Friday, December 20, 2013

The 2013 Drug Channels Year in Review

Dear Drug Channels reader,

Whew. It’s been a crazy, busy year. Thank you for welcoming me into your inboxes and browsers. I’ve had fun writing about this year’s unexpected, unusual, and fascinating events. I’m grateful to our many sponsors and guest writers. Special thanks to the brave souls who joined in the spirited discussions below the articles.

This was also big year for Drug Channels. We hit almost 8,000 subscribers, started tweeting @DrugChannels, and proudly launched the Drug Channels Institute (DCI), a management education and computer-based training business for and about the pharmaceutical industry.

Below, I gift wrap 2013’s six biggest themes, so you can unwrap your favorite articles for the holidays.

Drug Channels will return in the new year. In the meantime, please enjoy our Drug Channels video greeting. As a special treat, you can see me dancing with my wife, Paula, who runs DCI’s e-learning business.

Here’s my 2014 promise to you: If you like your Drug Channels, you can keep your Drug Channels. Period.

All the best to you and your family,

1. Deals, Deals, Deals

2013 was filled with mergers, acquisitions, and other unique combinations. The drug channels players are planning for healthcare reform (ha!), positioning for the generic wave’s final stage, and preparing for the specialty boom. Check out my comments on this year’s notable deals:
On a personal note, I got some nice national TV exposure, which made me marginally cooler to my kids

2. Our Crazy Generic Market

2013 was wacky for generic drugs. The generic wave caused drugstore sales to drop for the first time, while the supermarket chain Wegmans helped us understand What Free Generic Lipitor Says about Pharmacy's Future. Amid the deflation, prices have skyrocketed for a small number of generic drugs. Our research, summarized in Retail Generic Drug Costs Go Up, Up, found the cost of twelve drugs increased by more than 2,000%! FOX Business noticed our story, as you can see below. (Click here if you can’t see the video.)

In July 2014, the new AMP-based Medicaid generic drug reimbursement metrics will launch (maybe), even as a new government study showed that Obamacare Will Squeeze Pharmacy Profits. To quote my old friend Roger Daltrey: It’s hard.

Still, as prices went very high or very low, buying generic drugs more cheaply became a global channel focus. Three big combinations are now ramping up: (1) WBAD with AmerisourceBergen, (2) McKesson-Celesio, and (3) CVS Caremark-Cardinal Health. As I noted in Breaking WBAD: An Update on Walgreens-Alliance Boots Synergies, the news will be tough for generic manufacturers. The just-announced Cardinal and CVS Caremark joint venture looks like the lowest-risk, highest-return deal. But all three organizations will be getting badder in 2014. That’s right, they bad.

3. Preferred Networks Are Kind of a Big Deal

This year, narrow pharmacy networks went mainstream.

In January, Drug Channels exclusively reported that 4 out of 10 seniors chose a 2013 Medicare Part D with a preferred network. Later in the year, we broke the news that more than 70% of 2014 Medicare Part D plans have a preferred pharmacy network. Our analyses also showed that Walmart is playing to win in these networks, while CVS and Rite Aid lag. For a 30-second summary, see Walmart's TV Ad Pitches Preferred Networks.

Commercial plans are starting to adopt these models, so I asked: Will Narrowing Pharmacy Networks Squeeze Manufacturers?

In January, we’ll get our first look at 2014 Part D enrollment numbers. The data will go well with poetry, a glass of scotch, and, of course, my friend Baxter.

4. Everyone Is Special

As I wrote in my 2013 Armada Summit wrap-up, pharmacy is becoming specialty. In 2018, 6 of the 10 best-selling drugs by revenue will be specialty drugs, per Meet the Top Ten Drugs of 2018.

The largest three PBMs all project specialty drug trend to remain above 15%. We compared and contrasted the projections in More Drug Trend Forecasts: An Exclusive Look at Prime Therapeutics vs. the Big Two PBMs. Employers are getting tougher on specialty drugs, while payers are shifting more specialty costs to patients (per How the Fourth Tier Coinsurance Boom Drives Copay Offset Programs.)

We offered further proof that specialty pharmacy is booming, in Say Hello to the 12 Fastest-Growing, Private Specialty Pharmacies, our exclusive analysis of the Inc. 500 list. The long term care pharmacy Pharmerica has just acquired a minority stake in No. 5 on that list.

Meanwhile, the specialty drug distribution business is under pressure. As we told you in November, AmerisourceBergen Still Dominates Specialty Distribution, but Competition is Catching Up, while Payers Want Specialty Drug Distribution to Change. For full details, check out our 2013–14 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

You can read all of specialty-related articles at this link.

5. That 340b Controversy

As predicted in February’s The Coming Battle Over 340B Contract Pharmacies, the 340B drug discount program became big news. Senator Chuck Grassley’s inquiries shined an unflattering light on Hospitals' Extraordinary 340B Pharmacy Profits from Insured Patient, which prompted My Controversial 340B Op-Ed.

Drug Channels also had the pleasure of revealing that Walgreens Dominates 340B Contract Pharmacy Mega-Networks, which prompted Senator Grassley to ask Walgreens a few uncomfortable (and heretofore unanswered) questions.

By mid-2014, the Health Resources and Services Administration (HRSA) will unveil its very first proposed regulations for this out-of-control program. Expect much more 340B hullabaloo.

6. We Follow the Dollar

As always, Drug Channels digs deep for the financial nuggets that others ignore. We uncovered that Pharmacist Salaries Hit $117K and Keep Climbing, revealed that Profits Rebound for Pharmacy Owners, and analyzed Profits in the 2013 Fortune 500. We even benchmarked pharma economics in oncology practices.

We also kept close tabs on the ever-shifting government drug spending projections, explaining The Outlook for Pharmaceutical Spending Through 2022. What’s more, we found that Public Funds and Exchanges Will Soon Overtake Employer-Sponsored Insurance.

2014’s first batch of wonkery will arrive when the government releases the latest healthcare spending data. Sounds like my kind of fun.

Your Holiday Bonus: Big Macareindeer

Have a great holiday and happy New Year! Click here if you can't see our video greeting. Turn up your speakers!

1 comment:

  1. Dr. Fein,
    Thank you for another year of stimulating articles. Your site is a very valuable source of information about our industry.
    Happy holidays!