Comments on Drug Channels: The Myth of Fading Independents

Wouldn't generic penetration rate have some impact...

2008-04-14T08:48:00.000-04:00

Wouldn't generic penetration rate have some impact on purchases as well? If chains are doing a better job of filling with generics, than the dollar amount of their purchases would be lower than other pharmacies filling the same number of scripts but filling with branded medications.

Also, you say that scripts per store are 50% higher for independents over the past 15 years. But that is probably true for all pharmacies, since volume per store had to rise as reimbursement rates reduced pharmacy profitability, and technology and better use of technicians allowed pharmcies to handle greater volume.

Prior to Med D, our pharmacy stocked the medicatio...

2008-04-07T12:07:00.000-04:00

Prior to Med D, our pharmacy stocked the medications on the NYS Medicaid or NYS EPIC formularies. Now with Med D we are purchasing and stocking meds to meet the needs of 8 or so benchmark plans for our dual eligible patients alone. As a result our inventory is not only higher but it turns less often. While we are indeed purchasing more, I hesitate to use purchasing as a yardstick for growth (in our pharmacy) while Med D is still in its relative infancy.

Steve Moore

Now this really IS surprising!

2008-04-04T11:57:00.000-04:00

Now this really IS surprising!

Adam,One swallow does not a summer make, right? Th...

2008-04-03T17:20:00.000-04:00

Adam,

One swallow does not a summer make, right? The longterm trend has been downward, so it remains to be seen whether this is a one-year blip or something else. Who knows, maybe the Big Three wholesaler programs for independents are having an effect. At www.PharmaceuticalCommerce.com, we also noted that scrip volume as reported by IMS Health went up for food stores even though dollar volume went down--which would seem to point away from price-reporting changes by IMS Health.

Marc,As always, thanks for the comment.Yes, my pos...

2008-04-03T16:49:00.000-04:00

Marc,

As always, thanks for the comment.

Yes, my post is admittedly "short-sighted," but the point is that the results are so contrary to my expectations. Hence, the graphic of the purple gorilla professor.

Re:your questions
-- I'm comparing the growth rates 8.4% vs. 1.6%, which is 5.4X.
-- This is a report of purchases *by* each channel, i.e., sales to each channel by manufacturers or wholesalers.
-- I calculate comparable growth rates for 2003 to 2007:
Independents +$6.9B (+22%)
Chains +$18.9B (+24%)

I don't think that price issues are large enough to account for the discrepancy. I'm actually more concerned that IMS changed their data categories and did not restate the historical data, but I do not have any quantifiable verification that this occurred.

Adam

Adam,Forgive me if I'm incorrect, but according to...

2008-04-03T14:16:00.000-04:00

Adam,

Forgive me if I'm incorrect, but according to the Channel Distribution report, I don't see how independents increase of 3 billion equates to 5 times the chain growth of 1.5 billion from 06 to 07. I see only twice the growth. ( doesn't 1.5 x 2 = 3?)

Also, is the report of channel distribution by US sales a summary of pharmacy purchases or pharmacy sales? If it is purchases, could some of the difference in dollars be due to the higher prices independents must pay to purchase due to lack of negotiation power?

Finally, the same reports you are quoting (2007 Channel Distribution...), show that Chains increase by 18.9 billion from 2003 to 2007 while independents only by 13.7 billion. Wouldn't this be considered the "big picture" that should be considered more than the shortsighted 1 year review?

Dr. Fein -- You've done it again! Thanks for anot...

2008-04-03T09:08:00.000-04:00

Dr. Fein -- You've done it again! Thanks for another thoughtful and original analysis. I had no idea that IMS showed independents growing faster than everyone else. But I wonder if there is something about the way IMS gathers the data that could be inflating independents. Any ideas?

Well-managed independent pharmacies will always co...

2008-04-03T08:41:00.000-04:00

Well-managed independent pharmacies will always compete effectively, if they assimilate enough RX volume via technicians and technology.