Drug Channels News Roundup, May 2018: CVS Caremark, Albertsons/Rite Aid, Copay Accumulators, and A World Without PBM Rebates

It’s almost June—wedding season! Our invitation to the recent royal nuptials apparently got lost in the mail, but I invite you to our own monthly shower of noteworthy news:

• More questions about CVS Caremark’s profits in Ohio’s managed Medicaid programs

• Albertsons and Rite Aid reveal new details about their pharmacy plans

• HIV service organizations warn of patient dangers from copay accumulators

Plus, we revisit the classic Drug Channels black swan article for hints to a future without PBM rebates.

P.S. @DrugChannels on Twitter is now approaching 6,000 followers. Throw some rice and enjoy my daily tweets of interesting news, stories, and the reports you need to read.

CBI’s 4th Annual Specialty Pharmacy Network Design Summit

CBI’s 4th Annual Specialty Pharmacy Network Design Summit
June 14-15, 2018 | Washington, DC

Prescription dispensing revenues from specialty drugs at retail, mail, long-term care, and specialty pharmacies reached $138 billion in 2017. That amount accounts for one-third of the 2017 pharmacy industry’s $413 billion in total dispensing revenues. By 2022, prescription dispensing revenues from specialty drugs will account for $271 billion, almost half of the pharmacy industry’s projected $576 billion in total dispensing revenues. (See The 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, exhibit 70.)

At CBI’s 4th Annual Specialty Pharmacy Network Design Summit, gain the latest insights from leading multi-stakeholder perspectives, designed to help you learn how your network design decisions can impact patient access and the quality of patient care.

Visit CBI’s site for further details. Register by June 1 and receive $400 off the standard rate with discount code SPN400.

Download the complete agenda for the Specialty Pharmacy Network Design Summit.

Benchmark your specialty pharmacy network design strategies with your peers and with our distinguished speaking faculty:

• Mike Agostino, RPh, President, Amber Pharmacy & Hy-Vee Pharmacy Solutions
• Vice President, Specialty Pharmacy, Hy-Vee President, 2018 National Association of Specialty Pharmacy
• Cheryl Allen, RPh, BS Pharm, MBA, Vice President, Industry Relations, Diplomat
• Sheila M. Arquette, RPh, Executive Director, National Association of Specialty Pharmacy
• Jasmine Daniel, Director, U.S. Commercial Specialty Trade, Shire
• John Klimek, RPh, Senior Vice President, Standard and Information Technology, NCPDP
• Lynnae M. Mahaney, BSPharm, MBA, FASHP, Director, Pharmacy Accreditation, American Society of Health-System Pharmacists
• Brandon Newman, PharmD, CSP, Program Director, Vanderbilt Specialty Pharmacy, Vanderbilt University Medical Center
• Timothy Paine, Director, Industry Relations, Fairview Specialty Pharmacy
• Brandi Rabon, MSW, Patient Advocate, Manager, Patient Support Services
• One Patient Services, LLC
• John C. Robicsek, Assistant Vice President, Strategy, Business and Program Development, Pharmacy Administration, Atrium Health
• Tim Safley, Director, DMEPOS, Pharmacy & Sleep, Accreditation Commission for Healthcare
• Luis Torres, MBA, Vice President, Managed Care, BioPlus Specialty Pharmacy
• Julie Zatizabal, SVP, Trade Relations, Amber Pharmacy

Featured Topics Include:

• Copay and affordability criteria – reimbursement considerations to ensure specialty pharmacy network design success
• Examining the role of IDNs/ACOs in specialty pharmacy and the unique characteristics of successful integrated model partnerships
• Measuring outcomes and the impact on specialty pharmacy network design
• Opportunities and pitfalls of specialty pharmacy network design decisions
• Understanding the specialty patient population’s perspective
• Patient data aggregation – effective data collection and interpretation strategies
• Trends in oral oncology specialty pharmacy distribution

Visit CBI’s site for further details. Register by June 1 and receive $400 off the standard rate with discount code SPN400.

*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.

Who Best Managed the Drug Spending Slowdown in 2017: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?

It’s time for Drug Channels’ annual analysis of drug spending. For 2017, we again turn to the annual trend reports from four large pharmacy benefit managers (PBMs)—CVS Health, Express Scripts, MedImpact, and Prime Therapeutics. (See their report links below.)

