Independents Outshine PBMs in Manufacturers’ Exclusive Specialty Pharmacy Networks

Last week, we documented the substantial concentration of dispensing revenues for specialty drugs. See The Top 15 Specialty Pharmacies of 2023: Market Shares and Revenues at the Biggest PBMs, Health Plans, and Independents.

Today, we examine how manufacturers’ specialty networks contribute to this concentration. In DCI’s exclusive analysis below, we show that specialty pharmacies affiliated with pharmacy benefit managers (PBMs) play an outsized role in manufacturer-designated dispensing networks.

A typical network contains about five specialty pharmacies—but one in three specialty products with a manufacturer-designated network contains only a single specialty pharmacy. In those exclusive networks, independent and smaller specialty pharmacies are the big winners.

Read on for DCI’s updated profile of specialty networks—and ponder why smaller pharmacies are winning the battle for exclusive networks.

Visit Drug Channels in Booth #1801 at #Asembia24 for a Special “Ask Me Anything With Adam” (#AMAWA)

Next week, the Drug Channels Institute team will be attending Asembia’s AXS24 Summit at the wonderful Wynn Las Vegas.

And for the first time—thanks to our new friends at HMP Global—DCI will have its very own booth! (Click here for a special sneak peek.)

As you might expect, we will hit Vegas in true Drug Channels style. Stop by booth #1801 for fun and games:

• Partake in a special in-person Ask Me Anything with Adam (#AMAWA) session with DCI president Adam J. Fein, Ph.D.! The AMAWA session will start on Monday, April 29, at 4:30 p.m. (Bring your phone if you want a selfie!)
  
  Adam won’t be speaking at Asembia this year, so be sure to visit booth #1801 on Monday afternoon to get his hot take on whatever topic is vexing you.

• Spin the Drug Channels Wheel O’ Fun and win fabulous prizes!

• Meet Bar Stern, DCI’s newest and most bearded team member!

• Request an invitation to the inaugural Drug Channels Leadership Forum!

• Chat with the marvelous Paula Fein, DCI’s intrepid vice president of business development!

• Learn about First Report Managed Care!

• Enjoy snacks, treats, and espresso!

DCI’s booth will be in the back of the hall, with all of the cool kids. Here’s a handy map:

[Click to Enlarge]

Remember: What happens in Booth #1801, stays in Booth #1801. 😉

BONUS TIP

While you’re in Vegas, be sure to visit the fantastic new exhibition about the gross-to-net bubble at Circus Circus.

10/10 would pop the gross-to-net bubble in Vegas again!

How GoodRx is Evolving Its Reimbursement Approaches to Help Pharmacies and Consumers

Today’s guest post comes from Jim Sheninger, Pharmacy Strategy Officer at GoodRx.

Jim describes GoodRx's emerging pharmacy contracting strategies. In addition to working through pharmacy benefit managers (PBMs), GoodRx now also contracts directly with Walgreens, CVS, and other national and regional pharmacies. These direct agreements are based on acqusition cost, which helps pharmacies stabilize gross margins while still providing low pricing for consumers. 

To learn more about GoodRx and its pharmacy partnerships, reach out to network@goodrx.com.

Read on for Jim’s insights.

The Top 15 Specialty Pharmacies of 2023: Market Shares and Revenues at the Biggest PBMs, Health Plans, and Independents

Drug Channels Institute’s (DCI’s) latest analysis finds that participants in the specialty pharmacy market continue to get more diverse—although revenues remain highly concentrated.

We have identified nearly 1,800 dispensing sites with specialty pharmacy accreditation—about 40% of which are owned by hospitals, physician practices, and other healthcare providers.

Alas, specialty pharmacies owned by the three largest pharmacy benefit managers (PBMs) have the most brass in their pocket, as they accounted for two-thirds of prescription revenues from pharmacy-dispensed specialty drugs.

Read on for DCI’s latest overview of the 2023 marketplace and revenues of the biggest market participants, along with key specialty pharmacy trends.

How Patient Engagement Can Reduce Brand Launch Risks

Today’s guest post comes from Jessica Lens, Chief Patient Experience Officer at CareMetx.

