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 20,000 subscribers. Learn more...

Thursday, February 28, 2013

Specialty Pharmacies Keep Gaining on Buy-and-Bill

Hey there, fans of specialty drugs billed through the medical benefit. Magellan Pharmacy Solution/ICORE just released its latest 2012 Medical Pharmacy & Oncology Trend Report. (Free download with registration.) The report’s third edition provides a wealth of interesting data on the ever-evolving specialty channel.

For infused drugs administered in physician offices, the latest data clearly show buy-and-bill is being displaced by specialty pharmacy providers (SPPs). For non-chemotherapeutic drugs, SPPs already have a greater share of billing volume than buy-and-bill. See the data below if you are not convinced.

Magellan highlights some clear negatives for SPP in the medical benefit, yet I believe buy-and-bill will continue to lose share. As I explain below, hospital acquisitions of oncology practices encourages payers to choose SPPs instead of permitting buy-and-bill. When compared with the aggressive profit-seeking behavior of so-called “non-profit” hospitals, white bagging may be the lesser of two evils for payers.

Tuesday, February 26, 2013

Drug Channels News Roundup: February 2013

It may be chilly outside, but that won’t stop my monthly look at noteworthy new stories from the Drug Channels universe. In this issue:
  • CBO Recants (Again)—Why Part D keeps getting less expensive
  • Walmart’s Clinic Strategy—Why CVS is winning
  • Cataraman’s Takeover Plans—Why the #4 PBM will keep growing
  • Apple’s Channel Strategy—Why iPads never go on sale
Plus, the Onion examines Walgreen’s front-end merchandising strategy. (Don't worry, the article is safe for 9-year old Oscar nominees.)

Monday, February 25, 2013

Join me at the PCMA Specialty Pharmacy Business Forum

I want to remind you about PCMA's upcoming Specialty Pharmacy Business Forum (SPBF). The event will be held at the wonderful Wynn Las Vegas on March 26-28, 2013. You should register this week, because March 4 is the cut-off date for booking room reservations at the conference rate.

The SBPF is a must-attend meeting for anyone connected to the specialty channel—manufacturers, pharmacies, payers, PBMs, wholesalers, and others. PCMA has a special LinkedIn group for attendees. You can also schedule private meeting rooms during the event. Full details from PCMA below, including information about continuing pharmacy education (CPE) credits.

I'll be attending, so please send me an email if you'd like to arrange a one-on-one meeting. See you in Vegas!

Friday, February 22, 2013

Listen to my Podcast About the Pharmacy Industry’s Future

Todd Eury’s Pharmacy Podcast Show just posted a 25-minute podcast interview with me. We cover many topics, including:
  • the economic forces changing retail pharmacy
  • preferred networks
  • the commoditization of pharmacy services
  • how retail pharmacies are competing for the specialty drug opportunity
While  my consulting clients are pharmaceutical manufacturers, I also share some thoughts for pharmacy owners who want to survive and thrive over the next five years.

You can listen to the podcast below or on the Pharmacy Podcast site.

BTW, I have the honor of being the show's 77th pharmacy podcast. Click here to view the whole list.

Enjoy!

Wednesday, February 20, 2013

Final 2013 Part D Data: Preferred Pharmacy Networks Still Win Big, But CMS is “Concerned”

The Centers for Medicare and Medicaid Services (CMS) just released the final 2013 open enrollment data for Medicare Part D Prescription Drug Plans (PDPs). These updated data include about 1 million additional seniors and show some slight differences versus the initial data release.

However, the song remains the same. As I note last month, 16 of 2013's 190 PDPs have a preferred pharmacy network design. Consistent with the preliminary numbers, more than 4 out of 10 seniors enrolled in one of these 16 plans. Walgreens will benefit from active participation in preferred networks. CVS Caremark’s retail business will face headwinds. See the updated data table and comments below.

While consumers have been showing a whole lotta love for preferred networks, you may think that CMS has been standing around like a fool in the rain. But last week’s 2014 CMS call letter unexpectedly announced that CMS is now “concerned” about potentially higher costs in preferred networks. Check out the surprising excerpt below.

Tuesday, February 19, 2013

Bio/Pharmaceutical Sample Management Strategies

Want to stay current with the latest strategies, tools, and compliance for sampling? Then check out CBI’s Bio/Pharmaceutical Sample Management conference. The event is being held at the Hyatt Regency Princeton, in Princeton, New Jersey on March 18 and 19, 2013.

