Drug Channels 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. Drug Channels reaches an engaged, loyal and growing audience of more than 18,000 subscribers. Learn more...

Thursday, January 31, 2013

The FDA Updates Its View of Drug Shortages

If you’re following the drug shortage situation, then check out this must-read article from the latest Clinical Pharmacology & Therapeutics: Economic and Technological Drivers of Generic Sterile Injectable Drug Shortages. The article, written by FDA staffers Janet Woodcock and Marta Wosinska, argues that that drug shortages trace back to the perverse market dynamics facing manufacturers of generic injectable drugs.

I’m heartened to see the FDA publicly acknowledge investment incentives and market failures, although there is a distinct “blame the healthcare buyer” view embedded in the FDA’s perspective. The FDA's new view also contains a not-so-subtle rebuke of Congressional critics who have blamed drug shortages on overzealous FDA inspections. Oddly, the FDA omits any discussion of gray markets, which distort incentives during drug shortages. Read on for my overview.

BTW, I’ll be delivering the keynote at next week’s HSCA/HISCI 2013 Pharmacy Forum, where I’ll be talking in part about drug shortages. Say hi if you attend!

Tuesday, January 29, 2013

Drug Channels News Roundup: January 2013

Baltimore vs. San Francisco! Brother vs. Brother! Buffalo wings vs. Nachos! Yup, it’s time for a weekend of blow-out commercials, occasionally interrupted by a football game. Hope you’ve been training all season to gorge at the Super Bowl-party level. But before you indulge, check out this month’s notable news stories from around the Drug Channels universe.
  • Trick play: Walmart will offer primary care…or not?
  • Sacking the bad guys: How Pfizer pfights pfakes
  • Ask Manti Te’o: Are generics really the same as brands?
Plus, the White House responds to a Death Star petition, while an anti-preferred pharmacy network petition flops.

Thursday, January 24, 2013

A Peek at Manufacturers’ PBM Rebates

The Pharmacy Benefit Management Institute (PBMI) just released the 2012-2013 Prescription Drug Benefit Cost and Plan Design Report, a highly informative report on employer-sponsored pharmacy benefits. (Free download with registration.) The report is chock full o’ enlightening tidbits about employers’ PBM contracting and pharmacy benefit design decisions. A hearty Drug Channels “Thank You” to Takeda Pharmaceuticals North America for sponsoring the research.

As far as I know, the PBMI report is the only public source for benchmarking (1) manufacturer rebates to PBMs, and (2) PBM-employer relationships. A few fascinating highlights:
  • There is an amazing diversity of PBM rebate structures, including per-prescription guarantees and percentage shares. Many smaller employers get no rebates.
  • Rebates average $17 per 30-day brand-name retail prescriptions, although the range is broad.
  • Employers receive almost 90% of manufacturers’ rebates to PBMs.
The report will surely be a topic of conversation at PBMI’s 18th Annual Drug Benefit Conference in February.

Tuesday, January 22, 2013

NEW: 2012-13 Economic Report on Retail, Mail, and Specialty Pharmacies

I am pleased to announce the availability of our new report: The 2012-13 Economic Report on Retail, Mail, and Specialty Pharmacies. We’re offering special discounts if you order before February 5, 2013.

If you like Drug Channels, then you'll love this report! The completely updated, revised, and expanded report thoroughly dissects the pharmacy channel and its interactions with consumers, PBMs, payers, wholesalers, government agencies, and more. The 2012-13 edition also dives deeply into such future trends as healthcare reform, specialty at retail, 340B, and much more.

I worked hard to make the report into an essential tool for pharmaceutical manufacturers, wholesalers, pharmacists, pharmacy owners, benefit managers, managed care executives, healthcare policy analysts, investors—anyone who wants to understand and benefit from this ever-evolving healthcare sector. Whether you're a newbie or a grizzled veteran, the 2012-13 Economic Report on Retail, Mail, and Specialty Pharmacies will help you and your team build deep business acumen about U.S. dispensing channels.

Read on for more details, or download your very own copy today. Enjoy!

Monday, January 21, 2013

PBMI's Annual Drug Benefit Conference

Today, I welcome PBMI’s 18th Annual Drug Benefit Conference as a Drug Channels Sponsor. This year's conference will be held at the MGM Grand Hotel in Las Vegas, Nevada on February 18-20, 2013.

Many attendees will be from employers, health plans, and unions, so it's a great opportunity to learn about payers' perspectives on pharmacy benefits. PBMI has added a lot of specialty drug content to this year's meeting.

