The Drug Channels blog 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. Learn more...

Thursday, May 29, 2014

Drug Channels News Roundup, May 2014: CVS, WAG, Alliance Boots

Summer is almost here. Before you get out your grill, check out our monthly summary of noteworthy news stories that you may not have noticed. In this issue:
  • Yikes! Medi-Cal’s new limited network excludes CVS and Walgreens
  • ¡Híjole! Alliance Boots makes big pharmacy acquisitions in Mexico and Chile
  • No gooaaal! CVS Caremark fails to buy a second Brazilian drugstore chain…for now
In lieu of a humorous final story, check out a great Philadelphia Inquirer article about a non-profit that’s using mobile cell phone towers to build a vaccine cold chain in Africa. Very cool.

P.S. For daily updates on noteworthy news, follow @DrugChannels on Twitter.

Wednesday, May 28, 2014

2013 Pharmacy Market Analysis: Chains Up, Mail Down

The IMS Institute for Healthcare Informatics recently released its official 2013 market data in the thoroughly titled Medicine Use and Shifting Costs of Healthcare: A Review of the Use of Medicines in the U.S. in 2013 (Free download with registration.) The report offers many interesting (and some inaccurate) stats, but I focus here on the prescription data.

Below, I discuss the industry's winners and losers, and summarize the data in a tidy chart. Highlights:
  • Total outpatient prescription growth was 0.2% in 2013, a slowdown from the 1.2% growth in 2012.
  • Chains rebounded, in the biggest single-year market share increase in at least 10 years.
  • Supermarkets continued their comeback, returning this format’s share to 2005 levels.
  • Mail prescriptions took their biggest dive ever, shrinking sharply in both absolute size and market share.
  • Independents experienced another year of small declines, but the format’s share now equals that of mail pharmacy.
Take note: Some of IMS’s data changed significantly. Tricare stopped providing its data, for instance, while Walmart began providing data. I discuss details of these changes below.

Friday, May 23, 2014

New Part D Final Rule: What CMS Still Doesn’t Get about Pharmacies, PBMs, and Preferred Networks

Today, the Centers for Medicare & Medicaid Services (CMS) officially published its Final Rule Part D rule for 2015. Savor the bureaucratese in the aptly-named Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs.

As I discuss in Run Away: CMS Abandons Part D Preferred Pharmacy Network Changes, CMS strategically retreated from its original Medicare Part D plans to alter preferred networks and Any Willing Provider (AWP).

Below, I highlight a few questionable aspects in CMS’s reasoning. Its self-serving explanations for the turnaround are fascinating. Oscar Wilde once said: “We are never more true to ourselves than when we are inconsistent.” By that standard, CMS is an organization of rare self-awareness.

CMS is proceeding with significant changes to Maximum Allowable Cost (MAC) rules for pharmacy benefit managers (PBMs), continuing an intriguing trend toward so-called MAC transparency. It also explains why the pharmacy industry is especially afraid of the forthcoming Average Manufacturer (AMP) finalization.

Tuesday, May 20, 2014

Hammer Time: McKesson Starts Pressing Generic Drug Makers for Global Savings

The shift to global drug distribution is accelerating. During last week’s earnings call, McKesson Chairman, President and Chief Executive Officer John Hammergren clearly described the company’s rapid transition to consolidated global drug procurement. Read the full transcript. (Free registration required.)

Highlights:
  • McKesson will take over Rite Aid’s generic distribution business by summer’s end.
  • McKesson is already negotiating with the additional Rite Aid generic volume.
  • By late summer, McKesson expects to gain operational control over Celesio. McKesson will then bid this generic volume, too.
  • NorthStarRx, McKesson’s private-label generic manufacturing business, will play a role for both Rite Aid and Celesio.
Read on for choice earnings call excerpts and my explanation of them. Manufacturers will feel increasing pressure to bust a move and establish global trade account management.

Monday, May 19, 2014

Join Me at IntegriChain’s 2014 DNA Innovation Summit

I invite you to join me at the 2014 IntegriChain DNA Innovation Summit, which will be held in Pittsburgh, PA, on September 8 to 10, 2014. Registration is free for pharmaceutical manufacturers. Click here to register.

I'll be delivering the keynote address, on "New Channel Realities for Product Launch." Official event details below or on the website.

