Tuesday, January 28, 2020

Drug Channels News Roundup, January 2020: ESI/Walgreens Breakup, Amazon Pharmacy, Humira’s G2N, Generic Prices, ABC's CEO, and Miss America

Super Bowl LIV is here. Time for some blow-out beer commercials, occasionally interrupted by the 49ers and Chiefs.

But who needs a Super Bowl-party when you can tackle this month’s selection of notable news stories, intercepted for you from the Drug Channels gridiron:
  • Fumble: Express Scripts will stop buying generic drugs with Walgreens
  • Trick play: Amazon signals global pharmacy ambitions
  • Pass interference: The gross-to-net bubble for Humira
  • Touchdown! ABC’s CEO pens a good letter to the editor
  • Defensive line: Competition still lowers prices, says the FDA
Plus, the new Miss America is … a PharmD student?

P.S. Join the nearly 8,800 followers of my daily musings and links to neat stuff at @DrugChannels on Twitter. My recent tweets have highlighted best practices for biosimilar adoption, white bagging, hospital profits, 340B program oversight, insulin economics, the innovation ecosystem, California’s bonkers idea for generic drugs, Baby Yoda, and much more.

ESI to Withdraw from WBAD: Limited Loss of Leverage but Incremental Benefits will be Missed, Nephron Research

Eric Percher of Nephron Research had a big news scoop last week: Express Scripts will exit its generic drug procurement relationships with Walgreens Boots Alliance. This move is more bad news for Walgreens, which already faces major headwinds for its U.S. pharmacy business.

Here’s a look at the Drug Channels Institute’s generic purchasing market share estimates, from our 2019–20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

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A few weeks ago, I speculated that the Express Scripts / Prime Therapeutics deal would poses fresh challenges for Walgreens Boots Alliance. Looks like the fun has already begun. For what could come next, reread point #3 in Express Scripts + Prime Therapeutics: Our Four Takeaways From This Market Changing Deal

It's only January, but 2020 is already shaping up to be another crazy year in the drug channel.

(Sorry, I can't share a link to the full Nephron report. Click here to email Eric about accessing Nephron’s research reports.)

Amazon just filed a bunch of international trademarks for ‘Amazon Pharmacy’, CNBC

In my November news roundup, I noted that Amazon had recently changed its branding “PillPack, an Amazon company” to “PillPack by Amazon Pharmacy.” The company has also filed state licenses to put the “Amazon Pharmacy” name on its pharmacy fulfillment centers.

Chrissy Farr at CNBC now reports that Amazon has filed to trademark “Amazon Pharmacy” in Canada, the U.K., and Australia.

It’s intriguing, but let’s not get carried away. Amazon will need many years of dramatic growth to become a significant player in any pharmacy market. I still expect its overall market share to remain in the low single digits for at least the next five years.

The Shocking Rise of Prescription Drug Prices, Consumer Reports

Consumer Reports published this look at prescription prices. Reporter Lisa Gill explains some crucial underlying economics of the U.S. drug channel.

The chart below caught my attention, because it nicely illustrates the gross-to-net bubble.
  • Humira’s list price rose by 78%, from $2,914 in 2015 to $5,174 in 2019. That means list prices grew by an average of 15% per year.
  • However, the net price received by the manufacturer (AbbVie) grew by an average of only 4% per year. That’s because rebates grew by an astonishing 611%, or an average rate of 63% per year.
[Click to Enlarge]

Pity the patients who had to pay ever-higher coinsurance amounts based upon the growing list price rather than the much lower net price.

Out-of Pocket Costs More Important Than Drug Rise, The Wall Street Journal

Steve Collis, the CEO of AmerisourceBergen, published this excellent letter to the The Wall Street Journal. He succinctly highlights the complex interplay between drug prices, benefit design, and out-of-pocket spending. Well done, Steve!

Generic Competition and Drug Prices: New Evidence Linking Greater Generic Competition and Lower Generic Drug Prices, Food and Drug Administration

A new FDA study reiterates that more generic drug competitors results in:
  • Lower invoice prices to pharmacies, as measured by the national drug acquisition cost (NADAC), and
  • Lower revenues for manufacturers, as measured by the average manufactuer price (AMP)
The chart below shows the ski slope for generic pricing. Not a surprise, but nice to see that the usual deflation pattern still holds and that competition works.

[Click to Enlarge]

VCU pharmacy student Camille Schrier crowned Miss America 2020, VCU News

VCU School of Pharmacy student Camille Schrier is our new Miss America. Camille is studying for her Pharm.D. Finally, some good news for the pharmacy industry!

Here’s a video of her pageant-winning science experiment for the talent portion of the competition. (This is the best video I could find.) Click here if you can’t see it.

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