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.

Drug Channels News Roundup, March 2024: My $0.02 of CarelonRx/Kroger & CVS, Provider-Owned Pharmacies, Shady AFPs, 340B Deception, and Lilly’s GLP-1 Ad

It’s finally spring in Philadelphia, home of Drug Channels. Along with sunshine and fine weather, the vernal equinox has ushered in a crop of new and noteworthy stories:

• What the CarelonRx/Kroger specialty pharmacy deal means for CVS Health

• Provider-owned specialty pharmacies expand in Medicare

• Payers are not keen on shady alternative funding programs (AFP)

• Hospitals’ association spreads 340B misinformation

Plus, Lilly trolls our nation’s celebrities.

P.S. Join my nearly 54,000 LinkedIn followers for daily links to neat stuff.

What’s ahead for the drug channel? Find out during Drug Channel Implications of the Inflation Reduction Act, a new live video webinar with Adam J. Fein, PhD. Click here to learn more and reserve your spot at our April 5 webinar.

Drug Channels News Roundup, February 2024: Pharmacy Shakeout Update, High Drug Prices, 340B Realities, MDs vs. Pharmacists, and Foo Fighters

February is longer than usual this year, which means that you’ll have extra time to leap into our monthly curated selection of noteworthy news. In this issue:

• An update on the retail pharmacy shakeout

• Arguing for high drug prices

• A leading researcher provides a 340B reality check

• Physicians don’t want pharmacists getting uppity

Plus, Dave Grohl fights for your right to…have healthcare price transparency?

P.S. Join my nearly 53,000 LinkedIn followers for daily links to neat stuff. You can also find my daily posts at @DrugChannels on Twitter/X, where I have more than 17,400 followers. (I recommend that you follow me on LinkedIn, because the quality of comments and engagement is much higher than they are on Twitter. Sorry, no Threads.)

Drug Channels News Roundup, January 2024: 2024 List Price Surprises, GSK vs. PBMs, Walgreens’ 340B Profits, Gen Z vs. Pharmacy, and PE + Hospitals

Super Bowl LVIII is almost here. Time for some blow-out beer commercials, occasionally interrupted by a football game. In case you haven’t heard, Taylor Swift is dating the brother of Paula’s favorite Eagles player.

But who needs the Super Bowl when you can tackle this month’s selection of notable news stories, intercepted for you from the Drug Channels gridiron:

• Punt: Average list prices are unchanged for 2024

• Trick Play: GSK tussles with PBMs over lower-priced products

• Rush! Senator Cassidy tries to tackle CVS and Walgreens—and I give you a peek at a Walgreens 340B contract

• Offsides: To Gen Z, being a pharmacist is cheugy.

Plus, Dr. Glaucomflecken peeks inside a hospital owned by a private equity firm.

P.S. A big THANK YOU for all the warm wishes and congratulations on DCI’s acquisition by HMP! Check out the wonderful comments on this LinkedIn post. Great things ahead.

Drug Channels News Roundup, December 2023: CVS’s New GPO, Medicaid vs. PBMs, 340B in Part D, and a Rockin’ Ex-CEO

Happy New Year, everyone! It has been another wild year for our ever-evolving healthcare system.

Thank you, dear readers, for welcoming Drug Channels into your inboxes, browsers, and apps. I’m proud of the diverse and thoughtful audience who follows and comments on our unique content. The Drug Channels community now encompasses 50,000+ LinkedIn followers, 25,000+ email subscribers, and 17,000+ Twitter/X followers.

We’ve had a blast bringing you our perspectives and curated links in 2023 and hope that you had fun engaging with it. Stay tuned for some exciting announcements in 2024!

Wishing you and your family health and happiness,
Adam and the Drug Channels team

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In this issue:

• Say hello to AVERON, CVS Health’s latest group purchasing organization

• States continue to carve PBMs out of Medicaid programs

• Seniors and taxpayers fund a growing share of 340B profits

Plus, George Barrett, former CEO of Cardinal Health and current cool dude, re-launches his music career.

EXCLUSIVE: The 340B Program Reached $54 Billion in 2022—Up 22% vs. 2021 (rerun)

This week, I’m rerunning some popular posts while I prepare for today’s Drug Channels Outlook 2024 live video webinar. My topic #9 for 2024: The Battle Over 340B Gets Even Messier.

Click here to see the original post from September 2023.

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Drug Channels has just obtained new details on the size of the 340B Drug Pricing Program. I couldn’t wait to share the news, hence this special Sunday post.

For 2022, discounted purchases under the 340B program reached a record $53.7 billion—an astonishing $9.8 billion (+22.3%) higher than its 2021 counterpart. The difference between list prices and discounted 340B purchases also grew, to $52.3 billion (+$2.6 billion). 