Below, I compare who’s better and who’s best among the PBMs and share additional observations about the 2017 trends. We offer four key conclusions:

• Drug spending grew by only 1.5% in 2017, continuing a multiyear decline in the growth rate.

• Total drug spending declined at more than 40% of plan sponsors.

• Spending on traditional drugs dropped by mid-single digits.

• For specialty drugs, higher utilization was a much bigger contributor to spending growth than was growth in unit costs.

The 2017 data figures show that PBMs’ negotiating abilities continue to put spending growth in a squeeze box. Unfortunately, the warped incentives of the gross-to-net bubble and plan sponsor cost-shifting mean that patients do not always get on the magic bus and benefit from the low trend figures.

CBI's Reimbursement and Access 2018

Reimbursement and Access 2018
August 15-16, 2018 | Philadelphia, PA
www.cbinet.com/reimbursement

For all companies within the life sciences arena, staying on the pulse of emerging trends, ensuring favorable reimbursement and justifying product prices are core pillars of overall product success. Whether your organization is pre-commercial or managing multiple products, CBI’s highly-acclaimed Reimbursement and Access arms attendees with invaluable learning, practical strategies and tangible takeaways on the most impactful ways to reduce barriers to access.

Join CBI in Philadelphia this August 15-16 at Reimbursement and Access 2018 for unparalleled insights and practical expertise.

Register today! Drug Channels readers will save $500 off the standard registration rate when they use discount code JUR627*

High-Impact Topics Transforming Access Strategy Including:

• Copay Accumulators and PBM Restrictions
• Evolving Health Policy Landscape
• Value-Based Contracting
• Formulary Management
• Biosimilar Strategy and Access
• Payer Engagement
• Cell and Gene Therapies
• Temporary Supply and Quick Start Programs

Dynamic Dialogue Driven by a Multistakeholder Speaking Faculty Representing:
AbbVie • Adama’s Pharmaceuticals • America’s Health Insurance Plan (AHIP) • Avalere, an Inovalon Company • BIO • Boehringer Ingelheim • Braeburn • Covington & Burling • CSL Behring • Eisai, Inc. • Frier Levitt • Health Results Group • Heron Therapeutics • Ipsen Biopharmaceuticals • Johnson & Johnson Health Care Systems • Jupiter Life Sciences Consulting • Kaiser Permanente Institute for Health Policy • King and Spaulding • Kite, a Gilead Company • Pfizer • Regional Cancer Care Associates • Sobi • Spark Therapeutics • U.S. Attorney’s Office for the District of New Jersey • U.S. Attorney’s Office for the Eastern District of Pennsylvania • U.S. Attorney’s Office for the Western District of Oklahoma • Walgreens • Xcenda • 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 JUR627*

*Discount expires 06/22/2018 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.

The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption

Last Friday, the U.S. Department of Health & Human Services (HHS) released American Patients First, a report billed as “The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.” This administration’s blueprint offers a thoughtful diagnosis of U.S. drug pricing along with the unintended consequences and warped incentives of our drug channel system.

The report also proposes a very long list of more than 50 regulatory and legislative fixes. It therefore doesn’t translate to quick action or simple sound bites. Many people are discounting the plan as no big deal and therefore underestimating how radically the system could change.

Below, I review some of its more radical notions—and highlight why the document's ideas pose substantial long-term risks for drug channel companies and their profit models. I also examine proposed changes for modernizing the Medicare Part D program and discuss two popular but ineffective ideas that were omitted from the document. While I don’t cover it in this article, I suspect changes to the Medicare Part B program may arrive soon.

The blueprint avoids facile diagnoses and simplistic solutions. It therefore looked on Friday like a weak political move. However, I expect last Friday’s announcement will mark the start of many coming changes.

Partnering with IDNs BioPharma Strategy Summit

Partnering with IDNs BioPharma Strategy Summit
August 15-16, 2018 | Philadelphia, PA
www.cbinet.com/IDNStrategy

In this complex healthcare market, integrated delivery networks have different decision-making processes, the size to leverage price discussions and access to real-world data in order to assess a therapy’s value. It is up to manufacturers to understand what IDNs require to meet their goals and adapt their sales teams to support and communicate effectively with these customers.

CBI’s 3rd annual Partnering with IDNs BioPharma Strategy Summit convenes manufacturers and integrated delivery networks to discuss how to create a mutually beneficial partnership for data-driven product advancement, greater patient engagement and adherence, and optimal care coordination.

