Monday, September 25, 2017

Pfizer Files Lawsuit Against J&J, Claiming Anticompetitive Practices

Source: Pink Sheet Pharma Intelligence
Pfizer filed suit against Johnson & Johnson (J&J) on Wednesday for allegedly using anticompetitive practices to prevent less expensive versions of its rheumatoid arthritis (RA) drug to thrive in the budding biosimilar market.

J&J has sold the injectable biologic Remicade for nearly 2 decades, generating $4.8 billion in US sales last year alone. This injectable biologic drug is widely used to treat RA, Crohn’s disease, and other inflammatory disorders, according to the Chicago Tribune.

Pfizer’s Inflectra was the second biosimilar to receive FDA approval.

If Pfizer wins the case against J&J, it could pave a new path that would discourage brand name companies from cutting deals with insurers to limit competition in the biosimilar marketplace, according to the Chicago Tribune. However, if J&J comes out on top it could continue to fuel strategies that thwart competition, according to the article.

Tyrone's comment:  While this is a first in the biologics industry, these types of lawsuits (generic vs brand manufacturers) are not uncommon. It's a clear indication biosimilars are a serious threat to brand competitors and will soon come to market in mass. J&J knows the future of biotech includes biosimilars so they are delaying the inevitable in an attempt to hold on to the cash cow for as long as possible. Because cost will eventually come down as a result of these lawsuits and innovation, this is a good thing for self-funded plan sponsors - stay tuned.

“This is the first lawsuit that is challenging anti-competitive behavior in the biologics industry, and that is very important because this is the wave of the future––this is where a lot of the innovation is taking place today,” Michael Carrier, law professor at Rutgers Law School, told the Chicago Tribune. “It really is an uncharted path, in terms of what competition should look like going forward.”

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Thursday, September 21, 2017

Reference Pricing: "Gross" Invoice Cost for Popular Generic and Brand Prescription Drugs (Volume 185)

This document is updated weekly, but why is it important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to health care reform. 

The costs shared here are what the pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to actual acquisition costs or AAC. Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

How to Determine if Your Company [or Client] is Overpaying

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Monday, September 18, 2017

AbbVie’s Mavyret Drug Pricing: Disruptive to the Pharmacy Benefit Manager Business Model

AbbVie’s pricing for its new Hepatitis C Virus drug Mavyret is disruptive to the current PBM business model because it forces the Big 3 PBMs to consider a drug for inclusion in their national formularies that is aligned with their clients interests — more cost-effective than Harvoni — but not aligned with their own interest of needing to squeeze out all the rebates they can from specialty drugs included in their formularies.

Will PBMs open up the HCV therapeutic class and add Mavyret? Or, will they expose themselves to claims of misalignment by excluding AbbVie’s Mavyret? Stay tuned.

The PBM Business Model Today

The management of the prescription (Rx) drug benefit portion of health care plans has become the domain of contracted specialists called pharmacy benefit managers (PBMs). The three largest, independent PBMs — Express Scripts, CVS Health,  and Optum Rx, (known as “The Big 3”) control 73% of the total Rx claims processed the United States in 2015.

Since the early 2000s, PBMs have continually come under attack for not acting in the best interest of their clients.  We have written a number of papers since 2004 pinpointing an opaque reseller business model as the source of this misalignment.

In a 2017 paper, we presented the case that there have been 3 distinct phases of the PBM business model over the past 15 years demarcated by radical shifts in the primary source of gross profits (graph below):

 up to 2005 — reliance on retained rebates from small molecule brand drugs;
 2005 – 2010 — reliance on mail order generics Rx margins;
 2010 – today — reliance on retained rebates from specialty drugs.

Source: Abrams papers on Medco to 2007, estimates thereafter
To compensate for declining mail order generics Rx margins after 2010, PBMs saw the rising trend of specialty and biotech drugs as a promising basis for a renewed reliance on retained rebates. But there are several constraints today on a PBM business model relying on retained rebates from specialty drugs.

The first constraint in that the specialty drug Rx volume “basis” for collecting rebates today is a lot less than it was ten years ago when small molecule drugs were the basis for rebates. The second constraint is a newfound awareness by clients that retained rebate dollars can be substantial yet an opaque source of PBM gross profits.

As a defensive move, CVS Health finally declared publicly on their website that, “CVS Caremark was able to reduce trend for clients through… negotiations of rebates, of which more than 90 percent are passed back to clients.” 

The problem facing PBMs today is how to derive a majority of gross profits from specialty Rx while maintaining a transparent rebate retention rate of 10% on average. Using data supplied by the drug company Merck, we reconstructed a step-by-step sequence of how PBMs and drug companies might negotiate the parameters of a rebate deal under the triple constraints of:

(1) Pharma’s net prices must grow;
(2) PBMs retained rebate gross profit DOLLARS must grow; and
(3) PBM rebate retention rate must be fixed at 10%.

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Friday, September 15, 2017

Insurers cutting back on drug coupons amid concerns over consumer costs

With many drug prices rising, consumers often pull out coupons or discount cards from drugmakers to save money when they buy medications at pharmacies.

But some insurers, including in Illinois, are limiting how those discounts may be applied amid concerns they’re driving up health care costs for everyone. Curbing the coupons could mean more money out of consumers’ pockets in the short term, but in the long run could also help hold down drug prices and health care costs, say critics of the cards and coupons.

Ex. Drug Coupon
Blue Cross and Blue Shield of Illinois told its members with individual plans this year they can still take advantage of the discounts, but they won’t get credit toward their deductibles or out-of-pocket maximums. Cigna only allows coupons to be used for specialty drugs — medications used to treat rare or complex conditions. UnitedHealthcare and Aetna declined to comment on their policies on the discounts.

A number of experts and advocates for lower drug prices applaud any actions aimed at stemming the use of copay cards and coupons, which are available online, through the mail or from doctors.

Tyrone's comment: I'm not one of those individuals who doesn't like drug coupons. However, I do agree that patients should not be rewarded by having coupon amounts applied to their deductible or MOOP. Let's keep it real, non-fiduciary PBMs and health plans don't like coupons because typically the products with coupons available won't pay rebates which takes away from the revenue they would have earned from those products which do pay rebates. Plan sponsors follow suit because their PBM or carrier says it's a bad thing. If a patient is unable to start or complete specialty drug therapy, due to cost which a coupon may have alleviated, the resulting hospital bill will cost more in the long run. Is it about the patient or not? 

Typically, patients with individual and employer-based plans can use the cards or coupons to save money on their insurance copays for certain prescription medications at the pharmacy. While a coupon can reduce all or part of a patient’s copay, the insurance company still has to pay its full portion for what might be a high-priced drug — a cost that opponents of the discounts say is ultimately passed on to all consumers in the form of higher insurance premiums.

Such discounts made news last year amid outcry over the skyrocketing costs of EpiPens, sold by Mylan. As part of its response to the uproar, Mylan offered $300 savings cards to patients with nongovernment insurance to help lower their out-of-pocket costs. Mylan still faced criticism that the discounts wouldn’t help everyone as much as simply lowering the price would.

“The copay coupons are a scam by the drug companies,” said David Mitchell, president and founder of Patients for Affordable Drugs, a nonprofit that doesn’t take money from drug companies or insurers. “Effectively we wind up, all of us, paying a higher price for our health insurance because they just steered us to a more expensive drug that ultimately gets paid for by someone.”

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