Posts Tagged "PBMs"

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PBM Pricing Post-AWP – An Estimate of Sustainable Earnings Power

Using Medco (MHS) as a proxy for large PBMs, we show that generic buying margins dominate PBM gross profits; PBMs appear to have sacrificed most (or even all) alternative sources of gross margin, levering the industry’s pricing structure almost completely

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A Detailed Comparison of the AWP Replacements: AMP v. NADAC

This note compares the two drug acquisition cost benchmarks (Average Manufacturer Price or AMP, and National Average Drug Acquisition Cost or NADAC) that CMS intends to make public. NADAC values have not been calculated or published; however because Alabama’s Average

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CMS Starts to (Kind of) Publish AMP – Why This Matters

Generic dispensing (i.e. gross) margins are far higher than branded dispensing margins throughout the drug trades (wholesalers, retailers, and PBMs). In our view this is primarily due to the traditional use of average wholesale price (AWP) as a benchmark for

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CMS Takes Concrete Steps Toward Replacing AWP

On August 4, 2011 CMS hosted a meeting to update external stakeholders on the status of the implementation and roll-out of the national actual acquisition cost (AAC) survey, the existence of which Secretary Sebelius first revealed in a letter to

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ESRX, MHS, and the PBM Bear Case

We update and summarize our PBM bear case in light of ESRX’ bid for MHS Generic dispensing margins (est. $9.01 / Rx) should fall toward brand levels (est. $5.77 / Rx) if average wholesale price (AWP) is replaced by a

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The Thread Holding Generic Dispensing Margins

Plan sponsors’ (e.g. employers’) contracts with PBMs specify how much the sponsor pays for each prescription handled; plan sponsors’ payments to PBMs typically are determined as a function of the average wholesale price (AWP) of each prescription For brand drugs,

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CMS Says AMP is Coming; Acquisition Cost Data Reduce Generic Costs 37% in ‘Bama; Why Ortho Demand May Slow in the Mid to Longer-Term

CMS confirmed to us their intention to publish average manufacturer price (AMP) data to the general public; this is in addition to Secretary Sebelius’ February 2011 commitment to provide average acquisition cost (AAC) survey data to the states We analyze

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Co-Pay Cards and the Stalling of Drug Rebate Growth

For the first time, because of growth in both rebate percentages and brand drug prices, rebates paid for preferred formulary status now appear to roughly equal the spread in non-preferred (e.g. tier 3) and preferred (e.g. tier 2) co-pays Co-pay

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Uncertainty and Motive in Pharmacy Dispensing Mark-Ups

Recently we argued incremental (relative to brands) generic dispensing premia of roughly $5 / script ultimately will fall. This note addresses healthy criticisms of that note, particularly: 1) payors already know generic acquisition costs; and, 2) the generic dispensing premium

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October 29, 2010 – Why Generic Dispensing Margins (Eventually) Must Fall

October 29, 2010 – Why Generic Dispensing Margins (Eventually) Must Fall For both drug retail and PBM mail-order we estimate that per-Rx generic dispensing margins are $5 higher for generics than brands, and show that this premium results from: 1)

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