, including almost 1,700 @DrugChannels Twitter followers. Our Drug Channels Institute subsidiary is humming along.

Drug Channels will return in 2015. In the meantime, please enjoy the video greeting below, which gives you a small taste of my awesome dance skillz. (I'm ready for my dance-off with Star Lord.)

Have a great holiday! All the best to you and your family,
Adam

December 2014 news update: Walgreens, Express Scripts, Diplomat, AmerisourceBergen, and CVS Health

December at last! It’s time for our final news roundup of 2014. To help you with the next four nights of Hanukkah, here are four stories that go behind the headlines and highlight notable individuals atop some well-known drug channels companies.

• Greg Wasson, Walgreen—A behind-the-scenes look at his departure

• Steve Miller, Express Scripts—A humanizing profile of this vocal PBM executive

• Phil Hagerman, Diplomat Pharmacy—A cool first-person perspective on growth and going public

• Peyton Howell, AmerisourceBergen—A worthwhile peek at ABC’s global ambitions

Plus, The Onion reports that CVS is having trouble quitting cigarette sales. It’s your must-read article of the week!

Highlights of CVS Health’s Latest Specialty Market Forecasts

Yesterday, CVS Health held its annual Analyst Day. The accompanying 224-page slide deck provides great insight into the company’s strategy.

Senior executives told investors how everything is awesome. There is even a section titled “We Made the Right Moves.” (Really.)

CVS Health also provided a wealth of data about the pharmacy and managed care market. Below, I highlight some specialty market projections that caught my eye.

CVS has an unfortunate tendency to change its basis of presentation every year, so be sure to read the slide footnotes to figure out what’s really going on.

What’s Behind Medicare and Medicaid Drug Spending Growth?

Let’s dip back into the just-released 2013 National Health Expenditure data, which the Centers for Medicare & Medicaid Services (CMS) recently released. In last week's Hospitals and Physicians Spending Outpace Drugs in Latest U.S. Healthcare Spending Data, I compare drug spending growth with spending growth of other healthcare services.

Today, I delve into drug spending trends by payer. As I describe below, policy and population changes led to significant drug spending growth by Medicare and Medicaid, while private health insurance and consumers paid less.

The 2013 numbers provide a peek at the forces that will change drug payment in the coming years. Don't say you weren't warned!

Government Drug Pricing Forum

Government Drug Pricing Forum
February 11-13, 2015
Embassy Suites Washington DC Convention Center, Washington. DC

With the increase in complexity of government pricing and contracting, the Conference Forum is no longer holding its Medicaid Rebate Summit. Instead, it is expanding its coverage and presenting the Government Drug Pricing Forum (GDP). The GDP Forum will cover changes in MDRP, 340B, Tricare and Medicaid Managed Care. It specifically addresses the AMP Final Rule, AMP-based FULs, proposed HRSA guidance, rise of contract pharmacies, and new state reporting requirements impact government and commercial contracting rules and operations. This event brings together CMS, FDA, IRS, HRSA, States and OIG to address how to be compliant with separate agency requirements.

Register today! Drug Channels readers receive a 15% discount with code DC15.

Featured Speakers include:

Lori Reilly, PhRMA	Laurel Todd, BIO
Don Bell, National Association Chain Drug Store (NACDS)	Ann Maxwell, Office of Evaluation and Inspections, Office of Inspector General
Andrew Wilson, McKesson	Alice Valder Curran, Hogan Lovells
John Shakow, King & Spaulding	Kathleen Black, Pfizer
George Kenny, Genentech	Stephanie Kupski, Iroko Pharmaceuticals
Ed McAdam, Daiichi Sankyo	Jay McKinley, Dendreon
Lorraine Moccio, Johnson & Johnson

Conference Topics

• Healthcare Trends and Policy Expectations: From ACOs and AMP to Contract Pharmacies

• New State Reporting Requirements and Tricare Contracting

• Drug Channel Contracting Strategies

• Compliant Government Pricing Programs

February 11th Workshop Choices

• Government Pricing Programs 101

• 340B Program Policies, Operational Answers, and Audits Findings 

Register today! Drug Channels readers receive a 15% discount with code DC15.

Walgreens Loses Its CEO: How Did We Get Here? What’s Next?

By now, you’ve surely read this press release: Walgreens President and CEO Greg Wasson Announces He Will Retire Following Completion of Merger with Alliance Boots

File this news under “expected surprise,” as this outcome has been building all year. Stefano Pessina will take over as acting CEO. Shocking, I know.

How did we get here? Who’s the next CEO? My summary and some speculations below.

Hospitals and Physicians Outpace Drugs in New U.S. Healthcare Spending Data

Last week, the econowonks at the Centers for Medicare & Medicaid Services (CMS) released the 2013 National Health Expenditure data. Savor the numbers in this Health Affairs article: National Health Spending In 2013: Growth Slows, Remains In Step With The Overall Economy. (Free download)

It’s fashionable to blame healthcare spending growth on pharmaceuticals, but it’s also inaccurate. In 2013, prescription drug spending grew by 2.5%, which was 110 basis points behind the 3.6% growth in overall expenditures.

Our analysis also shows that spending on hospital care and physician services, which account for a majority of healthcare expenditures, grew more quickly than drug spending. See the chart below.

CMS projects that these trends will reverse in 2014, because of healthcare reform’s rollout and Sovaldi’s legendary launch. Until then, don’t blame drugs.

