Observations on the New Walgreens Boots Alliance-Rite Aid Deal

Yesterday we got some pre—July 4th fireworks.

Walgreens Boots Alliance (WBA) announced a deal to buy 2,186 Rite Aid stores and three distribution centers for $5.2 billion. Rite Aid will also get the option to source generic drugs via the wonderfully named Walgreens Boots Alliance Development (WBAD) organization. Click here to read the press release.

With a potential FTC battle looming, WBA made the debt-laden Rite Aid an offer that it couldn’t refuse.

Before you head off for the long holiday weekend, please enjoy these thoughts on the new transaction along with commentary on Fred’s and the drug wholesalers.

Drug Channels News Roundup, June 2017: Amazon, Whole Foods, 340B, DIR Fees, Provider-Sponsored Health Plans, and Kaiser

Happy 241st birthday, America! Before you launch your July 4 festivities, please enjoy these Drug Channels fireworks:

• My $0.02 on how Amazon-Whole Foods affects Amazon’s pharmacy ambitions

• Congress starts to get serious about the 340B program

• CMS finalizes reporting on pharmacy-related DIR fees

• A reality check on provider-sponsored health plans

Plus, Kaiser provides a hilarious look at the hospital of the future…as seen from the 1950s!

P.S. Follow @DrugChannels on Twitter for my daily curated selection of news and commentary.

CBI’s 9th Hub and SPP Model Optimization

CBI’s 9th Hub and SPP Model Optimization
September 26-27, 2017 | San Diego, CA
www.cbinet.com/HubsWest

Calling all manufacturers, specialty pharmacies, PBMs and hub service providers!

Head to San Diego this September to discuss the opportunities and challenges for swiftly moving data among all stakeholders to improve patient access and hub performance. Hear expert perspectives from Actelion Pharmaceuticals, Aegerion Pharmaceuticals, AssistRx, Churchill Pharmaceuticals, Horizon Pharma, Otsuka America Pharmaceutical, PharmaCord, Relypsa, Retrophin, Shire, TC Market Access and Welkin Health.

Drug Channels readers will save $400 off the standard registration rate
when they use discount code HUT465.*

Capitalize on effective strategies to improve hub operations:

• Optimize the use of field reimbursement managers and data sharing with hubs
• Design hubs to best measure the right data points and transfer data across multiple organizations (Hub data, manufacturer leadership, contract management team, IT account specialists) for swift implementation
• Gain best practices to eliminate consuming workflows for the hub
• Identify how to improve information exchange between Hubs and specialty pharmacies
• Enhance the hub to propel product success and patient access
• Align channel and hub strategies to maximize efficiency

Download the complete agenda here, and visit www.cbinet.com/HubsWest for further details and to register. Drug Channels readers will save $400 off of the standard registration rate when they use discount code HUT465.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rate or non-profit 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.

Insider Tips to Help Meet Patient Management Standards in URAC’s Specialty Pharmacy v3.0 Accreditation

Today’s guest post comes from Russel Allinson, co-founder, Chief Executive Officer, and Chief Clinical Officer of Therigy.

Russ discusses the importance of understanding the latest URAC Specialty Pharmacy v3.0 accreditation requirements, particularly relating to patient management. To learn more, register for a free webinar co-hosted by Therigy and Cleveland Clinic. The webinar will be held on July 11, 2017, at 1:00 p.m. EDT.

Read on for Russ's insights.

Profits in the 2017 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies

Time for my annual review of the Fortune 500 list. Every year, this is one of my most popular posts, because it helps us “follow the dollar” and understand how drug channel intermediaries make money.

The 2017 list contains the same seven drug channel companies that the 2016 list did: AmerisourceBergen, Cardinal Health, CVS Health, Express Scripts, McKesson, Rite Aid, and Walgreens Boots Alliance.

Using the Fortune data, I explore the profitability and shareholder returns of the largest public drug wholesalers, chain pharmacies, and pharmacy benefit managers (PBMs). I compare these companies with the Fortune 500’s ten pharmaceutical manufacturers and a separate survey of independent pharmacies.

The Fortune data remind us that many multi-billion dollar businesses profit as drugs move through the U.S. reimbursement and distribution system. We must recognize this complex system in order to tackle the price and affordability of drugs.

CBI’s Specialty Pharmacy Network Design Summit

Specialty Pharmacy Network Design Summit
August 17-18, 2017 | Philadelphia, PA
www.cbinet.com/specialtynetwork

Mark your calendar for August 17-18, 2017 and attend the Specialty Pharmacy Network Design Summit in Philadelphia!

Learn about the latest strategies to optimize specialty pharmacy networks, the role of data shaping the future of specialty pharmacy, and specialty drug pricing/contracting trends. This meeting focuses on all aspects of specialty pharmacy network design from a multi-stakeholder approach providing the ideal platform to discuss opportunities and decision-making criteria behind building and expanding your specialty drug networks.

