Monday, November 25, 2013

Drug Channels News Roundup: November 2013

Here's a pre-Thanksgiving news roundup, to stretch your mind before stretching your stomach later this week. In this issue:
  • Drumstick of Truth—Walmart’s Alabama plan exposes pharmacy economics
  • No Leftovers—What Hospitals think about specialty drug white bagging
  • Extra stuffing—Cardinal’s George Barrett wins CEO of the Year…in Ohio :/
Plus, GlaxoSmithKline launches an ultra-orphan, “second term strength” version of Paxil. You’re welcome, Mr. President.

Walmart: Alabama Medicaid Pharmacy Savings Proposal
In last month’s news roundup, I highlighted Walmart’s preferred network pitch to the Alabama Medicaid Pharmacy Study Commission. We can now view the full slide deck, which shows Walmart’s computations and logic. Walmart offered Average Wholesale Price (AWP) minus 22% for brand-name prescriptions, and AWP-85% for generic prescriptions. At those rates, Walmart’s first-year revenues would be below competitors by an astounding $14 per retail script. (See below.) No wonder Walmart aggressively joins preferred networks.

‘White Bagging’ of Specialty Drugs Draws Some Ire
This article contains valuable provider viewpoints on white bagging, which occurs when a specialty pharmacy ships a patient’s prescription to a physician office or an outpatient clinic. The article is based on a presentation made at the Oncology Pharmacy Education Network (OPEN) meeting, held before the Association of Community Cancer Centers National Oncology Conference. Economics are partially responsible for the controversy, because the provider and the distributor lose buy-and-bill spreads when specialty products are white bagged. For more on the pros and cons of white bagging, see the section starting on page 94 of the 2013–14 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

Healthy Outlook
George Barrett, Cardinal Health’s Chairman & CEO, has had a rough ride. The company lost mega-billions in revenue when Express Scripts and Walgreens switched their wholesale business to AmerisourceBergen. (See ABC Wins Express Scripts Contract from Cardinal and Making Sense of ABC-Walgreens-Alliance Boots.) The indefatigable Mr. Barrett is all smiles for this interview, which sheds light on Cardinal’s upbeat outlook. As I noted in March, the company still has three strong growth platforms. Sometimes losing is what you do before winning.

Anti-Depressant For Obama
I LOLed at this video that simultaneously mocks our beleaguered President and pharma TV ads. Worth watching. Click here if you can’t see the video below.


  1. Alabama and Walmart,
    This should not be a surprise to anyone who understand how competitive markets work. At the very least WalMart's offer will be a catalyst for Alabama Medicaid to sharpen their pencils and re- evaluate their reimbursement methodology.

  2. AWP-85% on generic Prozac is $11.77/30 capsules. NC Medicaid MAC is $ deal there. Or generic Keppra $63 Wally vs $11.05 NC, EVEN WORSE. Sorry, but it appears our state MAC is much better than Wally's promised savings. So Wally is playing the PBM's misinformation "AWP-minus" game with surprise there. The real question is are Alabama's Medicaid people smart enough to see through the smoke and mirrors.

  3. Good stuff... No word on what is what definition-wise (I think that a lot of hay can be made if there is freedom to call things brands that some would consider generics). Either way, I think PBMs are hoping clients don't stumble upon this while meandering around on the inter-webs.