This week, I’m rerunning some popular posts while I work on the forthcoming 2020-21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from June 2020. It was one of my most popular articles in 2020.

One minor update: PrudentRx finally has a website! It's still uninformative and misleading, but I suspect that my original article shamed them into putting up a better placeholder.

In Copay Maximizers Are Displacing Accumulators—But CMS Ignores How Payers Leverage Patient Support, I explained a new Centers for Medicare and Medicaid Services (CMS) final rule regarding health plans’ use of copay accumulator adjustment. I also highlighted why plans have responded to the negative patient impact from accumulators with copay maximizer programs.

However, maximizers are being implemented very differently from accumulators.

The two largest PBMs—CVS Health’s Caremark and Cigna’s Express Scripts—have each partnered with secretive and independent private companies to operate specialty drug maximizer programs for their plan sponsor clients. What’s more, at least one of these private companies earns fees equal to 25% of the manufacturer’s copay support program.

These arrangements are very odd. Why do multi-billion-dollar public companies rely on these private companies to administer their maximizer programs? Why do these small companies deserve such outrageous fees? Why are beneficiaries required to affirmatively sign up with the companies—or face ludicrous costs that far exceed their plan’s out-of-pocket maximums? Does any oversight exist for these arrangements?

Here’s what I managed to uncover about these businesses. See what you think.

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This week, I’m rerunning some popular posts while I work on the forthcoming 2020-21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from June 2020.

I'll have an update on accumulators in September.

COVID-19 has not stopped the wheels of policy bureaucracy from grinding. Last week, the Centers for Medicare and Medicaid Services (CMS) released its final Notice of Benefit and Payment Parameters for the 2021 benefit year. You’ll find the document links below.

This final rule permits insurers to exclude the value of a pharmaceutical manufacturer’s copay support program from a patient’s annual deductible and out-of-pocket maximum obligations.

Translation: CMS has confirmed that insurers have the option to use copay accumulator adjustment for their pharmacy benefit programs.

Patients on specialty drugs lose big from accumulators, while plans profit from the lower spending that results. Consequently, copay maximizers have emerged as a more patient-friendly alternative to accumulators. Below, I remind you of the math behind these alternatives.

Plan sponsors are publicly denouncing copay support programs—while they’re privately embracing them. CMS’s final rule ignores the troubling reality behind maximizers and accumulators: They encourage plans to use pharmacy benefit deductibles as a scheme that allows payers—not patients—to reap the greatest benefits from a manufacturer’s patient support program.

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This week, I’m rerunning some popular posts while I work on the forthcoming 2020-21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from July 2020.

I'm rerunning this post to provide context for manufacturers' recent actions regarding 340B contract pharmacies. The “SUBREGULATORY MISCHIEF” section below explains crucial background.



Yesterday, Eli Lilly announced that its products can be dispensed only at covered entities and their child sites, but not via external pharmacies. However, Lilly will permit its insulin to be dispensed from 340B contract pharmacies—as long as patients receive the discounted 340B prices of $0.03 per 3 mL pen or $0.10 per 10 mL vial. Amazing.

It’s time for our annual look at the 340B Drug Pricing Program’s booming pharmacy component.

Our exclusive analysis of government data finds that 28,000 pharmacy locations—almost half of the U.S. industry—now act as contract pharmacies for the hospitals and other healthcare providers that participate in the 340B program. Over the past 12 months, the number of pharmacies in the program has grown by more than 3,300 locations.

As you will see below, multi-billion-dollar, for-profit, publicly traded pharmacy chains—Walgreens, CVS, Walmart, Rite Aid, Kroger, and Albertsons—continue their unchecked 340B expansion.

Despite this astonishing growth, the contract pharmacy component does not have—and has never had—a regulatory infrastructure. That’s because the subregulatory notice that created contract pharmacies wasn’t subject to any rulemaking procedures. Eli Lilly recently challenged this notice, which forced the government to concede that its own pharmacy guidance is “not legally enforceable.”

As you review our analysis, ponder why manufacturers still comply with HRSA’s non-binding guidance—and why investors remain unconcerned with the risks of public companies’ participation in the out-of-control 340B program.

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This week, I’m rerunning some popular posts while I work on the forthcoming 2020-21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from June 2020.

