The Drug Channels blog delivers timely analysis and provocative opinions on pharmaceutical economics and the drug distribution system. It is written by Adam J. Fein, Ph.D., one of the country's foremost experts on pharmaceutical economics and channel strategy. Learn more...

Thursday, July 31, 2014

Drug Channels News Roundup, July 2014: Formulary Exclusion, Specialty Pharmacy, Narrow Networks, and Weird Al

Given all of the news lately, the hazy days of summer have not been very lazy. Put your feet up and relax with this month’s selection of noteworthy news stories. In this issue:
  • First Round of PBM 2015 Formulary Exclusions Announced
  • How To Win in Specialty Pharmacy
  • Narrow Networks Are Here to Stay
Plus, the great Weird Al Yankovic returns to take on corporate jargon. On behalf of consultants everywhere, I apologize.

Tuesday, July 29, 2014

Noise and Nonsense Over Walgreens’ Inversion Plans

Since I published March’s Inversion Uncertainty: Is Alliance Boots Really Acquiring Walgreens?, Walgreens has become embroiled in a giant PR nightmare over its plans. Major politicians are attacking the company. Editorials are calling the company “unpatriotic.” A potent anti-Walgreens consumer movement is starting to spread online. Examples below.

The attacks are very misinformed. If Walgreens moves its headquarters to Switzerland, it will continue paying U.S. taxes on its U.S. operations. Walgreens will only avoid U.S. taxes on its substantial, soon-to-be-acquired non-U.S operations. That's one reason why inversion is still the most likely outcome. See if you agree with my scenario below.

Walgreens' management neglected to get in front of this story, so politicians and anti-Walgreens activists are leading the narrative. Has the company again misjudged a controversy (a la the 2012 Express Scripts debacle) and handed an easy victory to its pharmacy competitors?

Monday, July 28, 2014

Industry Keynote Speakers McClellan and Turner Announced for IIR’s MDRP 2014

IIR’s Medicaid Drug Rebate Program (MDRP) 2014  is back in Chicago September 15-17, 2014, just in time to provide you with essential regulatory updates surrounding the impact of the ACA, Medicare Part D, AMP Final Rule, and the 340B Program's Proposed “Mega Rule.”

This year, the MDRP event team brought together not one, but TWO keynote speakers:
  • Mark McClellan, MD, PhD, Senior Fellow, Brookings Institution; Former Commissioner, FDA; Former Administration, CMS
  • Grace-Marie Turner, President, Galen Institute
Hear from them as they share their first-hand experience in managing the true impact of the ACA and Medicaid reform. They will also provide big-picture insights into the politics and policies of Medicaid expansion and discuss the future of Medicaid.

Click here to register with code XP1958DRUG to SAVE $100 off the Current Rate!

Download the Brochure Here for Full Agenda and Speaker Details

More details below.

Friday, July 25, 2014

MAC Transparency Legislation Gains Momentum

Today’s guest post comes from Todd Grover, President & CEO of and Co-Founder of Glass Box Analytics.

Todd reviews the new Center for Medicare & Medicaid Services (CMS) final rule regarding the disclosure and updating of Maximum Allowable Cost (MAC) reimbursement limits. As Drug Channels readers know, a MAC establishes the reimbursement limit for a multiple-source drug.

He then describes Predictive Acquisition Cost (PAC), an alternative benchmark that aims to get closer to a pharmacy's true acquisition cost. Drug Channels readers can analyze MAC pricing by downloading the PAC – MAC Optimization Calculator, an Excel workbook with data on five key generic drugs.

Please contact Todd ( with any questions about the article.

Tuesday, July 22, 2014

Who Pays Less for Drugs: Medicaid, DOD, or Medicare Part D? The Answer May Surprise You

Hey there, pharmacy reimbursement nerds! The Government Accountability Office (GAO) has a fun new report for you: Comparison of DOD, Medicaid, and Medicare Part D Retail Reimbursement Prices.

The report documents the interplay between a retail pharmacy’s prescription revenues, the consumer’s out-of-pocket expenses, and the net (post-rebate) drug price paid by each program. It also has a good background on how each federal payer operates.

Bottom line: While Medicaid had the biggest rebates, Medicare Part D had the lowest average prescription costs. Although the GAO doesn’t explain this discrepancy, my computations below show that Part D had higher generic dispensing rates than the other government payers. An argument for the triumph of formulary management over federal price controls?

Monday, July 21, 2014

Hub Models and Program Design

3rd Hub Models and Program Design
September 10-11, 2014
San Diego, CA

Leaders in brand management and commercial operations across the industry are actively reassessing their Hub strategy – are you?

This September, CBI’s Hub Models and Program Design conference is heading out west to explore pressing questions about Hub strategy. Join your peers at this timely meeting on Hub models and program design as you prepare to launch, transition or reboot your corporate or product approach to hub services.

Speakers come from such companies as Boston Biomedical Pharma, CareMetx, inVentiv Health, Ipsen Biopharmaceuticals, Lash Group, Novartis, Occam Health, Omnicare, Sonexus Health, and UBC.

Drug Channels subscribers can save $400 off of the standard registration rate when they use code QUJ684.Register today!

*Cannot be combined with other offers or used towards a current registration. Other restrictions may apply.

Wednesday, July 16, 2014

One Percenters: The Real Facts Behind Hospitals' 340B Contract Pharmacy Mega-Networks

As a follow-up to yesterday's article on the explosion in 340B contract pharmacies, let's look at the covered entities that build 340B networks.

As the table below shows, just 290 healthcare providers—only 1.2% of all 340B covered entities—account for nearly half of the program's 35,000 contract pharmacy agreements. These providers (mostly hospitals) have built mega-networks seemingly designed not to help needy and uninsured patients, but to enrich hospitals and pharmacies.

Simple math suggests that any contract pharmacy abuses are concentrated with the top 1% of 340B providers. How long will the program’s defenders (and the other 99%) ignore the facts? My questions below highlight the challenges facing manufacturers, managed care, and policy makers.

Tuesday, July 15, 2014

One in Four U.S. Pharmacies is Now a 340B Contract Pharmacy

As part of Drug Channels’ ongoing coverage of the 340B drug pricing program, I want to highlight our new analysis showing that the 340B drug pricing program continues to expand at a breakneck pace.

More than 15,300 pharmacy locations now have 35,000 contract pharmacy agreements with 340B covered entities. That accounts for nearly a quarter of total U.S. retail, mail, and specialty pharmacy locations. Walgreens still dominates, but its share is shrinking as CVS, Rite Aid, and Walmart pile into the market.

This dramatic growth, combined with pharmacies' 340B profit opportunities, makes me wonder how 340B networks could be undermining payers' network pharmacy models.

Tomorrow, I'll explain how a very small minority of hospitals may be disrupting traditional managed care contracting strategies with large 340B mega-networks.

Monday, July 14, 2014

IIR’s All-New Specialty Pharmacy Collaboration Summit

IIR is proud to introduce the all-new Specialty Pharmacy Collaboration Summit taking place September 15-17, 2014 in Boston, MA.

This collaborative summit is designed to facilitate networking and integration between all key stakeholders in the evolving specialty pharmacy value chain, including the leading pharmaceutical manufacturers, health plans, and specialty pharmacies.

As a partner for the event, Drug Channels' readers receive a 15% discount off the standard rates! Register Now to SAVE 15% off standard rates with code XP1968DRUG.