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.

Amazon’s bid for Whole Foods sparks speculation on what it might gobble up next, The Washington Post

The prospect of Amazon’s entry into the pharmacy and/or pharmacy benefit management (PBM) business made many people lose perspective. I have a more nuanced view, per A Reality Check on Amazon’s Pharmacy Ambitions.

Amazon’s acquisition of Whole Foods set off another round of crazy conjectures. As I told The Washington Post:

Ongoing speculation about a possible Amazon foray into the prescription drug business is largely unfounded, said Adam J. Fein, president of Pembroke Consulting, a Philadelphia-based research firm. “Everyone has massively overreacted to the prospect of Amazon entering the prescription business,” he wrote in an email. “Whole Foods does not help Amazon’s pharmacy ambitions.”

Whole Foods has no prescription pharmacy operations. It has fewer than 450 locations, so it is a weak platform for entering the retail pharmacy business. What’s more, most Whole Foods stores are in urban areas that already offer plenty of retail pharmacy options. And Amazon has still said nothing about the transaction.

Sorry, folks. Amazon will surely experiment in pharmacy, but it''ll be a while before your oxycodone and organic kale are delivered together by an Amazon drone.

June 1, 2017, letter to Health Resources and Services Administration, House Energy and Commerce committee

The booming 340B Drug Pricing Program is finally facing closer scrutiny. The House Energy and Commerce committee sent this letter to the administrator of Health Resources and Services Administration (HRSA), the agency that manages the program through its Office of Pharmacy Affairs (OPA). Per the letter:

“The Committee is concerns about the 340B program’s rapid growth without additional and proportional oversight.”

True! Examples of abuse and channel distortions continue to pile up. Here are the two latest examples of 340B covered entities behaving badly:

• Doctor: Hospital Using Federal Program To Undercut Our Price 

• Hospitals chase lucrative drug discounts 

Reform and modernization of the 340B program are essential. Expect much more news to come.

Final Medicare Part D DIR Reporting Requirements for 2016, Centers for Medicare & Medicaid Services

In May’s news roundup, I highlighted CMS’s proposed change to Direct and Indirect Remuneration (DIR) reporting. The final requirements in the link above are almost identical to the proposal. See my previous comments for details on the changes.

Analysis of Integrated Delivery Systems and New Provider-Sponsored Health Plans, Robert Wood Johnson Foundation, Robert Wood Johnson Foundation

This white paper offers a sobering reality check to the hype over hospitals and integrated delivery networks (IDNs) becoming health plans. Here’s the dispiriting conclusion:

"Based on the analysis reported here, it is hard to identify any of the new cohort of provider-sponsored health plans that show strong promise. Five in that group have already failed, and two national hospital systems announced their intent to reduce or even end their ventures into the health plan business. A few new plans have enjoyed some success, reaching enrollments of 100,000 in just a few years. However, almost all these plans continue to operate at a loss, in some cases reporting very large losses."

Ouch. I guess Public Enemy was right.

1950s Hospital Of The Future, Kaiser

At a recent conference, the keynote speaker played this awesome video. It shows us how the future looked back in the 1950s. My favorite part starts at 43 seconds. Click here if you can’t see the video.

I wonder what breathless trends Drug Channels readers will find amusing in the year 2080...