Hub Models and Program Design

4th Hub Models and Program Design
February 5-6, 2015 | Philadelphia, PA
www.cbinet.com/hubs

With mounting cost pressures and increased demands for affordable, value-based treatment options, bio/pharmaceutical teams face an increasingly competitive specialty market. They also confront a number of challenges in effectively managing product and patient services.

The 4th Hub Models and Program Design conference brings together key specialty bio/pharmaceutical thought leaders for a dynamic and collaborative, two-day event to help you and your team effectively manage your brand and ensure patient services. Visit www.cbinet.com/hubs for more information.

Speakers include representatives from: Children’s PKU Network | Cubist Pharmaceuticals | CVS Health | The Dedham Group | Eisai Inc. | Endo Pharmaceuticals | Genzyme | Horizon Health Services | Hyperion Therapeutics | Ipsen Biopharmaceuticals, Inc. | Lash Group, an AmerisourceBergen company | Loeb & Loeb LLP | ProMetrics | Raptor Pharmaceuticals | Relypsa Inc. | Sonexus Health | UBC | Viewpoint Health

Register today! 

Drug Channels readers will save $200 off the standard registration rate when they use code RGX588.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates. Other restrictions may apply.

McKesson Officially Dominates Celesio

On Tuesday, McKesson announced that it had achieved operational control over Celesio, the global retail and wholesale company operating in 13 European countries and Brazil. Read the press release.

Technically, the Stuttgart Higher Regional Court approved the " domination and profit and loss transfer agreement" between Celesio AG and McKesson’s German subsidiary. Domination! Hard to beat that evocative Teutonic M&A terminology.

The three largest, U.S.-based wholesalers are now all expanding significantly outside North America—a key trend in our 2014-15 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. The McKesson-Celesio deal exemplifies this new era of global drug distributors. Read on for details.

Profits Up Again for Independent Pharmacy Owners

Time for my annual look at independent pharmacy owners’ business economics, drawn from the recently released 2013 National Community Pharmacists Association (NCPA) Digest, Sponsored by Cardinal Health. Here's the press release: NCPA Digest: Community Pharmacists Promoting Medication Adherence, Generic Drug Savings

Once again, independent pharmacy owners are doing better than you might expect. In 2013, overall profits increased (again), while the average pharmacist owning a single pharmacy earned about $247,000. The number of independent pharmacies continues to hold steady.

Bottom line: Smaller independent pharmacies remain an important and healthy industry segment. Keep that in mind when pharmacies ask for any new special legislative protections.

As always, I welcome your constructive comments. Just remember our Drug Channels philosophy, courtesy of the late senator Patrick Moynihan: "Everyone is entitled to his own opinion, but not his own facts."

Specialty Therapies 2015—A Forum for Payers

Specialty Therapies 2015—A Forum for Payers
January 29-30, 2015 | Las Vegas, NV
www.cbinet.com/specialtytherapies

The cost of specialty therapies continues to increase significantly as the number of available specialty drugs grows rapidly. It is crucial to evaluate the best techniques for managing cost, access and quality of specialty therapies.

Now in its 12th year, the Specialty Therapies Summit expands with all new content offerings, networking opportunities and value.

Hear from a distinguished speaking faculty from industry-leading companies including BlueCross BlueShield of South Carolina/BlueChoice HealthPlan, Blue Cross Blue Shield of Tennessee, California Chronic Care Coalition, Denver Health Medical Plan, Inc., Kaiser Permanente, Priority Health, United Healthcare Pharmacy and more!

Visit www.cbinet.com/specialtytherapies for the complete agenda.

Drug Channels readers will save $200 off of the standard registration rate when they use discount code HKN525.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates. Other restrictions may apply.

Get Your Team Ready for 2015 with the Drug Channels Institute

Do you appreciate Drug Channels’ complex, yet accessible content about the pharmaceutical industry? Are you looking for a thorough, cost-effective, and easy-to-use way to help your team grasp important industry concepts?

Then consider Drug Channels Institute’s e-learning modules.

Like Drug Channels, DCI’s e-learning modules are packed with information, yet easy to understand. They are an essential tool for building knowledge and results. We’ve updated the modules for 2014, so you’ll be getting the most current industry insights.

Contact Paula Fein (paula@drugchannelsinstitute.com), DCI’s VP of Business Development, to learn more today.

Or, view an excerpt from The Economics of Provider-Administered Specialty Drugs, one of our most popular. (View the complete list here.)

[Click to View the Module]

Our modules can be viewed in any web browser or on an iPad. They contain an audio component, so please enable your audio and crank up your speakers!

Surprise? Once Again, FULs and AMP Final Rule Delayed

In what has become a semi-annual ritual, the Centers for Medicare & Medicaid Services (CMS) last night announced plans to delay the Federal Upper Limits (FUL) and the Final Rule on Covered Outpatient Drugs, a.k.a., the Average Manufacturer Price (AMP) Final Rule. Full text of the non-announcement email below.

You can read about the previous delays here…and here…and here…and, oh yes, here, too.

In its email, CMS confirms that it will do something, at some point in the future, and that it looks forward to partnering with stakeholders whenever it does the thing that it may or may not ever do.

Meanwhile, we'll all just muddle along without clarity on AMP computations, bona fide service fees, the definition of retail pharmacy, and more. It's enough to make any cat grumpy about the Affordable Care Act's implementation.

