Remicade: A Case Study in How U.S. Pricing and Reimbursement Curb Adoption of Biosimilars (rerun)

This week, I’m rerunning some popular posts during the pre-holiday week. Click here to see the original post and comments from September 2017.

This post is good reminder that biosimilar products have unanticipated channel dynamics. CMS’s policy change will further alter the 2018 market. Effective January 1, 2018, each biosimilar will have its own J-code. See Final Policy, Payment, and Quality Provisions in the Medicare Physician Fee Schedule for Calendar Year 2018.

Drug Channels will return on January 3. Until then, have a great holiday and happy new year!

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The Centers for Medicare & Medicaid Services (CMS) has just released the Average Sales Prices (ASP) reimbursement data for the fourth quarter of 2017. You can download the drug pricing files here.

Below, I use these data to explore the reimbursement and payer dynamics behind the relatively slow adoption of Inflectra, the first biosimilar of Remicade. The introduction of Renflexis, a second biosimilar, will offer additional insights about pricing and channel strategies.

The U.S. biosimilar market is highly underdeveloped compared with our European counterparts. As this case study shows, it’s pretty, pretty, pretty hard to launch a biosimilar.

Why Manufacturers and PBMs Should Worry About the Growth of Hospital-Owned Specialty Pharmacies (rerun)

This week, I’m rerunning some popular posts during the pre-holiday week. Click here to see the original post and comments from September 2017.

Another $0.02: In 2018, providers will continue to create the next wave of specialty pharmacies. But growth may slow with the likely legislative and/or regulatory reform of the 340B Drug Pricing Program. Expect a volatile 2018 for the specialty pharmacy industry.

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The American Society of Hospital Pharmacists (ASHP) has just released its latest national survey of pharmacy practice in hospital settings. (Free download) I always enjoy this annual treasure trove of insights.

This year’s survey confirms the extent to which hospitals and health systems are pursuing specialty pharmacy dispensing revenues. In 2016, about 1 in 11 hospitals had a specialty pharmacy. However, nearly half of the largest hospitals operated a specialty pharmacy.

Below, I summarize these new data and review hospitals’ motivations for growth. Pharmaceutical manufacturers and pharmacy benefit managers (PBMs) should be wary of the expansion in hospital-owned specialty pharmacies.

Follow the Dollar Math: How Much Do Pharmacies, Wholesalers, and PBMs Make From a Prescription? (rerun)

This week, I’m rerunning some popular posts during the pre-holiday week. Click here to see the original post and comments from August 2017. We’ll have an updated and expanded version of this analysis in the 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, which will be released on February 27, 2018.

ICYMI: The Pharmaceutical Research and Manufacturers of America (PhRMA) just released its own Follow The Dollar white paper, which is also worth reading.

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Yesterday, The Wall Street Journal published an intriguing article by Jonathan Rockoff titled Behind the Push to Keep Higher-Priced EpiPen in Consumers’ Hands.

The article includes a graphic attributed to me (cited as Pembroke Consulting). It shows that the drug channel—pharmacy benefit managers (PBMs), wholesalers, and pharmacies—receive more than $37 in gross profit for a brand-name drug with a $300 list price. PBMs capture about half of this amount.

The WSJ article doesn’t describe how I arrived at the figures. But now you, Drug Channels reader, will get the inside scoop.

Below, I go inside the box and trace these crucial computations. They determine the revenues and profits of the drug channel participants that operate between a brand-name drug maker and the patient. I also reveal how the figures affect the net prescription cost for a third-party payer.

As with many things, you'll have to observe the system to figure out the superposition.

Drug Channels Outlook: What to Watch in 2018

Hooray! We all made it through another 12 months. This year was stuffed with mega deals, political turmoil, the drug pricing blame game, generic market disruption, an ever-inflating gross-to-net bubble, and Amazon mania.

Through it all, Drug Channels was there to help you figure it out. I’m pleased to report that we had another record year. Drug Channels now has more than 20,000 subscribers, including nearly 5,000 @DrugChannels Twitter followers. (Follow me there for daily updates.)