Educational sessions will be led such companies as Aetna, Citi Investment Research, Envision Rx Options, Express Scripts, HealthPartners, Humana, inVentiv Medical Management, Pharmaceutical Strategies Group, PMSI, Premera Blue Cross, Prime Therapeutics, RegenceRx, Source Healthcare Analytics, UnitedHealthcare, Walgreen and more.

Check out the official description below. BTW, the early bird discount ends on January 24!

Friday, January 18, 2013

Brand New 2013 Part D Data: Nearly Half of Enrollees Chose Preferred Pharmacy Networks

Last night, the Centers for Medicare and Medicaid Services (CMS) released the first batch of 2013 enrollment data for Medicare Part D Prescription Drug Plans (PDPs). These close-to-final numbers offer an exclusive Drug Channels first look at the PDP winners and losers.

The highlights:
  • Sixteen of 2013's 190 PDPs have a preferred pharmacy network design.
  • More than 4 out of 10 seniors enrolled in one of these 16 plans.
  • The Humana Walmart-Preferred Rx Plan is now the fourth-largest PDP.
  • Walgreen is a preferred pharmacy in plans with 30% of total PDP enrollment.
  • SmartD, the Walgreens-plus-independents plan, was a bust.
Part D beneficiaries annually choose their own new plan, rather than having a benefit administrator or insurance plan provide a few choices for them. Thus, these new data convincingly demonstrate the consumer appeal of preferred networks. This year’s Part D market should dispel any doubts about the narrow network revolution.

Disruptive Ideas (eyeforpharma guest post)

Today’s guest post is from Kevin Dolgin, Meeting Facilitator at eyeforpharma.

In this guest post, Kevin recaps the recent eyeforphama Disruptive Ideas workshop which is part of the eyeforpharma Philadelphia conference launch. More industry-led panels on this topic will be held at eyeforpharma Philadelphia on June 5, 6, and 7 in Philadelphia, PA.

Please contact Theo Fellgett, Event Director at eyeforpharma (theo@eyeforpharma.com or 201-234-4802) with any questions about the article or event.

Thursday, January 17, 2013

Costco Unveils Its Own PBM

Here's something we hope you'll really like.

Mass merchandiser Costco Wholesale has just started publicizing Costco Health Solutions (CHS), its very own pharmacy benefit manager (PBM). January’s Costco Connection magazine highlights the heretofore publicity-shy business in A Prescription for Success.

Below, I outline how Costco’s PBM strategy exemplifies six key dynamics facing the pharmacy and PBM industries. In this slow prescription growth environment, retail pharmacies are looking for new growth drivers. With its PBM, Costco is emulating CVS Caremark's tactics for driving prescription store traffic. Walmart has a robust narrow network strategy and Walgreen is funding RxAlly and Smart D (but sold its PBM). So, who's next?

Tuesday, January 15, 2013

2012 Market Share of Top Pharmacies

NOTE: For fresher data, see 2013’s Top Pharmacies by Rx Revenues: The Big Get Bigger.

Next week, we'll be releasing the 2012-13 Economic Report on Retail, Mail, and Specialty Pharmacies. Here's a sneak peek at my list of top pharmacies, ranked by total prescription revenues.

The exhibit below, one of 82 in my new report, shows estimated share of prescription revenues by company for calendar year 2012.
  • The top five dispensing pharmacies—CVS Caremark, Walgreens, Express Scripts, Rite Aid, and Walmart—accounted for about 63% of U.S. prescription dispensing revenues in 2012.
  • The degree of concentration is comparable to that of 2011, although market share consolidated from six to five pharmacies due to the Express Scripts/Medco Health Solutions merger. Walgreens also lost market share, as we discuss below.
  • We estimate that total revenue growth of retail, mail, and specialty pharmacies slowed to 0.6% in 2012.
Read on for the 2012 details. For a sneak peek at the updated and expanded 2012-13 report, check out the free Overview.

Monday, January 14, 2013

Medicaid Rebate Summit & Bootcamp

I am pleased to welcome back The Conference Forum as a Drug Channels sponsor for its Medicaid Rebates Summit (MRS) and pre-conference Medicaid Rebate Bootcamp. The event will be held February 14-15, 2013, at the Park Hyatt in Washington DC.