News Roundup, November 2014: Salix, Merck, Co-Pay Cards, Part D Preferred Networks, and an Insurance Cartoon

Here's a pre-Thanksgiving news roundup, to stretch your mind before stretching your stomach next week. In this issue:

• Stuffing—Salix Pharmaceuticals reminds investors why wholesaler agreements matter

• Pumpkin Pie (in the Face)—How Merck beat co-pay card litigation

• Gobble, Gobble—An important update on retail chains’ participation in Part D plans’ preferred networks

Plus, I share a surprisingly useful cartoon that explains the U.S. health insurance system. Next week, show it to your family, so they understand more about your job and the world around us. Happy Thanksgiving!

In the Third Quarter, Retail Generic Drug Inflation Kept on Truckin’

This Thursday, the Senate Subcommittee on Primary Health and Aging, currently led by U.S. Senator Bernie Sanders (I-VT), will hold a hearing titled “Why Are Some Generic Drugs Skyrocketing In Price?”

The hearing is not a surprise. As I discuss in Congress Grills Generic Drug Makers Over Price Inflation, Senator Sanders and U.S. Representative Elijah E. Cummings (D-MD) have been probing generic manufacturers.

Our latest exclusive analysis (below) finds that generic inflation is alive and well. During the third quarter of 2014, more than one-third of generic drugs became more expensive. A small number of drugs have experienced mega-increases (exceeding 1,000 percent) over the past three months.

I’m skeptical, however, that the Congressional hearing will tell us anything we don’t already know—or anything that Congressmen Sanders and Cummings haven't already concluded.

2015 sPCMA Business Forum

2015 sPCMA Business Forum
March 16 – 17
Hilton Bonnet Creek, Orlando, Florida

The sPCMA Business Forum is a networking and educational conference designed for professionals of all levels engaged in the business of specialty pharmacy. From an educational standpoint, its speakers are among the industry's top thought leaders. According to PCMA, the sPCMA Business Forum attracts the highest number of pharmacy benefit manager (PBM) and specialty pharmacy decision makers than any other industry conference. The sPCMA offers an outstanding opportunity for networking and conducting business with industry partners and customers.

Conference Features:

• Remarks by C-suite and other senior PBM, specialty pharmacy, and pharma executives
• 25+ educational sessions, including 10+ hours of CPE sessions
• Dedicated time and facilities for private meetings
• Pre-Conference networking through PCMA-Connect http://www.pcmanet.org/pcma-connect
• 10+ Networking Receptions

Who Should Attend:

Anyone interested in attending is welcome. The 1,200+ expected attendees will range from C-suite executives to mid-level professionals tasked with all aspects of the business of specialty pharmacy and overall pharmaceutical care. Companies in attendance will include specialty pharmacies of all sizes and composition, PBMs and payers, manufacturers, wholesalers and distributors, consultants, vendors, and other specialty pharmacy stakeholders.

Register Now!

Contact PCMA

Please contact Jenny Dawson (jdawson@pcmanet.org) with questions and to request information about the Affiliate Program or conference sponsorships.

New Walgreens Data Verifies That 340B Reduces Retail Generic Dispensing Rates

November’s Health Affairs includes The 340B Discount Program: Outpatient Prescription Dispensing Patterns Through Contract Pharmacies In 2012. (Sorry, the full article is available only to subscribers.)

The paper inadvertently provides compelling evidence that the 340B Drug Pricing Program’s crazy incentives are lowering generic dispensing rates at retail pharmacies. The two lead authors work at Walgreens, which perhaps explains why they try (unsuccessfully) to spin the results away from this unfortunate conclusion.

With few exceptions, third-party payers and PBMs have been minimally engaged in the public policy discussion about how the 340B program should be modernized. Walgreens’ unexpected disclosures about cost-shifting to managed care suggest that they should start paying attention. Read on and see if you agree.

Forging ACO Partnerships

Forging ACO Partnerships
December 9-10, 2014 | Philadelphia, PA
www.cbinet.com/ACO

Forging Accountable Care Organization (ACO) Partnerships offers participants a unique forum for:

• Developing strategies for partnering with ACOs
• Understanding the various ACO models
• Discovering how ACOs are impacting purchasing decisions and physician prescribing behavior

The conference is being held December 9-10 in Philadelphia. Join CBI and your colleagues to convene with peers and discover best practices for adopting accountable care models in the healthcare industry.

The program features two informative case studies, four in-depth workshops, an ACO executive round robin, and a diverse group of pharma and ACOs representing Astellas, Bayer, Pfizer, Premier, Ferring, Amarillo Legacy Medical ACO, MHA ACO Network and many more, discussing innovative solutions to the most significant challenges affecting industry today:

• Discover how to effectively build out a business strategy that aligns to the accountable care models in order to effectively leverage ACO purchasing power
• Review the current climate of patient costs and access and analyze how effective ACOs are, economically, as part of a product sales strategy
• Examine how ACOs are driving physician prescribing behavior for medical groups, health systems and hospitals and understand the impact of adapting procedures to align with value-based contracting
• And much, much more!

CBI is offering Drug Channels readers an exclusive $300 discount when you register with discount code CBI061.*

Register today!

*Offer valid through December 5, 2014, applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to a current registration.

Express Scripts Looks at a “No Sin” Preferred Pharmacy Network

Yesterday, The Wall Street Journal revealed that pharmacy benefit manager Express Scripts is now evaluating a network of pharmacies that don’t sell tobacco products or alcohol. See Express Scripts Eyes Forming Alcohol and Tobacco-Free Pharmacy Networks.

