Analysis

UPDATE (12/2/13): CMS announces its intention to finalize the Federal Upper Limits (FUL) for multiple source drugs in July 2014!

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Here’s another reason to be cynical about the Affordable Care Act's implementation.

The long-awaited Final Rule on Covered Outpatient Drugs, a.k.a., the AMP Final Rule, has been pushed back yet again, to May 2014. This follows at least two previous delays, described here and here.

Sounds to me like politics trumps the law. Given the dual debacles of healthcare.gov and “you can keep your insurance,” I presume the Obama administration wants to avoid political noise from the ACA's hit to pharmacy profits.

The delay is good news for the pharmacy industry. When (if?) the new AMP-based Federal Upper Limits get implemented, pharmacies in many states will face reimbursement cuts of 30% or more. See Obamacare Will Squeeze Pharmacy Profits.

For government notice aficionados, I have pasted the notice below. Enjoy Black Friday!

Posted by Drug Channels Institute, an HMP Global company on Friday, November 29, 2013

Labels: Average Manufacturer Price (AMP), Health Care Reform, Generic Drugs, Pharmacy

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.

Posted by Drug Channels Institute, an HMP Global company on Monday, November 25, 2013

Labels: Specialty Drugs, Wholesalers, Channel Management, Narrow Networks, Pharmacy Economics

For an updated analysis, see Retail Generic Drug Inflation Reaches New Heights (August 2014).

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Retail generic drugs usually get cheaper over time. But our exclusive analysis (below) shows that about one-third of generic drugs have gotten more expensive in the past twelve months.

Even more surprising, a small number have skyrocketed. Twelve drugs’ costs have increased by more than 2,000%.

Drug shortages appear to be the primary culprit. Contrary to what some people believe, exploding generic costs are the one thing that can’t be blamed on Obamacare.

Pharmaceutical wholesalers have been the big winners. Some pharmacies have also benefited, but many are being squeezed by third-party payer reimbursements. My big questions: will continued price increases slow the pharmacy industry’s race-to-the-bottom generic price war or make preferred network participation less appealing to pharmacies? Keep an eye on this trend.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, November 19, 2013

Labels: Average Acquisition Cost (AAC), Generic Drugs, Drug Shortages, Costs/Reimbursement

The Pharmaceutical Care Management Association (PCMA) will hold its 2014 sPCMA Business Forum in Orlando, Florida, on March 12 and 13, 2014.

The new conference combines all of the networking, business, and educational benefits of the PCMA's previous spring conferences—the Managed Markets Educational Forum, the PBM Summit, and the Specialty Pharmacy Business Forum—into a single, two-day event.

Former Secretary of State Hillary Rodham Clinton will deliver the keynote address. Check the agenda for updates on speakers and sessions.

Posted by Drug Channels Institute, an HMP Global company on Monday, November 18, 2013

Labels: Sponsored Post

While healthcare.gov is failing, the Medicare Part D open enrollment period is going strong.

Regular readers know that Preferred pharmacy networks are kind of a big deal among 2014 Medicare Part D prescription drug plans (PDPs). You also know that Walmart is the biggest deal in these preferred networks.

In the TV commercial below, see how Walmart explains a preferred network's appeal, in just 30 seconds. Narrow networks are teaching consumers to shop for prescriptions by price. View the lesson below.

Posted by Drug Channels Institute, an HMP Global company on Thursday, November 14, 2013

Labels: Narrow Networks, Pharmacy, Medicare Part D, Marketing

AmerisourceBergen (NYSE: ABC) recently reported financial results for its 2013 fiscal year. Read the press release.

Its Oncology Supply specialty distribution business again underperformed, as that distributor's revenues dropped by 10% in 2013. On the earnings call, the company blamed the decline on “reimbursement headwinds,” which I presume refers to the sequester’s impact on government payments.

But that’s only part of the story. As I discuss in DCI’s latest economic report (page 91) and in May’s What’s Behind AmerisourceBergen’s Disappointing Oncology Results?, the community oncology market is undergoing dramatic change, posing risks to specialty distributors. While ABC still accounts for more than 50% of total specialty product distribution revenues to physician offices and clinics, it also faces newly-energized competitors.

