Monday, January 07, 2008

Catching up with CVS and Cardinal

Happy New Year! I hope you were able to ring in 2008 successfully even in the absence of Average Manufacturer Price (AMP) data.

As you know, I’ve been on vacation and have not been blogging. Unfortunately, there was no wi-fi access on the beach and our hotel did not subscribe to Drug Store News or Pharmaceutical Commerce. Plus, I forgot to pack my back issues of the Federal Register. You can surely see my disappointment in the photo on the right.

I’m now tanned (or perhaps just a bit pinker), rested, and ready for 2008! Let’s get the year started with two interesting stories that I missed:

CVS Caremark Tightens its Network
CVS Caremark closed mail order facilities in Fort Worth and Phoenix as part of the company's plan to tighten up its mail and store distribution network. These moves will provide further cost savings beyond the improved generic purchasing power that I discuss in CVS' Channel Power.

But at the same time, a leaner network will allow the company to extract more margin from its wholesalers and/or credibly shift to direct purchasing of brand drugs. CVS Caremark is now the single largest customer of the two largest drug wholesalers -- McKesson (MCK) and Cardinal Health (CAH). Its wholesaler supply contracts are up in 2009 – I expect some major shifts in drug channels as CVS flexes its buying power.

Get ready for a rumble.

Cardinal Hires a New Investigator?
According to this article, Cardinal Health (CAH) is bringing McGruff the Crime Dog to the Jacksonville, Florida, police department. The company would not comment on rumors that the canine officer will be sniffing out diversion problems at Cardinal’s facilities. (DOH!)

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In upcoming posts, I’ll delve into two new bogus studies on retail pharmacy, discuss developments in direct-to-pharmacy distribution, and take another look at the retail vs. mail debate. In the meantime, I suggest that the many new subscribers from the past two weeks check out my 2007 Year in Review.

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