Blame Pharmacy Benefit Managers (Not Pharma) For Driving The Gross to Net Drug Price Bubble

Summary: We start with a review of the history of the opaque pharmacy benefit manager (PBM) reseller business model. We present our prior estimates of the distribution of PBM gross profits over the past decade showing that they have become dependent today on retained rebates from specialty drugs. Next, we present numbers showing how PBMs …

Quantifying a Pharmacy Benefit Manager (PBM) Fee-For-Service Business Model

Downloadable .pdf version: Quantifying a PBM FFS Business Model Summary: Using CVS’s 2018 10-K reports to the SEC and its 2018 Drug Trend Report, we convert its PBM segment (a.k.a. Caremark) reseller gross profits business model to a single transparent fee-for-service expressed in terms of dollars per member per year (PMPY).   The following table …

CVS’s 2019 Formulary Removals – Negligent Handling Diabetes Test Strip Change

Summary Around the first week in August for the past four years, CVS has made an official announcement of its next year’s formulary changes. It posts these changes on its own websites. But that changed in 2018. During an August 8th 3Q2018 Earning Conference Call,  CVS said that 2019 formulary details would be available around …

The Problem with CVS’s “Guaranteed Net Cost” PBM Business Model

Summary: Consider this meta:  CVS opaquely is substituting one opaque source of gross profits — guaranteed net cost markup — for another opaque source — retained rebates. The pharmacy benefit manager (PBM) CVS Caremark has offered its self-insured corporate clients an alternative business model called “Guaranteed Net Cost”.  The pricing scheme features 100% pass-through of …

Was CVS’s Formulary Exclusion of Mavyret a Violation of Antitrust Laws?

Summary In October 2017, CVS Caremark (CVS) finally decided to exclude from its 2018 drug formulary the new-to-market Hepatitis C Virus (HCV) drug Mavyret despite it being list priced aggressively by its manufacturer AbbVie at an estimated 72% below the list price of Gilead Sciences’ incumbent HCV drug Harvoni. We estimate that Gilead Sciences had …

Hepatitis C Formulary Choices for 2018: Will CVS Risk Looking Bad?

Summary: AbbVie’s aggressive list pricing for its new Hepatitis C Virus (HCV) drug Mavyret is disruptive to the current PBM business model.  It essentially asks PBMs to align with client interests by adding a cost-effective drug to their national formularies despite little to no possibility for retained rebates. On September 15, 2017 Express Scripts (ESRX) …

Pharmacy Benefit Managers

CURRENT PAPERS ON PBMs A Position Auction Demonstration Project for Lowering Reference + Biosimilar Rx Drug Prices in Medicare Part B  (8/19) Off-Target: Pelosi’s Binding Arbitration Proposal to Reduce Medicare Part D Drug Prices (04/19) Quantifying a Pharmacy Benefit Manager (PBM) Fee-For-Service Business Model   (03/19) CVS’s Negligent Handling of Its 2019 Formulary Change In Coverage …

Preferred Provider Pharmacy Networks

PREFERRED PROVIDER PHARMACY NETWORKS The CVS-Caremark Merger and the Coming Preferred Provider War (12/06) Medicare Part D and Preferred Provider Pharmacy (04/05) The CVS-Caremark Merger: The Creation of an Elasticity of Demand for Retail Rx (11/06) Contrary to What Wall Street and the FTC Say, The PBM Business Model is Misaligned (11/05) Sins of Omission’: …

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