CVS Changes Direction With Surprise OptumRx Deal

Well, CVS Health blinked.

In July 2017, CVS Health’s retail pharmacies will become a preferred retail channel for 90-day prescriptions dispensed to OptumRx’s commercial clients. Here’s the press release: OptumRx and CVS Pharmacy Partner to Expand Consumer Choice, Reduce Costs and Improve Health Outcomes.

The surprise announcement echoes the arrangement that OptumRx established with Walgreens. The new deal signals that CVS is starting to counter Walgreens’ aggressive partnering strategies. OptumRx customers also get to choose which chain will be their preferred 90-day at retail provider.

Below, I provide some context for the agreement and outline CVS Health’s two basic strategic options as it competes with Walgreens. I’m very curious to hear how CVS Health will spin this latest move during its upcoming analyst day, on December 15.

Drug Channels News Roundup, November 2016: CVS Caremark, Generic Drugs, Health-System Pharmacies, and the FDA

Hope everyone enjoyed the Thanksgiving holiday! Now that you’ve stretched your stomach, stretch your mind with some food for thought. In this issue:

• Dispensing oncology practices win their battle with PBM CVS Caremark

• 2016 was a record year for generic drug approvals (data below)

• The ASHP’s latest forecast for health system pharmacy

Plus: The FDA approves a new product—with a twist!

P.S. ON SALE! Our 2016 Economic Report on Retail, Mail, and Specialty Pharmacies is now 40% off. The 2017 edition will be released in early February. (FYI: I announced the sale yesterday on @DrugChannels.)

Expanded Access Programs 2017

Expanded Access Programs 2017
March 9-10, 2017 | Washington, DC

The evolving political landscape is transforming and expanding patient access to experimental and unapproved drugs. CBI’s Expanded Access Programs is dedicated to the nuances and intricacies of designing and implementing early access programs. This multi-stakeholder event is focused on U.S. and global models for a variety of access management programs, including, but not limited to:

Expanded Access Programs, Early Access Programs, Compassionate Use Programs, Named Patient Programs and Managed Access Programs.

This is your opportunity to take a deep dive into the implications, prevailing policies, and current industry approaches to expanded access programs. Join industry thought-leaders and share key concepts around providing investigational, pre-launch or end-of-lifecycle drugs to patients for treatment purposes.

Visit www.cbinet.com/expandedaccess for more information.

Drug Channels readers will save $400 off of the standard registration rate when they use discount code EAPDCH.*

Register Now!

*Applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to an existing registration. Offer not valid on workshop only or academic/non-profit registrations.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

CBI’s 12th Life Sciences Trade and Channel Strategies

CBI’s 12th Life Sciences Trade and Channel Strategies
December 13-14, 2016 | Philadelphia, PA
www.cbinet.com/trade

Don’t miss the must-attend event for industry trade, channel, account and pharmacy strategy professionals!

CBI’s Annual Trade and Channel Strategies Conference boasts incomparable networking opportunities and unmatched, forward-thinking content from a broad array of stakeholders.

Drug Channels readers are eligible for a Thanksgiving week discount. Save $400 off of the standard registration rate when you use code MUT953.* Hurry! You must register by Friday, November 25th!

Can’t Miss Keynotes Featuring:

• Adam J. Fein, Ph.D., President, Pembroke Consulting, Inc.; Author, Drug Channels

• William Roth, Founding Partner, Blue Fin Group

Industry Trailblazers Speak on High-Impact Topics Transforming Trade Strategy, Including:

Pharmacy and Wholesale Business Economics | Organized Commercial Customers | Payers’ Channel Management Strategies | Government Regulations and Policy | Shift to IDNs and HMOs | Network Strategies and Distribution Trends | Pharmacy and Provider Models | Valeant/WBA Relationship | Reimbursement | Site-of-Care Reform | Vertical Integration | Globalization | Channel Considerations for Brands, Generics, Specialty and Biosimilar Products | Serialization | Co-Pay Programs

Over 50 participating companies thus far:

AbbVie | Alcon | Alexion | Alkermes | AmerisourceBergen | Amgen | Astellas | AstraZeneca | Bayer HealthCare | Biogen Idec | Blue Fin Group | Boehringer Ingelheim | Bracco Diagnostics | Bristol Myers Squibb | BTG International | Daiichi Sankyo | Depomed | Diplomat | Eli Lilly | Elwyn Pharmacy Group | Emmaus Life Sciences | FFF Enterprises | Genentech | Gilead | Goldman & Sachs | Hospital of the University of Pennsylvania | Indivior | Jazz Pharmaceuticals | Johnson & Johnson | Lilly USA | Mallinckrodt | Merck | Mylan | Novartis | PDX | Pembroke Consulting | Pfizer | Purdue Pharma | Radius Health | Relypsa | Rx Sourcing Strategies | Sanofi| Smith Drug Company | Sunovion | Takeda | Teva | Texas Oncology | Therigy | UCB | ZS Pharma

For more information, please download the complete agenda or visit www.cbinet.com/trade.

