Tuesday, August 16, 2011

Drug Channels News Roundup: August 2011

Here is my monthly look at noteworthy news stories for your reading pleasure. Perfect for a lazy afternoon in August! In this issue:
  • The PBM Roll-Up Begins: SXCI makes a move
  • After Heparin: A worthwhile study on the pharmaceutical supply chain
  • Et Tu, NACDS? A surprising attack on PBMs
Plus, The Onion asks some average Americans for their thoughts on the upcoming generic pipeline.

SXC Health Solutions To Acquire PTRx, Inc.
SXC’s InformedRx (NASDAQ:SXCI) recently announced the acquisition of regional PBM PTRx and its mail pharmacy SaveDirectRx. PTRx was a customer and client of SXC, so the deal is consistent with my speculation in Part 3 of my ESRX-MHS series that SXC would start rolling-up the regional PBMs. Interesting to note that PTRx/SaveDirectRx were much more profitable than the average PBM, with EBITDA of $10 million on drug spend of only $90 million. SXC has been adding significant executive talent from the big 3 PBMs, so the ESRX-MHS deal should be good for recruiting.

After Heparin: Protecting Consumers from the Risks of Substandard and Counterfeit Drugs
I am a few weeks tardy in drawing your attention at the Pew Prescription Project's thorough look at the pharmaceutical supply chain, from upstream manufacturing through downstream distribution. Drug Channels readers will be most interested in Chapter 3, which looks at the domestic retail and wholesale drug distribution system. I’m somewhat skeptical of the serialization recommendations given ongoing opposition by retail pharmacies (Reality Check on Supply Chain Security), but national standards would be better than letting us devolve into 50 competing approaches. Dirk Rodgers at RxTrace also wrote this thoughtful critique. Full disclosure: I was an external reviewer for the manuscript. (Proof on page 105 of the report PDF.)

NASPA/NACDS/NCPA: Oppose Merger of PBM Giants ESI and Medco
The proposed Express Scripts (NASDAQ:ESRX)-Medco Health Solutions (NYSE:MHS) has generated vocal opposition from the pharmacy community, as this joint letter from NACDS, NCPA, and NASPA demonstrates. You should not be surprised if you read Part 2 of my ESRX-MHS series on the meaning of oligopsony. But you may be surprised to see NACDS supporting such virulent anti-PBM rhetoric given the fact that one of its largest members is a major PBM. (The actual language appears to come from this NCPA-only document.) NACDS, which has a top-notch communications team, confirmed to me that the “language in the document is the official position of NACDS.” As NCPA gets ready for war, NACDS will find itself in a sticky situation. (You can read its more sober letter to the FTC here.)

Big Drugs About to Go Generic
The Onion, America’s Finest News Source, weighs in on the upcoming generic wave. Click to enlarge if you can't read these enlightening comments from a cross-section of our fellow citizens.

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