Thursday, January 07, 2010

Strategic Questions for 2K10 (Part 2 of 2)

Here is the second of two posts outlining major topics that I'll be watching in 2010, framed as strategic questions with links to relevant background posts. Please feel free to add your own strategic questions in the comments.

Strategic Questions for 2K10 (Part 1 of 2) appeared on Tuesday.

I'll be returning to regularly scheduled blogging tomorrow.


5) Who will dominate the specialty channel? Specialty pharmaceuticals reach patients in two primary ways--via a wholesale distribution-to-provider channel and via a central-fill specialty pharmacy channel. I see specialty pharmacy channel growing faster than the provider channel given the bundling of specialty services with pharmacy benefit management and the reduced provider profitability for injection/infusion therapies under traditional buy-and-bill systems. But it will be an interesting turf battle.
6) How will brand drug manufacturers adapt to the new channel strategy challenges? Previously distinct distribution, dispensing, and contracting channels are converging into unified operating models that will seek to leverage influence against pharmaceutical manufacturers. These new organizations are aggressively competing with each other to gain a privileged position as consumer and clinical access agents. This competition (usually) benefits payers at the expense of generic and brand manufacturers. There will be new challenges in the coming year. Alas, the most interesting situations never make the news and hence I can’t report them on Drug Channels.
7) Will a truly global drug wholesaler emerge in 2010? The drug wholesaling industry is in a period of relative stability. The fee-for-service transition is over; major contracts have been renewed (albeit at lower margins, naturally); the largest wholesalers are forward-integrating in specialty distribution and independent pharmacies; and overall market growth seems solid. International expansion—or a major acquisition by an international wholesaler—looks like a logical next step as the credit markets improve and the retail generic price war accelerates.
8) Will we ever get national supply chain security standards? Here’s another unanswered question from my 2009 list. Things have been very quiet ever since California pushed its e-pedigree deadline over the horizon to 2015, although some manufacturers are still proceeding with small e-pedigree and/or serialization trials. The Food and Drug Administration Amendments Act of 2007 empowered the FDA to take a stronger hand in these matters with Section 913, entitled “Assuring Pharmaceutical Safety.” (Click here to read this section.) Look for news from the FDA in March 2010.

Any other suggestions for topics that I missed?


  1. Adam:

    I think that one of the bigger one's that you missed is the HITECH Act. AKA "Son of HIPAA" with up to $1.5 million penalties and jail time now on the line.

    You can't tell me that with the deficits we are facing that the Feds aren't licking their chops on this one!!

  2. Hi Adam,

    In reading your last post, what do you mean by, “patient-centric branded strategies” as part of PBM’s new business model?
    Do you have any links I can check out explaining this?


  3. Kevin:

    I’m referring to a PBM's branded services focusing on overall health care spending and clinical outcomes instead of narrowly concentrating on drug trend. Examples include Proactive Pharmacy Care (CVS Caremark), Therapeutic Resource Centers and Optimal Health (Medco Health Solutions), or Consumerology (Express Scripts).


  4. Adam

    In the specialty pharmacy are what role do you forsee for companies like ICORE that specialize in driving marketshare to specialty products?

  5. Kevin,

    Below is a recent announcement from Medco of a presentation at a JP Morgan Healthcare Conference in San Francisco on January 12, 2010.

    Note the use of trade mark symbols after clever phrases. This is a relatively new development -- efforts to brand clinical programs.

    Medco Health Solutions, Inc. (NYSE: MHS) is pioneering the world's most advanced pharmacy® and its clinical research and innovations are part of Medco making medicine smarter™ for more than 60 million members.