Thursday, November 18, 2010

Drug Channels News Roundup: November 2010

Time to get ready for Thanksgiving with these noteworthy news stories from the Drug Channels universe. In this edition:
  • Say what?!? Kinray sells to Cardinal Health
  • The Perils of Discount Generics: Big Brother can’t watch!
  • Pedigree Referee: Will wholesalers control your pedigree strategy?
  • Waiting for Pigs to Fly: A plea for rational debate about health care policy
  • Dirty Deeds: The Onion examines GSK’s manufacturing problems

Cardinal Health To Acquire Kinray for $1.3 Billion
One of of the last remaining regional drug wholesalers finally bit the bullet and sold out. As I describe in Double Trouble for Cardinal Health, Cardinal really has no choice but to diversify away from its dependence on CVS Caremark (NYSE:CVS) and Walgreens (NYSE:WAG). I'm just surprised Stewart Rahr sold out first. So, what will Morris & Dickson and H.D. Smith do now? BTW, it's quite amusing to note that Cardinal's press release states that Kinray's revenues are $3.5 billion versus Forbes' estimate of $5.3 billion. Never trust a flamboyant billionaire?

Four-Dollar Generics—Increased Accessibility, Impaired Quality Assurance
This op-ed from the New England Journal of Medicine argues that low cost, cash-pay prescriptions undermine quality and monitoring. The article asserts: “Many pharmacies do not submit claims to insurers when patients pay cash, since they have no incentive to do so.” I’ve heard similar stories, but the authors have no data to support this statement. (Yes, I contacted Dr. Shrank to be sure.) Walmart has stated publicly that they always file a claim on behalf of patients. See the last paragraph of Wal-Mart adds some $4 generics (yawn). Hmmm...

Who Will Decide Which Pedigree Model You Will Invest In?
I encourage you to read this very provocative essay by Dirk Rodgers at RxTrace, who argues that pharmaceutical wholesalers that distribute into California will dictate which pedigree model and technology must be used by the entire supply chain. If he’s right, then I expect manufacturers and pharmacies to get much more interested in a national pedigree approach as a way to minimize the wholesalers’ power. Or will the FDA wake up and decide track-and-trace and pedigree should be “strategic priorities.” (See Is Track-and-Trace a priority for the FDA?)

Tell Us The Truth Before You Tell Us Why You Are Right
Here’s a thoughtful plea from Washington insider Bob Laszewski to begin any healthcare or entitlement reform discussions from a factual basis. It’s music to my ears, but unlikely to be heard in the corridors of legislative power. Good effort, though.

Company Paying For Bad Drugs
British drug manufacturer GlaxoSmithKline agreed to pay $750 million to settle criminal and civil complaints that the company sold drugs with questionable safety from its plant in Puerto Rico. The Onion, America’s Finest News Source, takes a (humorous?) look at the alleged problems.


  1. Holy ****! I thought your first story was an April Fool joke!

  2. For more on the Cardinal-Kinray deal, see my comments in The Wall Street Journal: Cardinal Health to Buy Drug Distributor Kinray .


  3. Just read your Wal-Mart $4 story and have some comments:

    1. Third party contracts require WM to submit U and C prices $4/$9. However pharmacies have the right to promote their own discount card programs to compete with T/P prescription plans.

    2. Patients have the right to pay cash and not present their "prescription" card

    3. New England JOM comments that cash prescriptions undermine quality. The writer is not knowledgeable about the real PBM world and DUR edits. They should research what really happens in the PBM-DUR world.

    Have a wonderful Thanksgiving.

  4. For more on the Cardinal-Kinray deal, see my comments in The Wall Street Journal: Cardinal Health to Buy Drug Distributor Kinray .