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, 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.

Thursday, July 10, 2014

Future Vision: The Top 10 Drugs of 2020

Professional prognosticator EvaluatePharma recently released World Preview 2014, Outlook to 2020. (The report is free with site registration.) This report projects for prescription drug sales and R&D activity in the U.S. and abroad.

Below is my handy summary table comparing 2020’s best-selling U.S. drug products with the top sellers of 2013. The number of specialty drugs in the top 10 keeps rising. In 2020, 9 of the 10 best-selling drugs by revenue are projected to be specialty drugs, compared with 3 drugs in 2010 and 6 in 2013. EvaluatePharma predicts that AbbVie’s Humira will stay on top. You might be surprised at the Solvadi forecast.

One oddity: EvaluatePharma doesn’t expect biosimilars to do much harm to 2020’s top drugs. See if you agree.

Tuesday, July 08, 2014

10 Fun Financial Facts from Diplomat Pharmacy’s IPO Filing

Last week, Diplomat Pharmacy filed a Form S-1, the Securities and Exchange Commission (SEC) document that companies use for an initial public offering (IPO) of common stock.

Everyone interested in specialty pharmacy economics should study Diplomat’s filing. To help you get started, I’ve highlighted 10 fun financial disclosures about Diplomat’s business. They include unprecedented details on revenues, profit margins, business mix, executive salaries, and other intriguing items.

Congratulations to Phil Hagerman and his team for bringing Diplomat to this point! Read on for a peek behind the counter at the country’s largest independent specialty pharmacy.

Monday, July 07, 2014

340B Manufacturer Summit

340B Manufacturer Summit
August 20, 2014
Alexandria, VA

Here's a subject near and dear to Drug Channels—the 340B Drug Pricing Program.

As the industry grapples with potential 340B changes, CBI’s one-day 340B Manufacturer Summit provides timely updates and strategies for manufacturers working within this expanding program.

Join CBI in August to discuss the evolving regulatory landscape, changes to 340B eligibility and best practices to avoid duplicate discounts and ensure program integrity.

Save $300 with code FGC347.* Visit for more information.

For a pre-conference review on 340B, check out these Drug Channels articles.

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

Tuesday, July 01, 2014

Take the 2014 Drug Channels Reader Survey...and Win a Free Report!

Time for my annual check-in with you, faithful Drug Channels reader. Tell me what you think of the site and how I can improve it.

What's in it for you? Well, just answer 4 very brief questions—the survey should take 5 to 10 minutes, tops—and you could win a free Drug Channels Institute report. Here's the survey link:

You can answer anonymously.

But if you provide an email address, you'll be entered in a drawing to win a free corporate license of either the 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies (a $3,850 value) or the 2013-14 Economic Report on Pharmaceutical Wholesalers (a $3,160 value). If you win, you'll choose whichever report you want.

Any information you provide will be held in the strictest confidence. Per Drug Channels long-standing policy, I never publish, release, or disclose any personal data without your permission.

Please let me know if you have any questions or comments. Thanks in advance for helping me help you.

P.S. I really do read EVERY response, so don't be shy!