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In this issue:
- Say hello to AVERON, CVS Health’s latest group purchasing organization
- States continue to carve PBMs out of Medicaid programs
- Seniors and taxpayers fund a growing share of 340B profits
AVERON, U.S. Patent and Trademark Office
In Five (or Maybe Six?) Reasons that the Largest PBMs Operate Group Purchasing Organizations, I profiled the group purchasing organizations (GPOs) that pharmacy benefit managers (PBMs) formed to further consolidate the number of covered lives in rebate negotiations with pharmaceutical manufacturers.
Based on a recent service mark filing, CVS Health seems to be setting up yet another GPO called AVERON. It seems like it will focus on pharmacies' cost of goods. Here’s the relevant text:
You can see both serious and snarky guesses from the DCI community in my LinkedIn post about this news.
Based on a recent service mark filing, CVS Health seems to be setting up yet another GPO called AVERON. It seems like it will focus on pharmacies' cost of goods. Here’s the relevant text:
“Group purchasing organization services, namely, coordination and negotiation of contracts for others to purchase pharmaceuticals; Group purchasing services in the nature of negotiation of specialty pharmacy member contracts with manufacturers and other suppliers for discounts on pharmaceutical products procured in specialty and retail pharmacies or resale by wholesalers; Administering group purchasing contracts between pharmaceutical drug manufacturers and wholesalers of generic, brand and biosimilar pharmaceuticals, and pharmaceutical purchasers, retail pharmacies, specialty pharmacies, and mail order pharmacies; Providing group purchasing contracts, namely, negotiation, settlement, and execution of commercial transactions between pharmaceutical drug manufacturers and wholesalers of generic, brand and biosimilar pharmaceuticals, and pharmaceutical purchasers, retail pharmacies, specialty pharmacies, and mail order pharmacies; Administering group discount purchasing programs, namely, negotiating buying programs contracts for specialty and retail pharmacy participant members to purchase specialty pharmacy prescription drugs from manufacturers and wholesalers; Business administration and business management of prescription drug procurement for wholesalers, specialty and retail pharmacies; Business administration and business management of prescription drug purchasing data and dispensing data for specialty and retail pharmacies.” (emphasis added)I have more questions than answers. Will AVERON focus only on specialty drugs dispensed by retail and specialty pharmacies? Will it affect the computation of acquisition cost under CVS Heath’s new CostVantage program? Will AVERON displace or complement Red Oak Sourcing, CVS Health’s joint venture with Cardinal Health?
You can see both serious and snarky guesses from the DCI community in my LinkedIn post about this news.
Amid Unwinding of Pandemic-Era Policies, Medicaid Programs Continue to Focus on Delivery Systems, Benefits, and Reimbursement Rates, KFF
ICYMI, a growing number of state Medicaid programs—including the two largest programs in California and New York—have shifted, or plan to shift, pharmacy benefits from managed care to fee-for-service Medicaid. The chart below highlights the results from KFF’s latest 50-state survey.
These shifts to fee-for-service are due largely to the disclosures about PBMs’ unexpectedly high spread pricing profits from managed Medicaid contracts. However, carving out Medicaid pharmacy benefits also has significant implications for pharmacy reimbursements and provider profits from the 340B Drug Pricing Program. See Section 8.4. of DCI’s Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers for details.
The Medicaid shift is one reason that spread pricing accounts for a declining share of the large PBMs’ profits. Meanwhile, one-third of employers continue to choose spread pricing for their pharmacy network. Hmm.
[Click to Enlarge]
These shifts to fee-for-service are due largely to the disclosures about PBMs’ unexpectedly high spread pricing profits from managed Medicaid contracts. However, carving out Medicaid pharmacy benefits also has significant implications for pharmacy reimbursements and provider profits from the 340B Drug Pricing Program. See Section 8.4. of DCI’s Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers for details.
The Medicaid shift is one reason that spread pricing accounts for a declining share of the large PBMs’ profits. Meanwhile, one-third of employers continue to choose spread pricing for their pharmacy network. Hmm.
Trends in Proportion of Medicare Part D Claims Subject to 340B Discounts, 2013-2020, JAMA Health Forum
Whoa. For 2020, prescriptions eligible for 340B Drug Pricing Program discounts accounted for nearly 20% of Medicare Part D claims. That’s more than double the share from 2013.
This means that seniors, Part D plans, and taxpayers: Consider the Medicare beneficiaries who faced unlimited out-of-pocket prescription drug costs when they reached the catastrophic coverage limit. As a matter of principle, a senior on a fixed income shouldn’t pay hundreds or thousands of dollars out-of-pocket for a drug that a large, multi-billion-dollar health system bought for $0.01.
Patients, manufacturers, and Part D plans can’t detect that a specific prescription is eligible for 340B pricing. This will change somewhat under the Inflation Reduction Act of 2022, because manufacturers will not be required to provide a Maximum Fair Price (MFP) and a 340B discount for the same unit of a drug.
The Centers for Medicare & Medicaid Services (CMS) has proposed a to-be-created Medicare Transaction Facilitator (MTF) to facilitate a transactional infrastructure for pharmacies and beneficiaries. But last week, CMS postponed any decision on a solution.
As I observed during last week’s Drug Channels Outlook 2024: CMS says TBD on the MTF so there’s no 340B in MFP Rxs. 😉
[Click to Enlarge]
This means that seniors, Part D plans, and taxpayers: Consider the Medicare beneficiaries who faced unlimited out-of-pocket prescription drug costs when they reached the catastrophic coverage limit. As a matter of principle, a senior on a fixed income shouldn’t pay hundreds or thousands of dollars out-of-pocket for a drug that a large, multi-billion-dollar health system bought for $0.01.
Patients, manufacturers, and Part D plans can’t detect that a specific prescription is eligible for 340B pricing. This will change somewhat under the Inflation Reduction Act of 2022, because manufacturers will not be required to provide a Maximum Fair Price (MFP) and a 340B discount for the same unit of a drug.
The Centers for Medicare & Medicaid Services (CMS) has proposed a to-be-created Medicare Transaction Facilitator (MTF) to facilitate a transactional infrastructure for pharmacies and beneficiaries. But last week, CMS postponed any decision on a solution.
As I observed during last week’s Drug Channels Outlook 2024: CMS says TBD on the MTF so there’s no 340B in MFP Rxs. 😉
George Barrett: CEO Rediscovers His Musical Roots,
Ten years ago, I published A Tale of Two Wholesaler CEOs. I took an amused look at the diverse retirement strategies of Dave Yost, former CEO of AmerisourceBergen, and Stewart Rahr, former CEO of Kinray Drugs.
For another strategy, consider George Barrett, former CEO of Cardinal Health. George—at age 68—just released his first record. And guess what? It’s good!
Here’s a video of the first single from his album. If you get a chance to see George play live, be sure to tell everyone how you knew the performer when he was only the CEO of a Fortune 25 company.
Click here if you can’t see the video.
For another strategy, consider George Barrett, former CEO of Cardinal Health. George—at age 68—just released his first record. And guess what? It’s good!
Here’s a video of the first single from his album. If you get a chance to see George play live, be sure to tell everyone how you knew the performer when he was only the CEO of a Fortune 25 company.
Click here if you can’t see the video.
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