Weekend update

As previously noted, Congress is out of town until September 5.

Becker’s Hospital Review updates us on the five largest publicly traded health insurance carriers’ second quarter 2017 financial reports. Here’s a link to not-for-profit Kaiser Permanente’s report on its second quarter earnings.

Drug Channels tells us about the large prescription benefit managers recent announcements of their 2018 formulary changes.

The Wall Street Journal had three illuminating articles on the prescription drug market over the past couple of days:

  • On Friday, the Journal reported that 

AbbVie announced Thursday [August 2] it has received Food and Drug Administration approval to sell its next generation hepatitis C drug, Mavyret.  AbbVie said in a statement that up to 95% of hepatitis C patients in the U.S. will be eligible to take Mavyret. The drug will cost $26,400 for a standard course of treatment before rebates and discounts. That’s well below the list price of older drugs from AbbVie, Merck & Co. and Gilead Sciences .   Most treatments currently on the market require 12 weeks of treatment, but AbbVie expects most patients will be able to finish treatment with Mavyret in eight weeks.

  • Also on Friday, the Journal reported that 

U.S. generic-drug prices are falling at the fastest rate in years, eating into the profits of pharmaceutical wholesalers and manufacturers alike and erasing billions of dollars of their market value in recent days.
The three largest U.S. drug wholesalers, which warehouse and distribute some $400 billion of pharmaceuticals annually, have been competing aggressively to win business among independently owned pharmacies, largely by agreeing to cut prices on generics. In turn, the wholesalers are squeezing drugmakers for better prices.
The trend has been good for the employers and government programs that ultimately pay for drugs, and for independently owned pharmacies, the mom-and-pop operators that compete with national chains. But it is taking a hard toll on wholesalers and generic-drug makers.

  •  Today, the Journal reported that the Epipen remains dominant in a now competitive market. 

[M]ore than seven months after the introduction of the generic, the more expensive brand-name EpiPen still accounts for more than one-quarter of the market, according to Bernstein Research, even though a brand-name drug’s sales usually shrink significantly after low-cost competition arrives.
One reason, according to multiple people familiar with the drug industry, is that a middleman can profit from the sale of pricier medicines, such as EpiPen. In the murky world of the U.S. drug-supply chain, higher prices can mean a bigger piece of the pie for middlemen such as pharmacy-benefit managers. There is no way to know exactly how much, however, because the amount a PBM makes is laid out in confidential contracts.

The articles illustrate that a competitive presciption drug market exists in the U.S.  Bear in mind that most prescriptions are for generic drugs and that OPM requires that the nationwide FEHB plans and other experience rated plans use fully transparent pricing — all of the rebates go back to the plan’s reserves held in the U.S. Treasury. So the Epipen problem does not impact the FEHBP by and large.