Friday, June 04, 2010

The Strategic Value of Pharmacy

Today, I am pleased to bring you a thought-provoking guest post about the strategic value of pharmacy to manufacturers.

The article below is written by John Halpern, VP and co-founder of IntegriChain, a Drug Channels blog sponsor. Josh makes the case that drug makers are not investing enough time or attention on retail pharmacy relationships. Josh plans to follow up this article with case study examples drawn from IntegriChain client experiences.

Josh will be in Booth 518 at HDMA's 2010 Business & Leadership Conference in Orlando next week. Be sure to stop by and share your thoughts with him on this topical issue.

And don't forget to tell him the secret phrase: "Drug Channels sent me." (Please note that the secret phrase is no longer "Rollo Tamasi.")

The Strategic Value of Pharmacy
by Joshua I. Halpern, Co-founder & Vice President, Products, IntegriChain

IntegriChain recently attended one of the largest conferences for pharmaceutical market researchers and sales operations. The presentations ran the gamut of pharma promotion strategy—the drive to greater regionalization, group practice selling models, customer-centricity, and in everything, greater responsiveness to the realities of managed care.

Conspicuously absent from each presentation? The pharmacy and its influence.

Unfortunately, some brand, sales, and market research executives view today’s pharmacy simply as a distributor. Perhaps this reflects the advent of syndicated prescription data and the demise of sales’ dependence on the pharmacist as a source of business intelligence.

I have heard stories of sales executives directing their reps to end the practice of pharmacy detailing. Even marketing teams are moving their focus from “pharmacy strategy,” leaving trade teams and operational managers to take the lead.

Recently, IntegriChain worked with several leading pharma companies as they reconsidered the value and influence of the pharmacy. In the past eighteen months, three of the top five manufacturers have launched new relationship-building programs in the pharmacy. Their programs are diverse, and most are brand and regional “pilots.” Taken as a whole, these initiatives represent a significant trend of entrepreneurial engagement and a well-sponsored pursuit of brand competitive advantage.

A brief review of recent pharmacy and managed care developments explains this trend.
  • When it comes to generics, the interests of the pharmacy and managed care are well aligned. The pharmacy makes nearly all of its behind the counter profit from filling generic scripts that in turn drive down the cost of care for payers.
  • As blockbuster brands go generic, other brands in the same therapeutic category come under enormous pressure from managed care. Generic Zocor®’s impact on Lipitor® was but the first fruit of a looming wave of therapeutic interchange, and the pharmacy counter will be a critical front in this struggle.
  • The major chains are doubling down on their strategies to expand health clinics in pharmacy, contract directly with payers, and increase services for the institutional market.
  • Some independent pharmacies are finding success by emphasizing their relationship with the patient and their ability to specialize in patient populations requiring more personalized care.
  • Channel conflict in the generics marketplace is creating surprising opportunities for brands post-LOE. While multi-source generic availability remains the death knell of brand market share, at least one blockbuster that lost exclusivity in 2009 was stunned by the share it retained through Q1 2010.
The pilots mentioned above have identified a mix of insight and as yet unanswered questions that leadership needs to understand in developing a pharmacy strategy. My IntegriChain colleagues and I are confident that the success innovators are finding in the pharmacy will prove a compelling case study for brand teams and sales leadership.

I will provide greater details on the pilots listed above in a follow-up article and offer additional insight on how pharmaceutical manufacturers can develop a successful pharmacy strategy.

In the meantime, I welcome your feedback on this issue. You can reach me at (609)806-5005 or by email.

1 comment:

  1. AnonymousJune 05, 2010

    Hello Josh.

    You may want to review your data re pharmacy profits and generics.

    With PBM's driving down the MAC prices over the past 18 months to a less inflated figure, dollar margins are very similar to the branded side.

    Expect this to continue, with the pharmacy financial incentive for growing the GFR to be eliminated.

    Ultimately, the pbm should have the same pricing controls.....but wait, they fly without any controls.

    Chairs up.