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, September 01, 2015

Specialty Pharmacy’s Bright but Complex Future: Seven Reflections on #Armada15 (rerun)

This week, I’m rerunning some popular 2015 posts, so I can work on the forthcoming 2015-16 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors

Click here to see the original post and comments from May 2015. And if you want to beat the crowds, you can register now for the 2016 Armada Specialty Pharmacy Summit.

Last week, Paula and I had the pleasure of attending the 2015 Armada Specialty Pharmacy Summit, in wonderful Las Vegas.

Armada has cemented its position as the must-attend event for anyone participating in the specialty channel. Kudos to Larry Irene and Robert Irene. They’ve had the vision and wisdom to invest in making the meeting bigger and better every year. The social media buzz also was impressive. Check out the many, many #Armada15 tweets.

Continuing my annual violation of Vegas code, I'll tell you what happened there—what I heard and learned about specialty pharmacy’s future. If you were there, please add your own comments and observations.

Monday, August 31, 2015

NORD 2015 Rare Diseases & Orphan Products Breakthrough Summit

NORD 2015 Rare Diseases & Orphan Products Breakthrough Summit
October 21-22, 2015 | Arlington, VA

The ONLY Rare Disease Conference Co-Sponsored by the FDA:

Drug Channels readers will save $200 off the standard registration rate when they use code TCC245.*

At NORD’s 2015 Rare Diseases & Orphan Products Breakthrough Summit, benefit from breakthrough conversations in:
  • Integrating the patient voice into R&D
  • Optimizing clinical trial success
  • Precision medicine initiatives
  • The legislative path ahead on federal and state levels
  • Branding & fundraising strategies for rare diseases
  • Expediting early diagnosis
  • Perspectives from pediatric patients
  • And more!
This is the largest multi-stakeholder event in rare diseases. You won’t want to miss the chance to hear from an unparalleled speaking faculty, including four featured Keynote Addresses:
  • Jono Lancaster, Patient Advocate, Treacher Collins Syndrome
  • Janet Woodcock, M.D., Director, Center for Drug Evaluation and Research (CDER), FDA
  • Stephen Ostroff, M.D., Acting Commissioner, FDA
  • Christopher P. Austin, M.D., Director, National Center for Advancing Translational Sciences (NCATS), NIH
For more information including the speaker list and session line-up, please visit

Drug Channels readers will save $200 off the standard registration rate when they use code TCC245.*

*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, August 27, 2015

What’s Behind Walmart’s Pharmacy Profit Warning?

Last week, Wal-Mart Stores surprised everyone by highlighting reduced profits from its pharmacy business. In corporate-speak, these were called “headwinds from pharmacy reimbursements” on its quarterly and annual earnings. Investors took note, especially since Walmart usually discloses nothing about its pharmacy business.

Walmart didn’t provide many details about what caused the margin reduction, but I believe two factors played a key role: (1) lower margins from newly insured consumers (compared with cash-pay consumers), and (2) Walmart’s aggressive participation in preferred networks.

Does this profit announcement signal that Walmart will start emphasizing its pharmacies’ profits over growth? I’m sure that its competitors hope so. Read on and see if you agree.

Tuesday, August 25, 2015

The Retail Generic Drug Inflation Slowdown: It’s Real

Looks like stock prices aren't the only things that have stopped rising. As we predicted in April, generic price increases are slowing down.

For the second quarter of 2015, we again found that generic drug price increases were lower than our previous examinations. So far in 2015, no drugs have had with mega-increases that exceed 1,000%. Below, I highlight comments by executives at the large wholesalers that confirm our slowdown analysis.

A separate RBC Capital Markets study (shown below) found an inflection point in the Food and Drug Administration’s (FDA) approval of new generic drugs. If the trend continues, new supply will enter the market and generic prices will decline. Hello, Econ 101!

Meanwhile, the pharmacy industry’s lobbyists may find that faster MAC updates may be quite painful if generic prices start falling. Wheee!

Monday, August 24, 2015

Real-Time Benefit Verification & ePrior Authorization Benchmarking Summit

Real-Time Benefit Verification & ePrior Authorization Benchmarking Summit
October 22-23, 2015 | San Francisco, CA

CBI’s third installment of the Real-Time Benefit Verification (RTBV) & ePrior Authorization (ePA) Benchmarking Summit elevates the conversation on the adoption and implementation of electronic patient services (RTBV, eBV, ePA, EMRs, EHRs) by providing concrete case studies and experiences on systems integration, workflow improvements, and information exchange.

Drug Channels readers will save $400 off the standard registration rate when they use code NMK264.*

Featuring a multi-stakeholder faculty, including manufacturers, payers, PBMs, physicians, specialty and retail pharmacies, EHR/EMR vendors and other leading service providers, this summit presents the latest developments and creates a roadmap for next steps needed to achieve success in RTBV and ePA adoption. Visit for more information.

