In this edition, we look at the latest bogus study of drug prices from AARP, get an update on CVS Caremark’s (NYSE:CVS) PBM selling season, hear more about NACDS' secret AMP letter, and learn how McKesson (NYSE:MCK) avoids taxes using an Irish subsidiary. Blimey!
Speaking of the secret AMP letter, please say hello if you see me in the audience this Sunday morning at the NACDS meeting in San Diego during Medicaid Expansion and Changes to Pharmacy Reimbursement. Then join me for a brunch of eggs, spam, bacon, spam, spam, and AMP!
AARP Says Brand-Name Drug Prices Up 8% in 2009
The latest AARP/University of Minnesota continues an unbroken string of misrepresentation versus a proper price index such as the BLS' methodology. FWIW, a footnote on page 19 of the original report illustrates just one of the many serious biases in this latest iteration: "In order to measure the impact of changes in retail price alone, the weights for drug products in this market basket are fixed over time. Drug products that enter the market as generics after 2006 will not be included in this index." Yes, you read correctly—the branded price is included in the computation even if the drug became generic during the past 4 years. Thus, the new report ignores generic substitution effects and what seniors actually paid. But hey, why read boring old footnotes when it’s easier to mindlessly bash pharma companies!
CVS Caremark Drug-Benefit Turnaround Tied To Sharper Marketing
Intrepid Dow Jones reporter Dinah Jones follows the progress of CVS Caremark under Per Lofberg’s leadership. She writes that the company “is bouncing back from a rocky ‘selling season’ last year that led to billions of dollars in lost accounts, thanks to a honed marketing message and competitive pricing in its pharmacy benefit management business.” She also discusses the Aetna deal, which I analyze in CVS-Aetna: Less Than Meets The Eye?
Where, Oh Where, Have Our AMP Rules Gone?
My friend Chris Cobourn at CIS responded to Secret AMP Letter Emerges; FUL Delay Likely. Chris echoes the pharmacy lobby’s plea for formal rule-making by the Centers for Medicare & Medicaid Services (CMS) instead of painful-sounding “sub regulatory guidance,” writing:
“First of all, I agree with the wish to see actual regulations with a sufficient comment period. The manufacturing community is familiar with “sub regulatory guidance” throughout the history of the Medicaid Program … The Final Rule was the first time in the Medicaid Program that we had actual regulations. And, although the changes were dramatic and had a huge operational and systems impact on manufacturers, at least we had it down on paper what was required.”Drug Giant McKesson Moving Huge Revenues Through Its Irish Outlet
According to this article: “US drug giant McKesson Corporation is channelling almost $10 billion a year in overseas revenues through a Dublin-registered subsidiary … The vast bulk of the money routed through Ireland comes from the company’s pharmaceutical sales in Canada, Israel and Mexico, according to new company filings.” Tax Breaks: They're Magically Delicious!