Replies to post #429820 on Amarin Corp Plc (AMRN)

[TCI1]

Wasn’t coverage ended 1st July? Or did we lose another one?

[AMRNEPA]

AI believes most PBM contracts are 3 years but many consultants advise Companies to avoid 3 years and go for annual.
Here is example from Linked-In:

"Three-year PBM contracts? Hard pass. (Especially this renewal season.)

.....
If you know anything about RxBenefits, you probably know we only offer one year contracts. That isn't by accident. From 25 years of experience we know renewing every client, every year strongly encourages our PBM vendors to refresh their pricing and to keep it where the market is.

Most PBMs offer three-year deals, and there are good reasons for that. For them. I've worked in the pharmacy market since 1997, and I have never, not once, seen a long term contract that benefitted an employer over the life of the contract.

If you lock in a price or get a better financial deal in exchange for a long term relationship, a multi-year contract can make sense. A multi-year PBM contract does neither. You are locking in discounts (not prices) when discounts will be better next year. You are locking in rebate guarantees when rebates will be better next year.

I've often heard that a three year term allows a PBM to invest in a better initial deal in exchange for the certainty of a multi-year relationship. In fact, let's stipulate the year one deal is better. Now let's unpack that point. The pharmacy benefit is the most used health benefit. 50% of members access it each year. This makes it incredibly sticky. Contract term or no, your clients won't move the benefit unless they have a really good reason.

I'm reminded of the story of the old man sitting on his porch with his dog laying next to him, moaning. A passerby, hearing the dog, says to the old man, "Why is your dog moaning?"

The old man replies, "He's laying on a nail."

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The passerby asks "Why doesn't he move?"

The old man says "It doesn't hurt bad enough."

Your clients won't move unless service is really, really bad. (It has to hurt enough.) There's no need for a multi-year contract for the PBM to maintain a long term relationship with their client. I know that's true because we do exactly that.

That brings me to the current renewal season. Right now many of your are looking at three year PBM contracts for your clients spanning 2022, 2023, and 2024. My advice is look very carefully at those offers. I'd go so far as to say not to sign one. This is critically important this year. Why?

In 2023, Humira, the number one drug in the world is going off patent, and there will be five biosimilars providing competition in the US. In 2024, Stelara follows suit. This represents a loss of exclusivity for 21 billion in drug spend across 2023 and 2024. While it isn't crystal clear how the interplay of formularies, rebates, AWP discounts, and biosimilars will shake out, I know signing a three year deal risks putting your clients in a position where they can't take full advantage of these market dynamics."

No Indication of being Copy Righted by Christopher Brown