Hospitals accounted for 87% of 340B purchases for 2022. Every 340B covered entity type experienced double-digit growth, despite drug prices that grew more slowly than overall inflation.

Another surprise: HRSA estimated that manufacturers' contract pharmacy restrictions reduced 340B purchases by only $470 million—or less than 1% of 2022's total purchases. That's far below the figure quoted by 340B lobbyists.

Once again, the data demonstrate that 340B advocates are wrong when they claim that manufacturers are “stripping critical resources from the nation’s health care safety net.” As I noted last year, only in the U.S. healthcare system can billions more in payments and spreads be considered a cut.

Read on for full details and analysis, including the opportunity to download your own copy of the raw data from HRSA.

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

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.

Drug Channels News Roundup, October 2023: CVS & Humira Biosimilars, GLP-1 G2N Bubble, 340B Abuses, Rite Aid's Endgame, Mark Cuban Update, and an Epic Meetup

Zoinks! It's time for a super-sized Halloween roundup of wicked Drug Channels’ tales. This month’s tricks and treats:

• Spooky! CVS Health frightens all but one Humira biosimilar maker away from its formulary.

• Creepy! The gross-to-net bubble for anti-obesity GLP-1 drugs walks among us.

• Grotesque! Penn Medicine gorges on the 340B program.

• Vampiric! Rite Aid’s many management missteps finally put a stake in the company’s heart.

• Eerie! Mark Cuban Cost Plus Drug Company conjures a partnership with Alto Pharmacy.

Plus, an epic meetup with two of my favorite drug channel experts.

P.S. For my daily haunting, join the zombie horde who shamble after me on LinkedIn. You can also find my ghostly rantings at @DrugChannels on Twitter/X. (I recommend LinkedIn for maximium scares. Alas, I’m still spooked by Threads.)

EXCLUSIVE: The 340B Program Reached $54 Billion in 2022—Up 22% vs. 2021

Drug Channels has just obtained new details on the size of the 340B Drug Pricing Program. I couldn’t wait to share the news, hence this special Sunday post.

For 2022, discounted purchases under the 340B program reached a record $53.7 billion—an astonishing $9.8 billion (+22.3%) higher than its 2021 counterpart. The difference between list prices and discounted 340B purchases also grew, to $52.3 billion (+$2.6 billion). 

Hospitals accounted for 87% of 340B purchases for 2022. Every 340B covered entity type experienced double-digit growth, despite drug prices that grew more slowly than overall inflation.

Another surprise: HRSA estimated that manufacturers' contract pharmacy restrictions reduced 340B purchases by only $470 million—or less than 1% of 2022's total purchases. That's far below the figure quoted by 340B lobbyists.

Once again, the data demonstrate that 340B advocates are wrong when they claim that manufacturers are “stripping critical resources from the nation’s health care safety net.” As I noted last year, only in the U.S. healthcare system can billions more in payments and spreads be considered a cut.

Read on for full details and analysis, including the opportunity to download your own copy of the raw data from HRSA.

Do Plan Sponsors Understand How Their PBMs Make Money?

Today, the House Committee on Oversight and Accountability will hold a hearing with a subtle and not-at-all pejorative title: The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part II: Not What the Doctor Ordered.

To help you prepare, I share fresh insights from a new survey of PBMs’ plan sponsor clients. As you will see, clients are somewhat more satisfied with the perceived transparency of smaller PBMs. However, satisfaction with transparency of the Big Three PBMs—CVS Caremark, Express Scripts, and OptumRx—is only a smidge behind smaller PBMs.

From my perspective, this counterintuitive result reflects how the PBM profit model has evolved. A plan sponsor can feel satisfied with its larger PBM’s transparency, while remaining blissfully unaware of how its PBM actually earns money. I outline some of these novel profit sources below.

Can plan sponsors get some satisfaction? Read on for what I say.

What I (and Others) Told the Senate about the 340B Drug Pricing Program

Recently, a bipartisan group of six U.S. senators issued a request for information (RFI) for “input on bipartisan policy solutions that would provide stability and appropriate transparency to ensure the 340B program can continue to achieve its original intent of supporting entities serving eligible patients.” Click here to read the full letter.

I submitted a 14-page letter, which you can read below. I shared my $0.02 on the overall market, explained channel distortions from 340B contract pharmacies, and offered some policy recommendations. How could I not?

Click here to read the Drug Channels Institute letter to
Senators Thune, Stabenow, Moore Capito, Baldwin, Moran, and Cardin.

Below, I include links to publicly available comments from a diverse range of stakeholders, including 340B Health, the American Hospital Association, Biotechnology Innovation Organization, Community Oncology Alliance, National Association of Community Health Centers, and Pharmaceutical Research and Manufacturers of America. Enjoy!

