Amazon's Next Pharmacy Move: Cut out the PBMs?
In an unusual turn of events, Amazon’s PillPack pharmacy strategies have come to light within a CVS Caremark lawsuit. CVS recently filed a non-compete lawsuit against a former employee who accepted a job at PillPack that involves negotiating contracts with PBMs and payers. The court ultimately sided with CVS, but during the arguments, Amazon revealed that PillPack has already started direct negotiations with private and public payers, thus potentially cutting out the PBM middlemen.
Amazon admitted that PillPack has started approaching clients directly to supply mail-based pharmacy services. Additionally, PillPack has already contacted some of CVS Caremark's clients and PillPack's CEO would not deny that PillPack is planning to provide its own PBM-like services directly to their clients. This move will not only impact CVS Caremark, but more PBMs may soon find themselves in competition with PillPack soon.
While PillPack has said there are no immediate or firm plans to build a PBM, they have explored a number of different, less immediate options around building a PBM. So, for now, we cannot consider them a PBM.
PillPack also does not want to be considered a mail order pharmacy and has been negotiating more favorable retail pricing terms with CVS and likely with other PBMs. Typically, 90-day mail order claims are the best value for clients, so PillPack’s 30-day retail set up may not actually be favorable to payers.
Amazon is not a company prone to accepting the status-quo in supply chain models, so Amazon's use of PillPack as disruptor in the pharmacy supply chain comes as little surprise. We will continue to watch the path they create for themselves.
HHS Moves the International Pricing Index (IPI) Model a Step Forward
As part of the Trump Administration's blueprint to lower drug costs, the Department of Health and Human Services (HHS) has submitted an international pricing index proposal to the White House. The idea behind this proposal is to phase down the Medicare payment amount for select drugs to more closely align with international prices.
This proposal would move away from the traditional free-market drug pricing currently used in the US and is expected to face opposition from some members of Congress and the pharmaceutical industry.
At this point no timeline for this proposal has been issued by the White House and we would expect it will take a significant amount of time to adapt revisions and provide an opportunity for public opinions to be submitted before this proposal is finalized.
FDA to Change Approval Process for Opioids
The FDA has announced a new draft guidance to change the way they review and approve new opioid analgesics. Under current FDA policies, all new drugs are reviewed via the New Drug Application (NDA) process and include a benefit-risk assessment. The new draft guidance for opioids will also account for the national opioid crisis and the NDAs must include the public health implications of approving the product. The FDA will consider the benefits and risks of proposed new opioid analgesics relative to other opioids and non-opioid analgesics already on the market. The FDA will also seek evidence of any characteristics that would mitigate the risks of overdose, abuse or the development of addiction for the new drugs.
Not only will manufacturers be required to prove their drug works, they will also need to reveal if their drugs have any novel or greater risks compared to other opioids on the market. They must also include the public health implications of their products in terms of risks to non-patients, including members of the patient’s household, visiting relatives, friends, etc.
The FDA will hold a public meeting on September 17, 2019 to discuss the agency’s benefit-risk assessment of opioid analgesic and they will also discuss whether an applicant for a new opioid analgesic should be required to demonstrate that its product has an advantage over existing drugs in order to be approved and, if so, what new authorities the FDA would need to impose such a requirement. Currently, the FDA does not require head-to-head studies for new drugs to prove an advantage over existing therapies so this could potentially be a big change in how the FDA reviews drugs.
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