Analysis

NOTE: For fresher data, see 2013’s Top Pharmacies by Rx Revenues: The Big Get Bigger.

---

Next week, we'll be releasing the 2012-13 Economic Report on Retail, Mail, and Specialty Pharmacies. Here's a sneak peek at my list of top pharmacies, ranked by total prescription revenues.

The exhibit below, one of 82 in my new report, shows estimated share of prescription revenues by company for calendar year 2012.

• The top five dispensing pharmacies—CVS Caremark, Walgreens, Express Scripts, Rite Aid, and Walmart—accounted for about 63% of U.S. prescription dispensing revenues in 2012.
• The degree of concentration is comparable to that of 2011, although market share consolidated from six to five pharmacies due to the Express Scripts/Medco Health Solutions merger. Walgreens also lost market share, as we discuss below.
• We estimate that total revenue growth of retail, mail, and specialty pharmacies slowed to 0.6% in 2012.

Read on for the 2012 details. For a sneak peek at the updated and expanded 2012-13 report, check out the free Overview.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, January 15, 2013

Labels: Mergers and Acquisitions, Channel Management, Industry Trends, PBMs, Pharmacy

I am pleased to welcome back The Conference Forum as a Drug Channels sponsor for its Medicaid Rebates Summit (MRS) and pre-conference Medicaid Rebate Bootcamp. The event will be held February 14-15, 2013, at the Park Hyatt in Washington DC.

The meeting has an impressively big and diverse list of speakers, including representation from: Acorda Therapeutics, Amneal Pharmaceuticals, APEXUS/ 340B Prime Vendor Program, Bayer HealthCare, Berkeley Research Group, BIO, Boehringer Ingelheim Pharmaceuticals, Celgene, CIS, Daiichi Sankyo, District of Maryland, District of Massachusetts, Eastern District of Pennsylvania, Eli Lilly & Co., Express Scripts, Fresenius-Kabi USA, Genentech, Heritage Foundation, Hewlett Packard Enterprise Services, Hogan Lovells, HRSA Office of Pharmacy Affairs, Janssen, Mylan Pharmaceuticals, NACDS, NCPA, National Governors Association, PhRMA, Purdue Pharma, Reckitt Benckiser Pharmaceuticals, Sidley Austin, VA Office of Inspector General, Vertex Pharmaceuticals, Wockhardt USA, and the Wyoming Department of Health.

The Conference Forum is offering a special 20% discount to Drug Channels readers. Just register with code DCH20. Thanks, Conference Forum!

Posted by Drug Channels Institute, an HMP Global company on Monday, January 14, 2013

Labels: Sponsored Post

Last January, CMS issued its proposed AMP rule to implement a teeny part of the March 2010 healthcare legislation. See New AMP Rule Targets Bona Fide Service Fees. Are you ready for AMP’s next act?

Well, pull up a chair. According to this just-posted page at the Office of Information and Regulatory Affairs, it looks like the Final Rule won't arrive until August 2013. That's much later than most people (including me) expected.

While I presume that CMS doesn’t feel tardy, we can start thinking about what the final numbers mean. As I explain below:

• The AMP final rule probably won’t have catastrophic effects on the drug channel. However, it will reduce Medicaid pharmacy reimbursement in the few states that are currently overpaying for generic drugs.
• AMP will probably not become a primary reimbursement metric.
• AMP-based upper limits have a slight upward bias vs. acquisition cost metrics.

The Final Rule could also have some unexpected implications. I’m curious to see how (if?) CMS clarifies its guidance on bona fide service fees for distribution services and inventory management, because it could affect whether manufacturers can offer financial terms that would be attractive to chain warehouses seeking to purchase brand-name drugs directly.

Posted by Drug Channels Institute, an HMP Global company on Thursday, January 10, 2013

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

Yesterday, the boffins at the Centers for Medicare and Medicaid Services (CMS) released the 2011 National Health Expenditure data. Savor the wonkiness by checking out this Health Affairs article: National Health Spending In 2011: Overall Growth Remains Low, But Some Payers And Services Show Signs Of Acceleration (free download).

Total U.S. expenditures on retail prescription drugs were $263.0 billion, a 2.9% annual increase vs. 2010. Prescription drug expenditures were the slowest growing part of the U.S. health care system, which grew by a historically low 3.9%. (See Exhibit 2 of the Health Affairs article.)

There are a lot of moving parts in the latest numbers, so I encourage you to read the full article. A few highlights:

• Consumers’ share of U.S. drug expenditures dropped to a new low.
• Medicare Part D was the fastest-growing payer, in part because healthcare reform increased spending on brand-name drugs.
• 2010’s prescription spending estimate was revised downward.

Read on for a detailed review at the latest prescription spending numbers, along with a bonus look at why overall healthcare spending will start accelerating. Despite the legislation's name, healthcare reform seems unlikely to provide affordable care.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, January 8, 2013

Labels: Health Care Reform, Costs/Reimbursement, Industry Trends, Pharmacy

I am pleased to welcome CBI’s Hub Models and Program Design as a Drug Channels sponsor. The conference will be held at Hyatt at the Bellevue in Philadelphia, PA on February 27 and 28, 2013.