EXCLUSIVE: For 2023, Five For-Profit Retailers and PBMs Dominate an Evolving 340B Contract Pharmacy Market

Looks like pharmacy and PBM profiteering within the 340B Drug Pricing Program will never go out of style.

Drug Channels Institute’s (DCI) latest analysis reveals that more than 33,000 pharmacy locations—more than half of the entire U.S. pharmacy industry—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 1,000 locations, which was the slowest growth rate since DCI started tracking this figure more than 10 years ago.

Consistent with our previous research, five multi-billion-dollar, for-profit, publicly traded pharmacy chains and PBMs—CVS Health, Walgreens, Cigna (via Express Scripts), UnitedHealth Group (via OptumRx), and Walmart—account for 75% of all 340B contract pharmacy relationships with covered entities. These contract pharmacy operators’ total estimated gross profits from the 340B program were nearly $3 billion in 2023.

Manufacturers’ contract pharmacy policy changes have slowed profits at pharmacies and PBMs, while triggering change in hospitals’ pharmacy strategies. Read on for my latest effort to pierce these little webs of 340B opacity.

The Inflation Reduction Act: 10 Predictions About Market Access and Drug Channels (rerun)

This week, I’m rerunning some popular posts while I prepare for this Friday’s live video webinar: PBMs and the Battle Over Patient Support Funds: Accumulators, Maximizers, and Alternative Funding.

Click here to see the original post from April 2023.

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Like it or not, the Centers for Medicare & Medicaid Services (CMS) is barreling ahead with its implementation of the Inflation Reduction Act of 2022 (IRA). Last Friday was the last day to submit comments on CMS's initial guidance on the drug price negotiation program.

The IRA will alter many crucial aspects of the Medicare program and the overall drug channel. To help you anticipate what’s ahead, below I highlight 10 predictions on how the IRA will impact drug prices, demand for prescription drugs, Part D plan strategies, rebates, manufacturers’ revenues, retail pharmacies, and more.

While this is a longer-than usual post, I can still only barely scratch the surface of the many far-reaching effects of this legislation. As always, I encourage you to share your own thoughts in the comments below or on social media.

Drug Channels News Roundup, May 2023: 340B Shame, OptumRx vs. Humira Biosimilars, ICER on White Bagging, Hospitals vs. Taxes, and Dr. G

Summer unofficially began over the weekend. Check out these noteworthy delicacies, seared to perfection on the Drug Channels grill:

• Fresh evidence of 340B abuses by hospitals and contract pharmacies

• OptumRx rewrites its biosimilar Humira strategy

• ICER discovers channel markups

• Tax-exempt hospitals are not holding up their end of the bargain

Plus, Dr. Glaucomflecken helps you pick an insurance plan!

P.S. Join my more than 41,000 LinkedIn followers for daily links to neat stuff. You can also find my daily posts at @DrugChannels on Twitter, where I have more than 16,400 followers. (I recommend that you follow me on LinkedIn, because the quality of comments is much higher than they are on Twitter.)

Speaking of PBMs, be sure to join me for my new live video webinar, PBMs and the Battle Over Patient Support Funds: Accumulators, Maximizers, and Alternative Funding, on June 23, 2023, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

The Inflation Reduction Act: 10 Predictions About Market Access and Drug Channels

Like it or not, the Centers for Medicare & Medicaid Services (CMS) is barreling ahead with its implementation of the Inflation Reduction Act of 2022 (IRA). Last Friday was the last day to submit comments on CMS's initial guidance on the drug price negotiation program.

The IRA will alter many crucial aspects of the Medicare program and the overall drug channel. To help you anticipate what’s ahead, below I highlight 10 predictions on how the IRA will impact drug prices, demand for prescription drugs, Part D plan strategies, rebates, manufacturers’ revenues, retail pharmacies, and more.

While this is a longer-than usual post, I can still only barely scratch the surface of the many far-reaching effects of this legislation. As always, I encourage you to share your own thoughts in the comments below or on social media.

Drug Channels News Roundup, March 2023: My $0.02 on Insulin Price Cuts, AbbVie vs. AFPs, Optum Expands, ASAP340B, and Hooray for Pharmacists

Spring is here in sunny downtown Philadelphia, worldwide headquarters of Drug Channels. The vernal equinox has brought us an unexpected bounty of noteworthy news:

• Thoughts on the recent insulin price cuts by Lilly, Novo, and Sanofi

• AbbVie gets tougher on alternative funding programs

• Optum quietly adds a new drug channel role

• A novel partnership emerges to modernize the 340B program

Plus, a celebration of pharmacists’ activities during the COVID-19 pandemic.

