The State of Specialty Pharmacy 2018: Reflections from #Asembia18 (rerun)

This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from May 2018.

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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.

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

This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from May 2018. Note that the data from this post were provided to me by the Health Resources and Services Administration (HRSA)!

ICYMI, be sure to read yesterday's New York Times article: A Little-Known Windfall for Some Hospitals, Now Facing Big Cuts

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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.

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

This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from May 2018.

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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.

Profits in the 2018 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies (rerun)

This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from June 2018.

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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. Our analysis also provides crucial background for understanding the Trump administration's drug pricing blueprint.

Fortune’s 2018 list contains the same seven drug channel companies that the 2017 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 eleven pharmaceutical manufacturers and with a separate survey of independent pharmacies.

Alas, this may be our final review of the list, because by this time next year two companies—Express Scripts and Rite Aid—may no longer exist as independent public companies. In the meantime, let’s enjoy the crazy complexity of the U.S. drug distribution and reimbursement system.

CBI’s 3rd Edition Drug Pricing Transparency Congress

CBI’s 3rd Edition Drug Pricing Transparency Congress
September 27, 2018 | Philadelphia, PA
www.cbinet.com/drugpricing

Have you been keeping up with the various state drug pricing regulations that have been introduced and passed across the nation? Over the past year, states including Oregon, California, Nevada, Maryland, New York, Massachusetts and Vermont – to name a few – have introduced and/or enacted different laws and enforcement initiatives mandating the disclosure of drug pricing increases, introducing restrictions limiting Medicaid drug spending, requiring disclosure of company metrics and expenses, and other related pricing ballot initiatives.

CBI’s 3rd Edition Drug Pricing Transparency Congress convenes key industry stakeholders to discuss how the future of state drug pricing transparency regulations will impact commercialization, reimbursement, pricing and compliance practices.

Register by Friday, September 21, 2018 and
receive $300* off the standard rate with discount code DCP300.

Featured Discussion Topics:

• State Drug Pricing Reporting Requirements and Interpretations — What You Need to Know Now to Ensure Reporting Compliance
• Implications of State Drug Pricing Transparency Laws on Policy
• Operational Best Practices Focused on Governance and Planning for the Future
• Oregon HB 4005 — Reporting Requirements Overview and Update
• California SB-17 — Implementation and Enforcement Update
• The Latest Developments for New York's Medicaid Drug Cap and the Impact of ICER on Drug Pricing
• The Impact of Transparency and Disclosure Legislation on Legal and Compliance Practices
• Federal Legislative Activity Update — Patients First Blueprint Review

Speaker Perspectives

• Brian A. Bohnenkamp, Partner, FDA & Life Sciences Practice, King & Spalding LLP
• Joanne Chan, Assistant General Counsel, Pharmaceutical Research and Manufacturers of America (PhRMA)
• Sarah diFrancesca, Partner, Cooley LLP
• Seth Lundy, Partner, King & Spalding LLP
• Angela Marcucci, Director of Global Policy, Pfizer Inc.
• Kendra Martello, Senior Director, Public Policy, Government Affairs & Public Policy, Mallinckrodt Pharmaceuticals
• William A. Sarraille, Partner, Sidley Austin LLP
• Vince Sampson, Partner, Cooley LLP
• Debbie A. Walters, Vice President, Assistant General Counsel, Pfizer Inc.
• Sabrina Yohai, Vice President, Policy, Access & Value, Corporate Legal, Vertex Pharmaceuticals
• Andrew Parks, Director, KPMG

Don't be left out of the critical conversation. Register by Friday, September 21, 2018 and receive $300* off the standard rate with discount code DCP300.

*Offer expires September 21, 2018; applies to standard rates only and may not be combined with other offers, category rates, and promotions or applied to an existing registration.

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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.

Drug Channels News Roundup, August 2018: PBM Spread Profits, Part D Rebates, 340B Questions, Amazon and Dentists, and PBS on PBMs

We’re wrapping up one of newsiest summers in recent memory. As you send the kids back to school, savor this curated collection of curiosities, combed from the now-empty Drug Channels beach:

In this issue:

• An Ohio audit provides unprecedented data about pharmacy benefit manager (PBM) profits

• New revelations about rebates in Medicare Part D. (Bonus: AHIP discovers that rebates actually exist!)

• Congress has tough questions for 340B contract pharmacies

• How Amazon Business is drilling into the dental supplies market

Plus, an unexpectedly straightforward PBM news story that is clear enough to watch with your kids.

P.S. Join the more than 6,200 people who follow my daily musings and neat links at @DrugChannels on Twitter.

CBI’s 13th Annual Value-Based Oncology Management Summit

CBI’s 13th Annual Value-Based Oncology Management Summit
October 10-11, 2018 | Scottsdale, AZ
www.cbinet.com/VBO

As cancer care costs continue to soar, innovations in oncology care management and payer-provider payment reform remain a critical imperative for key stakeholders. Now in its 13th year, CBI’s Value-Based Oncology Management Summit convenes payers, providers, PBMs, manufacturers and specialty pharmacies to examine current trends/challenges and share best practices to control costs, reduce variation in care and improve patient outcomes.

