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

This week, I’m rerunning some popular posts while I work on the forthcoming 2019-20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from May 2019.

This article was the first of my 2019 series exploring the hidden economic mysteries of the 340B Drug Pricing Program. You can read the full series here: https://drugch.nl/340B

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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.

CVS, Express Scripts, and the Evolution of the PBM Business Model (rerun)

This week, I’m rerunning some popular posts while I work on the forthcoming 2019-20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from May 2019.

This article was written before the rebate rule was withdrawn. That's why the PBMs Reborn scenario described below remains relevant.

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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.

The State of Specialty Pharmacy 2019: Industry Trends and Photos from #Asembia19 (rerun)

This week, I’m rerunning some popular posts while I work on the forthcoming 2019-20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from May 2019.

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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!

Profits in the 2019 Fortune 500: Manufacturers vs. Managed Care vs. Pharmacies, PBMs, and Wholesalers (rerun)

This week, I’m rerunning some popular posts while I work on the forthcoming 2019-20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from June 2019.

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Time to dive into our 12th (!) 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.

Fortune’s 2019 list contains only six drug channel companies: AmerisourceBergen, Cardinal Health, CVS Health, McKesson, Rite Aid, and Walgreens Boots Alliance.

Consolidation and vertical integration have transformed the channel—and the Fortune rankings. Below you will see our list of the companies that disappeared from the roster. We therefore have added to our analysis the four managed care and insurance companies on the list that operate PBMs.

Using the Fortune data, I explore the profitability and shareholder returns of the largest drug channel and managed care companies. I compare these companies with the Fortune 500’s eleven pharmaceutical manufacturers and with a separate survey of independent pharmacies.

These data remind us that many multi-billion-dollar businesses profit as drugs move through the U.S. reimbursement and distribution system. Enjoy our swim through this crazy complexity.

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

This week, I’m rerunning some popular posts while I work on the forthcoming 2019-20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from May 2019.

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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.

Decreasing Prescription Abandonment with Price Transparency

Today’s guest post comes from Miranda Gill, Senior Director of Provider Network at CoverMyMeds.

Miranda discusses how high-deductible plans are making prescription drug patients behave more like consumers. As a result, patients want to know how much their prescriptions costs—before they pick it up.

CoverMyMeds offers RxBenefit Clarity, a real-time benefit check platform that is available in most electronic health records (EHR) platforms. Learn more in this new case study: Improving Prescription Decision Support with RxBenefit Clarity.

Read on for Miranda’s insights.

Drug Channels News Roundup, August 2019: Amazon Insanity, Diplomat’s Final Days, Express Scripts DIR Fees Exposed, and a Rebate Cartoon

Another news-laden summer is coming to an end. Time to pack away your bathing suit, send the kids back to school, and savor these curated curiosities that have washed up on our Drug Channels shore:

• Amazon, PillPack, and collective insanity

• For Diplomat Pharmacy, the end is nigh

• Fresh info on Express Scripts’ DIR fees

Plus, a cartoon about … rebates?

P.S. @DrugChannels on Twitter is approaching 8,000 followers. Recent tweets have explored generic drug prices, importation, the retail pharmacy shakeout, hospital economics, ICER, Yoda, and more. Follow me for daily insights and cool links.

CBI's 14th Annual Value-Based Oncology Management Summit

14th Annual Value-Based Oncology Management Summit
October 3-4, 2019 | Saguaro Scottsdale | Scottsdale, AZ
www.cbinet.com/VBO

With the rapid influx of new oncology drugs and innovative treatments entering the market, there is a greater urgency to examine the impact of payer-provider payment reform on overall oncology costs and patient outcomes. Now in its 14th year, 14th Annual Value-Based Oncology Management Summit convenes payers, providers, PBMs, manufacturers and specialty pharmacies to discuss current trends, challenges and best practices to bend the oncology cost curve, enhance the quality of care and improve patient outcomes.

Visit www.cbinet.com/VBO for more information. Drug Channels readers will save $300 off the standard registration rate when they use promo code NMT596*.

