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...

Wednesday, July 08, 2015

Walgreens Boots Alliance: Analysis of its New U.S. Pharmacy Strategy (rerun)

I’m taking a break from blogging this week and rerunning some popular posts from early 2015. Click here to see the original post and comments from April 2015 Today's rerun is a good primer for WBA's earnings call tomorrow..

Last week, Walgreens Boots Alliance (WBA) held its first analyst day as a combined company. Click here to download the slides and transcripts. (More detailed links below.)

WBA is a complex, global business with three major divisions and annual revenues of nearly $125 billion. Hence, the analyst “day” was a 2-day, 12 hour affair in which management presented 282 slides and generated a 125 page transcript!

Never fear, Drug Channels reader. I scoured every ounce of this material to find you the most valuable kernels. Below, I highlight my observations about WBA’s Retail Pharmacy USA division, a.k.a. Walgreens. My themes include the U.S. businesses’ changing focus, hypercompetition in the pharmacy industry, payer relationships, specialty pharmacy strategy, previous management’s missteps, and more. Read on for the sweet and salty details.

Tuesday, July 07, 2015

What Gilead’s Big Hepatitis C Discounts Mean for Biosimilar Pricing (rerun)

I’m taking a break from blogging this week and rerunning some popular posts from early 2015. Click here to see the original post and comments from February 2015. Unfortunately for the manufacturers about to launch PCSK9 inhibitors, this artcle is also relevant to those products.

This week, Gilead Sciences reported blockbuster 2014 results for its hepatitis C products Sovaldi and Harvoni. Read the press release. However, Wall Street freaked out when Gilead disclosed that its payer discounts are much larger than many people had assumed—more than 50% off list in some cases. (See the numbers below).

These unexpectedly large price cuts provide more evidence that competition gives payers enormous power, even when purchasing differentiated, highly valuable therapies. Imagine what will happen as biosimilar versions of top-selling biological drugs hit the market over the next few years.

Sorry to be the bearer of bad news. But for the manufacturers developing biosimilars and those defending biological products, it’s probably time to lower revenue projections.

Monday, July 06, 2015

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

I’m taking a break from blogging this week and rerunning some popular posts from early 2015. Click here to see the original post and comments from March 2015.

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.

Tuesday, June 30, 2015

News Roundup, June 2015: Diplomat, Burman’s, CVS, Target, and the Drugstore Outlook

Summer vacation is here! Before you launch your July 4 festivities, please enjoy these Drug Channels fireworks:
  • The valuation behind Diplomat’s acquisition of Burman’s specialty pharmacy
  • A Wall Street perspective on the CVS-Target deal
  • The outlook for drugstore chains
Plus, we revisit a stirring patriotic message from Sam the Eagle. Happy 239th birthday, America!

P.S. Follow @Drug Channels on Twitter for my daily updates on news and other intriguing ideas.

Wednesday, June 24, 2015

Profits in the 2015 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies

Time for my annual review of the latest Fortune 500 list. Every year, this is one of my favorite posts, because its helps us to “follow the dollar” and understand how drug channel intermediaries make money.

The 2015 Fortune 500 list contains eight drug channels companies—AmerisourceBergen, Cardinal Health, CVS Health, Express Scripts, McKesson, Omnicare, Rite Aid, and Walgreens.

Using the Fortune data, I explore the profitability and shareholder returns of the largest drug wholesalers, chain pharmacies, pharmacy benefit managers (PBMs), and pharmaceutical manufacturers. I compare these companies with the Fortune 500’s 11 pharmaceutical manufacturers and a separate survey of independent pharmacies. I doubt you will be hungry for more analysis in one hour.

Thursday, June 18, 2015

Alex Gourlay Shakes Off Walgreens' Old Strategy and Hints at PBM Plans

Crain’s Chicago Business has just published The Plan to Save Walgreens, a fascinating interview with Alex Gourlay, the former Alliance Boots executive who is now president of Walgreens. Kudos to Brigid Sweeney for another insightful article about Walgreens.

In the article, Gourlay concedes that Walgreens faces challenges, outlines his strategic priorities, and hints at the company’s plans to acquire or partner with a pharmacy benefit manager (PBM).

Gourlay seems upbeat, as if he has music in his mind saying it's gonna be alright.

Highlights and my PBM acquisition speculations below, along with comments on what this week’s CVS-Target deal might mean for Walgreens.

Tuesday, June 16, 2015

CVS Aims at Target: Deal Analysis and Marketplace Implications

Wow! I didn’t see this one coming.

Yesterday, CVS Health announced that it will acquire Target’s pharmacy business and operate the pharmacies as a CVS-branded, store-within-a-store format. Read the press release.

Below, I review key deal terms and what they mean for CVS and Target. I also consider derivative impacts on McKesson, Cardinal Health, Diplomat Pharmacy, and Catamaran. I’ll discuss Walgreens in an upcoming post.

This marks the first big pharmacy outsourcing arrangement by a mass merchant or supermarket. Will more deals follow?

Monday, June 15, 2015

Hub Models and Program Design

CBI’s 5th Hub Models and Program Design
September 29-30, 2015 | San Diego, CA

CBI’s 5th Hub Models and Program Design conference is the ONLY conference that addresses concerns of all key stakeholders, including perspectives from patient advocates, specialty pharmacies, and manufacturers.

With mounting cost pressures and increased demands for affordable, value-based treatment options, bio/pharmaceutical teams face an increasingly competitive market, for both specialty and non-specialty products. Increasingly, industry must strategize to manage the most critical challenges associated with product and patient services.

CBI’s Hub Models and Program Design conference provides executives with strategies for developing and integrating hub programs and other patient-centric services to ensure product access and maximize reimbursement. Join us in San Diego this coming September to benefit from content tailored to answer your most pressing questions. Visit for more information.

Drug Channels subscribers will save $400 off of the standard registration rate when they use discount code ARP946.*

*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, June 11, 2015

The 90-Day at Retail Boom

Below you'll find our exclusive analysis of the prevalence of 90-day prescriptions, categorized by dispensing format. As you will see, 90-day scripts have nearly doubled at retail pharmacies. They now account for more than one in nine prescriptions at chain stores and supermarkets.

These data provide more insight into the market share trends revealed in 2014’s Winners and Losers: Prescription Market Share by Dispensing Format, which we published on Tuesday. Retail pharmacies are accepting lower reimbursements for 90-day prescriptions to compete with mail pharmacies, which have consequently lost market share.

So grab your flannel shirt, blast your Jagged Little Pill CD, tickle your Elmo, and let’s take a spin through the 90s.