Tuesday, February 26, 2013

Drug Channels News Roundup: February 2013

It may be chilly outside, but that won’t stop my monthly look at noteworthy new stories from the Drug Channels universe. In this issue:
  • CBO Recants (Again)—Why Part D keeps getting less expensive
  • Walmart’s Clinic Strategy—Why CVS is winning
  • Cataraman’s Takeover Plans—Why the #4 PBM will keep growing
  • Apple’s Channel Strategy—Why iPads never go on sale
Plus, the Onion examines Walgreen’s front-end merchandising strategy. (Don't worry, the article is safe for 9-year old Oscar nominees.)

The Incredible Lowering of the Medicare Drug Benefit Baseline
In last month’s State of the Union address, President Obama took aim at the Medicare Part D benefit, which he called “taxpayer subsidies to prescription drug companies.” (ugh!) This article explains why the President is totally bonkers. As James Capretta explains, the Congressional Budget Office (CBO) has once again lowered the baseline spending amount for Part D. On page 57 of its latest Budget and Economic Outlook, CBO states: “The largest downward revision in the current baseline is for spending for Medicare’s Part D.” So, a successful program that works must be radically changed because pharmaceutical companies are poll-tested villains, while costs in every other part of the system spiral out of control?  Even though the non-partisan CBO has concluded that prescription drugs can reduce overall Medicare costs?  Think of Obama’s latest proposal as another reason to be despondent by what passes for health policy debate.

Wal-Mart Clinics Trail CVS Reaping 39% Growth: Retail
This Bloomberg article helpfully contrasts Walmart’s retreat from in-store clinics with CVS Caremark’s growth. While Walmart is closing locations, CVS plans to expand MinuteClinic to more than 1,500 clinics by 2017. According to the article, Walgreens still plans for its Take Care clinics to “grow significantly,” in contrast to the stagnation of recent years. See page 32 of the 2012-13 Economic Report on Retail, Mail, and Specialty Pharmacies for further context on in-store clinics.

Drug Manager Catamaran Can't Stop Its Takeover Habit
Here’s a good interview with Mark Thierer, CEO of Cataraman Corp. The fourth-largest PBM was formed when SXC Health Solutions acquired Catalyst Health Solutions. (See The SXC-Catalyst Merger: Initial Thoughts On the Deal.) As Mr. Thierer makes clear, Cataraman plans to gobble up many more mid-market, regional PBMs. If you don’t like to read, you can watch this brief video to hear Mr. Thierer’s thoughts on healthcare reform, talent recruitment, and future acquisitions. Click here if you can’t see the video.

How Apple sets its prices
Ever wonder why Apple iPads and Macs sell for the same price everywhere? Check out this article outlining Apple’s two-step channel discounting strategy. First, Apple offer very small purchasing discounts to a reseller, limiting the reseller’s ability to offer deep consumer discounts. Then, Apple offers additional monetary incentives that are only available if resellers advertise Apple products at or above the Apple-designated “minimum advertised price” (MAP). Fans of U.S. antitrust law know that such vertical restraints as resale price maintenance are not per se illegal. (Hat tip to Mark Dancer at Channelvation.)

Walgreens Manager Certain Dead Father Would Have Been Proud Of Crest Toothpaste Display
As I note in Walgreen+Alliance Boots: Questions about Global Pharmacy, front-end, non-drug sales account for 25% of revenues at Walgreen’s pharmacies. The Onion, America’s Finest News Source, interviews a store manager about the keys to the company’s success. Fantastic insight for endcap fans!

1 comment:

  1. Mark Thierer is the epitome of what's wrong with the PBM Industry. It's ALL about the GROWTH of his PBM company and NOTHING he exudes is abut better patient care. "Returning the Benefit of Pharmacy to the Patient" as a slogan could place Mark in a whole other galaxy of PBM. These PBMs need their CLOCKS-CLEANED and their priorities adjusted. No one is saying not to be profitable - but for health-sake, make it about the patient 1st and 2nd about the profit and you'll still be profitable.