- A costly PBM trick: set lower copays for expensive brand-name drugs than for generics (statnews.com)
When the patent on a brand-name drug expires, and one or more generic versions enter the market, you’d expect consumers to pay less for the generic. That isn’t necessarily the case, thanks to the middlemen known as pharmacy benefit managers...Our research group, led by Khurram Nasir...wanted to figure out how much money had been spent on Lipitor...after generic atorvastatin became available...$2.1 billion could have been saved had Lipitor been replaced with generic atorvastatin...It turned out that Pfizer had partnered with pharmacy benefit managers to ensure that its more-expensive Lipitor had a lower copay than less-expensive generic atorvastatin...it boosted the overall cost of the drug...These shady practices haven’t gone unnoticed...If an employer serves as its own pharmacy benefit manager, it has all the incentive it needs to drive down the costs of drugs for its employees. So it’s no wonder that large employers such as Coca-Cola, Verizon, and IBM, which collectively spend $20 billion a year on health benefits, formed a coalition to devise means to buck the influence of pharmacy benefit managers...
- Middlemen Play Gatekeeper in Battle to Curb Soaring Drug Costs (bloomberg.com)
Jeff Bezos is teaming up with two fellow billionaires in what could be a prelude to bigger plans to undercut the dominance of intermediaries in the country’s complex health-care system. Pharma companies are trying to shift the blame onto them for soaring drug prices...In response, the middlemen known as pharmacy-benefit managers, or PBMs, are getting more aggressive with the tactics they use to control costs. Express Scripts Holding Co., CVS Health Corp. and UnitedHealth Group Inc.’s OptumRx are increasingly denying coverage of some drugs, negotiating discounts on others or requiring high co-pays for expensive treatments...“It’s becoming more common that we have to play the gatekeeper role,”...The strategy has had some success. Express Scripts said clients’ drug costs rose 1.5 percent last year, the slowest in more than two decades. For 2018, Express Scripts and CVS each refused to cover about 150 drugs -- typically in cases where they negotiated a better deal for alternatives...The tension between PBMs and drugmakers is likely to intensify for two sets of promising drugs coming soon: treatments that help prevent migraines, and drugs for a little-known but widespread liver disease called NASH...
- CVS may have a secret weapon against Amazon’s move into healthcare (CVS, AMZN) (markets.businessinsider.com)
CVS is reportedly in talks to buy Aetna in a deal that could help protect its business from the entry of the tech giant in to the healthcare space...CVS should focus on its vertical integration strategy, according to Morgan Stanley, and steer clear of gong head to head with Amazon in next day or same day delivery...Don't go head-to-head with Amazon...Goldwasser said that CVS' strength is its vertical integration. CVS has made a number of acquisitions over the past decade, such as Caremark RX, a pharmacy benefits manager, Omnicare, a leading pharmacy services provider and Target's pharmacy and retail clinic businesses. That push puts the company on a better footing to engage consumers, improve access to care, and deliver cost savings, he said.Goldwasser said however that any plans to go head-to-head with Amazon in next-day or same-day delivery service of prescriptions may impact the company's front-store sales. CVS already offers this service and plans to expand it to all of its locations in 2018.
- The Other Side of Opioid Limits (drugtopics.modernmedicine.com)
Proponents argue that limits reduce the risk of addiction, but are they keeping pharmacists from caring for their patients?... As the opioid crisis worsens, pharmacies, pharmaceutical manufacturers, and legislators are scrambling to help solve the problem. Recently, those efforts have focused on limiting opioid supplies. But in the effort to prevent unnecessary medications, are pain patients getting left behind?...Express Scripts and CVS Caremark recently announced a seven-day supply limit, and PhRMA...supported a seven-day limit...one-size fits all approach and will supplant providers’ clinical decision-making and the needs of patients who have legitimate need for these medications...payer limits restrict patients with legitimate pain management needs from accessing opioids. Those limitations...will force patients not at risk of abuse or misuse to work with their prescriber and pharmacist—which will cost the health-care system and “significantly” impact patients with limited resources, physical restrictions, or transportation issues...
- Drug copays sometimes exceed costs (reuters.com)Frequency and Magnitude of Co-payments Exceeding Prescription Drug Costs (jamanetwork.com)Patients Overpay For Prescriptions 23% Of The Time, Analysis Shows (khn.org)
Insurance companies may be asking people to shell out more money for drug co-payments than the drugs actually cost, a new study suggests...Generic drug co-payments in the U.S. exceeded the cost of medicines about 28 percent of the time – or for more than one in four prescriptions, researchers found...Co-payments for branded drugs were higher than the medication cost about 6 percent of the time, they report in JAMA...“This is money that patients could be saving if they knew about and could avoid the practice,” said lead study author Karen Van Nuys of the Schaeffer Center for Health Policy and Economics at the University of Southern California...To avoid overpayments, patients should always ask the pharmacist if their costs would be lower if they paid cash instead of using their insurance...“Pharmacists might not be allowed to offer this information to patients due to `gag clauses’ but if patients ask, pharmacists can tell them,”...“Several states have banned these practices and allow pharmacists to offer this information but even if you live in one of those states, you should ask,”...“Patients can also use pricing tools on the internet like GoodRx.com to see what prices they could expect across a variety of pharmacies if they paid cash.”
