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- A Big PBM Says the Price of Drugs Is Accelerating (But Other Industry Data Points in the Opposite Direction)
A Big PBM Says the Price of Drugs Is Accelerating (But Other Industry Data Points in the Opposite Direction)
Plus some links on tariffs and a new study that looks at 340B margins

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INFLECTION POINT/ Evernorth Drops Data Showing Prices Are Rising
Once upon a time, Express Scripts/Evernorth used to put out an annual report on drug trends. It was a treasure trove, and it generally supported a pharma talking point: net drug prices weren’t rising that quickly.
It was one of those numbers that worked for Express Scripts, too. It was proof that they were negotiating hard and keeping prices down. One coin, two sides.
But then, in 2022, Express Scripts stopped publishing the report. I don’t know why, but I suspect that the numbers weren’t supporting its narrative, so it turned down the transparency.
And now: the Drug Trend Report is back (now called Pharmacy in Focus)**. Conspiratorial types will note that the numbers now support PBM talking points more cleanly, so there is a lot more benefit to talking about them. Much of the report focuses on GLP-1s and is well worth the read, but I’m focused on the topline, which looks like this:
The takeaway is clear: Cost, not just volume, is up.
It’s not entirely clear to me why this is happening so dramatically all of a sudden. Much of the data, including recent SSR numbers that Ed Silverman at STAT highlighted yesterday, suggests net prices remain under control, so the Evernorth spike is a bit weird.
My assumption would have that the total trend -- the increase in overall spending -- might have spiked in conjunction with GLP-1 utilization (not price), but these numbers suggest something else.
Here’s where Evernorth places the blame:
Several factors contribute to rising unit costs, including demand, inflation in raw material and manufacturing costs, supply chain disruptions, health care policies, reimbursement structures, and rising research and development (R&D) expenses. For consumers, this translates into significant affordability and accessibility challenges, with the median list price of a new drug reaching $300,000 in 2023. Another key factor of this spending volatility is the accelerating pace of pharmaceutical innovation, which indirectly influences costs.
Again, there aren’t giant spikes in list or net prices appearing in other datasets, so much of this explanation doesn’t exactly fall into a clear trend. But, certainly, a shift from lower-priced to higher-priced drugs -- accelerated by higher-priced launch medicines -- could account for some of the phenomenon.
Regardless, it’s a fascinating disclosure, and I’ll share hot takes as I see them. (I look forward to yours!)
** Hat tip to Adam Fein for spotting this.
QUICK TURNS/ Tariffs, IRA+RWE, and -- Of Course -- an Item on 340B Margins
So you know, there’s been a lot of chatter about pharma tariffs lately. I fear I don’t have the time or the mental capacity to be comprehensive, but it feels uncomfortable to not acknowledge that it’s happening, especially when the investment community is beginning to freak out about M&A and the like.
If this is your jam, you should probably keep an eye on Max Bayer at Endpoints, who had a nice scene-setting piece on Monday and the findings of a BIO survey on tariffs this morning.
One of my evergreen complaints about the way the IRA was written and implemented is that there are very few standards for anything. So this Health Affairs Scholar paper by Sean Tunis and team made me pretty happy. It suggests some incredibly practical ways -- including a detailed checklist -- that CMS can incorporate real-world evidence. Here’s hoping someone over at CMS is tracking on the work.
This Deloitte report is super-interesting to me, illustrating a number of drug development truths: The return on pipeline investme is still good, but it costs more and takes longer than it used to to get a medicine over the finish line. We’re clearly not Warp Speeding.
Drones are a cost-effective way to deliver vaccines. That’s it. That’s the whole item. I just think it’s cool.
Eisai cut their projections for 2027 Leqembi sales in half, give or take, per this Endpoints piece. My point is not to comment on the Alzheimer’s market but rather to remind everyone that CMS totally botched its estimate of Leqembi sales. As a general rule, be very cautious about payers claiming that some new intervention will instantly break the bank. Though there are rare exceptions, hysteria is much more common than disaster.
I saved the 340B item for the very end, because I know some of you were just waiting to see if I go could go a whole edition without talking about 340B. (I couldn’t.)
This NPC data, published in the journal Inquiry, characterizes the variation in 340B margin across a number of variables. Turns out that 340B providers in wealthier areas -- and places with less competition -- tend to have the biggest 340B margins. I don’t think that’s necessarily surprising, but it’s a reminder of the economic incentives at play.
Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations.
To learn more about how Reid Strategic can help you, email Brian Reid at [email protected].