Read on for details and our market share estimates.

Posted by Drug Channels Institute, an HMP Global company on Wednesday, November 13, 2013

Labels: Specialty Drugs, Buy-and-Bill, Wholesalers, Channel Management

The long-running Specialty Therapies Summit returns to Las Vegas in January. This meeting is a great way to understand how payers view the evolving specialty marketplace. Key topics: cost control, benefit design, and formulary strategies.

Speakers come from such companies as Aetna, Armada Health Care, Artemetrx, CVS Caremark, Diplomat Specialty Pharmacy, Horizon Blue Cross Blue Shield, John Hopkins Healthcare, OptumRX, Priority Health, RegenceRx, UPMC Health Plan, Western University of Health Sciences College of Pharmacy, and more.

Drug Channels readers can register with code DTY526 to save $400 off of the standard registration rate.* Thanks, CBI!

Posted by Drug Channels Institute, an HMP Global company on Monday, November 11, 2013

Labels: Sponsored Post

Today’s guest post is from George Kitchens, RPh, President of Artia Solutions, and consultant for Elsevier.

George discusses research that compares acquisition cost reimbursement benchmarks—National Average Drug Acquisition Cost (NADAC) and Predictive Acquisition Cost (PAC)—to such usual list price benchmarks as Average Wholesale Price (AWP). He provides examples showing that acquisition cost methods can reduce payer costs while also improving pharmacy profits. Anyone interested in more effective pricing metrics should take a look.

Visit the Centers for Medicare & Medicaid Services to learn about NADAC. Download Elsevier’s most recent case study and news article to learn how Predictive Acquisition Cost (PAC) aids retail pharmacies and payers.

Please contact George Kitchens (gkitchens@artiasolutions.com) with any questions about the article.

Posted by Drug Channels Institute, an HMP Global company on Friday, November 8, 2013

Labels: Sponsored Post, Guest Post

Imagine that you are the just-retired CEO of a major pharmaceutical wholesaler. How should you live your life?

Should you:

• Spend your days visiting your grandkids, hanging out with your wife of 40+ years, and sitting on a few boards?

• Divorce your wife and go on an unhinged, hedonistic bender filled with girls, guns, and sex tapes?

Put another way, should you follow the example of Dave Yost, former CEO of AmerisourceBergen, or Stewart Rahr, former CEO of Kinray Drugs? Read on for the just-published mundane and/or salacious details of their respective post-wholesale retirements.

Which one is the cautionary tale? Well, that's between you, your conscience, and your spouse.

Posted by Drug Channels Institute, an HMP Global company on Thursday, November 7, 2013

Labels: Wholesalers, Fun Stuff

Time for my annual look at independent pharmacy owners’ true economics, courtesy of the just-released 2013 National Community Pharmacists Association (NCPA) Digest, Sponsored by Cardinal Health. Here's the press release: NCPA Digest: Community Pharmacists Promoting Medication Adherence, Generic Drugs To Improve Health Outcomes and Reduce Costs

The news is pretty good for pharmacy owners. Here are my observations from crunching the Digest's latest numbers. Full details below.

• An independent pharmacy's overall margins and per-prescription profits increased in 2012.

• The average pharmacist owning a single pharmacy earned about $245,000 in 2012—up 5% from 2011. Owners of multiple pharmacies earned much, much more.

• The NCPA estimates that the total number of independent pharmacies continues to hold steady.

Hmmm, what happened to the doom-and-gloom predictions about the Express Scripts/Medco merger, which would, as NCPA said, “make an already bad situation even worse”? As the data below show, it was never that bad, and it hasn’t grown worse.

As always, I welcome your constructive comments. Just remember our philosophy, courtesy of the late Senator Patrick Moynihan: "Everyone is entitled to his own opinion, but not his own facts."

Posted by Drug Channels Institute, an HMP Global company on Tuesday, November 5, 2013

Labels: Costs/Reimbursement, Pharmacy, Pharmacy Economics