Specialty Pharmacy Keeps Disrupting Buy-and-Bill—and COVID-19 Will Accelerate It (rerun)

This week, I’m rerunning some popular posts while I prepare for today's video webinar: Drug Channels Outlook 2021.

Click here to see the original post and comments from September 2020.

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Will COVID-19 trigger long-term share gains for specialty pharmacies as suppliers to hospitals and physician offices?

Before the pandemic, specialty pharmacies—via white, brown, and clear bagging—had already displaced buy-and-bill distribution channels for a substantial chunk of provider-administered specialty drugs. See below for detailed data on oncology and non-oncology products.

We estimate that in the first half of 2020, the coronavirus pandemic accelerated this shift. Some of the changes will likely be transitory, as patients return to their healthcare providers. But payers will try to retain some of these gains—especially if they also own a specialty pharmacy.

Read on and see if you agree.

The Booming Biosimilar Market of 2020 (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s video webinar: Drug Channels Outlook 2021.

Drug pricing perceptions always seem to lag reality. Consider HHS's "Most Favored Nation" model for Medicare Part B. HHS relied in part on a highly misleading ASPE study of 2018 data. Conveniently for HHS, ASPE's analysis stopped before the biosimilar boom began.

Click here to see the original post and comments from October 2020.

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The biosimilar market is finally beginning to fulfill its promise.

The latest data show that provider-administered biosimilar drugs are successfully displacing their reference biological products. As I predicted last year, newer biosimilars are being adopted quickly, and their prices are declining rapidly. What’s more, manufacturers of reference products are cutting drug prices to defend their market shares.

Last year, Dr. Scott Gottlieb, a former FDA commissioner, argued that we shouldn’t give up on biosimilars and prematurely regulate prices. As you will see below, Dr. Gottlieb was right.

My Wall Street Journal Op-Ed about the 340B Program (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s video webinar: Drug Channels Outlook 2021.

The 340B program will be a major issue in 2021. I expect manufacturers to escalate their challenges to the contract pharmacy elements of the program. Meanwhile, covered entities will be battling manufacturers, state Medicaid programs, their contract pharmacy partners, and perhaps even HRSA itself. I'll share my thoughts on the latest developments during this Friday's webinar.

In the meantime, please enjoy my op-ed from September, which focuses on how 340B warps *prescription* prices (not drug list prices) and patient out-of-pocket costs. ICYMI, here are some clarifying comments on federally-qualified health centers (FQHCs).

Click here to see the original post and comments from September 2020.

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Last Friday, The Wall Street Journal published my opinion piece: The Federal Program That Keeps Insulin Prices High. The article text is pasted below for those who don't subscribe.

I summarize issues with the role of contract pharmacies in the 340B Drug Pricing Program. My arguments will be familiar to regular readers of Drug Channels. I wrote this piece for a general business audience, so it's highly readable and omits industry insider terminology. To help you get the most from the article, I have included additional links to source materials in the text.

Note that my commentary focuses primarily on hospitals, which account for the vast majority of 340B program sales. Federal grantees are more likely to pass discounted 340B prices to needy patients. However, grantees should consider my warning from 2014: The good apples—the 340B entities that require additional financial support to support needy patients—should be worried that the bad ones could rot away the program for everyone.

Please share your comments below and I'll respond where appropriate.

How GoodRx Profits from Our Broken Pharmacy Pricing System (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s video webinar: Drug Channels Outlook 2021.

GoodRx went public in September. Its current market cap is an astounding $17.6 billion. Amazon is now copying the GoodRx discount card model.

Click here to see the original post and comments from August 2020.

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On Friday, GoodRx filed its Form S-1 in preparation for going public. Link below.

The company is insanely profitable. Its adjusted net income—earnings before interest, taxes, depreciation, and amortization (EBITDA)—is an astonishing 40%.