JOIN VALUE-BASED ONCOLOGY LEADERS TO:

• Assess the current success of alternative oncology payment models
• Understand key components of provider readiness to accept risk in value-based contracts
• Evaluate how shifting payment models, payer initiatives to promote palliative care and advanced care directives impact patient outcomes and total cost of care
• Examine the role of treatment innovation, biosimilars and care-delivery improvement in managing oncology costs
• Explore critical factors, both clinical and financial, affecting the adoption of biosimilars
• Consider the potential impact of the increase in risk-based models on patient access, outcomes and costs
• Discuss the evolving role of specialty pharmacy in filling gaps in the patient cancer care continuum
• Prepare for a mandatory alternative payment model for radiation oncology — Explore the impact of the mandatory model on practices and patient outcomes
• Address how to manage the business of oncology as risk-based reimbursement models increase
• Review the current state of data interoperability within cancer care and consider the benefits of greater access for regulators, health systems, health plans and patients

DISTINGUISHED FACULTY:

• Arif H. Kamal, M.D., MBA, MHS, FASCO, Associate Professor of Medicine and Business Administration, Duke University
• Terrill Jordan, President, CEO and Board Member, Regional Care Cancer Associates, LLC
• Jonathan Harding, M.D., Senior Medical Director, Senior Products Division, Tufts Health Plan
• Steven Peskin, Executive Medical Director, Population Health, Horizon Blue Cross Blue Shield of New Jersey
• Anne Hubbard, MBA, Director of Health Policy, The American Society for Radiation Oncology
• Anthony V. Coletta, M.D., MBA, CEO and Chairman of the Board, Tandigm Health a wholly owned subsidiary of Independence Blue
• Scott Soefje, PharmD, MBA, BCOP, FCCP, FHOPA, Director, Pharmacy Cancer Care, Assistant Professor of Pharmacy, Mayo Clinic
• Nick Calla, Vice President, Pharma Relations, BioMatrix Specialty Pharmacy
• And more!

REGISTER TODAY!

Visit www.cbinet.com/VBO for more information. Drug Channels readers will save $300 off the standard registration rate when they use code NMT596*.

*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.

CBI’s 5th Edition Drug Pricing Transparency Congress

CBI’s 5th Edition Drug Pricing Transparency Congress
September 18-19, 2019 | Sheraton University City | Philadelphia, PA
www.cbinet.com/DrugPricing

With the recent regulatory activity surrounding drug pricing transparency, bio/pharma manufacturers must continuously be ahead of the ever-evolving changes. Stay on the pulse of Federal and State reporting requirements, policy initiatives and strategic best practices for implementation at the 5th Edition Drug Pricing Transparency Congress taking place September 18-19 in Philadelphia.

Exclusive Offer for Drug Channels Readers:
Register Now to SAVE $300* using promo code DRG300

This meeting’s agenda provides timely and mission-critical updates on how drug pricing transparency regulations will impact commercialization, reimbursement, pricing and compliance practices, with an expert speaking faculty including those representing PhRMA, Sanofi, King & Spalding, Celgene, BIO, Boehringer Ingelheim, Sidley Austin, Pfizer, Mallinckrodt and more!

High Impact Topics Transforming Pricing Dynamics Include:

• Anticipate New State Legislations to Watch in 2020 — A Practical Analysis
• State Drug Pricing Transparency Level-Set — Reporting and Requirements Landscape
• Status Update on Federal Initiatives for Transparency
• State-by-State Analysis Showcase
• Industry Talk — Set up an Internal Team to Respond to Drug Pricing Transparency Laws
• PLUS! Choose Between Two Pre-Conference Workshops
• A. Drug Pricing Transparency Bootcamp — Key Considerations and Learnings For Reporting
• B. Strategize for 2020 — Breaking Down Transparency Headlines for Industry

Visit cbinet.com/DrugPricing to view the complete speaker and in-depth session lineup, then register using promo code DRG300 for this exclusive savings of $300 off!*

*Discount expires 9/17/19; 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.

