Tuesday, August 22, 2017

Drug Channels News Roundup, August 2017: Amazon, Express Scripts, Walgreens, PharMerica, Rebates, and Bezos Business Wisdom

The eclipse has passed! Now it’s time to enjoy this blinding collection of curious questions, filtered through the all-seeing Drug Channels viewfinder.
  • What are Amazon’s actual prospects in the drug channel?
  • What does Express Scripts think about Amazon's prospects?
  • Why did Walgreens partner with KKR to buy PharMerica?
  • What happens to patients when plans favor brand-name drugs over generics?
Plus, Jeff Bezos shares words of wisdom for budding entrepreneurs.

P.S. If everything under the sun is in tune, then you'll follow @DrugChannels on Twitter for my daily links to all that you love.

Goldman Sachs breaks down how Amazon can jump into health care, CNBC

Can’t get enough idle speculation about how/when/where Amazon will disrupt the pharmacy/PBM/wholesale industries? Then you’ll love this CNBC article, which summarizes a much longer (but not publicly available) Goldman Sachs report. Here’s the key summary chart:

[Click to Enlarge]

Goldman’s views are fairly consistent with the perspective that I lay out in A Reality Check on Amazon’s Pharmacy Ambitions. Note that Goldman rates three of the five options as low viability for Amazon.

Alas, I doubt this chart will stop people from assuming that Amazon will automatically dominate every aspect of the drug channel. Anyone else getting a whiff of late 90s dot com hysteria?

Drug middleman Express Scripts is getting peppered with questions about Amazon's health care interest, CNBC

CNBC has carved an interesting niche as a primary news source for Amazon's drug channel ambitions. Here's a nice summary of what Express Scripts president and CEO Tim Wentworth said on a recent earnings call. The article also include my $0.02: ""I think Amazon has more lucrative areas to go after than becoming a PBM.".

PharMerica Corporation Enters into Definitive Agreement to Be Acquired by KKR for $29.25 per Share in Cash, KKR & Co. L.P.

File under “thing that make you go hmmm.” Investment firm KKR is acquiring PharMerica, the second-largest long-term care pharmacy. What’s notable is that Walgreens Boots Alliance (WBA) is participating in the deal as only a minority investment. I had been expecting WBA to buy PharMerica outright.

What’s going on? Is KKR keeping PharMerica on ice until WBA clears its new Rite Aid deal? Will KKR invest in Rite Aid and/or Fred’s to help smooth the path for the WBA-RAD deal?

Take the Generic, Patients Are Told. Until They Are Not, The New York Times

Here’s a must-read look at the wild and wacky world of rebates and pharmacy benefit management. The article examines people whose health plan favors a brand-name drug over its generic equivalent. Presumably, the brand-name drug has a lower net cost for a plan sponsor though it may be more expensive for the patient.

It’s a useful reminder that the gross-to-net bubble has real-world implications for patients' out-of-pocket costs. For context, see my two-part series from June:
My Advice To Anyone Starting A Business Is To Remember That Someday I Will Crush You, The Onion

Jeff Bezos penned this thoughtful essay for The Onion, America’s Finest News Source. Forget the Oracle of Omaha. All hail the Sage of Seattle!

P.S. There is no dark side of the moon really. Matter of fact it's all dark.

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