REGISTER TODAY!

Drug Channels readers will save $400 off the standard registration rate when they use discount code FZK768*

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In-Depth Sessions and Discussions Include:

• Demystify current trends in value-based oncology payment and reimbursement models
• Examine the future of (CAR)-T cell therapy and cost effectiveness
• Explore the use of biosimilars in cancer treatment – Consider how biosimilars contribute to treatment options, efficiencies and expanded access to cancer therapies
• Assess the impact of oncology value partnerships with managed care plans
• Leverage real-world data and observational insights to understand and assess value-based care performance
• Advance palliative care models – Empower patients to make informed treatment decisions

REGISTER TODAY!

Visit www.cbinet.com/VBO for more information, or download the full agenda today. Drug Channels readers will save $400 off the standard registration rate when they use discount code FZK768*.

*Discount expires October 10, 2018; 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.

2019 Express Scripts Formulary Exclusions: Hepatitis C Changes Show Why the Drug Channel Must Change, Too

Last week, Express Scripts released the 2019 updates to its formulary exclusion lists. They are available below for your downloading pleasure. Unfortunately, CVS Health won’t release its list until October.

For 2019, Express Scripts was more aggressive than ever, expanding its list to more than 240 excluded products. For the first time, it excluded products in two specialty categories: HIV antiretrovirals and Factor VIII recombinant products. It also added a new exclusion in multiple sclerosis.

Oddly, Express Scripts has made a patient unfriendly change to the hepatitis C category. It has excluded AbbVie’s Mavyret, the market share leader with a low list price. Instead, it added Merck’s Zepatier, whose list price was recently cut but can’t treat all types of hepatitis C. Consequently, the 2019 preferred formulary will force at least one in four patients to use the products with high list prices and high rebates. Many patients will end up incurring much higher out-of-pocket costs. Incredibly, Express Scripts advocates copay cards as a fix!

To me, the hepatitis C formulary change are further evidence of the warped incentives of our gross-to-net bubble. Payers benefit from a low net price, and PBMs gain from high list prices with high rebates (though less than we once thought). Meanwhile, patients get stuck making out-of-pocket payments based on the higher list price. Is this any way to run a drug channel?

New Disclosures Show CVS and Express Scripts Can Survive in a World Without Rebates. Are Plan Sponsors Now the Real Barrier to Disruption?

Last week, the two largest pharmacy benefit managers (PBMs)—CVS Health and Express Scripts—both stated that rebates now account for a small part of their profits. The companies therefore strongly implied that they could survive in a world in which PBMs did not participate in the flow of funds from a brand-name manufacturer to a plan sponsor. Below, I unpack the new disclosures, which move us materially closer to a new model.

Hmm. The two biggest PBMs and at least one major manufacturer (Pfizer) have now implied a willingness to change. So what’s to stop massive drug channel disruption?

CVS Health perhaps inadvertently identified the real barrier to a system without rebates: employers and health plans. As you will see below, CVS Health disclosed for the first time the massive gross-to-net bubble within its commercial book of business. The new information confirms that plan sponsors are hoarding rebates rather than sharing the savings with the employees whose prescriptions generated the rebate funds.

If we really do migrate to a system without rebates, PBMs’ reportedly minimal profits from rebates mean they could escape drug channel disruption unscathed. The focus will now turn to the plan sponsors that are absorbing rebate dollars. Whether plan sponsors realize it or not, they are the next target.

CBI’s Life Sciences Outcomes-Based Contracting Summit

CBI’s Life Sciences Outcomes-Based Contracting Summit
October 3-4, 2018 | Philadelphia, PA
www.cbinet.com/OutcomesContracting

Exclusive Offer for Drug Channels Readers:

Register Now to SAVE $400* using discount code OUT400

CBI’s 3rd Annual Life Sciences Outcomes-Based Contracting Summit is the ideal platform to discuss best practices for value optimization and price alignment with health outcomes data and provides critical strategies into the process of outlining, structuring and negotiating risk-sharing agreements between bio/pharma manufacturers and payers.

This timely event will address the continuous challenges the industry faces to lower drug costs and increase patient access, all while demonstrating the value of their drugs to insurers by providing best practices and key insights from thought-leaders regarding the nuances surrounding outcomes-based contracting.

Gain critical insights from distinguished speaking faculty, including those representing AstraZeneca, Novartis Pharmaceutical Corporation, Aetna, University of Portsmouth, Center of Medicine in the Public Interest, BeiGene, Ltd., University of Washington Medicine Health System, Bristol-Meyers Squibb and more.