Drug Channels readers will save $400 off the standard registration rate when they use discount code FGD662.* REGISTER TODAY!

Diverse Perspectives from Industry Pioneers:

• Scott Canfield, Specialty Pharmacy Clinical Programs Manager, John Hopkins Home Care Group
• Mark Fisher, Director – Key Account Lead, Sanofi Joint Health
• Scott Garrett, Respiratory Institutional Regional Business Manager, Sunovion Pharmaceuticals
• Brandon Newman, PharmD, MMHC, CSP, Program Director, Specialty Pharmacy, Vanderbilt University Medical Center
• Elliot Jones, Regional Account Executive, IDNs-Northeast, Bayer
• John Robicsek, Assistant Vice President, Strategy, Business and Program Development, Pharmacy Administration, Atrium Health
• Michelle Templin, Vice President, Government Affairs and Business Development, MHA ACO Network
• Ameet Wattamwar, Pharm.D., Pharmacy Manager, Transition of Care, NYU Langone Medical Center

Take Your Health System Strategy to the Next Level with Dynamic Sessions:

• Engage with industry pioneers at this highly collaborative event and benefit from 5+ hours of dedicated networking opportunities
• Learn new sales models for engaging large hospital systems and IDNs
• Hear case studies around system care coordination and population health management
• Analyze the impact of an outcomes-driven marketplace for payers and providers
• Take away contracting strategies that provide the most value to organized customers
• Initiate and nurture network-based relationships
• Overcome the challenges of specialty data management
• And more!

REGISTER TODAY!

Visit www.cbinet.com/IDNStrategy for more information. Drug Channels readers will save $400 off the standard registration rate when they use discount code FGD662*

*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.

Reflections from #Asembia18: The State of Specialty Pharmacy 2018

Last week, Paula and I had the pleasure of attending Asembia’s 2018 Specialty Pharmacy Summit.

The Specialty Pharmacy Summit remains the most important forum in the specialty marketplace. This year, a record 6,500 people learned, networked, and connected in Las Vegas. It was another year of record attendance. (Here’s the official press release.) Drug Channels again salutes Larry and Robert Irene for sustaining and growing an annual event that unites the entire industry.

Today marks the eighth year that I will violate Vegas code and tell you what happened there.

Below, I offer reflections on the meeting and highlight key specialty industry trends. You’ll also find a link to the conference’s Featured Session slides and a few cool photos. Feel free to add your own observations and photos in the comments section below.

Integrate 2018: Three Co-Located Summits

Integrate 2018: Three Co-Located Summits
July 23-25, 2018 | Philadelphia, PA
www.worldcongress.com/events/Integrate/

This July 23-25, Philadelphia will become home to Integrate 2018 featuring three one-day Pre-Summits and three Full Summits.
Choose one of three Pre-Summits:

• The 2018 Copay Summit
• Specialty Data & Access Strategies Master Class
• AI & Blockchain Strategies Summit

Main Day Summits include:

• 2nd Annual Patient Services Compliance Summit
• 5th Annual Patient Support Services & Hub Design Summit
• 5th Annual Specialty Network Design & Channel Optimization Summit

Truly customize your experience by selecting one-, two-, or three-day options and the specific tracks of your choice. One ticket price allows you access to any session from any of the three main day Summits.

Register with discount code DC200 and save $200 off of current registration rates!

Attendees will have the opportunity to break down silos and engage in forward-thinking discussions with cross-functional colleagues in order to develop best practices for improving support and access from manufacturer to patient, provider and networks.

Shared Keynotes include:

• Examine Specialty Trends, Advancements, Emerging Partnerships, and Opportunities to Impact the Patient Journey and Improve Channel Strategies
• MULTI-STAKEHOLDER PERSPECTIVES: Advance Stakeholder Collaborations to Navigate the Evolving Specialty Pharma Marketplace, Improve Channel Strategies and Align Stakeholders Across the Patient Journey
• POLITICAL KEYNOTE: Insight into the Present Healthcare Landscape and its Implications on Patient Services, Specialty Pharmacy and Hub Design
• PATIENT INSIGHTS: Understand the Patient Journey to Enhance Channel Strategies, Ensure Affordable Patient Services, Improve Specialty Distribution Operations, and Impact the Patient Experience

Confirmed speakers include executives representing:
Otsuka Pharmaceuticals | Walgreens | UPMC Health Plan | Pfizer | LuckFupus | Patient Advocate Foundation | CVS Specialty Pharmacy | Asembia | Accredo Express Scripts | Teva | Chiesi USA | Eisai | Sandoz Novartis | 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 off of current registration rates!