Thank you, dear readers, for welcoming me into your inboxes and browsers each week. I’ve had a blast writing Drug Channels and also hope you had fun reading it. I’m grateful to our many sponsors and guest writers. Special thanks to the brave souls who posted comments and joined in the spirited discussions below the articles.

Here’s a bonus stocking stuffer: the Drug Channels Outlook: Things to Watch in 2018. These slides capture ideas I shared in my recent keynote presentation at CBI's Trade and Channel Strategies conference. It’s a sneak peek at some of next year's likely hot topics. I have also tucked in a few of my favorite personal photos from the past year.

We’ll post reruns for the balance of this week. But never fear: Drug Channels will return with new content in 2018! In the meantime, please enjoy our annual holiday tradition—a video greeting below from me and Paula, my wife and business partner in Drug Channels Institute.

Wishing you and your family health and happiness,
Adam

CBI’s 5th Annual Reimbursement & Contracting Conference

CBI’s 5th Annual Reimbursement & Contracting Conference
January 24-25, 2018 | Philadelphia, PA
http://www.cbinet.com/contracting

Exclusive Offer for Drug Channels Readers:

Register Now to SAVE $400*

(Use discount code HRQ997)

CBI’s 5th Annual Reimbursement & Contracting Conference is the ideal platform for bio/pharma manufacturers to unravel complexities associated with reimbursement, pricing strategies and federal and commercial contracting.

Join industry thought-leaders and colleagues in Philadelphia on January 24-25 at this CPE accredited event, and discover the necessary insights to navigate the evolving regulatory landscapes to develop innovative and competitive pricing strategies.

Featured Sessions from Our Distinguished Faculty Include:

• Hear the Latest Healthcare Updates and the Implications for Contracting and Reimbursement Strategies – Center for Medicine in the Public Interest
• Align New Technologies and New Treatment Paradigms within Existing Reimbursement Systems and Utilize AI Technologies to Enhance Efficiency – Pear Therapeutics and Magellan Method, a division of Magellan Rx Management
• Garner Best Practices to Develop Innovative Contracting and Implement Effective Pricing Strategies – Abarca Health and Alvogen Inc.
• Explore Outcomes-Based Contracting to Facilitate Enhanced Access for Biosimilars – National Institute for Health and Care Excellence (NICE)
• Overcome Key Challenges Facing the Specialty Marketplace – Intarcia Therapeutics
• And more!
• Plus, Choose Between Two In-Conference Workshops:
• A. Commercial Pricing and Contracting Master Class – Insmed Inc. and Horizon Pharma
• B. Navigate the Complexities of 340B and its Impact on Pricing and Contracting – 340B Health

Visit cbinet.com/contracting to view the complete agenda and speaker lineup, then register using discount code HRQ997 for this exclusive savings of $400* off.

Previous Attendees Acclaim:

“EXCELLENT CONFERENCE to bring the commercial and government contracting perspectives together.” - Department Director, Government Contracts & Reporting, Bayer

“EXTREMELY WELL RUN conference where ideas were shared so everyone could benefit and learn from the group!” - Business Relations Manager, Sanofi Genzyme

“The in-depth introduction of pros and cons for outcomes-based contracting OPENED THE DOOR FOR EXPLORATION.” - Senior Business Partner, Indivior

*Offer valid through 1/24/18; applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to existing registration. Not valid on workshops only or academic/non-profit registration. CPE credits pending approval.

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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.

Life Sciences Market Access & Commercialization (LSMAC) Summit

Life Sciences Market Access & Commercialization (LSMAC) Summit
February 5-7, 2018 | Philadelphia, PA

This coming February 5th -7th industry, payers, providers, pharmacies and patient leaders will convene at the Life Sciences Market Access & Commercialization (LSMAC) Summit in Philadelphia to learn tactics for optimized commercialization.

For the first time-ever, join a Summit covering four of the hottest therapeutic areas in 2018: cell and gene therapy, rare disease, oncology, and biosimilars. Robert Popovian, Vice President, US Government Relations, at Pfizer will chair the conference.

Register with discount code DC200 and save $200! 

(That’s only $795 for life sciences executives.)

