Novo’s Latest Move Shines More Light on How It's Structuring ‘Pharm to Table’

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INFLECTION POINT/ Novo Expands Its “Pharm to Table” Approach (Kind Of)

I made a big deal a couple of weeks ago about the rise of the “pharm to table” movement,** but I made clear that not all efforts were equivalent. Lilly’s LillyDirect seems like the most built-out, aiming for a seamless experience from intention to injection. 

I wasn’t quite sure what Novo Nordisk, the latest “pharm to table” player, was up to. They said a couple of weeks ago that they were launching a cash-pay option through its NovoCare pharmacy, but it was restrictive: Like copay assistance, the deal didn’t apply to those with government insurance (an issue for Medicare beneficiaries, mostly, given the Medicare is barred from covering medicines for weight loss). 

Yesterday, there were more hints that Novo’s effort is indeed just a gussied-up copay assistance card. The company announced that its cash-pay price was now available at all pharmacies, but the whole deal would be run through the Wegovy Savings Card. 

I want to be clear here. This is a good thing. The deal that Novo is offering through the savings card is a lot better than the deal they were offering a week ago. ($499 vs. $650). 

Still … there’s a lot less flexibility than a true LillyDirect-style implementation. If you’re unlucky enough to be in a plan with a copay accumulator or maximizers, you can’t use the card, in addition to the Medicare restrictions. 

I’m fascinated by what could be built here, both in terms of new supply-chain plumbing to allow different ways of paying for meds/getting them to patients, as well as the prospect of building a more compelling relationship with the patient as the customer. 

Because one of the wildest things about the health care system is that almost no one considers the patient as the “customer.” 

And that’s the real transformative potential of pharm to table.  

** Halle Tecco gets credit for the wordsmanship. 

THE ARC/ New Paper Suggests Launch Prices Be Taken With a Grain of Salt

I feel seen, and I’m worried. 

As you all know, one of my big projects with Tufts CEVR is quantifying launch prices and how they are communicated. 

So I got real nervous yesterday when three economists I respect -- Mel Whittington, Lou Garrison, and Jon Campbell -- pushed out an AJMC commentary that cautions against taking list prices too seriously at launch.

The paper is designed to get people to think twice before they compare a launch price to the result of a cost-effectiveness analysis (think ICER or the like).  

The AJMC piece offers four warnings: 

1. Launch prices are list prices, and list prices are kind of meaningless 

2. Cost-effectiveness analyses generally don’t capture the full scope of a medicine’s value

3. Cost-effectiveness analyses generally don’t account for future price drops (e.g. genericization, etc.)

4. Cost-effectiveness thresholds are in the eye of the beholder

These are not unimportant points, but #2, #3, and #4 come down to broad critiques about CEAs generally. They’re not bad arguments. They’re just not necessarily unique to this particular use case. 

But concern #1 caught my eye, and it’s one that’s worth amplifying. The list price at launch is not the eventual net price, though it’s hard to asses exactly what the net price will end up being. 

That’s not a reason to ignore the list price, but Whittington, Garrison, and Campbell’s point is well-taken: The launch price should be put into some context but generally is not. 

Companies will often include the caveat that the launch price doesn’t include price concessions, but industry can do an even better job. We know, straight off the hop, that Medicaid sales of pretty much all drugs will have a haircut of at least 23.1% at launch. Ditto for meds sold through the 340B channel. 

Being explicit about the existence of those statutory discounts can’t hurt, even if it doesn’t deliver the exact net price. 

Prices at launch are a unique opportunity for education, perhaps the best opportunity in the lifecycle of any medicine. How companies talk about that price will be, by necessity, imprecise. But talking, even with all that imprecision, is markedly better than the alternative. 

QUICK TURNS/ 340B, Health Benefits Lawsuits, and MFN/IRP

• International reference pricing/most-favored nation is a lousy approach to regulating U.S. prices for a whole host of reasons. But it’s also a lousy approach because it’s impossible to implement without ending up in a web of international laws and norms. Sally Pipes lays out those specifics well in forbes.com.

• Well, the lawsuits designed to force employers to not select health plans with grossly excessive generic drug costs are not going great. Yesterday, a federal judge tossed the case against Wells Fargo. I don’t think this story is over, though. For background, Bloomberg Law published a well-thought-out (but poorly timed!) overview yesterday.

• Employers are down with the idea of health-technology assessments, per some thoughtful quotes from the National Alliance’s Shawn Gremminger in this Inside Health Policy story: “We're not able to directly negotiate the price of our drugs, right? The PBMs are doing it and they're doing it based on a rebate model that's totally broken. So, all ICER does is it gives us some visibility into ‘Do we feel like this drug is actually high value or not?’”

• It’s a day that ends in “Y,” so there is 340B news: The Senate 340B working group -- this is the gang that kept failing to produce a fully formed bill last year -- has three new members: Sens. Tim Kaine, Markwayne Mullin, and John Hickenlooper. Not sure what that means, but I don’t think that it’s wise to assume that we’ll suddenly have thoughtful solutions.

• So much in life is timing. I would have loved to have seen this JAMA paper, from Inma Hernandez, Mark Fendrick, and colleagues, like two months ago. It quantified the savings from the proposed Biden-era pilot that would have brought the out-of-pocket price of many generic drugs to $2. Turns out, that would have created modest but real savings.
  
  Of course, that program was shelved earlier in the month by the Trump administration. Now it will live on mostly as a partisan talking point.

• It’s easy to get down on the dim commercial prospects for cell and gene therapy, but this defense of the technology -- and the business prospects! -- is rousing. It’s from the CEO of the Alliance for Regenerative Medicine and his job is to be rosy … but it’s still a compelling take. 

• The death of retail pharmacy is my #1 health policy megatrend, and this Seattle Times article tells the tale well. But the piece also unveils one of the trends behind the megatrend: The role 340B plays in picking winners and losers. Because at least two of the survivor pharmacies in the Seattle Times story were associated with 340B providers. As always, I’m not casting stones at those providers. Just pointing out the connection.

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].