- Long-Dreaded Amazon Threat to Drug Middlemen Draws Closer (bloomberg.com)
The industry awoke to the news Tuesday that Amazon.com Inc. was joining with Berkshire Hathaway Inc. and JPMorgan Chase & Co. to form a new health-care business, in an attempt by three of the world’s best-known companies to contain the spiraling cost of keeping their U.S. workers healthy...Other groups of big employers have tried to improve worker health care in the past, but none have dethroned the pharmacy-benefit managers who drug companies and some lawmakers claim aren’t transparent about the pricing deals they strike on behalf of health plans, and about how much money they keep for themselves...“They could completely cut out the middlemen here,” said Pratap Khedkar...at...ZS Associates. By doing so, Amazon, Berkshire and JPMorgan could gain more control over their spending and save money pharmacy-benefit managers currently consume...
- Potential CVS-Aetna merger: Top 6 industry implications (managedhealthcareexecutive.modernmedicine.com)
- The way could be paved for other new healthcare models...“Payers should pay close attention to the integration of pharmacy, retail, care management, and patient care that could be possible under a combined company,”...While being early to a merger like this could bode well for CVS-Aetna, it could also give other payers the roadmap they need to explore similar mergers, or scope similar partnerships without the full-scale merging of two companies...
- Intermediaries, which were intended to be the impartial arbiters, now have the ability to control markets on the demand (i.e., formulary) and the supply (i.e., provider networks, their own providers)...“While this has been a concern with the PBM industry for years, it is significantly exacerbated when the overall medical carrier is also the PBM,”...“Economically, why this is more significant is that unlike medical provider systems which have geographic diversity, making it difficult if not impossible to consolidate them, pharmacy chains have little diversity and are already organized into national chains...making it possible to buy and require the usage of their own chain, thereby controlling both what product is purchased, the price, and the supplier.”
- These complex mergers are new categories—neither payer nor provider—for which existing laws are insufficient to regulate...“It is almost impossible for a buyer to understand what they are buying, and in contracting, who is selling what,”...“Every deal now is a complex web of contracts, intermediaries, and providers. It is becoming harder and harder to understand the economics of what services are being purchased and how that compares to other alternatives, especially on the ‘vertically integrated bundles’ that are becoming the norm...
- Big data analytics technology will be front and center...“Big data will become even more important for private and government plans to more effectively coordinate and manage internally owned means of production,”..
- There will be increased negotiating power on large market drugs and fewer mouths to feed in the value chain...“Specialty higher priced drugs will likely not be too affected by the merger, but certainly larger market drugs are going to have potentially big players pushing hard on price and value to patients to drive share...”
- Patients might win—or lose...“The merger likely would lower prices and improve access, which is beneficial for both the pharmaceutical industry and patients,”...
- Health insurer Cigna to buy Express Scripts in $67 billion deal (cnbc.com)
U.S. health insurer Cigna said...it would buy pharmacy benefits manager Express Scripts for about $54 billion, the latest deal in the sector aimed at tackling soaring healthcare costs...The move follows the $69 billion merger of insurer Aetna and drugstore chain CVS Health announced last December, and highlights a sector-wide trend toward deals between companies that do not have directly overlapping operations...The deals seek to lower healthcare costs by bringing under one roof pharmacy and medical claims, and give the combined entities greater leverage in price negotiations with drugmakers...Cigna's offer consists of $48.75 in cash and 0.2434 shares of stock of the combined company for each Express Scripts share...
- Pharma, under attack for drug prices, started an industry war (washingtonpost.com)
It’s not easy to get Americans mad at a behind-the-scenes industry they’ve barely even heard of, but pharmaceutical companies have spent most of this year trying...With national and state advertising campaigns, white papers and cartoon infographics, the powerful and well-funded drug-industry lobby spent 2017 working to redirect public anger about drug prices to pharmacy benefits managers: links in the supply chain that sits invisibly between the patient and the drugmaker — in the process bringing a long-simmering feud between two big health-industry players into the open...the drug companies’ fight with PBMs and insurers has helped thwart any real action — splintering the problem into a multi-industry echo chamber of accusations that’s hard to comprehend, much less solve...“This has been a year of finger-pointing,”...“They’re flooding the zone — with ‘they’ being pharma — with efforts to diffuse and deflect the focus on their role in drug pricing. Part of the policy challenge is they have a point.”
- Thanks, California! SB17 Will Trigger Massive Speculative Buying, Windfall Pharmacy Profits, and Supply Chain Disruption (drugchannels.net)
California governor Jerry Brown has just signed SB-17 – Drug Price Transparency into state law...This law is truly nutty. It won’t accomplish much of what it purports to do...Pharmacies and healthcare providers will become the primary beneficiaries of SB17’s requirement that pharmaceutical manufacturers provide advance notice of WAC price increases. Payers and patients will see limited gains. The state of California will see no appreciable benefit...This unexpected result will occur because the revenues and profits of pharmacies are linked directly to brand-name list prices. By providing advance notice of a price increases, pharmacies will have enormous incentives to purchase extra inventory and earn windfall profits. These profits do not have to be shared with third-party payers or patients...SB17 should encourage manufacturers to begin exploring direct inventory management relationships with key pharmacies to minimize speculation and the accompanying risks of drug shortages and diversion. It will be tough to negotiate these agreements, because pharmacies will see the lure of big profits...speculative purchasing will wreak havoc with pharmaceutical supply chains. What were California’s legislators thinking? Do they have any idea how little California will benefit from advance notice? What will happen to the excess inventory and higher pharmacy profits generated by California’s new law?...Don’t ask the people who wrote the bill. They seem completely oblivious to SB17’s actual impact...