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

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

A Post-Election Projection: The 2025 Payer Market for Prescription Drugs

In Latest CMS Forecast Shows Big Drug Spending Growth Through 2025, I examined the July 2016 drug spending forecasts from the Centers for Medicare & Medicaid Services (CMS).

Alas, last week’s election exploded these projections. Today, I analyze CMS’s official pre-election insights about payment for outpatient prescriptions drugs in 2025. I then speculate on how these figures might change under the new administration, which wants to repeal and replace the Affordable Care Act (ACA). Based on the most well-known Republican proposals, I project a rebound in the employer-sponsored market compared with the CMS baseline projections.

But never forget a truism of the projection business: A good forecaster is not necessarily smarter than everyone else—he merely has his ignorance better organized.

Genentech’s Shocking $2 Billion 340B Revelation

ICYMI, the Roche Group recently made a startling disclosure: For the first half of 2016, the 340B Drug Pricing Program accounted for 18% of Genentech’s volume.

I estimate that at that rate, hospitals and other 340B-covered entities claimed discounts on about $3.4 billion in purchases annually from Genentech. With profit margins averaging 58%, that figure translates into about $2 billion in financial benefits.

Where did the money go? Who benefited from these funds? Did financially needy patients have to pay their Part B coinsurance for 340B-purchased drugs from Genentech? We have no idea, because hospitals and their lobbyists fight any call for them to disclose or account for how they use their 340B profits.

I suspect that the Trump administration will take a dim view of the lack of transparency and excesses that have occurred in the 340B program. Expect significant change in 2017 and beyond.

Specialty Therapies 2017

Specialty Therapies 2017
January 26-27, 2017 | Las Vegas, NV

Head to Las Vegas this January to share and learn strategies for managing the high cost of specialty therapies management. Through thought-provoking sessions, panels and keynotes, take your organization to the next level in 2017!

What topics are on tap for Specialty Therapies 2017?

• Optimizing value-based contracting strategies
• Improving integration of medical and pharmacy benefits
• Analyzing the effect of specialty therapies on alternative payment models
• Considering the impact of PCSK9 inhibitors
• Reducing costs and improving quality through implementing clinical pathways
• Ensuring access to high-cost specialty drugs through coupons and co-pays
• Analyzing the role of IDNs in generating specialty data
• Considering orphan drugs and the reinvention of specialty pharmacy

PLUS! Don’t miss a Keynote from CMS on the Oncology Care Model.

For more information, please download the complete agenda or visit www.cbinet.com/specialtytherapies. Drug Channels readers will save $400 off of the standard registration rate when they use discount code FKD639.*

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

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Will President Trump Eliminate The DSCSA?

Today’s guest post comes from Dirk Rodgers, a Regulatory Strategist for Systech International and author of the great RxTrace blog.

For those don’t know, the Drug Quality and Security Act (DQSA) was signed into law by President Obama on November 27, 2013. Title II of DQSA, the Drug Supply Chain Security Act (DSCSA), outlines steps for building an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.

In today’s essay, Dirk speculates about the future of the DSCSA under the new administration. He provides a useful framework for thinking about a crucial new uncertainty facing the drug channel. Pay particular attention to his third possibility.

Dirk is my go-to source for information on the DSCSA. If you want to get smarter on track-and-trace, then click here to subscribe to RxTrace. Bonus: Drug Channels readers get a special discount when they use coupon code DCNOV16.

CVS Drugstore Profits Suffer as Walgreens Partners

Here we go again.

On Tuesday CVS Health lowered its profit outlook, due partly to “the projected loss of more than 40 million retail prescriptions related to marketplace changes, including new retail pharmacy networks that are excluding CVS Pharmacy drugstores.” Its stock closed down 12%, before bouncing back slightly in yesterday’s post-Trump healthcare rally.

CVS Health placed the blame squarely on Walgreens Boots Alliance (WBA), which has aligned with Prime Therapeutics and displaced CVS retail pharmacies from the TRICARE retail network.

Call it competitive judo: Walgreens has used the strength of CVS Health’s integrated PBM/retail model against the CVS retail pharmacy business.