Speakers include representatives from:
Allergan | CVS Health | AssistRx | Athenahealth | Blue Shield of California | CenterX | CoverMyMeds | Fairview Specialty Pharmacy | MedSocket | NewCrop | NextGen Healthcare | OA Systems | Pharmacy HIT Collaborative | Pfizer | Point-of-Care Partners | Providence Health Services | RelayHealth Pharmacy Solutions | SureScripts | UCSF School of Medicine | University of Illinois Hospital and Health System | Walgreens

*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, August 20, 2015

Catching Up With Cardinal Health China

Pharma distribution nerds, rejoice! Cardinal Health has just released its 10-K annual report for its 2015 fiscal year, which ended on June 30. Unfortunately, Cardinal continues to reduce the amount of information it discloses to investors and others. This year, working capital stats and associated chargeback adjustments have mysteriously vanished from Cardinal's SEC reports and earnings presentations. (When I asked, Cardinal would only say that "it's not a required disclosure." Hmmm...)

Despite the troubling opacity, let's review Cardinal’s China position. As the chart below shows, FY15 revenues at Cardinal Health China were $3.0 billion and accounted for 3% of the company’s total corporate revenues. I include a recent interview with CEO George Barrett, who provides useful insights into China’s political and economic climate.

P.S. Our updated 2015-16 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors will be released in early October. In the meantime, the 2014-15 edition is on sale until September 9.

Tuesday, August 18, 2015

2014’s Fastest-Growing, Private Specialty Pharmacies (From the Inc. 5000 List)

Time for our annual review of the Inc. 5000 list, the magazine’s annual ranking of the fastest-growing private companies in the United States. While the list includes only those firms that submitted data to Inc. magazine, it offers a useful snapshot of the dynamic world that lies beyond the top 10 specialty pharmacies.

We have identified 10 specialty pharmacies on the 2015 list, which is based upon revenue growth through 2014. Annual revenues range from $11 to $800 million. The pharmacies and key stats are listed below.

Given specialty drugs’ growth prospects, there is an active market for the buying and selling of specialty pharmacy companies. Diplomat Specialty Pharmacy, now that it has gone public, no longer appears on the list. Below, I review the fate of other companies from recent lists that have been acquired. Given Diplomat’s sky-high valuation, consider this year’s ranking to be a shopping list.

Monday, August 17, 2015

Influence the AMP Final Rule at IIR’s MDRP 2015

IIR’s MDRP 2015
September 30 - October 2, 2015 | Chicago, IL

IIR’s MDRP 2015 is a platform to impact the Final Rule during the comment period and directly influence its outcome. Connect with 550+ MDRP executives and 100+ industry experts to dissect the proposed rule and submit feedback to CMS. Get a head start on your compliance operations for the impending Final Rule implementation.

  • September 30th: The AMP Rule Full-Day Pre-Conference-Understand the Application, Implementation and Impact of the Final Rule
    • Brace Yourself: The AMP Final Rule is Here! What To Do, What Not To Do & What To Do First
    • PANEL: Deconstructing the AMP Final Rule: A Step by Step Analysis of the Key Implications of the Final Rule
    • Identify Line Extensions & Implement Alternate Rebate Formula
    • Clarification to the Re-definition of Bundled Sales & Its Implications
    • How to Categorize & Calculate the 5i's
    • Implications of the Expansion of RCP
    • Impact of the Final Rule on Class of Trade & Innovator Products
    • PANEL: Implementation: Constructing a Final Rule Application Checklist
  • October 2nd:
    • CMS Pharmacy Updates from John Coster, Director, Division of Pharmacy, CMS
    • The AMP Final Rule: Operationalizing for MDRP
    • Track One: Impact of AMP on Government Pricing
    • Track Two: Post AMP Panel Navigating the Regulatory Framework
    • Track Three: Financial Implications of the AMP Final Rule on GP Calculations
    • Track Four: Re-assessing GP Methodology post AMP
  • October 3rd:
    • Keynote Fireside Chat with External Counsel focusing on the legal implications of the AMP Final Rule and how to remain compliant
    • Townhall to answer all your AMP related questions

PLUS! Get 340B Updates directly from HRSA on October 1st during the main conference from Michelle Herzog, Deputy Director, Office of Pharmacy Affairs, HRSA, and during the full-day 340B Mega Guidance Compliance pre-conference summit on September 30th.

This is your opportunity to benchmark best practices and gain solutions to overcome new operational challenges brought on by AMP Final Rule, 340B, Medicaid Expansion, Class of Trade, Fair Market Value, FSS, VA, OIG, and other critical government programs.

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

Tuesday, August 11, 2015

New CMS Forecast: Drug Spending Grows Along with Impossible Hospital and Doctor Spending

The Centers for Medicare & Medicaid Services (CMS) recently released its latest forecasts for national health expenditures. They are summarized in a new Health Affairs article: National Health Expenditure Projections, 2014–24: Spending Growth Faster Than Recent Trends (Available to Health Affairs subscribers or for purchase).

I crunch the underlying prescription drug data below. In 2014, prescription drug spending growth was higher than the growth in total U.S. healthcare spending. Over the next 10 years, however, drug spending is projected to closely track overall healthcare spending.

By 2024, the U.S. will spend about $560 billion annually on outpatient prescription drugs. Despite this growth and the perceptions that drugs prices are “too high,” outpatient prescription drugs will only account for about one of every 10 U.S. healthcare dollars. Hospitals and physicians will still account for nearly 60% of U.S. healthcare spending—or about six times as much as spending on pharmaceuticals.

Being part the CMS forecasting team is not easy. If any members of the Office of the Actuary are caught with bad projections, the Secretary of Health and Human Services will disavow all knowledge of their actions.