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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.

EXCLUSIVE: The 340B Program Reached $19.3 Billion in 2017—As Hospitals’ Charity Care Has Dropped

The 340B Drug Pricing Program continues to expand at double-digit rates. Our research reveals that these discounted sales hit a record $19.3 billion in 2017.

What’s more, we found that since 2014, purchases under the program have grown at an average rate of 29% per year. By comparison, manufacturers’ net drug sales grew at an average rate of less than 5% over the same period.

Consequently, the 340B program has grown to account for at least 6% of the total U.S. drug market.

Here’s another uncomfortable fact: Nearly all of the billions in 340B discounts have accrued to hospitals. Yet hospitals' charity care has dropped by almost $8 billion amid the 340B program’s astounding growth.

Read on for the latest details and ponder who really benefits from the 340B program's growth.

Employers Are Getting More Rebates Than Ever—But Sharing Little With Their Employees (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from January 2018.

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Yesterday, I examined new data showing that employers are receiving an increasing share of the rebate money collected by pharmacy benefit managers. See Employers Are Extracting More of Their Rebate Dollars from PBMs.

The data, from a Pharmacy Benefit Management Institute (PBMI) survey, also documented a troubling reality. Employers acknowledged that they are hoarding rebates rather than sharing the savings with the employees whose prescriptions generated the rebate funds. It’s the first time that I’ve seen such an admission from plan sponsors.

Consider the data below as confirmation of the warped incentives caused by the gross-to-net bubble—the growing spread between a manufacturer’s list price for a drug and the net price. Consider the diabetes example below. Fixing this situation will be more challenging than walking to Mordor. Point-of-sale (POS) rebates may be a good place to start, but employers seem unwilling to part with their precious.

A Lesson from McKesson: How Specialty Pharmacy Growth Is Hurting Wholesalers (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from February 2018.

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Last week, McKesson released its quarterly earnings for the fourth calendar quarter of 2017. See the links below.

The profit outlook for its distribution business was lower than Wall Street’s expectations, due partly to what management termed “customer and product mix.” Below, I offer my take on the three interrelated mix changes that challenge wholesalers' profits from the growth of specialty pharmacy drugs.

Wholesalers have been trying to alter their conventional pricing and contracting approaches to address these pressures, though it’s not clear how successful these efforts have been. The specialty boom may prove to be a mixed blessing for wholesalers.

Cigna-Express Scripts: Vertical Integration and PBMs’ Medical-Pharmacy Future (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from March 2018.

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Wow. Yesterday, Cigna announced that it would acquire Express Scripts. See the links below.

Though Cigna was an unexpected acquirer, the deal confirms the importance of pharmacy and medical benefit integration. It also reinforces the role that pharmacy benefit management (PBM) plays in the drug channel. PBMs are now linked closely to the expensive specialty drugs that treat smaller patient populations, not to the primary care blockbusters of yesteryear.

The strategic logic, however, is much more compelling for Express Scripts than it is for Cigna. Perhaps that’s why the stocks reacted so differently yesterday. Express Scripts’ stock closed up 9%, while Cigna’s stock closed down 12%. Better to sell a PBM than buy one?

Below, I provide data about the PBM market, highlight vertical integration between PBMs and insurers, and discuss other industry implications.

Please feel free to leave your own $0.02 below. If you’re shy, you can comment anonymously.

Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from January 2018.

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Let’s kick off 2018 with a Last Jedi-themed look at copay accumulator programs—a benefit design option that I expect to become highly controversial this year.

Accumulator programs target specialty drugs for which a manufacturer provides copayment assistance. Unlike conventional benefit designs, the manufacturer’s payments no longer count toward a patient’s deductible or out-of-pocket maximum.

As you will see below, plan sponsors—employers and health plans—will save big money because accumulators shift a majority of drug costs to patients and manufacturers. Accumulator programs will further lower a plan’s drug spending by discouraging the appropriate utilization of specialty therapies and reducing adherence. What’s worse, many patients won’t understand their new “benefit.”

Given the direct human healthcare impact of copay accumulator programs, I don’t see how they can be considered value-based designs. Is it any wonder that people think their employers and insurance companies are from the dark side?