Below, I provide my overview of how our crazy drug channel system enables GoodRx’s good fortune. You will admire the GoodRx management team’s business savvy in building a company that lowers out-of-pocket costs for consumers. But you will also wonder whether this business perpetuates a broken pharmacy drug pricing model.

P.S. This article updates and expands on the comments I posted to @DrugChannels on Friday evening.

Prime Therapeutics Deepens Its Reliance on Express Scripts: Our Four Takeaways From Their New Pharmacy Relationship (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s video webinar: Drug Channels Outlook 2021.

Click here to see the original post and comments from October 2020.

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Last week, news broke that Prime Therapeutics is expanding its relationship with Cigna’s Express Scripts to include mail and specialty pharmacy dispensing. So far, there's been very little written about this transaction.

Below, I share my thoughts on the following topics arising from the deal:

• The mail and specialty pharmacy market

• The future of AllianceRx Walgreens Prime

• The emerging Express Scripts industry platform

• A reminder about why the Federal Trade Commission won’t challenge the relationship

Prime is becoming increasingly dependent on outsourcing to Cigna’s Express Scripts business. This new pharmacy contract furthers the industry’s move toward vertical consolidation and the disappearance of the independent PBM industry. 

Once again, channel intermediaries continue to gain power and extract profits. More to come.

How Real-World Data is Helping Speed Oncology Drug Development

Today’s guest post comes from Sarah Alwardt, Vice President of Operations at Ontada.

Sarah describes how historical patient information can be used in current and future clinical trials, often eliminating the need for new trial participants. She also introduces us to Ontada, a new McKesson business that uses technology, real-world data, and research capabilities as a way to accelerate innovation and improve cancer therapies.

To learn more, visit the Ontada website.

Drug Channels News Roundup, December 2020: 340B Pharmacy Profits, Pre-Amazon PillPack, Physicians vs. Accumulators, Maine’s Importation Fail, and Vaccine Humor

Well, we are almost finished with 2020. Help us bid it good riddance with our final news roundup of the year:

• Quantifying the blockbuster 340 pharmacy profits of CVS, Walgreens, and Express Scripts

• An insider describes PillPack’s pre-Amazon origins

• Physicians vote to oppose copay accumulator adjustment

• Maine’s secret analysis shows that importation costs more

Plus, the first batch of humor about Pfizer’s COVID-19 vaccine.

P.S. Join the nearly 10,800 followers of my curated links published on @DrugChannels on Twitter. You can also join my nearly 14,000 followers on LinkedIn.

Drug Pricing Policy in 2021: Four Crucial Consequences of Pharmacy Benefits Today

When Americans complain about “drug prices,” most are actually complaining about the share of costs they pay—and how those costs are computed. Addressing patient affordability issues therefore requires a deep understanding of the U.S. drug channel.

Today, I review four crucial issues that the new Congress could tackle to address affordability, patients' out-of-pocket obligations, and prescription prices. I also highlight some of the existing and proposed legislative efforts. 

Our complex channel cannot be fixed with simplistic solutions. It may seem unlikely that we will get bipartisan legislation that sensibly addresses the distortions and challenges in our drug pricing system. But I can dream, can’t I?

Six Crucial Trends Facing U.S. Drug Wholesalers

During 2020, the COVID-19 pandemic disrupted every aspect of the pharmaceutical channel—and our lives. Pharmacy and healthcare provider markets experienced unprecedented volatility. If all goes well, 2021 will begin our return to normalcy, as vaccines roll out across the country.

This year has demonstrated the underlying resilience of U.S. distribution channels for prescription drugs. Pharmaceutical wholesalers have maintained shipments and operational capacity. They are now poised to play a vital role in distributing COVID-19 vaccines and therapeutics as they become available. However, there are substantial uncertainties about the timing and level of financial impact on wholesalers’ economics.

Below, I highlight six trends that will affect the U.S. drug wholesaling industry. I hope you enjoy this summary as we look toward the new year.