Drug Channels News Roundup, May 2019: Express Scripts’ New GPO, More on Amazon/PillPack, a BS Update, and Vegas Video

Summer is unofficially here! Before you break out the grill, check out these officially noteworthy items:

• Why did Express Scripts launch a GPO … in Switzerland?

• Behind the scenes of Amazon’s deal for PillPack

• More on BS in healthcare

Plus, a fun video recap from Asembia’s 2019 Specialty Pharmacy Summit—including some footage of your friendly neighborhood blogger!

P.S. Follow my daily musings and links to neat stuff at @DrugChannels on Twitter.

CVS, Express Scripts, and the Evolution of the PBM Business Model

Over the next week, CVS Health and Cigna will hold their annual investor days. (Links below.) They will offer business and financial overviews of their diverse companies, including an update on the outlook for their pharmacy benefit managers (PBMs).

It’s a tough time to be a PBM. Compensation models are shifting, due to increased scrutiny by payers, regulators, and politicians. Plan sponsors are more sophisticated and seek greater pass-through of rebates, admin fees, and other manufacturer-provided revenues. Network spreads are under pressure, while specialty pharmacy dispensing accounts for a growing share of profits. Plus, the entire drug channel system could move toward a world without rebates.

Below, I update Drug Channels Institute’s look at PBM market share and reflect on four crucial areas in which PBMs’ compensation will be evolving. No PBM discloses detailed information about the sources and composition of its profits, so consider my observations as general guidelines for evaluating the upcoming investor day commentary from management.

Partnering with IDNs BioPharma Strategy Summit East

Partnering with IDNs BioPharma Strategy Summit East
August 21-22, 2019 | Sonesta Rittenhouse Square | Philadelphia, PA
www.cbinet.com/IDN

Healthcare is undergoing unprecedented transformation driven by payer reform, consumer demands and scientific advancements. The shift from volume- to value-based payment and care delivery has driven healthcare providers to reshape their approach and many have answered the call for personalized, convenient and coordinated patient care by forming large organizations such as IDNs and ACOs. Understanding these complex health systems and how they interact with the industry’s stakeholders is crucial for manufacturers to better support and meet the needs of these growing networks.

REGISTER TODAY! Drug Channels readers will save $400 off the standard registration rate when they use discount code MGX763* by July 12, 2019.

To address the challenges and opportunities ahead, join a distinguished group of industry pioneers at CBI’s Partnering with IDNs BioPharma Strategy Summit East, for a highly collaborative meeting on refining care coordination, increasing patient engagement and adherence, and ultimately, improving patient outcomes.

Featured Speakers include:

• Matthew Malachowski, PharmD, BCPS, Supervisor, Specialty Pharmacy Services, UAB Medicine
• Gerard Taglianetti, Director, Biosimilars Contract Strategy, U.S. Payer & Channel Access, Pfizer Inc.
• Rebekah Hanson Anguiano, Clinical Assistant Professor, Pharmacy Practice, Clinical Pharmacist, Ambulatory Pharmacy Services, University of Illinois – Chicago
  
• Michelle Steinfest, National Accounts and Payer Relations Director, Xeris Pharmaceuticals, Inc.
• Sarah Johnson Conway, MD, Assistant Professor of Medicine, Johns Hopkins School of Medicine; Medical Director, Accountable Care, Office of Johns Hopkins Physicians; Medical Director, Johns Hopkins Hospital/Infusion Center; Associate Medical Director, Johns Hopkins Medicine Alliance for Patients, LLC
• Christopher Boone, Vice President, Global Medical Epidemiology & Big Data Analysis Lead, Pfizer Inc.
• Shibani Sharma, Project Manager, Population Health Management – OCIO, Northwell Health
• Nisha Shah, PharmD., Research Pharmacist, Health Outcomes and Research Program, Vanderbilt University Medical Center
• And more!

REGISTER TODAY!

Visit www.cbinet.com/IDN for more information. Drug Channels readers will save $400 off the standard registration rate when they use discount code MGX763* by July 12, 2019.

 *Offer expires 7/12/19, 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.

Which PBM Best Managed Drug Spending in 2018: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?

It’s time for our annual Drug Channels’ examination of drug spending reports. For 2018, we again aim our magnifying glass at the annual trend reports from four large pharmacy benefit managers (PBMs): CVS Health, Express Scripts, MedImpact, and Prime Therapeutics. (See their report links below.) The other large PBMs—Humana and OptumRx (UnitedHealth)—provide no public transparency into their performance.