The move is clearly a reaction to Caremark’s no-tobacco preferred pharmacy network. Express Scripts however has gone further with its concept for a “no sin” network.

Below, I ask whether payers really want pharmacies to be goody two shoes. Instead of writing your thoughts on a pound note, let me know what you think by posting a comment below.

Here’s Who Will Pay For Prescription Drugs in 2023

In CMS Forecast: Big Drug Spending Growth, But Hospitals and Doctors Will Still Capture Most Healthcare Spending, I examined the September 2014 drug spending forecasts from the Centers for Medicare and Medicaid Services (CMS).

After crunching the numbers again, I identified new insights into the 2023 drug market. As the charts below show, CMS expects that the employer-sponsored insurance market will shrink more than it had previously projected, while Medicare and Medicaid will grow even faster. CMS is still projecting that individually-purchased private insurance (via both public and private exchanges) will account for a small share of drug spending.

Is your organization prepared for the government’s unprecedented growth?

Life Sciences Trade and Channel Strategies

10th Life Sciences Trade and Channel Strategies
December 10-11, 2014 | Philadelphia, PA
www.cbinet.com/trade

I want to remind you about CBI’s upcoming Trade and Channel Strategies conference, being held this December in Philadelphia. This annual event has great networking opportunities and loads of solid content. Check out the agenda.

Drug Channels readers will save $400 off of the standard registration rate when they use code AUX474.* Hope you’ll join me in Philadelphia this December!

PERSPECTIVES FROM: AmerisourceBergen | Blue Fin Group | Boehringer Ingelheim | Depomed, Inc. | Deutsche Bank | Drug Channels Institute | IntegriChain | Jazz Pharmaceuticals | Johnson & Johnson Healthcare Systems Inc. | Mallinckridt Pharmaceuticals | McKesson Specialty Health | Pembroke Consulting, Inc. | RQ Global Pharma Strategies, LLC | RxTrace | SonexusHealth | Sunovion | Therapeutics MD | Therigy | Vertex Pharmaceuticals, Inc.

TOPICS: Specialty Channel Strategies | Alternative Go-to-Market Approaches | Economic Factors Impacting the Drug Channel | Impact of ABC, CAH and MCK Business Changes | Distribution Models Reshaping Trade Dynamics | Impact of ACA, CMS Final Rule, 340B and Shift from AWP Reimbursement | U.S. Serialization Requirements | Globalization, Vertical Integration and Product Specific Implications | and more!

You may be especially interested in the Trade Throwdown: Battle of the Experts. This year, Bill Roth of Blue Fin Group and Allen Dunehew or RQ Global Pharma Strategies will join me in CBI’s XTreme Battle Cage™. Three consultants will enter…but only three will leave!

Register today for this awesome event!

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates. Other restrictions may apply.

News Roundup, October 2014: Walgreens, Cardinal Health, Generics, Marley Drugs, and Roger Daltrey

Eeek! Time for my Halloween-themed roundup of Drug Channels news stories. In this issue:

• Icky: Walgreen’s ex-CFO alleges defamation

• Spooky: Generic inflation is changing benefit design

• It’s alive! An independent pharmacy thrives with a unique strategy

As your treat, watch a video of Cardinal Health CEO George Barrett jammin’ on stage with The Who’s Roger Daltrey. (Not a trick. Really.)

Sovaldi: The Legendary Blockbuster

Yesterday, Gilead Sciences reported another blockbuster quarter for Sovaldi sales. (Read the press release.) But just how good was Sovaldi’s launch?

Mark Schoenebaum of ISI Group compared hepatis C treatment Sovaldi’s launch to the launch of such other legendary drugs as Avastin, Gleevec, Revlimid, and more. Based on the chart below, I think you’ll agree that Sovaldi is the most legendary of them all. Competitive launches and Sovaldi’s successor Harvoni will slow Sovaldi’s growth, but until then…wow!

Despite ongoing criticisms of Sovadi’s pricing, patients and physicians clearly want this biomedical innovation—and wholesalers, pharmacies, and PBMs have come along for the ride.

PBMI's 20th Annual Drug Benefit Conference

Here's a cool conference: The Pharmacy Benefit Management Institute (PBMI) will host its 20th Annual Drug Benefit Conference at the San Antonio Marriott Rivercenter hotel in San Antonio, TX, on March 2-4, 2015.

Many attendees will be from employers, health plans, and unions, so you’ll learn the payers' perspectives on pharmacy benefits. Highlights include sessions on specialty drug management, healthcare reform, biosimilars, and the latest pharmacy benefit strategies. Check out the program preview.

Drug Channels readers can register with promo code PC2015 and receive an additional $300 off registration. Thanks, PBMI!

Thoughts on Caremark’s No-Tobacco Preferred Pharmacy Network

On Monday, The Wall Street Journal broke the news that CVS Health’s Caremark PBM will offer a new twist on preferred pharmacy networks. Consumers will face higher co-payments at pharmacies that sell tobacco products. See Caremark to Charge Extra Co-Pay at Pharmacies Selling Cigarettes. (The article includes comments from your friendly neighborhood blogger.)

The story generated plenty of other press coverage, much of it favorable for CVS Health. Below, I consider the move’s impact, including the payer’s perspective, the future of preferred networks, likely adoption rates, potential competitive effects on other drugstores, and whether CVS will replace $2 billion of lost tobacco revenue.

As a bonus, I tell you about Thank You For Smoking, one of my favorite movies.