Jessica discusses the challenges of patient nonadherence. She then outlines how manufacturers can build adherence into their patient services program to increase patient engagement.

To learn more about enhancing patient engagement and adherence, download CareMetx's new report: Driving Brand Success: Minimize Risk and Capture Missed Value from Patient Engagement and Adherence.

Read on for Jessica’s insights.

The Top Pharmacy Benefit Managers of 2023: Market Share and Trends for the Biggest Companies—And What’s Ahead

Three is still the magic number for pharmacy benefit managers (PBMs).

For 2023, nearly 80% of all equivalent prescription claims were processed by three companies: the Caremark business of CVS Health, the Express Scripts business of Cigna, and the Optum Rx business of UnitedHealth Group.

Read on for Drug Channels Institute’s (DCI’s) latest market share figures, along with a preview of the industry changes that will shift these shares over the next few years.

SAVE THE DATE: Drug Channels Leadership Forum, March 17-19, 2025

I am pleased to announce the inaugural Drug Channels Leadership Forum! This unique, new event will be held from March 17 to 19, 2025, at the Turnberry Resort and Spa in Miami.

The Leadership Forum will be an executive gathering where drug channel leaders can network and discuss key issues and challenges facing the commercial healthcare system. We intend to bring together people from the entire drug channel: pharmaceutical manufacturers, pharmacy benefit managers (PBMs), health plans, insurers, and plan sponsors, wholesalers and distributors, pharmacies, providers, buying groups, government officials, and more.

I’m personally assembling the agenda, which will be a mix of one-on-one fireside chats with industry leaders combined with hard-hitting, topical panel discussions. And of course, I'll be there to moderate the entire event and lead the fireside chats. Thanks to DCI’s partnership with HMP Global, we can bring this novel event to the drug channels community.

To maximize the value of networking and learning, the event will have a limited number of attendees. Click here to request an invitation.

We will also have a very limited number of sponsors. Click here to learn more about sponsorship opportunities.

Read on for the full press release. Hope you can join us!

Tales of the Unsurprised: U.S. Brand-Name Drug Prices Fell for an Unprecedented Sixth Consecutive Year—And Will Fall Further in 2024 (rerun)

This week, I’m rerunning some popular posts while I prepare for today’s live video webinar: Drug Channel Implications of the Inflation Reduction Act.

One important update: In the article below, I suggested that the IRA will make high-list/high-rebate products less attractive to Medicare plans. But this appears not be accurate, as I explain in Surprise! Thanks to the IRA, Part D Plans Will Prefer High-List, High-Rebate Drugs.

Click here to see the original post from January 2024.

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It's time for Drug Channels’ annual reality check on U.S. drug pricing.

For 2023, brand-name drugs’ list prices again grew at mid-single-digit rates. However, net prices dropped for an unprecedented sixth consecutive year. What’s more, after adjusting for overall inflation, brand-name drug net prices plunged by more than 7%. Details below.

Employers, health plans, and PBMs determine whether patients share in this ongoing deflation. Meanwhile, these data challenge drug pricing flat earthers (#DPFE) who remain committed to a false narrative of “skyrocketing” drug prices.

As I discuss below, manufacturers will face ongoing pressure on net prices from both commercial and government payers. They will also have new incentives to limit growth in list prices—and will even reduce list prices on certain drugs (as some are already doing).

Perhaps these factors will finally start to deflate the gross-to-bubble and reduce its negative effect on patients and public policy discussions. Hope has to triumph over experience eventually, doesn’t it?

Vertical Integration Lessons: The Economics and Strategies of Hospital-Owned Specialty Pharmacies (rerun)

This week, I’m rerunning some popular posts while I prepare for tomorrow’s live video webinar: Drug Channel Implications of the Inflation Reduction Act.

For updated data on hospital-owned specialty pharmacies, see Chapter 3 of DCI's new 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Click here to see the original post from November 2023.

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As many of you know, hospitals and health systems have emerged as significant participants in the specialty pharmacy industry. A new American Society of Hospital Pharmacists (ASHP) survey provides fresh insights into these specialty pharmacies.

Below, I review key findings on the economics and operations of these specialty pharmacies. I then highlight how hospitals steer prescriptions to their internal specialty pharmacies.