The lesson? Don’t bet against Stefano Pessina, our global channels overlord and executive vice chairman and chief executive officer of WBA. Read on for my analysis of the latest pharmacy showdown.

Post-election trivia question: In 2010, which former drug wholesale CEO (and future U.S. ambassador?) encouraged Donald Trump to run for President? Answer below!

Behind Diplomat Pharmacy’s Plunge: A Primer on DIR Fees in Medicare Part D

Last week, Diplomat Pharmacy became the latest high-profile drug channel company to see its shares take a high-profile dive. The specialty pharmacy’s stock dropped by 45%, falling below the IPO offering price. Look out below!

Diplomat’s management pinned the blame squarely on direct and indirect remuneration (DIR) fees paid to Medicare Part D plans. Below, I highlight the key concerns that Diplomat outlined. By reader request, I also provide a primer on DIR fees, whose impact was apparently unexpected by investors.

The rhetoric and controversy over DIR fees once again pits pharmacies against PBMs. Who will take the DIRect hit?

Reimbursement and Contracting Conference

Reimbursement and Contracting Conference
February 28 – March 1, 2017 | Philadelphia, PA

CBI’s Reimbursement and Contracting conference provides a platform for bio/pharmaceutical manufacturers looking to unravel complexities associated with reimbursement, pricing strategies and commercial contracting. As pricing pressures and competition continue to mount, reimbursement, pricing and contract teams must navigate evolving landscapes to developing competitive pricing strategies. Join experts to discuss the latest on Medicare Part B Payment Models, value-based contracting, specialty drug pricing, 340B, partnering with ACOs, value frameworks and payer mergers!

Key Insights and Takeaways:

• Identify current trends in reimbursement and contracting
• Operationalize resources to streamline pricing and contracting structures and processes
• Investigate Medicare Part B Payment Model Impact on ASP and Value-Based Purchasing
• Understand how pricing in various government programs is impacted by the evolving complexity of managed market contracts
• Align pricing projections with payer coverage while maintaining patient affordability
• Discuss the role of the 340B program and its impact on prescription drug prices
• Explore market trends in specialty products and biosimilars to develop contracts for long-term success
• Gain strategies for properly linking discounts and rebates with value and outcomes

DOWNLOAD BROCHURE

Drug Channels readers will save $400 off the standard registration rate when they use discount code GGS588.* Visit www.cbinet.com/contracting for more information or view conference preview.

*Discount expires January 31, 2017; applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to an existing registration. Offer not valid on workshop only or academic/non-profit registrations.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

An Important Correction to Yesterday’s Post

Oops.

I made a significant error in yesterday’s article. Sorry about that. After 10 years and more than 1,400 posts, I guess I was due for a major brain fart.

Basically, I counted the rebate twice, thereby incorrectly making it appear that payers were paid when an EpiPen prescription is dispensed. That’s not what CVS Health’s white paper illustrated.

EpiPen: What You Need to Know shows the following trends:

• The average wholesale price (AWP) for EpiPen 2-pack increased by 143%, from about $300 in 2013 to $730 in 2016.

• The final payer cost—which deducts rebates, discounts and the beneficiary’s copayment—increased by only 38%, from about $160 in 2013 to $220 in 2016.

Based on these data, CVS can legitimately claim that it “significantly reduced the impact of 3 years of EpiPen price increases” (for patients with flat copayments).

To avoid confusion, I have removed yesterday’s post because it is not reliable.

WHAT I GOT RIGHT

1) The CVS analysis changes significantly when patients have high deductibles. In those situations, the patient buys an EpiPen based upon its list price. The PBM and plan profit by collecting a rebate that is not reflected in the retail price, per the discussion in The Insurance Rip-Off At The Heart Of The EpiPen Scandal. We'll be hearing much more about cost-sharing and deductibles in coming months.

2) Senator Bernie Sanders' obsession with list prices is economically illiterate and misleading. The published list price does not equal the net price paid, as the EpiPen example illustrates. Our current drug channel system encourages ever-higher list prices—even when the net amount received by a drug maker is stable or even declining. That's why understanding the flow of funds and benefit designs is important before going on a twitter rant.

3) My tweet still stands: “Hey @SenSanders: List price increases for #insulin go to insurers and #PBMs, not #drug makers.”

More to come: Senator Sanders and Representative Elijah Cummings have just asked the Department of Justice and the Federal Trade Commission to investigate three insulin makers for alleged collusion on list prices. See this Pharmalot story.

How Payers Profit from Drug Price Inflation: The Strange Case of EpiPen and CVS Health

This post has been removed. Explanation here.