Attendees will benefit from a selection of 6 hands-on workshops on Day 1 and shared plenary sessions on Day 2 before diving deep into their specific area of interest on Day 3.

Key Agenda Highlights include:

• OPENING KEYNOTE: A View from Washington: What’s Next for Health Reform
• KEYNOTE PANEL DISCUSSION: Build a Strategy to Ensure Market Access & Commercialization Success in a Healthcare System with Increasing Costs and Complex Therapies
• PAYER PANEL DISCUSSION: Gain Payer Insight into Market Access Best Practices for Reimbursement of Specialty Products in a Value-Based Healthcare Landscape
• Drug Pricing and the Future of the Pharmaceutical Industry in an Era of Healthcare Transformation
• Discover and Utilize the Opportunity Brought About by Big Data as it Transforms Pricing, Market Access & Commercialization
• VALUE-BASED CONTRACTING PANEL: Overhaul Market Access & Commercialization through the Use of Value-Based Contracting
• MARKET ACCESS 2020: The Future of Market Access & Commercialization, What You Need to Plan For

Confirmed speakers include senior-level executives representing:
Pfizer| Humana | Aetna | AMCP BBCIC | GSK | Merck | NCCN | Bayer | Enzyvant | Adocia | NY Stem Cell Foundation | Roche | Walgreens | Alnylam | Amgen | Tocagen | and many more!

Don’t miss out on this opportunity to experience unprecedented value, networking and education. Register with discount code DC200 and save $200! (That’s only $795 for life sciences executives.)

Robert Popovian and the World Congress team look forward to seeing you in February!

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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.

2016 Drug Spending: The Shift from Employers to Government Payers—And Troubling Trends For Patients

In CMS Confirms It: Drug Spending Slows, Hospital and Physician Spending Grows, I showed that growth in drug spending was significantly below the growth rate of overall national healthcare spending. Today, I delve into trends in third-party and patient payment for prescription drugs.

In 2016, all payers experienced a slowdown in spending. Employers' drug spending growth was nearly flat, while consumers (on average) paid less out of pocket. And for the third year in a row, spending by government payers exceeded spending by employers. The NHE are net of rebates, so gross-to-net bubblenomics play a part in these figures.

I suspect that the very slow growth in employers’ net costs occurred partly because employees are being forced to pay debilitating coinsurance—in some cases with no limit on out-of-pocket drug expenses.

The NHE data therefore suggest a troubling gap between haves and have-nots, based on benefit design and diagnosis. Some people can make do with inexpensive generic drugs, while others end up with sky-high out-of-pocket costs.

Read on for our wonktastic deep dive into the 2016 spending data.

CMS Confirms It: Drug Spending Slows, Hospital and Physician Spending Grows

Last week, the econowonks at the Centers for Medicare & Medicaid Services (CMS) released the 2016 National Health Expenditure (NHE) data. Links below.

It’s politically fashionable to blame healthcare spending growth on pharmaceuticals, but it’s also inaccurate. For 2016, growth in drug spending was a mere 1.3%—significantly below the growth rate of overall national healthcare spending.

Another fun fact: drug spending has grown more slowly than NHE in seven of the past ten years. Yes, really.

Our analysis also shows that spending on hospital care and healthcare professionals continues to expand much more quickly than drug spending. For 2016, those categories accounted for six times the spending on drugs dispensed from retail, mail, long-term care, and specialty pharmacies.

These new CMS data confirm the slowdown that I have highlighted in multiple Drug Channels articles. Once again, I must be the bearer of non-fake news. Read on for the details.

sPCMA Business Forum 2018

sPCMA Business Forum 2018
March 5 & 6, 2018
Hilton Bonnet Creek | Orlando, FL

The sPCMA Business Forum attracts many executives and decision makers from PBMs and the nation's largest specialty pharmacies. The two-day event offers invaluable networking and education for individuals and companies involved in specialty drug benefit management including specialty pharmacies, PBMs, pharma/biotech manufacturers, consultants, and others.

Register now!

Conference features include:

• Timely and insightful sessions led by industry experts and decision makers;
• The ability to receive CPE credit;
• Dedicated time and facilities for private meetings;
• Valuable networking; and
• The new PCMA conference app allows users to access the attendee list, send messages to other attendees, create a personalized schedule, and access hotel maps, all in advance of the conference.

