What you may not know is that IMS Health also restated sales data from 2005 through 2008, resulting in a $25.7 billion, four-year drop in U.S. market size versus previous reports. No, this is not a belated April Fool's joke. IMS' explanation for the updated data is included below.
Chain stores and Non-Federal Hospitals had the biggest downward adjustments over the period, while Independents and Mail Pharmacies had small adjustments. I’ll comment more on share movement by distribution channel in an upcoming post. In the meantime: Caveat marketor!
IMS Health kindly makes certain industry data freely available on its Top-line Industry Data web page.
The 2009 Channel Distribution by U.S. Sales report (published in April 2010) presents data from IMS Health National Sales Perspective™ (NSP) based on sales *into* the various distribution channels tracked by IMS. As I understand the data, NSP represents product purchases from wholesalers or manufacturers, not revenues of the buyer. IOW, you won’t see data on pharmacy revenues. See below for more details on the NSP data.
What got my attention were the changes from the 2008 Channel Distribution by U.S. Sales document (published in April 2009). The older report shows market size that is higher every year from 2005 through 2008. In other words, the market has apparently shrunk—a lot—as measured by IMS.
Here are the changes to the top-line market size data:
Observations and comments
- The NSP sales into Chain Stores (pharmacies) were adjusted downward by -$13.5 billion (-3.5%), accounting for 53% of the total restatement.
- The source of the discrepancy changes over time. Chain stores account for 71% of the difference in 2005, but only 36% in 2008.
- The 2009 report on Number of U.S. Dispensed Prescriptions did not make any revisions to previously published data of total market size. Hmmm...
- Will these revisions affect the government’s already shaky predictions of future drug spending? See Drug Forecasts: Oops!...They Missed It Again for background.
- Ironically, I called on IMS to restate its data in 2008, although I was focused on reclassification among channels, not total market size. See IMS Recounts, but Independents Still Growing.
So, what happened?
The good folks at IMS told me that there were "material enhancements" to NSP data. These included items such as returns, shipping adjustments and historical corrections not previously reflected. IMS restated 72 months of history, leading to the market-level declines in sales volumes across all channels. IMS clients heard about the changes in January.
Okey-dokey. But I wonder if these type of mega-revisions will encourage manufacturers to rely more on EDI 852 and 867 data from wholesalers, or perhaps depend on channel data integrators such as Drug Channels sponsor IntegriChain?
A note about NSP data: NSP represents sales at invoice pricing, not sales at a list price such as Wholesale Acquisition Cost (WAC) or Average Wholesale Price (AWP). Contract pricing, such as a discounts processed via a wholesaler chargeback transaction, are reportedly reflected in the IMS NSP measures of price and sales. Off-invoice discounts and rebates, such as rebates paid directly by the manufacturer to a third-party, are not reflected in NSP data.
I'd appreciate hearing your thoughts on what's behind the latest numbers.