As Hospitals Pursue Specialty Pharmacy (and Walgreens Bets More on 340B), PBMs Become Their Best Frenemies

The American Society of Hospital Pharmacists (ASHP) has just released its latest national survey of pharmacy practice in hospital settings. Download it here. (Available for purchase.) I always enjoy this annual treasure trove of insights.

This year’s survey updates our understanding of hospitals’ and health systems’ all-out pursuit of specialty pharmacy dispensing revenues. In 2018, more than 75% of the largest hospitals operated a specialty pharmacy. Check out the data below.

The 340B Drug Pricing Program has—and will continue to—encourage even more specialty pharmacy growth at hospitals. It is also providing a new way for Walgreens Boots Alliance to profit from 340B.

Amidst this growth, hospital-owned specialty pharmacies find themselves competing for prescriptions against pharmacy benefit managers (PBMs). These PBMs have built benefit networks that shift prescriptions away from hospitals in favor of the PBMs’ own specialty pharmacies.

Hospitals can fight PBMs for network access—or they can befriend a PBM-owned 340B contract pharmacy and still earn super-size profits. As you’ll see below, the odd combination of narrow networks and 340B is creating unexpected frenemies in the drug channel.

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

West Coast Real-Time Benefit Check & ePrior Authorization Summit
October 16-17, 2019 | Hyatt Centric Fisherman’s Wharf | San Francisco, CA
www.cbinet.com/eBenefit

CBI’s 12th Real-Time Benefit Check & ePrior Authorization Summit provides attendees with an understanding of key issues and developments in electronic patient services, including electronic benefit verification, real-time benefit verification, prior authorizations health records and prescribing services.

Visit www.cbinet.com/eBenefit for more information. Drug Channels readers will save $400 off the standard registration rate when they use promo code TTZ273*.

TOP FIVE REASONS TO JOIN US IN SAN FRANCISCO THIS YEAR:

1. Advanced Case Studies — Learn from industry experts who have successfully implemented real-time benefit verification in their organizations
2. Multi-stakeholder Panel Discussions — Hear from diverse perspectives on the advantages and challenges of integrating electronic patient services
3. Regulatory Updates — Hear insights into the recent regulations released from CMS on Medicare Part D and real-time benefit tools
4. Tech Talk — Deep dive into the future of real-time benefit verification technologies and its impact on healthcare
5. Benchmarking and Networking — Take part in pre-conference surveys, interactive roundtables, coffee breaks and cocktail reception to make the most of your two-day experience and take away strategic insights you can only get at this meeting!

GAIN CRITICAL INSIGHTS AND STRATEGIES TO IMPROVE PATIENT ACCESS:

• Examine how to configure interoperability in a local/regional health setting and recent efforts within the FHIR/HL7 standards
• Hear how to streamline electronic benefit verifications and prior authorization solutions into a hub model
• Discuss clinical and operational factors to consider when implementing portal PA solutions with medical specialty drugs
• Understand the implementation steps needed to achieve real-time benefit verification
• Address considerations for enrollment standards in hubs and specialty pharmacies
• Facilitate efficient information exchange between key stakeholders, including manufacturers, health plans, health systems, PBMs and physicians

Featured Speakers include:

• Nancee March, Director of Pharmacy Authorizations, Blue Shield of California
• Brent Schwartz, Executive Director of Marketing and Access, Medical Dermatology, Allergan
• Amanda Robinson, Access Services Manager, Fairview Specialty Pharmacy
• Tyler Scheid, JD, Senior Policy Analyst, American Medical Association
• Michele V. Davidson, Senior Manager, Pharmacy Technical Standards, Development and Policy, Government Relations, Walgreens Co
• Michael B. Marchant, Director – System Integration & Health Information Exchange, UC Davis Health
• Hannah Fine, CPhT, Pharmacy Medication Authorization Technician, UVA Specialty Pharmacy Services
• And more!