Drug Channels readers will save $400 off of the standard registration rate when they use discount code MXZ956.*

Agenda Sneak Peek:

• Explore the Specialty Network Design Decision-Making Process – Critical Criteria to Consider for Network Design Success
• Patient Data Aggregation, Reporting and Interpretation Methods for Manufacturers to Better Understand the Complete Patient Journey
• Evaluate the Emerging Trend of IDNs/ACOs Role in Specialty Pharmacy – Network Design Strategies Tailored for IDNs/ACOs Partnerships
• Making the Connection with the Patient - Specialty Pharmacy Services Strategies, Consent Compliance and the Impact on Patient Access
• Utilizing Innovative Health Information Technology to Transform Network Design
• Specialty Pharmacy Oncology Case Study
• Interactive Scenario Planning – Discover the Best Network Design to Achieve Your Goals

Sign up to receive the complete agenda here, and visit www.cbinet.com/specialtynetwork for further details and to register. Drug Channels readers will save $400 off of the standard registration rate when they use discount code MXZ956.*

 CBI will see you there!

 *Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rate or non-profit 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 CVS Health’s Point-of-Sale Rebates Deflate the Gross-to-Net Bubble—and Disrupt the PBM Business?

Yesterday, I examined the magnitude of the gross-to-net bubble—the growing spread between a manufacturer’s list price for a drug and the net price to a third-party payer after rebates. See New Data Show the Gross-to-Net Rebate Bubble Growing Even Bigger.

The bubble directly affects patients’ out-of-pocket costs. Many patients now have benefit plans with deductibles and are therefore required to pay the full, undiscounted cost of their prescriptions. Patients taking specialty drugs face large coinsurance computed using the undiscounted list price.

One solution replaces formulary payments made to plan sponsors with prescription discounts for patients at the point of sale (POS). Last week, CVS Health became the first pharmacy benefit manager (PBM) to publicly embrace and explain this alternative benefit design. See below for details.

Which makes me wonder: Do point-of-sale rebates solve the patients’ problems that the gross-to-net bubble causes? And will this benefit design mark the beginning of the end for the PBMs’ traditional economic model?

New Data Show the Gross-to-Net Rebate Bubble Growing Even Bigger

Despite a slowdown in brand-name drug list prices, the gross-to-net bubble is alive and well. The bubble reflects the growing spread between a manufacturer’s list price for a drug and the net price to a third-party payer after rebates.

According to the most recent QuintilesIMS report, the total value of pharmaceutical manufacturers’ off-invoice discounts, rebates, and other price concessions has more than doubled over the past five years, from $59 billion 2012 to an astonishing $127 billion in 2016.

Those payments offset more than half of the increase in list-price based spending. And though the gap between invoice and net prices shrank in 2016, the value of manufacturers’ discounts and rebates payments still grew last year, by $11 billion.

Below I delve into these data and share my observations. Tomorrow, I’ll examine how the bubble affects patients’ out-of-pocket costs and how CVS Health’s PBM business hopes to survive when the bubble pops.

CBI’s Annual 340B Manufacturer Summit

CBI’s Annual 340B Manufacturer Summit
August 22-23, 2017 | Alexandria, VA
www.cbinet.com/340B

With evolving regulations impacting 340B programs, pharmaceutical companies are faced with uncertainty on how to strengthen program compliance and integrity. CBI’s Annual 340B Manufacturer Summit breaks down and clarifies the impending regulations, provides strategies to develop comprehensive self-disclosure response and auditing processes, and establishes best practices to collaborate with contract pharmacies and covered entities.

Drug Channels readers save $400 with discount code GBZ697.*

Expert Perspectives Include:

• Conference Chairperson: Sabrina Aery, Director, Medicare FFS, National 340B Strategy, Bristol-Myers Squibb
• Compliance Spotlight: Chris Hatwig, President, Apexus
• Covered Entity Insights: Maureen Testoni, Senior Vice President and General Counsel, 340B Health
• Legal Spotlight: John Shakow, Partner, King & Spalding
• Manufacturer-Only Discussion: Hae Won Min Liao, Assistant General Counsel, Gilead Sciences
• And more!

Critical Updates, Interactive Discussions and Valuable Takeaways:

• Develop proactive techniques to improve new policy adoption and program compliance
• Determine impact of the Mega-Guidance withdrawal on diversion risk
• Review manufacturer ceiling prices and civil monetary penalties
• Reduce duplicate discount loss potential by working with intermediaries to conduct good faith dispute resolution
• Evaluate the evolving specialty bio/pharma landscape and discuss changes in decision-making autonomy, payment methodology and delivery system structure
• Discuss options to increase visibility into contract pharmacy operations and understand how claims adjudication has occurred
• Uncover best practices to respond to covered entities and initiate good faith financial remediation

Download the complete agenda here and visit www.cbinet.com/340B for further details and to register. Drug Channels readers will save $400 off of the standard registration rate when they use discount code GBZ697.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rate or non-profit 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.

Trends and Challenges in Specialty Drugs

Today’s guest post comes from Kay Morgan, V.P. of Drug Products & Industry Standards and Clinical Solutions at Elsevier.

Kay reviews specialty drug pricing and discusses strategies to manage spending on these therapies. For more, download Managing the Costs of Specialty Drugs, a free whitepaper from Elsevier.