Using these data, which account for most of the commercial market, we detect the following key trends for 2018:

• Once again, we find that drug spending is not skyrocketing—contrary to what you often hear from journalists and politicians. Spending grew by about 2% in 2018, continuing a multiyear decline in the growth rate. Total drug spending at some plan sponsors even declined.

• Spending on traditional drugs dropped by mid-single digits, continuing a multi-year trend driven by generic drug deflation.

• For specialty drugs, higher utilization—not drug costs—was the biggest factor driving specialty spending growth. This wasn’t true for all specialty categories, however.

Patients—in the aggregate—gain from the slower growth in drug spending. What’s missing from the PBM reports is a transparent accounting of how much patients pay out of pocket for highly rebated drugs that are sold to insurers and PBMs at deep discounts. The hidden subsidies of the gross-to-net bubble remain—for now.

Reimbursement and Access 2019

Reimbursement and Access 2019
August 13-14, 2019 | DoubleTree by Hilton Center City | 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 Reimbursement and Access conference convenes stakeholders from across the life sciences community to provide insight into real-time policy briefings, impactful managed markets trends and strategies to ensure product access.

Drug Channels readers can register using discount code QEF679 to receive $500 off* the standard rate when you register by July 19, 2019.*

Gain critical insights from a distinguished speaking faculty representing AHIP, AppliedVR, Athenex Oncology, BIO, Boehringer Ingelheim, Cognoa, CSI Specialty Group, Foley Hoag LLP, Inceptua, National Hemophilia Foundation, Sobi Inc and many more!

Transform Access Strategies with Expert Insight and Compelling Discussions:

• The Current State of Safe Harbor Protection for Rebates – Where Are We Now?
• Realign Access Strategies to Overcome Challenges of Copay Assistance and PBM Restrictions
• Trends in Benefit Design and the Continued Shift to High Deductible Plans
• Medicare and Marketplace Coverage Policies Impacting Access
• Patient Assistance Compliance and Oversight
• The Role and Growing Use of Digital Therapeutics by Payers, IDNs and Health Systems
• New Product Commercialization and Launch Scenario Planning

Drug Channels readers can register using discount code QEF679 to receive $500 off* the standard rate when you register by July 19, 2019.*

*Offer expires 7/19/19; 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 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 New Starting Point for Patient Support: Technology-Driven Hub Services

Today’s guest post comes from Erica Conroy, VP of Specialty at CoverMyMeds and Bill Nolan, VP/GM of Access and Adherence at RxCrossroads by McKesson.

Erica and Bill discuss the challenges that specialty pharmacy patients encounter when accessing and utilizing hub services. They also present evidence showing that how hub services positively affect patient outcomes.

To learn more, download CoverMyMeds’ whitepaper: Revolutionizing Patient Access and Support for Specialty Therapies: Multiple Sclerosis.

Read on for their insights.

340B Health Gets It Wrong … Again

This week, Drug Channels published our annual update on the growth of the 340B Drug Pricing Program. See 340B Program Purchases Reach $24.3 Billion—7%+ of the Pharma Market—As Hospitals’ Charity Care Flatlines.

Right on cue, 340B Health, which lobbies for hospitals that participate in the 340B program, immediately issued its annual rebuttal of the Health Resources and Services Administration (HRSA) data that we used.

340B Health was particularly distressed that our analyses “focused on 340B sales instead of discounts.” Below, you will see that when the program is measured using 340B Health’s suggested approach, it accounted for 9% to 11% of the relevant market in 2018. That’s even higher than my computation, which showed that the 340B program constituted 7% to 8% of the total drug market that year.

We’re all entitled to our own opinions about the 340B program, but we’re not entitled to our own facts. It is indisputable that 340B contributes to a large and growing share of the market.

EXCLUSIVE: 340B Program Purchases Reach $24.3 Billion—7%+ of the Pharma Market—As Hospitals’ Charity Care Flatlines

The 340B Drug Pricing Program continues to expand at double-digit rates. According to our government contacts, discounted 340B purchases hit a record $24.3 billion in 2018. That figure is an astonishing 26% higher than its 2017 counterpart.