The meeting has an impressively big and diverse list of speakers, including representation from: Acorda Therapeutics, Amneal Pharmaceuticals, APEXUS/ 340B Prime Vendor Program, Bayer HealthCare, Berkeley Research Group, BIO, Boehringer Ingelheim Pharmaceuticals, Celgene, CIS, Daiichi Sankyo, District of Maryland, District of Massachusetts, Eastern District of Pennsylvania, Eli Lilly & Co., Express Scripts, Fresenius-Kabi USA, Genentech, Heritage Foundation, Hewlett Packard Enterprise Services, Hogan Lovells, HRSA Office of Pharmacy Affairs, Janssen, Mylan Pharmaceuticals, NACDS, NCPA, National Governors Association, PhRMA, Purdue Pharma, Reckitt Benckiser Pharmaceuticals, Sidley Austin, VA Office of Inspector General, Vertex Pharmaceuticals, Wockhardt USA, and the Wyoming Department of Health.

The Conference Forum is offering a special 20% discount to Drug Channels readers. Just register with code DCH20. Thanks, Conference Forum!

Thursday, January 10, 2013

AMP Final Rule is Coming … in August

Last January, CMS issued its proposed AMP rule to implement a teeny part of the March 2010 healthcare legislation. See New AMP Rule Targets Bona Fide Service Fees. Are you ready for AMP’s next act?

Well, pull up a chair. According to this just-posted page at the Office of Information and Regulatory Affairs, it looks like the Final Rule won't arrive until August 2013. That's much later than most people (including me) expected.

While I presume that CMS doesn’t feel tardy, we can start thinking about what the final numbers mean. As I explain below:
  • The AMP final rule probably won’t have catastrophic effects on the drug channel. However, it will reduce Medicaid pharmacy reimbursement in the few states that are currently overpaying for generic drugs.
  • AMP will probably not become a primary reimbursement metric.
  • AMP-based upper limits have a slight upward bias vs. acquisition cost metrics.
The Final Rule could also have some unexpected implications. I’m curious to see how (if?) CMS clarifies its guidance on bona fide service fees for distribution services and inventory management, because it could affect whether manufacturers can offer financial terms that would be attractive to chain warehouses seeking to purchase brand-name drugs directly.

Tuesday, January 08, 2013

Who Paid For Prescription Drugs In 2011?

Yesterday, the boffins at the Centers for Medicare and Medicaid Services (CMS) released the 2011 National Health Expenditure data. Savor the wonkiness by checking out this Health Affairs article: National Health Spending In 2011: Overall Growth Remains Low, But Some Payers And Services Show Signs Of Acceleration (free download).

Total U.S. expenditures on retail prescription drugs were $263.0 billion, a 2.9% annual increase vs. 2010. Prescription drug expenditures were the slowest growing part of the U.S. health care system, which grew by a historically low 3.9%. (See Exhibit 2 of the Health Affairs article.)

There are a lot of moving parts in the latest numbers, so I encourage you to read the full article. A few highlights:
  • Consumers’ share of U.S. drug expenditures dropped to a new low.
  • Medicare Part D was the fastest-growing payer, in part because healthcare reform increased spending on brand-name drugs.
  • 2010’s prescription spending estimate was revised downward.
Read on for a detailed review at the latest prescription spending numbers, along with a bonus look at why overall healthcare spending will start accelerating. Despite the legislation's name, healthcare reform seems unlikely to provide affordable care.

Monday, January 07, 2013

Hub Models and Program Design

I am pleased to welcome CBI’s Hub Models and Program Design as a Drug Channels sponsor. The conference will be held at Hyatt at the Bellevue in Philadelphia, PA on February 27 and 28, 2013.

I’m glad to see this new CBI conference, since specialty hubs are an infrequently-discussed part of the specialty pharmaceutical ecosystem. Hubs perform activities for payers, patients, and providers related to reimbursement and patient access support services. Participating speakers come from such companies as Eli Lilly, EMD Serono, IBM, Occam Health Services, Shire HGT, UCB, United BioSource, Vertex Pharmaceuticals, and more.

For additional details, read the official description below or visit the event website.

And if you make it to Philly, please skip the cheesesteaks. Instead, try one of our 50 best restaurants!

Friday, January 04, 2013

The Seedy, Greedy Underbelly of U.S. Drug Channels

Happy new year! Let’s kick off 2013 with a look at newly-uncovered unethical behavior by physicians and pharmacists.

In late December, the FDA sent warning letters to 350 (yes, 3-5-0) physician practices that knowingly purchased gray market Botox, which turned out to be counterfeit. The next day, the LA Times profiled two independent pharmacy owners that profited on the prescription opioid abuse.

Taken together, these stories illustrate why manufacturers need to keep a close eye on channels to the patient. Greed is not always good. Too bad that these providers didn't know which shoulder to follow.