Risky Business
This article was originally published in RPM Report
Executive Summary
The government protected Medicare prescription drug plans against excessive losses in 2006. But the "risk corridors" in Part D also limited the upside on profits for plans. The protections start phasing out in 2008. That brings a new set of risks for Part D plans--and Big Pharma.
You may also be interested in...
Tilting the Contracting Scales: Part D Plans Have Advantages Over Manufacturers in 2008
Contracting between pharma companies and Part D plan sponsors that took place last year for 2007 pricing and formulary placement was a relatively straightforward process. This year will be more interesting.
"Sweet Spot" Inside Drug Benefit Turns Sour
The "donut hole" inside Part D is proving hard to fill. Some drug insurance plans offered brand coverage in 2006-but they won't be doing that again any time soon. Humana lost a mint offering "complete" coverage, so for now its generics-only in the gap.
Negotiating Price Negotiation: Why the Democrats Will Struggle to Pressure Part D Prices
The new Congress wants to make federal price negotiation under Medicare a reality. But it won't be easy. Big Pharma should expect plenty of interference from the Democrats in Part D, but it is hard to see a meaningful impact on prices in the near term.