Pharmacies continue to ride the 340B Drug Pricing Program’s explosive growth.

Our latest exclusive analysis finds that nearly 20,000 pharmacy locations now act as a contract pharmacy for the hospitals and other healthcare providers that participate in the 340B Program. Fewer than 3,000 pharmacy locations were in the program in 2010.

Large retail pharmacy chains' rapid expansion (per the fourth chart below) into 340B suggests superior profits.

Every year, I question the economics behind this astounding growth. How many prescriptions do contract pharmacies provide at discounted prices to uninsured, underinsured, and low-income patients? Are pharmacies engaged in profit-sharing agreements with 340B hospitals? Are they earning fees that far exceed fair market value standards? Who is really benefiting from the contract pharmacy boom?

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Medicaid Drug Rebate Program Summit 2017

September 11-13, 2017

Marriott Magnificent Mile | Chicago

www.knect365.com/MDRP

Medicaid Drug Rebate Program Summit 2017 is a platform to:

• Network with 600+ government officials, industry leaders, and pharma executives
• Gain insights on the upcoming 340B Drug Ceiling Price and Civil Monetary Penalties Final Rules
• Address the potential implications of “repeal and replace” on Medicaid
• Hear lessons learned following the implementation of the AMP Final Rule

Earn CPE and CLE Credits!

A Universal Continuing Legal Credits (CLE) Certificate of Attendance will be applied for the State of Illinois. Continuing Professional Credits (CPE) will be provided in accordance with the National Association of State Boards of Accountancy (NASBA). State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. All credits will be provided following the conclusion of the conference.

Get guidance from key federal officials to ensure compliance on government program mandates

• Medicaid Reform in the Trump Era – Scott W. Atlas, MD, David and Joan Traitel Senior Fellow of the Hoover Institution, Stanford University; Member, Hoover Institution’s Working Group on Health Care Policy
• MDRP: Once a Good Idea, Now Not “Good Enough” – Jeff Myers, President and Chief Executive Officer, Medicaid Health Plans of America
• Part I: General Overview of the Medicaid Drug Rebate Program: History, Core Elements, and Manufacturer Requirements and Part II: Understand How to Calculate Critical Price Types Such as AMP, URA, Best Price, Base Line AMP – Miree Lee, Principal at M. Lee Consulting LLC
• Authorized Generics Price Calculations – John Gould, Partner at Arnold & Porter Kaye Scholer LLP
• Fireside Chat: External Counsel – Moderated by John Shakow, Partner at King & Spaulding, with KPMG, Arnold & Porter Kaye Scholer LLP, Sidley Austin, and Hogan Lovells

        

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This week, I’m rerunning some popular posts while I'm on vacation. Click here to see the original post and comments from May 2017.

This post is especially timely given President Trump’s draft Executive Order. In Section 4, the Order directs Secretary Price to ensure that the program benefits "the lower income or otherwise vulnerable Americans for which the program was intended." Shortly after the article below was published, I discovered that the 340B program has been growing by more than 30% annually. (See The 340B Program Hits $16.2 Billion in 2016; Now 5% of U.S. Drug Market.) It's time to moderninze the 340B Drug Pricing Program.

Last Friday, I had the privilege of meeting with Secretary of Health and Human Services (HHS) Tom Price. I was invited to meet with Secretary Price for one of his listening sessions with industry experts and stakeholders. I appreciated the opportunity to share my perspectives.

In our meeting, I highlighted four ways that the 340B Drug Pricing Program is raising drug costs. I then offered eight specific recommendations for improving the program by addressing the widespread channel distortions the program has caused.

Read on for the recommendations and a summary of my comments to Dr. Price.

I have no idea if my suggestions will have any impact. Regardless, your friendly neighborhood blogger enjoyed spending time among some Washington insiders.

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This week, I’m rerunning some popular posts while I'm on vacation. Click here to see the original post and comments from April 2017.

Yesterday probably didn’t turn out as well as Cardinal Health had expected.

The good news: The company announced the acquisition of Medtronic's Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses for $6.1 billion in cash.

The bad news: Cardinal sharply lowered its outlook for future profits from its pharmaceutical distribution business.

The company cited lower generic drugs prices and “sell-side" pressure from pharmacy customers as two primary causes of its financial woes. Wall Street was unhappy: Cardinal stock closed down a whopping 11%. McKesson and AmerisourceBergen stocks fell in sympathy.

Cardinal Health’s projected profit downturn illuminates a dilemma facing drug wholesalers:

• Generic buying consortia of wholesalers and pharmacies have reduced wholesalers’ acquisition costs for generic drugs

• Independent pharmacies—the most profitable customers of wholesalers—are successfully using their own buying groups to extract lower prices from wholesalers

Independent pharmacies have been backed into a corner—and have responded by pushing back against their wholesale suppliers. Cardinal’s warning highlights the coevolution of profits within the pharmacy channel ecosystem. Expect wholesalers to be increasingly desperate to make up these lost funds.