This will be a great learning event for anyone involved in trade or channel management, along with their partners in finance and forecasting. See you there!

Thursday, May 15, 2014

Seven Trends For Specialty Pharmacy’s Future: Reflections on Armada 2014

Last week, I attended the bigger-than-ever Armada Healthcare Specialty Pharmacy Summit & Expo, in Las Vegas.

Larry and Robert Irene outdid themselves with this 10th annual event, which had an astounding 3,000+ attendees. All facets of the industry were represented, making for top-quality networking and meetings. (Loved the lounge, BTW.) And the Wynn, my favorite Vegas hotel, never disappoints.

As usual, the meeting shed light on where the specialty market is heading. In violation of Vegas code, I'll tell you what happened there … or at least the part related to specialty pharmacy. Read on for my seven trends for specialty pharmacy's future, plus a bonus photo of me with two notable conference attendees.

Tuesday, May 13, 2014

Drug Pricing Transparency Legislation Demands Sound Methodology in Setting MACs

Today’s guest post comes from Todd Grover, President & CEO of ChainDrugStore.net and Co-Founder of Glass Box Analytics.

Todd delves into the controversial Maximum Allowable Cost (MAC) reimbursement methodology. As Drug Channels readers know, a MAC establishes the reimbursement limit for a multiple-source drug. MAC legislation has passed or is pending in 22 states. Todd provides direct links for all legislative activity below.

He then describes Predictive Acquisition Cost (PAC), an alternative benchmark that aims to get closer to a pharmacy's true acquisition cost. Drug Channels readers can analyze MAC pricing by downloading the PAC – MAC Optimization Calculator, an Excel workbook with data on five key generic drugs. Cool!


Please contact Todd (tgrover@glassboxanalytics.com) with any questions about the article.

Thursday, May 08, 2014

PBM-Owned Specialty Pharmacies' Financial Win From Sovaldi

I’m writing from the Armada Summit in Las Vegas. Gilead’s hepatitis C drug, Sovaldi, is a hot discussion topic.

In the first quarter, Sovaldi generated U.S. revenues of $2.1 billion, making it one the most successful drug launches. Many payers and pharmacy benefit managers (PBMs) are highly critical of Gilead’s pricing strategy. Good background in Kaiser Health News’ Who Should Get Pricey Hepatitis C Drugs?

Since PBMs own the largest specialty pharmacies, perhaps there’s a silver lining to Sovaldi’s robust sales. David Larsen, an analyst at Leerink, estimates that CVS Caremark and Express Scripts gained as much as $600 million in revenues from first quarter Sovaldi sales. As he sees it, PBMs “will actually benefit from Sovaldi sales and earnings in 2014."

Read on for highlights of David’s creative analysis. I have also included related comments from George Paz, chairman and CEO of Express Scripts.

Monday, May 05, 2014

Free Webinar: Benchmark Findings for Pharmaceutical Channel, Inventory & Service Level Trends

Every year, our friends at IntegriChain—an informed application cloud used by suppliers to manage relationships, orders, and inventories across retailers, e-tailers, and distributors—release benchmark data on pharmaceutical channel, inventory and service level trends.

To unveil their spring 2014 findings, highlighting data through Q4 2013, IntegriChain will be hosting a free webinar:

Title: Benchmark Findings for Pharmaceutical Channel, Inventory & Service Level Trends
Date: Wednesday, May 14th, 2014
Time: 1-2pm EST

This free webinar will be led by IntegriChain Executive Vice President, Josh Halpern, and two other industry experts, Dan Kinney, IntegriChain Vice President of Customer Operations, and Shivani Patel, IntegriChain Director of Advanced Analytics.

This webinar will have unique and cool drug channels data, by therapeutic category. Click here to learn more and register.

Friday, May 02, 2014

Fixing the Patient Non-Adherence Epidemic in the Specialty Drug Market

Today’s guest post comes from Scott Pribyl, CEO of mRx Ventures. He describes SamplifyRx, a cloud-based hub and virtual marketplace of patient support services that manages every touch-point in the specialty drug workflow process.

Scott will be at the Armada Specialty Pharmacy Summit & Expo. To learn more about his intriguing software platform, email him at scott@samplifyrx.com or connect via his Armada Summit profile page.

Worthwhile article. Check it out.