Read on for Kay’s insights.

Average Pharmacist Salaries Hit $120,000, but Growth Again Lags Other Healthcare Professions

Time to update our exclusive annual analysis of pharmacist salaries. As always, we rely on the latest Occupational Employment Statistics (OES) data from Bureau of Labor Statistics (BLS).

In 2016, the average gross base salary for a pharmacist at a retail, mail, and specialty pharmacy topped $120,000—up 0.6% from the 2015 figure. Retail employment expanded, with the greatest growth at drugstores.

Meanwhile, the share of pharmacists who work at hospitals grew again. Pharmacists who work at hospitals also had salary increases that exceeded those of the average pharmacist. As I explain below, the specialty boom and generic plateau continue to drive the pharmacy industry’s evolution.

Though pharmacist salaries are growing, they are not keeping pace with those of other healthcare practitioners. That disparity should be troubling to every pharmacy school dean.

Latest Data on Pharmacy Market’s Evolution: The Real Story Behind the Retail vs. Mail Battle

QuintilesIMS recently released Medicines Use and Spending in the U.S.: A Review of 2016 and Outlook to 2021. The report is an excellent, albeit often misinterpreted, resource for understanding the pharma market.

Below, I analyze the latest data on how pharmacy dispensing channels have changed over the past five years. Key insights:

• Retail chains now dispense nearly 6 out of 10 prescriptions. 
• Mail pharmacies have experienced declining prescriptions, but have soaring purchases of specialty drugs. 
• Contrary to popular belief, independent pharmacies continue to grow.

Just about every media story inaccurately reported the QuintilesIMS data as “drug spending.” To tickle your inner wonk, I also provide a primer on how to interpret and understand what the QuintilesIMS data really mean.

Reimbursement and Access 2017

Reimbursement and Access 2017
August 16-17, 2017 | Philadelphia, PA
www.cbinet.com/reimbursement

The market access, pricing and reimbursement landscape is rapidly evolving as stakeholders shift to a value-based healthcare system. This transition coupled with increasing drug pricing scrutiny and mounting uncertainty related to potential repeal/replacement of the Affordable Care Act creates tremendous challenges for bio/pharma manufacturers to overcome.

Join CBI in Philadelphia this August 16-17 at Reimbursement and Access 2017. Hundreds of leaders in Access, Reimbursement, Managed Markets and Commercial Operations have benefited from this highly-acclaimed event which arms attendees with best practices and practical strategies during a time of unprecedented uncertainty on complex issues.

Register with discount code EXH946 before 6/30/17 to save $500!*

Powerful Programming and Compelling Content on Topics Including:

• The current state and direction of the healthcare landscape
• Evolution and trends in drug pricing transparency
• Value-based contracting and rebating strategies
• Policy, trends and initiatives around Medicare benefit design
• Updates and real-time analysis on the Healthcare Exchange Marketplace
• Payer insights on utilization management strategies
• Recent advancements in value-based care models in oncology
• Emerging pathways for pricing assessment framework
• Patient assistance and reimbursement support programs

Dynamic Dialogue Driven by a Multistakeholder Speaking Faculty Representing:
AbbVie • Apobiologix • Aralez Pharmaceuticals • AssistRx • Avalere • BIO • Boehringer Ingelheim • Celgene • Center for Medicine in the Public Interest • Chiesi USA • Churchill Pharmaceuticals • Covance • CSL Behring • Gilead • Harvard Pilgrim Health Care • Johnson & Johnson Health Care Systems • Maxor National Pharmacy Services • Magellan Health • NASP • Pacira Pharmaceuticals • Pfizer • Pharming Healthcare • PhRMA • Sunovion Pharmaceuticals • UPMC Health Plan • Walgreens • And More!

REGISTER TODAY!

Visit www.cbinet.com/reimbursement for more information. Drug Channels readers will save $500 off the standard registration rate when they use discount code EXH946.*

*Discount expires 06/30/2017 and may not be combined with other offers, category rates, promotions, or applied towards an existing registration. Offer not valid on workshop only or academic/nonprofit registrations. 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.

Patient Assistance Programs: Why Pharmaceutical Manufacturers Operate the Biggest U.S. Charities

Ronny Gal, Ph.D., a senior analyst at the investment research firm Sanford C. Bernstein & Co., recently published a fascinating report on the size of pharmaceutical manufacturers’ charitable foundations. Ronny has graciously agreed to let me share the high-level results below.

Ronny and his team found that pharmaceutical manufacturers’ patient assistance programs (PAPs) account for 10 of the largest 15 U.S. charities and provided $6.5 billion of support in 2014. (See table below.) On average, the manufacturers’ financial support accounts for 8% of their operating expenses.

PAPs are controversial and closely monitored. As I argue below, their growth is linked to pharmacy benefit designs that shift prescription costs to patients. Many insured patients face economically-debilitating coinsurance—in some cases with no limit on out-of-pocket expenses. The programs are an imperfect, but necessary, fix to our imperfect drug channel system. Ronny has provided some valuable facts that show how important these programs have become.