Contact PCMA

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

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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.

Triplefin: How An Independent Service Provider Is Positioning for Growth

Today’s guest post comes from Tom Doyle, Executive Vice President Commercial Solutions at H. D. Smith / Triplefin.

Tom shares his views on how an ndependent patient services provider can enhance a manufacturer’s internal efficiency and the patient experience. He discusses patient assistance programs, automation, integration, and customer engagement.

To learn more about Triplefin’s full range of solutions, visit their booth at next week’s CBI Trade and Channel Strategies conference or visit www.triplefin.com.

Five Industry Trends for U.S. Drug Wholesalers in 2018

Modern Distribution Management recently published my article 2017 MDM Market Leaders | Top Pharmaceuticals Distributors. It is an excerpt from our 2017–18 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

Below, I republish the section of the article highlighting five significant industry trends affecting the U.S. drug wholesaling industry. I think Drug Channels readers will enjoy this summary as we look toward an eventful 2018. Click here to download a free overview of the full report.

Many of the trends highlighted below have been headwinds for the wholesalers. They may help you understand why H.D. Smith sold its drug wholesaling business to AmerisourceBergen. Note that H.D. Smith did *not* sell its interest in the TripleFin business and Arete Pharmacy Network.

The CVS-Aetna Deal: Five Industry and Drug Channel Implications

Surprise? CVS Health and Aetna announced their long-rumored merger. Relevant links below.

This transaction will create a healthcare organization with significant market share in the pharmacy, pharmacy benefit management (PBM), and health insurance businesses. There could be many potential opportunities for new consumer-oriented offerings. Finding the consumer value in this multi-headed $221 billion behemoth will be a major challenge.

Read on for my initial thoughts on the deal and what it means for PBMs, manufacturers, and pharmacies. I also highlight some of the implementation challenges.

Feel free to add your own thoughts on this mega-deal in the comments below. (Yes, you can comment anonymously.)

CBI’s 10th Hub and SPP Model Optimization

CBI’s 10th Hub and SPP Model Optimization
February 27-28, 2018 | Philadelphia, PA
www.cbinet.com/hubs

This February 27-28 in Philadelphia, join stakeholders from across the healthcare and life science industries to share and learn breakthrough strategies for service model design and enhancement to improve access and outcomes. You can read all about it here.

Drug Channels readers will save $400 off the standard rate when they use discount code MGK734 and register prior to December 15th.*

Led by chairperson Stella Vnook, Head of Patient and Access Services, Jazz Pharmaceuticals, the 10th installment of the Hub and SPP Model Optimization meeting features a broad range of perspectives:

• Industry Snapshot – Roxanne Schwans, Vice President, Managed Markets, Horizon Pharma
• Compliance Spotlight – Bradford Patrick, Division Counsel, AbbVie Inc.
• Collaborating with Hub and SPs – Matt Zeller, Vice President and Head, Patient and Specialty Services, Novartis Pharmaceuticals
• Hub Optimization – Meghan Szczeck, Director, Patient Services, Ipsen
• SPP Report Card – Caroline Teachey, HUB Program Liaison, Chiesi

You’ll also benefit from three Hub Lifecycle Learning Labs:

• Preparation Phase – Assessing Product Needs to Determine the Approach (Insource, Outsource or Hybrid)
• Development Phase – Selecting the Right Model for Your Therapy and Disease State
• Transition Phase – Minimizing Disruptions with Changing Partners

And three interactive and inclusive summits:

• Auditing Third-Party Providers and Measuring Program Performance to Ensure the Highest Quality of Service
• Contracting Course – Beyond the Data
• Hub Enrollment – Propelling Stakeholders to Go the Extra Step for their Patients

Plus! Attend our inaugural Technology Trailblazer Showcase – Statistical and Data-Driven Insights Unveiled.

Visit www.cbinet.com/hubs for further details and to register. Drug Channels readers will save $400 off the standard rate when they use discount code MGK734 and register prior to December 15th.*

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.