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This week, I’m rerunning some popular posts while I'm on vacation. Click here to see the original post and comments from May 2017.

Last week, the pharmacy benefit manager (PBM) Express Scripts and the online discount card company GoodRx partnered on a new program called Inside Rx. The program provides point-of-sales discounts to uninsured patients on at least 40 brand-name drugs from eight manufacturers. Click here to read the press release.

This innovative partnership is the latest attempt to offer direct-to-consumer discounts that pop the gross-to-net bubble—at least for uninsured patients. Below, I delve deep inside Inside Rx. I explain:

• How uninsured patients benefit
• What’s in it for manufacturers, Express Scripts, and GoodRx
• Which pharmacies are in the program’s narrow network
• The surprises on the drug list
• How inside Rx compares with CVS Health’s Reduced Rx program

Depending on your position in the drug channel, you will feel either joy, sadness, fear, disgust, or anger as this new program rolls out. Please feel free to emote in the comments below.

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Yesterday we got some pre—July 4th fireworks.

Walgreens Boots Alliance (WBA) announced a deal to buy 2,186 Rite Aid stores and three distribution centers for $5.2 billion. Rite Aid will also get the option to source generic drugs via the wonderfully named Walgreens Boots Alliance Development (WBAD) organization. Click here to read the press release.

With a potential FTC battle looming, WBA made the debt-laden Rite Aid an offer that it couldn’t refuse.

Before you head off for the long holiday weekend, please enjoy these thoughts on the new transaction along with commentary on Fred’s and the drug wholesalers.

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Happy 241st birthday, America! Before you launch your July 4 festivities, please enjoy these Drug Channels fireworks:

• My $0.02 on how Amazon-Whole Foods affects Amazon’s pharmacy ambitions

• Congress starts to get serious about the 340B program

• CMS finalizes reporting on pharmacy-related DIR fees

• A reality check on provider-sponsored health plans

Plus, Kaiser provides a hilarious look at the hospital of the future…as seen from the 1950s!

P.S. Follow @DrugChannels on Twitter for my daily curated selection of news and commentary.

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CBI’s 9th Hub and SPP Model Optimization

September 26-27, 2017 | San Diego, CA

www.cbinet.com/HubsWest

Calling all manufacturers, specialty pharmacies, PBMs and hub service providers!

Head to San Diego this September to discuss the opportunities and challenges for swiftly moving data among all stakeholders to improve patient access and hub performance. Hear expert perspectives from Actelion Pharmaceuticals, Aegerion Pharmaceuticals, AssistRx, Churchill Pharmaceuticals, Horizon Pharma, Otsuka America Pharmaceutical, PharmaCord, Relypsa, Retrophin, Shire, TC Market Access and Welkin Health.

Capitalize on effective strategies to improve hub operations:

• Optimize the use of field reimbursement managers and data sharing with hubs
• Design hubs to best measure the right data points and transfer data across multiple organizations (Hub data, manufacturer leadership, contract management team, IT account specialists) for swift implementation
• Gain best practices to eliminate consuming workflows for the hub
• Identify how to improve information exchange between Hubs and specialty pharmacies
• Enhance the hub to propel product success and patient access
• Align channel and hub strategies to maximize efficiency

Download the complete agenda here, and visit www.cbinet.com/HubsWest for further details and to register. Drug Channels readers will save $400 off of the standard registration rate when they use discount code HUT465.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rate or non-profit rates. Other restrictions may apply.

The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

        

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Today’s guest post comes from Russel Allinson, co-founder, Chief Executive Officer, and Chief Clinical Officer of Therigy.

Russ discusses the importance of understanding the latest URAC Specialty Pharmacy v3.0 accreditation requirements, particularly relating to patient management. To learn more, register for a free webinar co-hosted by Therigy and Cleveland Clinic. The webinar will be held on July 11, 2017, at 1:00 p.m. EDT.

Read on for Russ's insights.

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Time for my annual review of the Fortune 500 list. Every year, this is one of my most popular posts, because it helps us “follow the dollar” and understand how drug channel intermediaries make money.

The 2017 list contains the same seven drug channel companies that the 2016 list did: AmerisourceBergen, Cardinal Health, CVS Health, Express Scripts, McKesson, Rite Aid, and Walgreens Boots Alliance.

Using the Fortune data, I explore the profitability and shareholder returns of the largest public drug wholesalers, chain pharmacies, and pharmacy benefit managers (PBMs). I compare these companies with the Fortune 500’s ten pharmaceutical manufacturers and a separate survey of independent pharmacies.

The Fortune data remind us that many multi-billion dollar businesses profit as drugs move through the U.S. reimbursement and distribution system. We must recognize this complex system in order to tackle the price and affordability of drugs.

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