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...

Tuesday, March 31, 2015

OptumRx Sails Away with Catamaran: Deal Analysis and Industry Implications

Yesterday, UnitedHealthcare, which operates the OptumRx pharmacy benefit manager (PBM), announced its acquisition of PBM Catamaran. Read the press release.

Catamaran has long been considered a likely acquisition target in the consolidating PBM business. Yet I was surprised by the timing and the buyer. UnitedHealthcare will pay a 27% premium, which will probably deter potential bidders.

Below, I review the impact on PBMs, manufacturers, wholesalers, and pharmacies. I also consider how the deal will affect the larger companies.

Sadly, Catamaran’s exit will leave the industry high and dry on nautical metaphors…but not before today’s post docks.

Monday, March 30, 2015

Customized Distribution and Pharmacy Strategies Summit

Customized Distribution and Pharmacy Strategies Summit
May 12-13, 2015 | Philadelphia, PA

Pharmaceutical distribution channels are dramatically changing due to the impact of the Affordable Care Act and its ripple effect on where drugs are prescribed, delivered and accessed by the patient. Vertical integration with pharmacies, manufacturers and integrated health networks is increasing – this conference is designed to help industry stakeholders respond to these changes in order to position themselves for success. Visit for more information.

Drug Channels readers will save $200 off the standard registration rate when they use code HKD774.*

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

The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Thursday, March 26, 2015

How Hospitals Inflate Specialty Drug Prices: The Latest Medical Benefit Reimbursement Data

Hospitals eagerly blame pharmaceutical manufacturers for high specialty drug prices. Yet the new Magellan Rx Management 2014 Medical Pharmacy Trend Report demonstrates how hospitals contribute to drug prices, unashamedly capturing much larger mark ups than do other sites of care. (The full report is free with registration.)

Below, I summarize the report’s findings on drug reimbursement methods and costs for provider-administered drugs paid under a patient’s medical benefit. As you will see, commercial payers often reimburse hospitals based upon the hospitals’ fabricated sky-high “charges.” Meanwhile, physician offices receive drug reimbursement based upon the government’s Average Sales Price (ASP) metric.

Such top-selling specialty drugs as Avastin, Neulasta, and Remicade cost two to three times as much in a hospital outpatient facility than they do in a physician office. (See table below.) This inflates drug costs by thousands of dollars per claim, fuels hospitals’ acquisition of physician practices, and accelerates the growth of the 340B Drug Pricing Program. Read on and be perturbed.

Tuesday, March 24, 2015

Diplomat Shows Specialty Pharmacy’s Profits and Infusion’s Promise

Diplomat Pharmacy, the largest independent specialty pharmacy, recently released its 2014 10-K SEC filing. (Regular readers know how much I enjoy these corporate filings.)

Diplomat is the only public company (and the only specialty pharmacy) to report its per-prescription gross profits and gross margins. As you will see below, both of these financial metrics grew in 2014. Diplomat’s impressive results are a powerful counterpoint to the argument that specialty pharmacy margins are being squeezed.

Diplomat recently acquired BioRx, its third specialty infusion purchase. My calculations indicate that specialty infusion will now account for almost half of Diplomat’s profits.


Monday, March 23, 2015

It’s Time to Register for the 2015 Armada Specialty Pharmacy Summit! #Armada15

The 2015 Armada Specialty Pharmacy Summit is only six weeks away! This year’s event promises to be bigger and better than ever. I’ll be there along with Paula, my wife and Drug Channels Institute business partner. See the message below for updated details on this year’s event from our friends at Armada.

For registered attendees, Armada has a cool mobile app that will help you network. I really like the ability to search the entire attendee list. Download the free app from iTunes or Google Play. (If you're registered for the conference, then your basic profile already exists. Log in to add your photo, details, and make your full profile public.)

For updates, follow Armada on Twitter. This year’s official hashtag is #Armada15. See you in Vegas!

Thursday, March 19, 2015

Manufacturers: Get Ready for Global Trade Account Management

The latest Pharmaceutical Commerce includes my new editorial: Manufacturers: Get Ready for Global Trade Account Management. Read the article below or on the PC site.

In the article, I argue that manufacturers should plan for the global expansion of US-based pharmacies and wholesalers. (Examples below.) Some channel companies are now asking—or demanding—that manufacturers establish global relationships.

Many manufacturers, however, are not yet organized to respond effectively to these "requests." I offer four suggestions to help manufacturers prepare for this new world.

It's a world of channels and a world of fears. Let me know what you think.

Tuesday, March 17, 2015

Express Scripts New Trend O’ Drugs Report: Price Without Value

Last week, Express Scripts released its new 2014 Drug Trend Report. Click here to download the complete report. (Free download.)

As always, there are valuable data here on drug trend (the change in a third-party payer’s prescription drug expenditures). Below, I analyze the highlights for traditional and specialty drugs, including the impact of new hepatitis C therapies.

In one of his plays, clever Irishman Oscar Wilde defined a cynic as “a man who knows the price of everything and the value of nothing.” After reading this report, I wonder if Express Scripts has become a wee bit too cynical about the value of pharmaceutical innovation. Read on and see if you agree.

Monday, March 16, 2015

Medicaid and Government Pricing Congress

Medicaid and Government Pricing Congress
June 3-5, 2015 | Disney’s Yacht and Beach Club Resort | Orlando, FL

CBI’s Medicaid and Government Pricing Congress is one of the industry’s largest gatherings of managers and executives responsible for contracts, pricing, finance, accounting and government program compliance. Consistently rated highest for quality of content and practical takeaways, the CBI Congress brings real world topics — including healthcare reform, medicaid expansion, gross-to-net, VA/DoD, TRICARE, 340B, and compliance — all into one forum. This year is no exception as we look forward to the Congress in June!

Learn from an esteemed group of leaders representing leading companies and government agencies. Click here to view the Agenda.

Drug Channels readers will save $400 off of the standard registration rate when they use code KEF549.*

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

The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Friday, March 13, 2015

Take the Generic Drug Price Volatility Survey

Today’s guest post comes from Kay Morgan, Vice President of Drug Products & Industry Standards Clinical Solutions at Elsevier.

As a follow-up to her article Why Are Generic Drugs Getting More Expensive?, Kay reviews recent generic and brand inflation trends.

Elsevier is now conducting a Generic Price Volatility Survey. It will take fewer than 10 minutes. If you complete the survey, then Elsevier will send you a report with the survey results.

For more background on this important trend, read Kay's article below and download Elsevier’s free white paper Generic Drug Price Increases: Causes and Impact.