Since my original article below, MedImpact has released its annual drug trend report. Like Prime, MedImpact also underperformed the larger PBMs. Click here to view the updated chart that I posted on @DrugChannels.

It’s time for our annual Drug Channels examination of PBM drug spending reports. For 2019, we again aim our magnifying glass at the annual trend reports from the largest pharmacy benefit managers (PBMs): CVS Health, Express Scripts, and Prime Therapeutics. (See their report links below.)

Once again, we find that commercial drug spending did not race higher—contrary to what you keep hearing from journalists and politicians. Spending rose by less than 3% in 2019, continuing a multiyear trend of slow growth. At some plan sponsors, total drug spending even declined. For specialty drugs, higher utilization—not drug costs—was again the biggest factor driving specialty spending growth.

Notably, clients of Prime Therapeutics fared worse than those of Express Scripts and CVS Caremark. Below, I explain three factors behind Prime’s underperformance. Its third place finish highlights why the PBM industry continues to consolidate.

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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.

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Today’s guest post comes from Frank Dana, Chief Commercial Officer at ConnectiveRx.

Frank discusses the access challenges that patients face at the point of prescribing. He then describes how ConnectiveRx’s non-commercial pharmacy solution streamlines workflow for healthcare providers and captures useful data for brands.

Click here to download a free information sheet about the ConnectiveRx Careform non-commercial pharmacy.

Read on for Frank’s insights.

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Somehow, we are nearly two-thirds of the way through 2020. It’s time to explore what’s been happening within the U.S. prescription market and its dispensing channels.

Below, I highlight five data-based observations about the prescription trends we’ve seen so far this year. Our findings span the unexpected resilience of retail pharmacies and a troubling drop in new prescription activity.

I also offer a fresh perspective on recent mail controversies and the abundance of nonsensical statistics in recent news stories. Links to sources appear at the bottom of this article.

While reviewing the data below, please recall our Drug Channels philosophy, courtesy of the late senator Daniel Patrick Moynihan: “Everyone is entitled to his own opinion, but not his own facts.”

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As regular readers know, I believe the 340B Drug Pricing Program needs to evolve into a more transparent, properly regulated program.

That’s why I’m especially glad to share today’s guest post from Jeremy Docken, Founder and CEO at Kalderos. Jeremy explains the 340B program's use of rebates instead of the more common upfront discounts. He argues that greater adoption of the established 340B rebate process will benefit all stakeholders: covered entities, manufacturers, state Medicaid programs, and others.

To help the industry learn more about 340B rebates, Kalderos is sponsoring a live video webinar: Evolving 340B: Moving from Discounts to Rebates.

I’ll be joining Jeremy during this webinar for an interactive presentation, discussion, and Q&A. This webinar will take place on September 11, 2020 (12:00 p.m. to 1:00 p.m. ET). Registration is free and open to all.

Read on for Jeremy’s insights—and be sure to join us in three weeks!

Regards,

Adam

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Hospitals and health systems are building a major presence in the specialty pharmacy industry.

As we demonstrate below, nine out of ten large hospitals now operate a specialty pharmacy. Hospitals and other healthcare providers account for one-third of all U.S. accredited specialty pharmacies.

Clinical and general financial motivations are driving hospitals’ DIY specialty pharmacy growth. The enormous profit opportunities from the 340B Drug Pricing Program offer further encouragement for hospitals. In-house specialty pharmacies are also a valuable hedge against the potential loss of contract pharmacies.

Manufacturers would be wise to incorporate hospitals into channel strategy planning for their specialty drugs. At the same time, antitrust regulators should weigh the impact of hospitals’ growing clout over prescribers of specialty drugs and attempts to steer patients to in-house pharmacies.

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Today’s guest post comes from Julia Phillips, VP of Pharma Accounts and Enablement at CoverMyMeds.

Julia discusses the challenges of both access to therapy and patient adherence, specifically during the COVID-19 pandemic. CoverMyMeds’ technology solutions mitigate these issues and ultimately improve patient outcomes.

To learn more, download the CoverMyMeds case study, Overcoming Medication Access Barriers Caused by Prior Authorization.

Read on for Julia's insights.

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