On Monday, November 13, our colleagues in the Antitrust Section published an alert on the recent FTC workshop, “Understanding Competition in Prescription Drug Markets: Entry and Supply Chain Dynamics.” The workshop, which was held on November 8, 2017, began with two keynote addresses from FTC Acting Chairman Maureen Ohlhausen and FDA Commissioner Dr. Scott Gottlieb. Both speakers focused on the beneficial effects of greater competition on prescription drug prices and signaled that the branded drug manufacturers may be discouraging generic drug manufacturers from entering the market. However, Acting Chairman Ohlhausen stated that any FTC antitrust enforcement actions in this space will be based on the specific facts of a case rather than a broad-based action against particular industry practices.

The alert goes on to summarize the content of each of the four workshop panels:

  • Panel 1: Generic Drug Competition: Understanding Demand, Price and Supply Issues
  • Panel 2: Understanding Intermediaries: Pharmacy Benefit Managers
  • Panel 3: Understanding Intermediaries: Group Purchasing Organizations
  • Panel 4: Potential Next Steps to Encourage Entry and Expand Access Through Lower Prices

Click here to read the full summary of the FTC workshop.

We spend a lot of time covering prescription drug costs on this blog (and here), and even convened a Pharmacy Industry Summit earlier this year focusing on the various pressures that are contributing to higher drug prices. Although Congress has not been sitting on the sidelines of the drug pricing debate – having conducted three separate committee investigations, which included subpoenas of top executives and the most well-known of them, Martin Shkreli, getting booted from the committee room for refusing to answer any questions – Members of Congress are finally beginning to roll out legislation with the end goal of increasing prescription drug competition and decreasing the costs of drugs. Continue Reading Congress Proposes Legislative “Fixes” to Drug Industry Rules Believed to Be Contributing to High Costs

A few months ago, we noted that states were jumping into the drug pricing fray largely driven by a lack of federal action and a rising tide of public discontent. State legislation has taken various forms but most of the proposals reflect industry arguments that rising prices reflect rising R&D costs and would require pharmaceutical companies to either reveal their costs or explain their pricing.

Among the states where drug pricing legislation has been introduced, on June 2nd, Vermont became the first state to actually pass such legislation. The Vermont law requires drug companies to explain price increases on medications identified by state officials for which significant health care dollars are spent and where list prices rose by 50% or more over the previous five year period or 15% or more over a 12 month period.  For these identified medications, drug companies will be required to provide a report to the State Attorney General of “all factors that have contributed to a price increase” and “the role of each factor in contributing to the price increase.” The law does not just target drug companies. It also require health insurers to provide Vermont residents with information about how much they will pay out of pocket for their prescription drugs, and the law contains other price transparency provisions. Continue Reading States Step Up Efforts on Drug Pricing Initiatives

With 2015 coming to a close, we wanted to provide a recap of the major updates impacting the pharmacy industry and what pharmaceutical manufacturers, pharmacy benefit managers (“PBMs”), and pharmacies might expect in 2016.  This past year saw significant changes in the pharmacy industry.  From multiple high-profile mergers changing the PBM landscape, to the recent controversy over drug pricing, the pharmacy industry was in the national spotlight for much of 2015.  Meanwhile, federal and state enforcement continued to focus on pharmaceutical manufacturers, PBMs, and pharmacies.  We also saw the first biosimilar approval in 2015, significant updates to the 340B program, an increased focus on value-based purchasing, and additional state legislation focusing on PBMs.

Industry Consolidation – Changing PBM and Payor Landscape

There was a significant wave of merger activity in the PBM and payor industry in 2015, with pharmacy chains acquiring PBMs and long term pharmacies, as well as mergers among some of the largest payors.  This consolidation has reshaped the traditional PBM industry paradigms with a move away from stand alone PBMs to payor and provider affiliated PBMs.  This consolidation and alignment with payors and providers has been driven by a need to increase negotiating power and create economies of scale in the face of rising drug costs and fewer drug discount opportunities.  In addition, PBMs and payors are looking to adapt to new forms of payment encourage by the Affordable Care Act.  The Affordable Care Act has spurred CMS and private payors to focus on value-based purchasing and pricing.  Entities with integrated payor and provider operations (including expanded access to data critical for analytics) may be in a better position to save costs and compete in the market.

Moving into 2016, it is unclear if this merger frenzy will continue and if we will see additional consolidation among some of the stand-alone PBMs.  Nonetheless, this increased merger activity may lead to more competitive pricing and negotiating power among PBMs, as well as a new focus on the use of contract terms with performance based results. Continue Reading The Pharmacy Industry – 2015 Year In Review