EXCLUSIVE: Walmart and Walgreens Dominate 2015 Part D Preferred Networks, With Independents Close Behind

NOTE: This post has been updated. See notes at the bottom.

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In my previous post (For 2015, almost 9 out of 10 Medicare Part D plans will have a preferred pharmacy network), I highlighted the plans whose preferred pharmacy networks will dominate next year’s Medicare Part D prescription drug plans (PDP).

Today, I examine the pharmacy chains in the biggest plans’ networks. Walmart again leads the pack in preferred network participation. Walgreens has a big bet on preferred networks, while CVS and Rite Aid have been more cautious. Independent pharmacies feature prominently in many plans, which should—but probably won't—mute critics of preferred networks.

Read on for our exclusive look at 2015’s preferred network participants, along with some comments on DIR fees and pharmacy profits.

Specialty Data Optimization Summit

Specialty Data Optimization Summit
December 11, 2014 | Philadelphia, PA
www.cbinet.com/specialtydata

CBI’s Specialty Data and Optimization Summit is the first and only event laser-focused on strategies for leveraging pharmacy data for the commercialization and market penetration of specialty products. This cutting-edge forum will provide you with in-depth discussions and key industry perspectives on how to maximize data to make informed, targeted decisions that take ROI to the next level.

Hear multi-stakeholder perspectives from Altometrixs, AstraZeneca, AxelaCare, Blue Fin Group, Exelixis, IMS Health, LiquidHub, Paragon, Prime Therapeutics, Vertex Pharmaceuticals, Xcenda, and more!

Drug Channels readers will save $200 off of the standard registration rate when they use code SHA526.*

Register today!

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates. Other restrictions may apply.

Closing Gaps in Specialty Pharmacy Performance

Today’s guest post comes from Stephen C. Vogt, Pharm.D., President and CEO of BioPlus Specialty Pharmacy.

Dr. Vogt offers a thoughtful perspective on specialty pharmacies' shortfalls in managing patients with hepatitis C virus (HCV) infection. He then describes the BioPlus RxSteward™ drug management program, which uses real-time patient data to reduce unnecessary drug utilization while maintaining excellent clinical outcomes. Dr. Vogt also shares data on the program's substantial cost savings. He sees RxSteward™ transforming BioPlus from a dispenser to a partner in a patient's pharmaceutical care.

Read on for details, including a look at drug-cost savings by HCV drug regimen and HCV genotype. Please contact BioPlus for more information about RxSteward™.

EXCLUSIVE: For 2015, almost 9 out of 10 Medicare Part D plans will have a preferred pharmacy network

Tomorrow, Medicare Part D kicks off its open enrollment period. Through December 7, America’s seniors can keep their current plan or switch to a new one.

Who ya gonna call to understand the latest preferred pharmacy network trends? Drug Channels, of course!

For 2015, our analysis reveals that an astonishing 87% of Medicare Part D regional prescription drug plans (PDP) will have a preferred cost sharing network. That’s a big Twinkie!

Read on for our exclusive look at the 2015 Part D landscape, which includes insights on the major health plans—UnitedHealthcare, Humana, Express Scripts, et al—behind the PDPs.

Are pharmacies headed for a disaster of biblical proportions? In an upcoming article, I’ll look at pharmacy participation in the biggest plans’ networks.

VA • DoD • PHS • Federal Pricing and Contracts for Bio/Pharma Companies

VA • DoD • PHS • Federal Pricing and Contracts for Bio/Pharmaceutical Companies
December 9-10, 2014
Philadelphia, PA
www.cbinet.com/VADoD

Contracting with the Big Four Federal Programs can be very complex. Pricing models and processes for complying with complicated rules and regulations are difficult for any manufacturer to master.

CBI’s VA • DoD • PHS • Federal Pricing and Contracts is a must-attend event to stay up-to-date on processes and requirements and to gain best practices from your industry counterparts. Learn how to stay profitable in this low-margin, highly complex market.

You will gain insights from experts representing: Amneal Pharmaceuticals, Eisai, Epstein Becker Green, Government Pricing Specialists, Hogan Lovells, Impax Laboratories, IMS Health, M. Lee Consulting, Medicine Access and Compliance Coalition, National Supply Service Center, Nationwide Pharmaceutical, Pernix Therapeutics, Pfizer, Reckitt Benckiser Pharmaceuticals, VA Office of Contract Review, and VA Office of Inspector General.

Drug Channels readers who register before November 7th will save $400 off of the standard registration rate when they use code JDG992.*

REGISTER TODAY!

*Cannot be combined with other offers or used towards a current registration or applied to special category rates. Other restrictions may apply.

How Hospitals Inflate Specialty Drug Prices

Last Sunday, 60 Minutes aired a controversial anti-pharma story called The Cost of Cancer Drugs. The segment prominently featured several Memorial Sloan-Kettering and MD Anderson physicians, all of whom spoke with no self-awareness about health care costs. (Hints: Drugs are not the problem.) For your consideration, here is a rerun of a still-relevant Drug Channels article from October 2012, complete with my original 340B predictions from that period. P.S. Special pricing for our new 2014–15 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors ends today!

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Many people blame pharmaceutical manufacturers for high specialty drug prices. Yet channel intermediaries also add to drug prices, via mark-ups that account for the costs, profits, and value of the channel's services. But sometimes these mark-ups are eye-poppingly outrageous, as appears to be the case for North Carolina hospitals.

