There Are Eye-Popping New 340B Numbers Out from Drug Channels

I would love to write pages and pages about the trove of 340B data that Adam Fein dropped over the weekend, but if you really care about the issue, you should click over there and read it yourself. I can’t do it justice here.

That said, there were three numbers that jumped out at me.

The first is the obvious one: the 340B program is growing really fast. To see 340B purchases up by 22% (to an astonishing $53.7 billion) is really something else. It implies that covered entities (78% of which are disproportionate share hospitals) are essentially receiving tens of billions of dollars in mandated giveaways, and we really have no idea where those billions are going. Certainly, patients don’t seem to be feeling the relief.

Second is that the pharmaceutical industry’s effort to throw sand in the gears of the 340B machine is not having much of an impact. There are now 26 companies that are, in some ways, restricting 340B purchases, and yet all of that effort has reduced payments by $470 million, or less than 1% of total spending.

Finally, Adam estimates that the 340B discounts account for about 20% of the total gross-to-net spread.

Anyway: read the whole thing, as they say.

Time to veer away from the news flow for a moment to talk about launch prices. Talking about the price of a medicine when it’s approved and launched is a longstanding area of interest. I’m going to get geeky for a sec.

Since starting Reid Strategic, I’ve been amassing some interesting datasets on how companies talk about price at launch and how others in the system -- particularly media -- talk about launch prices. I plan on knitting that together into a report that I’ll publish around J.P. Morgan.

One of the variables that I wanted to track was population size for various medicines. It’s basically established fact that smaller patient populations are correlated with higher prices. That’s what the orphan-drug model is built off of.

That’s not the only variable, of course, but it’s a big one.

So I’ve been interested in estimates of population size. As it turns out, both California and Oregon, as part of their transparency efforts, require companies to disclose the estimated patient population that might be treated by a given drug.

But there is basically zero guidance on how the number should be calculated, so it’s possible to get mammoth numbers -- Pfizer told California that its Zavzpret migraine medicine is aimed at a population of more than 6 million -- as well as very small ones. Chiesi, for example, reported that 120 patients are likely to get its new ultra-orphan med.

The lack of standards is illustrated best by two competitive bispecific antibodies approved this year for essentially the same diffuse large B-cell lymphoma indication.

Genmab, in its filings around its Epkinly drug, said the market is 30,400 patients. Roche/Genentech, in contrast, told California that its DLBCL treatment, Columvi, was aimed at a population more than 100 times smaller: 216 patients.

I’m not suggesting that anyone is playing games here. There are no standards and -- to my knowledge -- no one is using those numbers in any way as a policymaking tool. It’s possible that I’m the only person not employed by Genmab or Roche to have even laid eyes on those figures.

But it is reflective of the limits of transparency. Some poor staffer at each company had to come up with that number to fill out a form, knowing full well that the work would probably go unnoticed. Just because something is public doesn’t mean the public is paying attention.

• Reporters and policy types are beginning to come around to the troubling realization that, all hype aside, there really is no assurance that the IRA’s price controls are going to lower prices for patients. This Insider piece is representative of a theme that I suspect we’ll see a lot more of. “Patients could see some lower out-of-pocket costs, but that's less certain,” KFF’s Juliette Cubanski told the outlet.

• Useful free resource: the top 10 medicines of 2Q23 vs. the top-selling products from a year earlier.

• If you want a gig setting pharmaceutical prices for the U.S. government, you’re in luck. The WSJ looked at the hiring process for the CMS group implementing the IRA.

• Technically, manufacturers of the drugs selected for price controls don’t have to go through the sham “negotiation” process. They can just withdraw entirely from federal health programs (or pay a ridiculously high tax). Bloomberg ran a needlessly long story coming to the fairly obvious conclusion that drugmakers are going to play ball. Not happily. Not without the threat of legal action. But -- yeah -- no one is going to leave Medicare.

• Speaking of Bloomberg, here’s an editorial from the wire service making the point that price controls should be based on a “fair price” linked to cost-effectiveness analysis.

• I noted last week some snafus with the rollout of COVID-19 boosters, now that insurance companies are involved for the first time. It looks like that’s a story with legs.

• I need to re-engage in the policy discussions over a proposed overhaul to the regulation of medicines in Europe so I can put things -- such as this new report that suggests that 45 orphan drugs will be “lost” by 2035 -- into better context.