I’m glad to see this new CBI conference, since specialty hubs are an infrequently-discussed part of the specialty pharmaceutical ecosystem. Hubs perform activities for payers, patients, and providers related to reimbursement and patient access support services. Participating speakers come from such companies as Eli Lilly, EMD Serono, IBM, Occam Health Services, Shire HGT, UCB, United BioSource, Vertex Pharmaceuticals, and more.

For additional details, read the official description below or visit the event website.

And if you make it to Philly, please skip the cheesesteaks. Instead, try one of our 50 best restaurants!

Posted by Drug Channels Institute, an HMP Global company on Monday, January 7, 2013

Labels: Sponsored Post

Happy new year! Let’s kick off 2013 with a look at newly-uncovered unethical behavior by physicians and pharmacists.

In late December, the FDA sent warning letters to 350 (yes, 3-5-0) physician practices that knowingly purchased gray market Botox, which turned out to be counterfeit. The next day, the LA Times profiled two independent pharmacy owners that profited on the prescription opioid abuse.

Taken together, these stories illustrate why manufacturers need to keep a close eye on channels to the patient. Greed is not always good. Too bad that these providers didn't know which shoulder to follow.

Posted by Drug Channels Institute, an HMP Global company on Friday, January 4, 2013

Labels: Enforcement, Buy-and-Bill, Channel Management, Drug Counterfeiting

Dear Drug Channels reader,

This is my 145th (and final) post for 2012. Thank you for welcoming me into your inboxes and browsers this year. I also appreciate the many people who took time to engage in often-spirited discussions below the articles.

Below are 2012’s top 10 most viewed articles. Looking over the list, you can see what an eventful 12 months it's been. There's been no shortage of important drug channel developments!

Drug Channels will return in 2013. In the meantime, please enjoy the video greeting below from my sombrero-sporting alter ego. As you can see, I’ve learned a few new dance moves since last year!

All the best to you and your family,
Adam

Posted by Drug Channels Institute, an HMP Global company on Thursday, December 20, 2012

Labels: Blog Administration, Fun Stuff

The holidays are here. Before you hit the mall, check out this hand-picked selection of notable news stories from around the Drug Channels universe.

• A Lump of Coal—Should plan sponsors be saving even more money when brands lose exclusivity?
• Anti-Stocking Stuffer—90-days supplies can be wasteful, but mail is no better (or worse) than retail
• The Ghost of Health Reform Future—A look at EHB benchmarks show skimpy coverage in some states
• Reindeer Games—Walgreen sells a small wholesale business

Plus, the inevitable pharmacy-themed "Gangnam Style" video has arrived, courtesy of some UCSF pharmacy students with waaaaaay too much time on their hands. Enjoy?

Posted by Drug Channels Institute, an HMP Global company on Tuesday, December 18, 2012

Labels: Health Care Reform, Generic Drugs, Mergers and Acquisitions, Pharmacy, Wholesalers, PBMs

Today, we welcome back CBI’s 10th Annual Specialty Pharmaceuticals, Oral Therapies and Injectables - A Forum for Payers conference as a Drug Channels sponsor. The event is being held at Planet Hollywood in Las Vegas on January 30 and 31, 2012.

The agenda includes a mix of payers and specialty pharmacies, so I expect lively conversations and lots of learning. There will be speakers from Acorda Therapeutics, Artemetrx Excellus Health Plan, Dean Health Plan, Diplomat Specialty Pharmacy, Kaiser Permanente, Medical Health Plans of America, PriorityHealth, RegenceRx, Travelers Insurance, and WellPoint.

Read more in the official description below or view the website http://www.cbinet.com/conference/fc13120.

Posted by Drug Channels Institute, an HMP Global company on Monday, December 17, 2012

Labels: Sponsored Post

Tuesday’s article—Surprise? CMS Computes and Publishes Pharmacy Prescription Profit Margins—generated a lot of email about the new National Average Retail Prices (NARP) and National Drug Acquisition Cost (NADAC) data sets. In particular, the data table showed average gross profit dollars (NARP minus NADAC) that were lower for generic prescriptions ($9.27) vs. brand-name prescriptions ($11.98). This result seems counter to everything that we all think we know about pharmacy margins.

The apparent discrepancy is resolved by comparing profit levels of newly-launched generics vs. more-common older generics. Below, I discuss the following:

• Pharmacy profitability from a generic drug varies over the drug’s lifecycle.
• As shown using the examples of Lipitor and Plavix, a new generic provides pharmacies with gross profits that are 2-3 times larger than an equivalent brand prescription.
• 7 of the 10 most widely-dispensed generic drugs have average prescription prices below $10, so potential gross profits are correspondingly low.

The generic lifecycle profit framework also highlights the generic wave’s importance for pharmacies. As long as new generics are launching, life is grand. Once the wave peters out in 2016, margin pressure will be brutal for the retail pharmacy industry.

Posted by Drug Channels Institute, an HMP Global company on Thursday, December 13, 2012

Labels: Average Acquisition Cost (AAC), Generic Drugs, Costs/Reimbursement, Pharmacy, Pharmacy Economics