According to N.C. nonprofit hospitals make big money on cancer drug markups, hospitals are routinely marking up specialty drugs far above Average Sales Price (ASP). For example, the table reproduced below shows that Duke University Hospital received nearly $23,000 for Avastin, versus an ASP of about $6,000. And as reported in Prices soar as hospitals dominate cancer market, hospitals are buying independent oncology practices and then able to charge more “for the same chemotherapy in the same office,” due to differences in payment methods.

For payers, these examples highlight the appeal of channel management strategies such as white bagging and medical benefit management. For manufacturers, the stories illustrate what happens to drug prices as providers consolidate and traditional classes of trade blur.

Read on and be outraged.

New Findings on Oral Oncologic Spending and Hospitals’ 340B Abuse

October’s Health Affairs focuses on “Specialty Pharmaceutical Spending & Policy,” and it offers many must-read articles for anyone working with specialty drugs. Check out the table of contents. (Sorry, full articles are available only to subscribers.)

The issue includes National Trends In Spending On And Use Of Oral Oncologics, First Quarter 2006 Through Third Quarter 2011, an article I co-authored with Rena Conti, Ph.D., a health economist at the University of Chicago, and Sumita Bhatta, MD, a former oncology fellow at the University of Chicago School of Medicine.

Below, I highlight key findings from our paper. I also discuss a notable and controversial paper on hospitals’ 340B abuses.

Congress Grills Generic Drug Makers Over Price Inflation

Why do generic drug prices continue to rise? In theory, sky-high inflation for a particular product should encourage new suppliers, thereby lowering prices.

Looks like Congress is also curious about the mystery of persistent generic drug inflation. U.S. Sen. Bernie Sanders (I-VT) and U.S. Rep. Elijah E. Cummings (D-MD) sent information requests to 14 generic pharmaceutical manufacturers. Below, I list the companies and provide direct links to the letters.

As you can see from the questions (also listed below), the congressmen are requesting details about pricing, contracts, purchasers, costs, and other internal details.

Political grandstanding, or a potential turning point for generic inflation? Even the most interesting man in the world doesn't know.

Trade and Channel Strategies 2014

10th Life Sciences Trade and Channel Strategies
December 10-11, 2014 | Philadelphia, PA
www.cbinet.com/trade

Are you ready for some drug channel strategy?

Then join me at CBI’s Trade and Channel Strategies conference, being held this December in Philadelphia. CBI’s annual event is the life science industry’s premier event focused on bio/pharma trade, channel, and account management.

I’ll kick things off with a keynote address on "Building Effective Specialty Channel Strategies." I'll update everyone on industry changes and discuss best practices of leading bio/pharma manufacturers.

Day one will end with a Trade Throwdown: Battle of the Experts. This year, Bill Roth of Blue Fin Group and Allen Dunehew or RQ Global Pharma Strategies will join me in CBI’s XTreme Battle Cage™. Three consultants will enter…but only three will leave!

As always, there will be great networking opportunities and loads of breakthrough content. You’ll gain critical insights on industry trends, wholesaler market dynamics, product-specific channel strategies, and tactics for optimizing distribution service agreements.

Drug Channels readers will save $400 off of the standard registration rate when they use code AUX474.* Hope you’ll join me in Philadelphia this December!

UNPARALLELED PERSPECTIVES FROM:

AmerisourceBergen | Blue Fin Group | Boehringer Ingelheim | Depomed, Inc. | Deutsche Bank | Drug Channels Institute | IntegriChain | Jazz Pharmaceuticals | Johnson & Johnson Healthcare Systems Inc. | Mallinckridt Pharmaceuticals | McKesson Specialty Health | Pembroke Consulting, Inc. | RQ Global Pharma Strategies, LLC | RxTrace | SonexusHealth | Sunovion | Therapeutics MD | Therigy | Vertex Pharmaceuticals, Inc.

THE INDUSTRY'S HOTTEST TOPICS:

Specialty Channel Strategies | Alternative Go-to-Market Approaches | Economic Factors Impacting the Drug Channel | Impact of ABC, CAH and MCK Business Changes | Distribution Models Reshaping Trade Dynamics | Impact of ACA, CMS Final Rule, 340B and Shift from AWP Reimbursement | U.S. Serialization Requirements | Globalization, Vertical Integration and Product Specific Implications | and more!

Register today for this awesome event!

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates. Other restrictions may apply.

See You at AMCP Nexus 2014 Next Week

FYI, I'll be at the AMCP Nexus 2014 meeting in Boston next week.

On Wednesday morning, October 8, I'll be presenting The 340B Drug Pricing Program: Overview, Outlook, and Impact on Managed Care. The photos on the right show you what to expect.

Visit www.amcpmeetings.org for complete session details. If you'll be in Boston, then stop by the session to listen and/or heckle.

Can Walgreens Fix Its Generic Drug Contracting Strategy?

On Tuesday, Walgreens released its latest quarterly earnings. During the investor call, Walgreens executives opened up (a little) about the company’s payer contracting problems and the generic drug inflation that triggered its billion-dollar forecasting blunder. Read the excerpts below and see what you think.

On the call, Walgreens also discussed a “significant step down” in its Medicare Part D reimbursement rates, beginning January 1, 2015. One day later, Express Scripts announced that its Part D Prescription Drug Plans (PDP) will have preferred retail pharmacy networks that include Walgreens and 18,500 other, unnamed community pharmacies. (Read the press release.) Working together, can they get the job done?