What’s more, we have found that since 2014, purchases under the program have grown at an average rate of 28% per year. By comparison, manufacturers’ net drug revenues have grown at an average rate of below 5% over the same period. Consequently, the 340B program has grown to account for at least 7% to 8% of the total U.S. drug market.

Nearly all of the billions in 340B discounts have accrued to hospitals. Yet hospitals' charity care has dropped amid the 340B program’s growth. The charts have the details.

So where did the money go? We have no idea, because hospitals and their lobbyists fight any call for them to disclose or account for how they use their 340B profits—while consistently misrepresenting the program's size and growth. Be skeptical when you read random stories about the generosity of a 340B covered entity. As always, the plural of anecdote is not data.

Read on for the latest details and ponder who really benefits from the 340B program's size—and how much longer this shocking growth can continue.

CBI’s Strategic Medicare Contracting Forum for Bio/Pharmaceutical Manufacturers

CBI’s Strategic Medicare Contracting Forum for Bio/Pharmaceutical Manufacturers
June 19-20, 2019 | Alexandria, VA
www.cbinet.com/Medicare

CBI’s Strategic Medicare Contracting Forum for Bio/Pharma Manufacturers provides a real-time analysis of newly proposed regulations, including the proposal to eliminate rebates, the use of step therapy under Medicare Part B, changes to coverage gap, influence of the International Pricing Index and much more.

Exclusive Offer for Drug Channels Readers:
Register Now and SAVE $400* using promo code MED400.

Taking place June 19-20 in Alexandria, VA, we invite you to convene with fellow stakeholders to receive an in-depth look into legislative and regulatory changes to Medicare and how it will impact manufacturers. You and your team members will benefit from this opportunity by gaining insights from industry experts on the complex changes occurring within Medicare, walking away with critical perspectives and robust knowledge on key topics.

Hear from 20+ Key Experts on High-Impact Issues, including:

• [Keynote Address] Washington Update on Medicare Policy — The White House
• HHS Keynote Address — U.S. Department of Health and Human Services (invited)
• International Pricing Index Model: Evaluate the Proposed Changes for Medicare Part B Drugs — American Action Forum and Pacific Research
• Examine the Implementation Strategies for Step Therapy Under Medicare Part B — BIO and Bristol-Myers Squibb
• [Panel Discussion] Discover Coverage and Payment Strategies for Novel and High Cost Therapies for Rare Diseases Under Medicare Parts A and B — Health Policy Strategies, Inc., King & Spalding and Gilead Sciences
• Impact of Value Frameworks on Access to Medications — Pfizer Inc.
• What’s Next for Medicare? — Perspective From Capitol Hill — U.S. House of Representatives

Visit www.cbinet.com/Medicare to view the complete speaker and in-depth session lineup, then register using promo code MED400 for this exclusive savings of $400 off!

*Discount expires 6/18/19; cannot be combined or applied to existing registration. 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 State of Specialty Pharmacy 2019: Industry Trends and Photos from #Asembia19

Last week, Paula and I had the pleasure of attending Asembia’s 2019 Specialty Pharmacy Summit at the wonderful Wynn Las Vegas.

The Specialty Pharmacy Summit remains the most important forum for learning, networking, and conducting business throughout the entire specialty marketplace.

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

Below, I offer reflections on the meeting, share my experiences during the featured session, and highlight four crucial specialty industry trends. You’ll also find a link to the conference’s Featured Session slides and cool photos—including two of the many selfies for which I posed during the meeting. Enjoy!

Patient Support Services Congress

Patient Support Services Congress
June 19-20, 2019 | Sheraton University City | Philadelphia, PA
www.cbinet.com/PatientServices

Join your colleagues for CBI’s Patient Support Services Congress — an industry-driven meeting, where you can participate in a wide-ranging dialogue surrounding customized patient support, operational efficiencies and compliant program services.

Visit www.cbinet.com/PatientServices for more information. Drug Channels subscribers will save $250 off the standard registration rate when they use discount code DRC250* by March 1, 2019.

REGISTER TODAY!

