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 …

A Position Auction Demonstration Project to Lower Reference + Biosimilar Drug Prices In Medicare Part B

Summary We outline below a proposal for a Center for Medicare and Medicaid Services (CMS)  demonstration project involving a position auction overlay to the existing reimbursement system for Medicare Part B. What is being auctioned off is a yearly “fail first” position in Medicare Part B.  The auction is limited in scope to therapeutic classes …

Off-Target: The Pelosi Proposal to Lower Medicare Part D Drug Prices  

Summary The purpose of paper is to show that the binding arbitration proposal championed by Speaker of the House Nancy Pelosi to lower Medicare Part D drug prices is off-target. We believe that there three broad categories of drugs where binding arbitration based on some neutral party’s estimate of value is more appropriate than mano-e-mano …

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 …

PBM Startup Papers

PBM STARTUP PAPERS Quantifying a Pharmacy Benefit Manager (PBM) Fee-For-Service Business Model (03/19) IFC Health : An Independent Formulary Company (01 /18) Will Amazon’s Online Pharmacy Display Therapeutic Interchange (12/17) Three Phases of the Pharmacy Benefit Manager Business Model (09/17) The Future of Consumer-Directed Pharmacy Benefits (08/07) Walgreen’s Transparency Issue (11/03)        

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 …

Insulin Drug Price Inflation: Racketeering or Perverse Competition?

  Summary We contend that recent insulin drug price inflation is a case of perverse competition rather than a case of illegal racketeering in violation of the RICO Act.   We will present the case that a now consolidated racketeering RICO lawsuit initiated by the law firm Hagens Berman has inverted the hierarchy of the …

Merck Data Discredits PBM-Sponsored Study of Brand Drug Price Inflation

Summary We present data supplied by the drug company Merck that discredits a study sponsored by the pharmacy benefit manager (PBM) trade association showing no correlation between PBM rebate rates and brand drug price inflation. Introduction The management of the prescription (Rx) drug benefit portion of health care plans has become the domain of contracted …

Three Phases of the Pharmacy Benefit Manager Business Model

We present the case that there has been three distinct phases of the pharmacy benefit manager (PBM) business model over the past 15 years. Each phase has been demarcated by a major shift in the dominant source of gross profits. These radical shifts in the primary source of gross profits in such a short period …

Trumpcare Needs Milton Friedman

Trumpcare has focused exclusively on eliminating mandates, reducing tax credits, and rolling back Medicaid expansion to the working poor. But, the consequences of this are an estimated 24 Million people dropping coverage and huge increases in premiums for those who wish to remain covered. Trumpcare is up for a vote in the House of Representatives and …

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