Drug Channels News Roundup, September 2014: WAG, Generics, NADAC, and Alliance Boots

Autumn has arrived! Time to gather your acorns, make fantasy football trades, and read my thoughts on these Drug Channels stories:

• Walgreens wants to sell its infusion business?!?

• New evidence that generic drug inflation is creating multiple generic tiers

• Texas Medicaid will base pharmacy reimbursement on acquisition costs

• Alliance Boots’ Stefano Pessina is not a fan of tobacco in pharmacies

Plus, the American Medical Association announces an innovative new cost-saving program: placebo doctors!

Government Pricing and Reporting Compliance

Government Pricing and Reporting Compliance
December 8-9, 2014
Philadelphia, PA
www.cbinet.com/GPCompliance

As bio/pharmaceutical manufacturers struggle with a rapidly evolving healthcare landscape and heavy government scrutiny on price reporting, the Government Pricing and Reporting Compliance Summit provides the first opportunity to assess the impact of the Final AMP Rule on operations and pricing methodologies. Key stakeholders come together to discuss strategies and best practices to comply with the increasing demands of government price reporting, while mitigating compliance risk.

Reasons to attend:

• Understand the role and importance of the NCPDP and the billing unit standard
• Assess AMP Rule changes and the impact on past, present, and future calculations
• Hear about current OIG oversight involving prescription drug enforcement
• Learn about strategies and procedures you can implement to mitigate risk and ensure contract compliance
• Ensure readiness and compatibility of current GP systems in light of DDR enhancements

Speakers come from such organizations as Arnold & Porter,Bristol-Myers Squibb, Celgene, Chiesi USA, Genentech, IMS Health, Jazz Pharmaceuticals, King & Spalding, OIG’s Office of Evaluation and Inspections, Pfizer, Ranbaxy, Skadden, Arps, Slate, Meagher & Flom, Taft Stettinius & Hollister, and West-Ward Pharmaceuticals.

Plus, extend your stay and benefit from the VA * DoD * PHS * Federal Pricing and Contracts conference. For special group rates, contact Christian.Alongi@cbinet.com.

Drug Channels readers who register before October 31st will save $400 off of the standard registration rate when they use code GTY563.*

Register today!

*Cannot be combined with other offers or used towards a current registration or applied to special category rates. Other restrictions may apply.

Buy-and-Bill’s Still Alive: The Surprising Uptick in Part B Spending

The Medicare Payment Advisory Commission (MedPAC), an independent agency that advises Congress on the Medicare program, recently released Health Care Spending and the Medicare Program, its latest, 200+ page wonktastic data dump. Chapter 10 focuses on prescription drugs.

The latest MedPAC Part B spending data show a surprising increase in Medicare buy-and-bill spending for provider-administered drugs. (See chart below.) After a post-2005 slowdown, spending growth accelerated from 2009 through 2012.

Do these data of prove buy-and-bill’s resilience, or are they a pre-sequestration fluke driven by new therapies and a growing Medicare population? My speculations are below. If you feel brave, make a yummy sound with a comment of your own.

NEW: 2014-15 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors

I am pleased to announce the availability of our latest report: The 2014–15 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. We’re offering special discounts if you order before October 10, 2014.

This completely updated, revised, and expanded report gives you the most comprehensive overview and analysis of the latest financial and industry data. You can see the breadth and depth of content by downloading the Free Overview of the Report. (Fair warning: the report has no jokes and zero pop culture references.)

The 2014-15 edition’s significant new content includes:

• New analysis of generic purchasing organizations
• New content on global drug distribution markets
• New assessments of wholesalers’ opportunities and risks from specialty drugs, including the prospects for biosimilars
• New market share estimates for the specialty distribution segment
• Expanded analysis of wholesaler margins
• Comparison of full-line vs. specialty distribution service agreements
• New analysis of wholesalers’ changing relationships with their large customers
• Updated company analysis of the Big Three public wholesalers: AmerisourceBergen, McKesson, and Cardinal Health
• Updated analysis of underlying business profitability, based upon our proprietary economic models
• And much more!

If you like Drug Channels, then you'll love this report. You'll also enjoy 83 data-packed charts and more than 200 endnotes, most of which have hyperlinks to original source materials. I included many more internal hyperlinks, making it easy for you to navigate and customize the material.

Click here to download the report today. If you have any questions (before or after reading the report), please email me. Enjoy!

Real-World Data/Late Phase Summit

Real-World Data/Late Phase Summit
November 5-6 | Philadelphia, PA
www.cbinet.com/RWD

Real-World Data/Late Phase Summit – A forum for navigating the latest updates and challenges with real-world data utilization, reimbursement, product value, market access late phase study design and much more – is being held November 5-6 in Philadelphia. Join CBI to convene with peers and discover practical business strategies for real-world data utilization to advance late stage research.

The program features five case studies, an extended payer Q&A, and a diverse group of 18+ industry experts representing Aetna, Astellas, AstraZeneca, Biogen Idec, Bristol Myers Squibb, Johnson & Johnson, Medivation, NICE, Quintiles, Sanofi U.S. and more, will discuss tried and true solutions to the most significant challenges affecting industry today:

• Evaluate the role of medical affairs, clinical development and HEOR in the post-approval process and examine how and when phase 4 studies should be conducted
• Review the current climate of converging payer and regulator real-world evidence needs and some associated key challenges
• Examine what acceptable standards are for real-world data through examining what is required from a payer point-of-view
• Develop better treatment pathways and optimize patient outcomes in comparative effectiveness research
• And much, much more!