Join CBI for Solutions-Oriented Sessions, Powerful Payer Insights and Illuminating Case Studies:

• Overview of over 60 published outcomes-based innovative contracts
• Pinpoint how AstraZeneca and Aetna have succeeded in creating outcomes-based contracts
• Explore new conditional reimbursement models with real-world versus real-time performance data
• Implement contracts to define, measure, report and create payment mechanisms for value-based arrangements
• Hear how payers perceive value-based agreements that involve rebates versus those with refunds
  
• And more!
• Plus, join us for the Pre-Conference Workshop: Playbook for the Construction & Deployment of Outcomes-Based Innovative Contracting

Download the complete agenda, then register using promo code OUT400 to receive $400 off* the standard rate.

 *Expires 10/2/18; applies to standard rate only and cannot be combined with other offers or applied to existing registration.

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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.

Redefining Digital Health: How a Different Approach Can Get Manufacturers Closer to Patients

Today’s guest post comes from Mary Roberts, Vice President of Business Development at EnvoyHealth, a subsidiary of Diplomat.

Mary describes the next generation of patient services and explains how manufacturers can use new digital health tools to get closer to patients.

Visit envoyhealth.diplomat.is/innovative to learn more about using technology to enhance patient services and differentiate brands.

Read on for Mary’s insights.

Still Possible: Hospitals Overcharge Health Plans for Specialty Drugs

Over the years on Drug Channels, I have explained the two primary reasons a drug’s list price doesn’t reflect what a third-party payer actually spends for that drug: (1) channel intermediaries and providers add markups that account for the costs, profits, and value of the services, and (2) manufacturers provide rebates and discounts to third-party payers.

Two recently-released reports confirm the often-overlooked magnitude of provider markups.

As you will see below, commercial payers use reimbursement approaches that permit hospitals to inflate specialty drug costs by thousands of dollars per claim when compared with physician offices. This is not about differences in patient care. It’s about hospitals adding big markups to drug costs.

Meanwhile, commercial insurers complain about “drug prices,” going so far as to publish misleading data about drug spending. Yet insurers conveniently forget to mention their own role in allowing powerful providers inflate drug spending. As evidenced by the proposed outpatient prospective payment system (OPPS) rule, the Secretary (of Health and Human Services) does not disavow any knowledge of site-neutral payments.

CBI's West Coast Real-Time Benefit Check & ePrior Authorization Summit

West Coast Real-Time Benefit Check & ePrior Authorization Summit
October 17-18, 2018 | San Francisco, CA
www.cbinet.com/eBenefit

CBI’s West Coast Real-Time Benefit Check & ePrior Authorization Summit convenes stakeholders, including manufacturers, specialty pharmacies, PBMs, health plans, solution providers and prescribers to discuss and share best practices regarding electronic patient service technology and speed to therapy. With constant innovations in electronic patient services (ePA, FHIR, HL7, RTPBI), the integration and implementation of this technology is imperative to drive patient access to therapy.

Join the conversation and participate in open discussions with your peers to discuss workflow improvements, firsthand experiences with system integration and the latest advancements in ePA and RTBC. Drug Channels readers will save $400 off the standard registration rate when they use discount code SGK838.*

Critical Topics for Peer-To-Peer Benchmarking:

• Discuss clinical and operational factors to consider when implementing portal PA solutions with medical specialty drugs
• Hear how to streamline electronic benefit verifications and prior authorization solutions into a hub model
• Examine how to configure interoperability in a local/regional health setting and recent efforts within the FHIR/HL7 standards
• Understand how to work more efficiently between specialty pharmacies, providers and payers to manage patient therapy
• Discuss alert fatigue, additional clicks, and how to avoid prescriber burnout
• Address considerations for enrollment standards in hubs and specialty pharmacies

REGISTER TODAY!

Visit www.cbinet.com/eBenefit for more information, or download the full agenda today. Drug Channels readers will save $400 off the standard registration rate when they use discount code SGK838*

*Discount expires October 17, 2018; 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.

A System Without Rebates: The Drug Channels Negotiated Discounts Model

Are you ready for a world without rebates?

In June, Alex Azar, Secretary of the U.S. Department of Health & Human Services (HHS), summarized his long-range vision for a new drug channel system:

“[W]e may need to move toward a system without rebates, where PBMs and drug companies just negotiate fixed-price contracts. Such a system’s incentives, detached from artificial list prices, would likely serve patients far better.” (emphasis added)

No one has yet explained what a system without rebates would look like.

To facilitate the discussion, I have sketched out a possible new drug channel system that would:

• Respond to the HHS vision for a “system without rebates”

• Remove/decrease the reliance on list price as a component of intermediary compensation

• Use negotiated discounts as an alternative to the current system of retrospective rebates

• Require manufacturers to negotiate for desirable market access

You can download The Drug Channels Negotiated Discounts Model below.

Please note that I am not advocating for this approach. I am merely exploring one way that a system without rebates could be implemented. I hope you find it helpful for your strategic planning.

As always, I welcome feedback on how to improve and refine this model. Either leave comments below or email me. Enjoy!