Analysis

My, my, how things have changed.

Yesterday, Walgreens released its latest quarterly earnings. President and CEO Greg Wasson has now completely reversed his public tone on tax inversion regarding Alliance Boots. Read his comments below and see what you think.

Putting aside the politically fraught inversion issue, Walgreens' financial picture gives us a valuable glimpse into the pharmacy industry's changing economics. Despite some good news on Alliance Boots synergies, gross margins were pulled down due to generic reimbursement pressures. (A-gain?) I highlight a key comment below, but you should really read the entire transcript.

Walgreens withdrew its 2016 guidance and now plans to update everyone in late July/early August. We'll all be waiting for Wasson to pull a rabbit out of his hat. Presto!

In Which PBM Best Manages Drug Trend?, I analyze and compare the 2013 drug trend figures from four of the largest pharmacy benefit managers (PBMs)—Catamaran, CVS Caremark, Express Scripts, and Prime Therapeutics.

Today, let’s look at each company’s drug trend projections for 2014 through 2016. As you can see in the charts below, the PBMs' forecasts are surprisingly different, especially for traditional drug trend. Despite specialty trend methodology disparities, the four PBMs have roughly comparable specialty projections.

Check back next year, and we'll see whose crystal ball was most accurate. In the meantime, remember that even a blind pig finds a truffle sometimes.

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July 22-23, 2014 | Philadelphia, Pennsylvania

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Today’s guest post comes from Zitter Health Insights.

Zitter describes how patient behavior increasingly affects healthcare spending. In response, Zitter Health Insights now offers Consumer Connect, a market research platform that tracks, stores, and analyzes data entered by thousands of patient panelists.

Read on for some surprising consumer insights on brand selection, costs, and other topics. Or, click here to learn more about Consumer Connect.

Four of the biggest pharmacy benefit managers (PBMs)—Catamaran, CVS Caremark, Express Scripts, and Prime Therapeutics—have now released their 2013 drug trend reports. The reports provide valuable marketplace insights. Just cite them with caution.

As the chart below shows, this year’s results are as mystifying as ever. Express Scripts had the highest overall drug trend, but the lowest specialty trend. Prime Therapeutics had a negative traditional trend, but the highest specialty trend. And so on.

Alas, the top-line figures don’t tell the full story, because of methodology and data presentation differences. As I noted last year, a PBM’s drug trend report is the bikini of pharmaceutical economics. What it reveals is interesting, but what it conceals is essential. Read on for the figure-hugging details.

Life Sciences Forum on Distributor Audits

July 15-16, 2014 | Philadelphia, PA

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CBI’s Life Sciences Forum on Distributor Audits brings together compliance, audit and supply chain senior level team members to discuss important challenges and strategize innovative solutions.

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As a follow up to yesterday’s analysis of Profits in the 2014 Fortune 500, let’s check out the U.S. Census Bureau’s latest Annual Retail Trade Report. These government-collected data provide the most complete industry picture of profits at retail drugstores.

As you can see in the charts below, drugstores’ gross margins increased again, reaching their highest levels in seven years. Gross profit dollars also grew.

Every year Drug Channels publishes these data, I get comments that “the sky is falling for pharmacy,” “next year will show how bad things really are,” yadda yadda yadda. Yet these impartial government data repeatedly show that retail drugstores’ financial position looks better than you may expect.

Time once again for my annual review of the latest Fortune 500 list. These data will help you “follow the dollar” and understand how drug channel intermediaries make money.

Below, I explore the profitability and shareholder returns of the largest drug wholesalers, chain pharmacies, pharmacy benefit managers (PBMs), and pharmaceutical manufacturers. Thanks to consolidation, the 2014 Fortune 500 list contains only eight drug channels companies—AmerisourceBergen, Cardinal Health, CVS Caremark, Express Scripts, McKesson, Omnicare, Rite Aid, and Walgreens.

Below are my five observations from comparing these companies with the Fortune 500’s 12 pharmaceutical manufacturers and a separate survey of independent pharmacies. So, buy a vowel and enjoy a spin on Drug Channels' Wheel of Fortune 500!

IIR’s Medicaid Drug Rebate Program (MDRP) 2014 is back in Chicago this September 15-17, 2014—just in time to provide you with essential regulatory updates surrounding the impact of the ACA, Medicare Part D, AMP Final Rule and the 340B Program Proposed “Mega Rule.”

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The Biotechnology Industry Organization (BIO) has released a troubling new analysis of the 340B drug discount program, titled Trends in 340B Covered Entity Acquisitions of Physician-based Oncology Practices. (Free download.)

The report highlights what happens when a hospital buys an oncology practice:

• Within about six months, the hospital is using 340B discounts to buy drugs for the acquired outpatient oncology sites.

• The sites quickly account for about 40% of the hospital’s total 340B chargebacks.

• Almost half such hospitals pocket the 340B savings, as evidenced by 340B chargebacks from the acquired sites that exceed the hospitals’ total charity care.

Read on for an insightful chart, along with my explanation for the economics behind hospitals' acquisitions of physician oncology practices. Add this report to the growing evidence that the 340B drug discount program often benefits hospitals and their executives, not needy patients.