A DIALOGUE-DRIVEN MEETING FOR ENFORCEMENT TRENDS AND NEXT-GENERATION APPROACHES TO PATIENT SERVICES:

• Examine the regulatory implications around copy cards and foundation relationships
• Discuss challenges in providing compliant assistance to functionally uninsured patients under Medicare Part D
• Assess the pros and cons of different support service models
• Learn how hubs qualify patients based on reimbursement, insurance, and industry knowledge
• Explore how manufacturers can tailor patient support services to individual facilities without losing the integrity of the program’s guidelines
• Address in-house versus outsourced hub services and the role that compliance plays in those decisions
• Review training and monitoring procedures for your field nurses to alleviate risk as operations scale up

ENHANCE YOUR LEARNING EXPERIENCE

Nurse Educator Programs takes place one day prior, on June 18th. Join your Compliance, Patient Access, and Medical Affairs counterparts to uncover leading strategies to ensure compliance throughout the design and management of Nurse Educator Programs.

Visit www.cbinet.com/PatientServices for more information. Drug Channels subscribers will save $250 off the standard registration rate when they use discount code DRC250* by March 1, 2019.

REGISTER TODAY!

*Offer 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.

Specialty Pharmacy M&A: Our Look at 2018’s Deals (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2019 Specialty Pharmacy Summit.

Click here to see the original post and comments from January 2019.

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Let’s kick off 2019 with a quick review of last year’s specialty pharmacy mergers and acquisitions (M&A). Our list (below) includes only deals that were publicly announced in 2018.

Pharmacy benefit managers (PBMs) were especially busy. CVS Health bought five specialty pharmacies. UnitedHealth’s OptumRx bought Avella Specialty Pharmacy, the largest independent specialty pharmacy.

Diplomat Pharmacy was uncharacteristically quiet during 2018, though it had been one of the most active acquirers in previous years.

The specialty pharmacy industry is rapidly maturing, so I expect many more exits in the coming years. Looking to pick up a fast-growing specialty pharmacy? Click here for your post-holiday shopping list.

Independent Pharmacy Economics Keep Deteriorating (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2019 Specialty Pharmacy Summit.

Click here to see the original post and comments from January 2019.

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Time for Drug Channels’annual look at independent pharmacy owners’ business economics, drawn from the recently released 2018 National Community Pharmacists Association (NCPA) Digest, Sponsored by Cardinal Health. Here's the press release: NCPA Releases 2017 Digest.

Below, I update our estimates on pharmacy economics and margins. Our analysis reveals that independent pharmacy owners have faced another year of deteriorating finances.

What's more, we estimate that in 2017, the average pharmacy owner’s salary fell to a level comparable to that of an employed pharmacist. Owning a pharmacy, with all of its hassles and additional obligations, now brings the same reward as being an employee. I wonder how many owners will conclude that it’s barely worth the risk and effort.

Read on for our look at pharmacy profits and some comments on the industry’s competitive dynamics, including the financial impact of direct and indirect remuneration (DIR) fees.

The pharmacy consolidation endgame is getting closer. The next time you see a pharmacy owner, offer your condolences.

Express Scripts Launches a New Formulary for a World Without Rebates. Will Plan Sponsors and Drug Makers Play Along? (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2019 Specialty Pharmacy Summit.

This is an especially timely rerun. Believe it or not, Express Scripts' 2019 formulary prefers Eli Lilly's high-list/high-rebate Humalog insulin over the authorized generic version that is being sold at a 50% lower list price. The authorized generic will be preferred only on Express Scripts' Flex Formulary, which has very low adoption. 

Bottom line: Many plans still crave rebate dollars. Sorry, patients with deductibles and coinsurance. The gross-to-net bubble lives on! 

Click here to see the original post and comments from November 2018.

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Express Scripts has just announced its National Preferred Flex Formulary, a new option that favors drugs with lower list prices over the high-list/high-rebate versions of these products. Click here to read the press release.

This new formulary signals that Express Scripts is trying to prepare its plan sponsor clients for a world without rebates. The formulary also provides a way for Express Scripts to prepare itself for such a world.

As I explain below, many plan sponsors embrace the warped incentives of the gross-to-net bubble—the ever-growing pile of money between a manufacturer’s list price for a drug and the net price after rebates and other reductions. I outline two crucial payer and PBM factors that make it difficult for manufacturers to cut list prices and pop the gross-to-net bubble.

Express Scripts’ new formulary challenges plan sponsors that are addicted to rebate dollars. Let’s see how many plan sponsors will prefer a low list-price over a high-list/high-rebate product—and how many more manufacturers will respond with lower list prices.