REGISTER TODAY

Visit www.cbinet.com/eBenefit for more information. Drug Channels readers will save $400 off the standard registration rate when they use promo code TTZ273*.

*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.

Here’s How PBMs and Specialty Pharmacies Snag Super-Size Profits from the 340B Program

Last week, I documented how the biggest independent and PBM-owned specialty pharmacies participate as contract pharmacies within the 340B program. These specialty pharmacies are owned by CVS Health, Cigna (Express Scripts), OptumRx (UnitedHealth Group), Walgreens Boots Alliance/Prime Therapeutics, and Diplomat Pharmacy.

Today, let’s follow the prescription dollar to expose how specialty pharmacies and covered entities profit from 340B prescriptions. We rely on confidential disclosures made to the U.S. Government Accountability Office (GAO).

You’ll see the indisputable prescription math that permits large specialty pharmacies to share in the 340B discounts that covered entities earn. These pharmacies’ profits can be $1,000 per prescription—far exceeding their typical profits from dispensing a third-party-paid prescription.

No wonder PBMs and specialty pharmacies are racing to become 340B contract pharmacies!

For years, hospitals and their lobbyists have been claiming that discounts from the 340B program support care for low-income and uninsured patients. What they don’t say: These discounts are also supporting some of the largest public companies in the U.S.

CBI’s 7th Annual Coupon and Copay Forum

CBI’s 7th Annual Coupon and Copay Forum
October 2-4, 2019 | Sonesta Rittenhouse Square | Philadelphia, PA
www.cbinet.com/coupon

Exclusive Offer – Register by 8/23/2019 and
save $500* (mention promo code COUPDC)

These continue to be turbulent times for life sciences manufacturers, as the drug pricing debate shows no signs of wavering, state legislation to ban copay accumulator programs intensifies, and rebate reform gets replaced by Trump’s push for ‘most favored nation” drug pricing policy. Staying on the pulse of the patient affordability landscape and overcoming patient access barriers by leveraging strategic copay programs is more paramount than ever.

CBI's flagship Coupon and Copay Conference, taking place October 2-4 in Philadelphia, is an important event devoted exclusively to designing (and re-designing) copay programs aimed at driving patient access and affordability to offset high-cost therapies and deductibles.

By popular demand, the 2019 agenda includes an all-new programming feature with one day of content devoted to the pressing topic of copay accumulators. Don’t miss three full days of jam-packed content on coupons, copays and accumulators covering:

• State and federal progress regulating copay accumulator programs
• Alternative copay strategies to respond to the rise of copay accumulator and maximizer programs
• Shifts in benefit plan design today and over the next 2-5 years
• Drug pricing legislation and potential impact on patient access
• Innovative copay program designs
• Impact of copay assistance programs on overall healthcare costs
• Potential effect of the price transparency debate and consumerism on patient adherence rates
• Performance metrics to justify the cost of copay programs
• And so much more!

Register today and save $500 or learn more at www.cbinet.com/coupon.

*Discount offer valid through 8/23/2019; applies to standard rates only and may not be combined with other offers, categories, 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.

Specialty Pharmacies and PBMs Hop On the 340B Money Train

I recently documented the astounding growth in the number of pharmacies participating in the 340B Drug Pricing Program.

Below, we turn our attention to specialty pharmacies and PBMs in the 340B program. We have updated our exclusive analysis of how the biggest independent and PBM-owned specialty pharmacies participate as contract pharmacies within the 340B program.

The five largest specialty pharmacies are owned by CVS Health, Express Scripts, OptumRx, Walgreens Boots Alliance/Prime Therapeutics, and Diplomat Pharmacy. As you will see below, these specialty pharmacies account for more than 20% of total contract pharmacy relationships with 340B hospitals and other covered entities. Yet they represent only 1% of 340B contract pharmacy locations.

We also review 340B participation by other large independent pharmacies.

Large, multi-billion-dollar, for-profit companies don’t participate in government programs unless there is money to be made. So next week, we’ll follow the prescription dollar to explore how specialty pharmacies and covered entities profit from 340B prescriptions.