As a valued reader of Drug Channels, CBI is offering an exclusive $300 discount when you register by Friday, October 3. (Be sure to mention promo code DCN275).

*Offer valid through October 3, 2014, applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to a current registration.

Walgreens and Alliance Boots Explain Their AmerisourceBergen Relationship

This week, Walgreens and Alliance Boots filed a “Registration Statement on Form S-4” that describes how the companies will transform into Walgreens Boots Alliance, Inc., a new Delaware corporation. (Link below.) The hefty 471-page filing, which will be the basis for a shareholder vote, has loads of interesting details on how the combined business will look.

Below, I highlight a few nuggets about the companies’ relationship with AmerisourceBergen, including equity ownership, Walgreens' distribution agreement, and the WBAD generic sourcing arrangement. This info had been previously disclosed, but only as part of a dense legal document. The S-4 summarizes the important points into a (somewhat) less cryptic format.

Read on for highlights. I’ll have more details on changing relationships between wholesalers and retail chains in our new 2014-15 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, available next week.

How Employers Are Managing Pharmacy Benefits in 2014

The just-released Kaiser/HRET 2014 Employer Health Benefits Survey (free download) delves into employer-sponsored health coverage at more than 2,000 companies.

Today, I profile the pharmacy benefit highlights from this excellent survey. The charts below summarize (1) cost-sharing tier structures, (2), average copayments, by formulary tier, and (3) type of cost-sharing (coinsurance and copayment).

Bottom line: employers didn't make many major changes in the past year. Fourth-tier plans with substantial co-insurance remain a significant part of the market.

As a bonus, I also include a video with an intriguing forecast for the future of benefit tiers.

Elsevier Healthcare & Pharmaceutical Economics Conference- 2014

Elsevier Healthcare & Pharmaceutical Economics Conference- 2014
October 29-30, 2014 / Clearwater Beach, Florida

Join Elsevier as they bring together industry experts to share insight on issues and trends in the ever-evolving healthcare and pharmaceutical marketplace. Discover the new direction for healthcare and the obstacles and opportunities created for health plans, retail pharmacy chains and convenient care clinics, drug manufacturers, wholesalers and PBMs, and healthcare technology companies. Explore regulatory and compliance issues, cost savings measures, consumer-driven healthcare initiatives, alternative healthcare delivery models, and the impact these all have on the drug supply chain.

Featured sessions include:

• Healthcare Regulation: Current Status and What’s Next in State & Federal Legislation, Adam Huftalen, Government Affairs, Reed Elsevier

• Specialty Pharmacy and Reimbursement for Drugs under ACA and Outcome-Based Payments, Dean Erhardt, D2 Pharma Consulting

• Alternative Healthcare Delivery and the Rise of Convenient Care Clinics, Tine Hansen-Turton, Executive Director, Convenient Care Association

• The Next Big Thing: Genomics and Personalized Medicine, Scott Megill, President, Coriell Life Sciences

• Current and Future Trends in Pharmaceuticals and Drug Supply Chain, Doug Long, IMS

• The Empowered Patient: A New Paradigm for Healthcare and Pharmaceutical Marketing, Dorothy Wetzel, extrovetic

• Taking the Mystery Out of Maximum Allowable Cost: Addressing the Transparency Trend, Anu Pathria and Todd Grover, Glassbox Analytics

• Going Mobile: How Far and How Fast Will Healthcare Technology Go?, David Lee Scher,MD,FACC,FHRS, Penn State University College of Medicine and Digital Health Consultants

• Coming Soon? Update on the Promise of Biosimilars, Ruey Tu, Abbott Laboratories

Plus: panel discussions with industry leaders about the big issues, updates on product innovations, and a sunset dinner reception overlooking the beautiful Gulf of Mexico.

Space is limited. Don’t forget to save the date!

Inside Express Scripts’ Narrow Network Strategy—and How It Beat Walgreens

Last month, AIS Health held a fascinating webinar: Health Plan/Employer Strategies for Implementing Narrow Pharmacy Networks. (A CD and on-demand recording are available for purchase.)

The webinar featured a Milliman consultant, a Medicaid managed care health plan director, and the director of Network Solutions at Express Scripts, Andy Becker.

Becker explained Express Scripts' pharmacy network strategy, noting that 15% to 20% of the PBM’s claim volume now goes through a narrow network. He also revealed some previously-undisclosed insights into how Express Scripts outfoxed Walgreens during their 2012 imbroglio.

I highly recommend this webinar to anyone interested in the PBM/pharmacy/patient dynamics behind narrow networks. Excerpts below.

CMS Forecast: Big Drug Spending Growth, But Hospitals and Doctors Will Still Capture Most Healthcare Spending

Last week, the Centers for Medicare & Medicaid Services (CMS) released its latest forecasts for national health expenditures. The forecast is summarized in a new Health Affairs article: National Health Expenditure Projections, 2013−23: Faster Growth Expected With Expanded Coverage And Improving Economy (free download).

I crunch the prescription drug forecasts below. In 2013, prescription drug spending growth was again slower than the growth in total U.S. spending. Growth will accelerate as insurance coverage expands, the generic wave ends, and newer specialty drugs launch. By 2023, the U.S. will spend nearly $500 billion on drugs.

Despite this impressive growth, outpatient prescription drugs will account for less than one of every 10 U.S. healthcare dollars. Hospitals and physicians will remain at almost 60% of U.S. healthcare spending—or about six times as much as spending on pharmaceuticals.