Drug Channels News Roundup, December 2024: Crazy Medicare Reimbursements, Independents Grow (Really!), AFP Risks, Pharmacy History, GLP-1 Jokes, and Two Cool Dudes

Happy New Year, everyone! It’s been a huge year for Drug Channels Institute (DCI).

In January, HMP Global acquired DCI. Thanks to our new friends at HMP, we will hold the Drug Channels Leadership Forum. This landmark event will take place in March 2025 in Miami. (If you haven’t done so yet, click here to request an invitation.)

Once again, I thank you, dear readers, for welcoming Drug Channels into your inboxes, browsers, and apps. I’m proud of the diverse and thoughtful audience who follows and comments on our unique content. The DCI community now includes more than 100,000 subscribers and followers from all parts of the industry. To stay in touch, you can sign up for an email subscription or follow me on LinkedIn.

We’ve enjoyed bringing you our perspectives and curated links in 2024. We hope that you had fun engaging with us and the DCI community.

Wishing you and your family health and happiness,
Adam and the DCI team

---

In this issue:

• Unexplainable pharmacy reimbursements in Medicare Part D

• Surprise! There are more (not fewer) independent pharmacies

• Plan risks from shady alternative funding programs

• A brief but enlightening history of pharmacy from 1385 to today

• Jim Gaffigan jokes about GLP-1s

Plus, a fun photo of two cool (but familiar) dudes.

Did you miss the Drug Channels Outlook 2025 video webinar? No worries! Just sign up to watch the replay and download the full slide deck.

Who Will Pay for Prescription Drugs in 2032: Four Takeaways from the New Government Forecasts (rerun)

This week, I’m rerunning some popular posts while I prepare for today’s Drug Channels Outlook 2025 live video webinar. (If you sign up before 12 p.m. ET, you can attend the live event.) Click here to see the original post.

---

The econowonks at the Centers for Medicare & Medicaid Services (CMS) recently released the latest projections for U.S. spending on healthcare. (See links below.) These data provide the latest official look at how the Inflation Reduction Act (IRA) will affect U.S. healthcare spending.

As you will see below, CMS projects that outpatient prescription drugs dispensed by retail and mail pharmacies will remain a small share of total U.S. healthcare spending. The Inflation Reduction Act’s changes to the Medicare Part D program, along with coming demographic shifts, will have a significant impact on future spending by government programs and consumers.

Nonetheless, taxpayers—primarily via Medicare and Medicaid—will continue to dominate the employer-sponsored insurance market. Like it or not, vertically integrated insurers, PBMs, specialty pharmacies, and providers will continue to prosper.

White Bagging Update 2024: Providers’ Pushback Preserves Buy-and-Bill (rerun)

This week, I’m rerunning some popular posts while I prepare for tomorrow’s Drug Channels Outlook 2025 live video webinar. During the webinar, I'll share some thoughts on how vertical integration will affect the buy-and-bill channel.

Click here to see the original post from September 2024.

---

Time for DCI’s annual update on the channels for provider-administered drugs. Below, I review the latest data on 2024 trends and compare them to the pre-pandemic figures.

For 2024, payers report that specialty pharmacies—via white and clear bagging—have displaced buy-and-bill for a meaningful share of commercial covered lives utilizing provider-administered oncology drugs. However, provider pushback has limited specialty pharmacies' share gains, so that buy-and-bill remains the most common channel for these products.

Payers’ adoption of white bagging—and provider’s push back—reflect the ongoing battle for oncology margin in U.S. drug channels. Let’s hope that patients don’t get caught in the crossfire.

P.S. Today’s article is adapted from Chapter 3 of DCI’s forthcoming 2024-25 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, which will be available to preorder next week at special introductory pricing.

Follow the 340B Prescription Dollar: How PBMs Profit from 340B Contract Pharmacies (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s Drug Channels Outlook 2025 live video webinar. During the webinar, I'll provide an update the 340B program, which continues to defy gravity. Click here to see the original post.

---

In my recent The 340B Drug Pricing Program: Trends, Controversies, and Outlook video webinar, I provided an update on the economics of the 340B program, reviewed the multiple controversies surrounding the program’s operations, discussed state and federal legislation, and analyzed how the Inflation Reduction Act of 2022 (IRA) will alter the 340B market.