Speakers come from such companies as AstraZeneca, Bull’s Eye Innovations, J. Knipper & Company, MD Mindset, Noven Pharmaceuticals, Otsuka Pharmaceuticals, Palo Alto Medical Foundation, Pfizer, Physicians Interactive, Priority Solutions, United Healthcare Pharmacy and more.

Thursday, February 14, 2013

The Coming Battle Over 340B Contract Pharmacies

Check out an important new must-read white paper for anyone in the drug channel: The 340B Drug Discount Program: A Review and Analysis Of The 340b Program. The report was funded by an unusual coalition of industry associations representing manufacturers, pharmacy benefit managers (PBMs), independent pharmacies, and oncology practices. (See the list below.) It provides a useful 340B background and explains how hospitals are profiting in ways that seem to go far beyond the program’s original intent.

Contract pharmacies are one crucial, but little understood, part of the program. Using contract pharmacies, a hospital can (legally) profit from a commercially-insured prescription filled by a community retail pharmacy and paid by a private third-party payer. Pembroke Consulting’s research shows that Walgreens is the biggest 340B player. What’s more, manufacturers could potentially pay both 340B and PBM rebates for the same commercial prescription.

To 340B or not to 340B? Given the money involved, it’s not a tough question for hospitals anymore. But something is rotten in the state of Denmark. Read on and let me know if you agree.

Tuesday, February 12, 2013

Walgreen+Alliance Boots: Questions about Global Pharmacy

Tomorrow, London investors will get an early Valentine’s Day gift—an analyst day presentation from Walgreens and Alliance Boots. (How romantic!) View the agenda or listen to the webcast.

As background, I provide a brief overview of the Boots retail pharmacy business. Then, I cheekily suggest some questions that will (or should) be asked at tomorrow’s meeting. Add your own questions in the comments below. Just keep in mind that Alliance Boots is primarily a pan-European wholesaler and only secondarily a British retailer.

If Walgreens mentions a long-expected announcement about its U.S. strategy, then I shan’t be too surprised. Shame I can’t pop by for a spot of tea after what will surely be a jolly fun meeting.

Thursday, February 07, 2013

Benchmarking Pharma Economics in Oncology Practices

I just discovered a neat data source about the economics and business operations of oncology practices: National Oncology Practice Benchmark, 2012 Report on 2011 Data, from the Journal of Oncology Practice. (Free download.) This is the seventh year of this benchmarking survey—but the first one that I’ve read.

The article has loads of useful data about many hot topics—electronic medical records, clinical pathways, staffing, and more. In this article, I highlight three findings on pharmaceutical economics in oncology practices:
  • Oncology practices purchase about $3.4 million of drugs per hematologist/oncologist. The practices earn a 15% gross margin on these purchases.
  • About one-third of practices dispense medicine through a practice-affiliated pharmacy. Outpatient pharmacy revenues average about $360,000.
  • Specialty pharmacy white bagging is making inroads to buy-and-bill, although this survey is inconsistent with other sources.
If your internal teams need to boost business acumen on this topic, check out Drug Channels Institute's e-learning module on the economics of provider-administered specialty drugs.

Tuesday, February 05, 2013

Defining Specialty Pharmacy

The Academy of Managed Care Pharmacy (AMCP) recently published its latest Format for Formulary Submissions, version 3.1. (free download) Starting on page 34, the Format tries to answer two seemingly straightforward questions: What is a specialty drug? What is a specialty pharmacy?

The AMCP’s answers, which are intended for manufacturers, certainly won’t satisfy every constituent and may be rapidly outdated due to marketplace developments. Nonetheless, I find them useful for clarifying the discussion. Read on and see if you agree.

P.S. Today is the last day for discounted pricing on the 2012–13 Economic Report on Retail, Mail, and Specialty Pharmacies.

Monday, February 04, 2013

Looking Beyond Generics to Reduce Drug Costs (Guest Post)

Today’s guest post is from Kay Morgan, Senior Vice President of Drug Products and Industry Standards Research and Compliance at Elsevier’s Gold Standard.

In this guest post, Kay argues that payers should not simply deny access to brand-name drugs, even when generic equivalents are not available. Instead, she suggests that payers should use such technology tools as MEDalternatives to quickly and efficiently identify cost-effective therapeutic alternatives.

Please contact Marialuisa Curran, Product Marketing Manager, Commercial & Retail Pharmacy at Elsevier’s Gold Standard (m.curran@elsevier.com or 813-579-2794) with any questions about the article.