As you’ll see, hospitals use network strategies that would make any pharmacy benefit manager (PBM) proud—especially when combined with the prescribing activities of hospital-employed physicians.

Vertical integration among insurers, PBMs, specialty pharmacies, and providers within U.S. drug channels gets most of the attention. But a parallel vertical integration has been occurring among hospitals, specialty pharmacies, and physicians. Manufacturers and payers must adapt to the growing power and market tactics of hospital-owned specialty pharmacies.

The Big Three PBMs’ 2024 Formulary Exclusions: Biosimilar Humira Battles, CVS Health’s Weird Strategy, and the Insulin Shakeup (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s live video webinar: Drug Channel Implications of the Inflation Reduction Act.

The 2024 formularies described below should boost biosimilar adoption. As a new Biosimilar Council report shows, Humira retained 99% of market share in late 2023, despite being more expensive than its biosimilars.

Click here to see the original post from January 2024.

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For 2024, the three largest pharmacy benefit managers (PBMs)—Caremark (CVS Health), Express Scripts (Cigna), and OptumRx (United Health Group)—have again each excluded 600 or more drugs from their standard formularies. You can find our updated counting below.

This year, Humira and its 14 biosimilars will provide the most intriguing formulary drama. Unfortunately, the gross-to-net bubble will remain a fixture for this category, despite a price war led by almost half of the biosimilars. CVS Health will lean into the craziness with an unusual Humira strategy.*

There are also unusual formulary developments for insulin products, many of which experienced massive list price cuts for 2024.

Read on for my deep dive into these two therapeutic categories. I also highlight recent research that raises troubling questions about the patient impact of these ever-growing exclusion lists. As always, I welcome your comments below or on LinkedIn.

What CVS Pharmacy’s New Cost-Plus Reimbursement Approach Means for PBMs, Pharmacies, Plan Sponsors, and Prescription Prices (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s live video webinar: Drug Channel Implications of the Inflation Reduction Act.

For more on acquisition cost reimbursement for pharmacies, see Sections 8.4. and 12.3.4. of our new 2024 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Click here to see the original post from December 2023.

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Is the world ready for new ways to price pharmacy and pharmacy benefit manager (PBM) services? CVS Health thinks so, as evidenced by two new initiatives that it announced yesterday. Below you'll find details and links to source documents.

I commend CVS Health for attempting to address key economic challenges facing the retail pharmacy industry and for tackling the hidden complexities of PBM pricing models. As I explain, a shift to cost-based pharmacy reimbursement could stabilize CVS Health’s retail business by improving its dispensing profits.

Nonetheless, CVS Pharmacy’s cost-plus model has some notable shortcomings for plan sponsors and is far less “disruptive” than the company would like us to believe. Mark Cuban should be flattered—but not fearful.

What's more, other large pharmacies will likely follow CVS with attempts to force payers and PBMs to accept some form of cost-plus reimbursement. (Et tu, Walgreens?) If that happens, expect higher prescriptions prices, less efficiency, and a slowdown in the inevitable retail pharmacy shakeout.

Understanding CVS Health/McKesson and Why Pharmacies Lose Money on GLP-1s (rerun)

This week, I’m rerunning some popular posts while I prepare for Friday’s live video webinar: Drug Channel Implications of the Inflation Reduction Act.

Click here to see the original post from December 2023.

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Consider two apparently unrelated drug channel anomalies:

• In McKesson’s 2023 fiscal year, CVS bought $75 billion in pharmaceuticals from McKesson’s wholesale business—a jump of more than 35% compared with the previous year.

• Despite skyrocketing sales for anti-obesity GLP-1 drugs, many retail pharmacies are losing money on every prescription.

The common factor behind these two disparate situations: Pharmaceutical wholesalers’ unusual pricing for brand-name drugs sold to pharmacies, hospitals, and other buyers. Below, I walk through the economic fundamentals to help you understand another obscure aspect of our opaque drug pricing system.

This morning’s announcement of CVS Health’s CostVantage pharmacy reimbursement model reflects the latest attempt to fix the system’s wacky economics. Tomorrow on Drug Channels, I’ll delve into the pros and cons of this new approach.