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Post by dreamboatcruise on Aug 11, 2017 14:43:58 GMT -5
So with some insurers, even if Mannkind were willing to price match or beat, they might not get the tier they seek. That is the way the rebate game is played, and why ExpressScripts and CVS both have brand exclusivity on their top tier formularies. Manufacturers cannot offer a price contingent on excluding other products, so instead they bundle a group of products and set a rebate contingent on the insurer or PBM reaching a certain penetration rate for their products. Example: We will charge $100 per script if fewer than 95% of your diabetic patients use our brand, but you get a rebate of $30 per script if 95% or more are on our product. Usually the rebates are all or nothing deals; the insurer hits the target or they lose the rebate entirely for that year. If the insurer covers 1 million diabetics loss of $30 million in rebates, which are pure profit, is very significant to their bottom line. The leading PBMs make 100% of their profit from the rebates (which they share with the insurers). The money is all in the rebates which is why formulary placement is so critical. If you can supply a wide range of insulin products, like Lilly or Novo does, then you can use rebates based on portfolio penetration instead of product penetration. That is why Lilly owns the ExpressScripts business and Novo owns CVS/Caremark. If Afrezza were free it might put enough of a dent in the penetration rate that an insurer would risk losing the rebate and winding up would be worse off economically. By building the rebate arithmetic around a portfolio of drugs Mannkind cannot duplicate, the competitors can ensure that Afrezza will never make economic sense for some formularies regardless of the price MNKD charges. Love the tap dance routine they have to use to get around regulations. It is an uphill battle with walls at the top... but Afrezza is a pretty impressive siege weapon. |
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