But who needs the Super Bowl when you can tackle this month’s selection of notable news stories, intercepted for you from the Drug Channels gridiron:
- Punt: Average list prices are unchanged for 2024
- Trick Play: GSK tussles with PBMs over lower-priced products
- Rush! Senator Cassidy tries to tackle CVS and Walgreens—and I give you a peek at a Walgreens 340B contract
- Offsides: To Gen Z, being a pharmacist is cheugy.
P.S. A big THANK YOU for all the warm wishes and congratulations on DCI’s acquisition by HMP! Check out the wonderful comments on this LinkedIn post. Great things ahead.
Brand Drug List Price Change Box Score, 46Brooklyn
A few weeks ago, I pointed out the slow growth in brand-name drug list prices through 2023—and the decline in net prices over the past six years. But what about 2024?
Well, Antonio Ciaccia and his colleagues at 46Brooklyn crunched the data and found that the typical brand-name drug’s list price grew by 4.5%. But when price increases are weighted by sales, list prices for 2024 grew by a whopping 0.4%. Does that count as skyrocketing?
This non-inflation happened because the removal of the Medicaid rebate cap encouraged manufacturers to reduce list prices for older products with substantial rebates. For example, Eli Lilly, Novo Nordisk, and Sanofi reduced the WAC list price of 37 insulin products by as much as 78%.
Medicaid rebates are linked to the bogus list price, which has been inflated by the gross-to-net bubble. Last April, I pointed to the uncapping of rebates as a key factor that could pop the gross-to-net bubble.
By lowering list prices and/or discontinuing high-list versions, manufacturers are rationally responding to Congressional incentives that encourage drugmakers to avoid having negative prices in Medicaid. As Antonio Ciaccia of 46 Brookyln recently observed:
How Lowering The Price of a Common Asthma Drug Made It Harder to Get, The Wall Street Journal
Well, Antonio Ciaccia and his colleagues at 46Brooklyn crunched the data and found that the typical brand-name drug’s list price grew by 4.5%. But when price increases are weighted by sales, list prices for 2024 grew by a whopping 0.4%. Does that count as skyrocketing?
[Click to Enlarge]
This non-inflation happened because the removal of the Medicaid rebate cap encouraged manufacturers to reduce list prices for older products with substantial rebates. For example, Eli Lilly, Novo Nordisk, and Sanofi reduced the WAC list price of 37 insulin products by as much as 78%.
Medicaid rebates are linked to the bogus list price, which has been inflated by the gross-to-net bubble. Last April, I pointed to the uncapping of rebates as a key factor that could pop the gross-to-net bubble.
By lowering list prices and/or discontinuing high-list versions, manufacturers are rationally responding to Congressional incentives that encourage drugmakers to avoid having negative prices in Medicaid. As Antonio Ciaccia of 46 Brookyln recently observed:
“It’s one thing for a drug manufacturer to offer something for free. It's another thing to literally pay for the privilege of doing so.”
For 2024, warped incentives met unintended consequences.
To avoid paying Medicaid for its products, GSK removed its high-list-price brand-name products from the market and launched a generic version with a list price that was 35% lower. PBMs promptly blocked this new version from their formularies, blaming GSK for introducing “unbranded versions at inflated prices.”
As the Wall Street Journal describes, patients have been the big losers so far.
Who’s right about the true change in net prices? ¯\_(ツ)_/¯
To avoid paying Medicaid for its products, GSK removed its high-list-price brand-name products from the market and launched a generic version with a list price that was 35% lower. PBMs promptly blocked this new version from their formularies, blaming GSK for introducing “unbranded versions at inflated prices.”
As the Wall Street Journal describes, patients have been the big losers so far.
Who’s right about the true change in net prices? ¯\_(ツ)_/¯
Ranking Member Cassidy Seeks Information from Major Contract Pharmacies as Part of Ongoing 340B Investigation, Senate Health, Education, Labor and Pensions (HELP) Committee
Kudos to Senator Bill Cassidy, who is finally asking CVS Health and Walgreens Boots Alliance some tough questions about their 340B contract pharmacy profits. Bonus points for linking to DCI's Taylor Swift-themed analysis of the marketplace.
Alas, some people refuse to believe that 340B contract pharmacies can earn outrageous profits from the program, per How Hospitals and PBMs Profit—and Patients Lose—From 340B Contract Pharmacies.
For your reading pleasure, I googled up a publicly-available 340B contract pharmacy agreement between Walgreen Co. and Public Health Trust of Miami-Dade County, Florida.
You can see the sky-high fees in the excerpt below. Walgreens gets 15% of the prescription’s full price plus a $65 dispensing fee. Thus, a $5,000 specialty prescription will yield $815 in gross profit (16% gross margin) for Walgreens. Many specialty drugs have 340B discounts of 75%, so a 340B covered entity would still earn about $3,000 from this prescription.
Contract pharmacy fees in the 340B program aren’t required to be based on the existing fair market value standards utilized in other federal programs. In fact, when it comes to contract pharmacy fees, there’s no guidance at all. Keep going, Senator Cassidy!
Alas, some people refuse to believe that 340B contract pharmacies can earn outrageous profits from the program, per How Hospitals and PBMs Profit—and Patients Lose—From 340B Contract Pharmacies.
For your reading pleasure, I googled up a publicly-available 340B contract pharmacy agreement between Walgreen Co. and Public Health Trust of Miami-Dade County, Florida.
You can see the sky-high fees in the excerpt below. Walgreens gets 15% of the prescription’s full price plus a $65 dispensing fee. Thus, a $5,000 specialty prescription will yield $815 in gross profit (16% gross margin) for Walgreens. Many specialty drugs have 340B discounts of 75%, so a 340B covered entity would still earn about $3,000 from this prescription.
[Click to Enlarge]
Contract pharmacy fees in the 340B program aren’t required to be based on the existing fair market value standards utilized in other federal programs. In fact, when it comes to contract pharmacy fees, there’s no guidance at all. Keep going, Senator Cassidy!
2022-2023 PharmCAS Applicant Data Report, American Association of Colleges of Pharmacy
Big yikes! Our vibe check finds that few Gen Zers want to become pharmacists.
According to the American Association of Colleges of Pharmacy (AACP), the total number of pharmacy school applicants has dropped by 36%, from 17,617 in 2012-13 to 11,227 in 2022-23. Thanks a ton to the eight people who boosted the latest figures above the 2021-22 total!
TBH, it’s sus that the acceptance rate to pharmacy school grew, from 70% in 2012-13 to 87% for 2022-23. Looks like it's now highkey easy to become a pharmacist.
According to the American Association of Colleges of Pharmacy (AACP), the total number of pharmacy school applicants has dropped by 36%, from 17,617 in 2012-13 to 11,227 in 2022-23. Thanks a ton to the eight people who boosted the latest figures above the 2021-22 total!
[Click to Enlarge]
TBH, it’s sus that the acceptance rate to pharmacy school grew, from 70% in 2012-13 to 87% for 2022-23. Looks like it's now highkey easy to become a pharmacist.
Private Equity Bathroom Breaks, Dr. Glaucomflecken
ICYMI, private equity firm General Catalyst has announced its intention to acquire Summa Health, a nonprofit health system.
Fortunately, we have Dr. Glaucomflecken, the funniest physician on the internet, to show us how private equity ownership affects hospital operations.
Click here if you can’t see the video.
Fortunately, we have Dr. Glaucomflecken, the funniest physician on the internet, to show us how private equity ownership affects hospital operations.
Click here if you can’t see the video.
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