In the video excerpt below, I walk through a brief history of 340B contract pharmacies. I then document how five multi-billion-dollar, for-profit, publicly traded pharmacy chains and pharmacy benefit managers (PBMs)—Cigna (via Express Scripts), CVS Health, UnitedHealth Group (via OptumRx), and Walgreens, Walmart—continue to dominate the 340B contract pharmacy market. I conclude with a “follow the dollar” example of 340B prescription economics with contract pharmacies.

If this clip whets your appetite for more, register to watch a replay of the full 90-minute video webinar from June.

You can also check out our recent data deep dive: Hospitals Are Relying More on PBMs to Manage Manufacturers' 340B Contract Pharmacy Restrictions: DCI's 2024 Market Analysis.

Click here if you can’t see the video below.

PBM Power: The Gross-to-Net Bubble Reached $334 Billion in 2023—But Will Soon Start Deflating (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s Drug Channels Outlook 2025 live video webinar. Click here to see the original post.

As you reread the article below, note that some manufacturers have already announced wholesale acquisition cost (WAC) list price declines for 2025.

---

Last week, the Federal Trade Commission (FTC) released its interim report on pharmacy benefit managers (PBMs). The report’s unsubtle subtitle revealed how the agency views PBMs: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies. ICYMI, the FTC's report relied extensively on the Drug Channels Institute's (DCI's) 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

PBMs’ negotiating leverage against pharmaceutical manufacturers has been a key factor inflating the gross-to-net bubble—the ever-growing dollar gap between sales at brand-name drugs’ list prices and their sales at net prices after rebates, discounts, and other reductions.

For 2023, DCI estimates that the total value of manufacturers’ gross-to-net reductions for all brand-name drugs was $334 billion. (As we describe below, our latest estimates make a crucial change in the presentation of these figures compared with previous editions.)

Multiple forces are poised to pop the gross-to-net bubble for high-list/high-rebate products. This will force PBMs to further evolve their business models, while challenging plan sponsors and the FTC to follow the dollars.

Alas, patients remain caught in the drug channel's murky waters. I still can’t predict when SpongeBob SquarePants departs from Drug Channels—although I wish him a happy 25th birthday!

Humira Biosimilar Price War Update: Should We Be Glad that CVS Health and Express Scripts Are Using Private Label Products to Pop the Gross-to-Net Bubble? (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s Drug Channels Outlook 2025 live video webinar. Click here to see the original post. During Friday's webinar, I’ll share some updated thoughts on biosimilars and PBM’s private label products.

---

The Humira biosimilar market just took another step forward—but remains far from its ideal state.

Last week, Cigna’s Express Scripts announced that it that will follow CVS Health’s CVS Caremark business and remove Humira from its largest commercial formulary in favor of multiple biosimilars.

Below, we review the 20 products competing with Humira—including four private-label products marketed by in-house subsidiaries owned by CVS Health and Cigna.

As you will see below, CVS Health’s formulary actions led to rapid uptake of a low-list-price biosimilar. Express Scripts’ 2025 strategy will also drive biosimilar adoption, although its pricing strategy is more problematic.

But what’s really going to bake your noodle later: Would the largest PBMs have popped the gross-to-net bubble for Humira if they hadn’t been able to profit from the switch?

Four Revelations from Minnesota’s First 340B Transparency Report

It’s time to pay attention to the money behind the 340B curtain.

Minnesota just released the industry‘s first ever mandated financial report on the 340B Drug Pricing Program. Below, I do a wicked deep dive into the data and highlight crucial implications about spending, profits, pharmacies, plans, patients, program integrity, and more.

There are important limitations to these data. But Minnesota’s report marks a valuable first step on the yellow brick road to the wonderful world of transparency. I suspect similar reports are gonna be popular.

And don't forget to put on your ruby slippers and hear from Doctor of Thinkology Adam J. Fein. During next week’s Drug Channels Outlook 2025 live video webinar, he'll tell you what's ahead for the program that continues to defy gravity.