P.S. Join my more than 38,000 LinkedIn followers for daily links to neat stuff. You can also find my daily posts at @DrugChannels on Twitter, where I have more than 16,000 followers.

Join me for my new live video webinar, Discount Cards, Cost-Plus Pharmacies, and PBMs: Trends, Controversies, and Outlook, on March 31, 2023, from 12:00 p.m. to 1:30 p.m. ET. Click here to learn more and sign up.

Drug Channels News Roundup, February 2023: Mark Cuban vs. PBMs, MDs on Humira Biosimilars, States vs. PBMs, 340B Transparency, and Health Insurer Humor (?)

The era of artificial-intelligence chatbots has arrived! I am pleased to report that this month’s Drug Channels news roundup was most definitely not written by ChatGPT. No promises about future articles. (See our forecast to the right.)

In this issue:

• Mark Cuban explains his anti-PBM strategy

• What physicians think about Humira biosimilars

• States go after PBMs

• HHS is confused about 340B transparency

Plus, The Onion tests your knowledge of United Healthcare’s policies.

P.S. Join my nearly 38,000 LinkedIn followers for daily links to neat stuff. You can also find my daily posts at @DrugChannels on Twitter, where I have nearly 16,000 followers.

Drug Channels News Roundup, January 2023: My $0.02 on Amazon & OptumRx, PBMs vs. AFPs, WSJ on 340B, Accumulators & Maximizers, and Tipping Culture

Here at our worldwide headquarters in Philadelphia, Eagles Super Bowl fever has landed. The police are already getting extra Crisco for the light poles. (Yes, really.)

Before you start training to gorge at your game day party, tackle this month’s selection of notable news stories, intercepted for you from the Drug Channels gridiron:

• Offsides: My $0.02 on the latest moves by Amazon and OptumRx

• Trick play: OptumRx attacks alternative funding programs

• Offensive line: Shocking Wall Street Journal expose of 340B abuses

• Touchdown! Accumulators and maximizers go mainstream

Plus, tipping culture comes to healthcare.

P.S. Join the nearly 37,000 people who run after me on LinkedIn. You can also chase me at @DrugChannels on Twitter. Every day, I tackle links to neat stuff for you.

Drug Channels News Roundup, December 2022: Vertical Integration Updated, Walgreens vs. Pharmacy, Cash-Pay Rx, Curing 340B, and Deductible Season

Whew. It was quite a year—one filled with big deals, big news, and big legislation.

Drug Channels also had a big 2022. We now have 35,000 LinkedIn followers, almost 25,000 email subscribers, and nearly 16,000 Twitter followers.

Thank you, dear readers, for welcoming me into your inboxes and browsers each week. I’ve had a blast writing Drug Channels and hope that you had fun reading it.

Wishing you and your family health and happiness,
Adam

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Ring in 2023 with our final news roundup of the year:

• A vertical integration update

• Walgreens backs away from prescriptions

• Meet a cash-pay pharmacy that’s not owned by a billionaire

• Time to cure or kill 340B?

Plus, Dr. Glaucomflecken helps you celebrate “I met my deductible” season!

The 340B Program Climbed to $44 Billion in 2021—With Hospitals Grabbing Most of the Money (rerun)

This week, I’m rerunning some popular posts while I prepare for today’s live video webinar: Drug Channels Outlook 2023.

ICYMI, the Health Resources and Services Administration (HRSA) finally got tired of my Freedom of Information Act (FOIA) requests. Shortly after I published the article below, HRSA posted public data about 340B covered entity purchases on its website. Alas, HRSA neglected to post any historical data. Fortunately, my 2022 FOIA efforts (described below) extracted purchases by 340B covered entity type for 2015 through 2021.

Click here to see the original post and comments from August 2022.

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Here’s a summer surprise for fans of the 340B Drug Pricing Program: Drug Channels has just obtained the 2021 figures from the Health Resources and Services Administration (HRSA)! Even better, my Freedom of Information Act (FOIA) request was able to pry out detailed purchases by covered entity type.

The data tell a familiar story. For 2021, discounted purchases under the 340B program reached a record $43.9 billion—an astonishing $5.9 billion (+15.6%) higher than its 2020 counterpart. Hospitals accounted for 87% of these skyrocketing 340B purchases.

What’s more, the difference between list prices and discounted 340B purchases also grew, to $49.7 billion (+$7.0 billion). This figure approximates the money collected by 340B covered entities.

340B advocates have been screaming that “drug companies are cutting 340B,” but the data tell a very different story. Only in the U.S. healthcare system can billions more in payments and spreads be considered a cut.

Read on for full details and analysis, including the opportunity to download your very own copy of the raw data from HRSA.