- How Part D plan sponsors responded to pharmacy DIR changes
- Troubling new data on copay accumulators in marketplace plans
- DCI’s latest vertical integration visualization
- How the IRA will hurt physician practices
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Part D trend insights: Initial snapshot of 2024 trends through Q3, Milliman
Since January 2024, the Centers for Medicare & Medicaid Services (CMS) has required that Part D plans convert pharmacy direct and indirect remuneration (DIR) payments into a point-of-sale discount to patients rather than a retroactive payment from pharmacies to plans.
According to this Milliman analysis, removing pharmacy DIR reduced pharmacy reimbursement by -1.6%, while expanding the AWP-to-gross-prescription-cost spread. Check out this chart (with our embellishments):
DCI’s take: Part D plans reduced pharmacy reimbursement to account for the loss of post-sales rebates from pharmacies to plans. Consequently, ingredient reimbursement rates paid by Medicare Part D plans became much closer to the rates paid by commercial plans.
For instance, Part D plans could have been reimbursing pharmacies at the rate of AWP minus 17%, but requiring DIR payments from pharmacies that were equal in value to 3% of AWP. In the absence of post-sale DIR payments, the reimbursement would be set to AWP minus 20%.
Lesson: Pharmacy lobbyists should be careful what you wish for!
P.S. Check out the robust conversation on social media about this report.
According to this Milliman analysis, removing pharmacy DIR reduced pharmacy reimbursement by -1.6%, while expanding the AWP-to-gross-prescription-cost spread. Check out this chart (with our embellishments):
[Click to Enlarge]
DCI’s take: Part D plans reduced pharmacy reimbursement to account for the loss of post-sales rebates from pharmacies to plans. Consequently, ingredient reimbursement rates paid by Medicare Part D plans became much closer to the rates paid by commercial plans.
For instance, Part D plans could have been reimbursing pharmacies at the rate of AWP minus 17%, but requiring DIR payments from pharmacies that were equal in value to 3% of AWP. In the absence of post-sale DIR payments, the reimbursement would be set to AWP minus 20%.
Lesson: Pharmacy lobbyists should be careful what you wish for!
P.S. Check out the robust conversation on social media about this report.
Our Loss, Their Gain: Copay Accumulator Adjustment Policies in 2025 , The AIDS Institute
In Why Plan Sponsors and PBMs Are Still Falling Hard for Copay Maximizers, I highlighted the rapid growth and adoption of accumulators and maximizers in commercial health plans.
The AIDS Institute report provides valuable context by documenting the use of copay accumulators in individual health insurance plans available for 2025 on state health insurance marketplaces.
Alas, there are still too many patient unfriendly plans on marketplaces. For 2025, 40% of the plans in 39 states have copay accumulators—although you may not be able to figure it out. As the report notes: “Across all states, 13 of the 18 plans that failed to provide plan documents online had copay accumulator policies.”
What’s more, many plans don't bother to comply with state laws that prohibit accumulators. Truly shameful.
The AIDS Institute report provides valuable context by documenting the use of copay accumulators in individual health insurance plans available for 2025 on state health insurance marketplaces.
Alas, there are still too many patient unfriendly plans on marketplaces. For 2025, 40% of the plans in 39 states have copay accumulators—although you may not be able to figure it out. As the report notes: “Across all states, 13 of the 18 plans that failed to provide plan documents online had copay accumulator policies.”
What’s more, many plans don't bother to comply with state laws that prohibit accumulators. Truly shameful.
Vertical integration by the Big Three Pharmaceutical Wholesalers, Drug Channels Institute
Drug Channels recently published Vertical Integration Redux: How Pharmaceutical Wholesalers Are Transforming the Buy-and-Bill Market. This brief video introduced a new DCI graphic showing vertical integration by Cardinal Health, Cencora, and McKesson.
To my amazement, the LinkedIn post of this chart garnered nearly 1,200 reactions and 100,000+ impressions. Here’s a slightly updated version for those who missed it.
You can find full details about all of these businesses and their interactions in DCI’s 2024-25 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.
To my amazement, the LinkedIn post of this chart garnered nearly 1,200 reactions and 100,000+ impressions. Here’s a slightly updated version for those who missed it.
[Click to Enlarge]
You can find full details about all of these businesses and their interactions in DCI’s 2024-25 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.
Estimating the Spillover Impact of IRA Part B Negotiation, Avalere
Watch out! The Inflation Reduction Act (IRA) will crush buy-and-bill margins for physicians—and the money will be captured by the federal government.
That’s because the IRA will directly reduce Medicare Part B reimbursement and indirectly reduce commercial reimbursements via the impact on average sales price (ASP). As this latest Avalere study shows, ASP is widely used by commercial plans.
The IRA text is silent as to whether the maximum fair price (MFP) values will be included or excluded in the ASPs, which commercial payers often use to reimburse providers. However, I expect that CMS will decide that the MFP should be included in ASP computations. Consequently, physician practices will also get lower reimbursement from non-Medicare payers. As practice ownership becomes less attractive, physicians will look to sell their practices, further accelerating the consolidation of these businesses. Commercial health plans will ultimately pay much more for provider-administered drugs than they currently pay.
Meanwhile, manufacturers should be prepared to shovel money into the channel to maintain the economic viability of independent physician practices.
Thanks, IRA!
That’s because the IRA will directly reduce Medicare Part B reimbursement and indirectly reduce commercial reimbursements via the impact on average sales price (ASP). As this latest Avalere study shows, ASP is widely used by commercial plans.
[Click to Enlarge]
The IRA text is silent as to whether the maximum fair price (MFP) values will be included or excluded in the ASPs, which commercial payers often use to reimburse providers. However, I expect that CMS will decide that the MFP should be included in ASP computations. Consequently, physician practices will also get lower reimbursement from non-Medicare payers. As practice ownership becomes less attractive, physicians will look to sell their practices, further accelerating the consolidation of these businesses. Commercial health plans will ultimately pay much more for provider-administered drugs than they currently pay.
Meanwhile, manufacturers should be prepared to shovel money into the channel to maintain the economic viability of independent physician practices.
Thanks, IRA!
Anthony DiGiorgio, DO, MHA, X.com
Good news for those who don’t have time to read. Anthony DiGiorgio has created a provocative cartoon about the out-of-control 340B Drug Pricing Program. Here you go:
ICYMI, in last August’s news roundup, I featured Dr. DiGiorgio’s fascinating article on fixing the 340B program.
[Click to Enlarge]
ICYMI, in last August’s news roundup, I featured Dr. DiGiorgio’s fascinating article on fixing the 340B program.
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