Analysis

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

Speakers include representation from: Acorda Therapeutics, APEXUS/ 340B Prime Vendor Program, Bayer HealthCare , BIO, Boehringer Ingelheim, CIS, CMS, Daiichi Sankyo, District of Maryland, Eastern District of PA, Eli Lilly, Express Scripts, HP, Hogan Lovells, Genentech, HRSA Office of Pharmacy Affairs, Janssen, Mylan Pharmaceuticals, National Association of Chain Drug Stores, National Community Pharmacists Association, National Governors Association, PhRMA and Purdue Pharma.

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, November 19, 2012

Labels: Sponsored Post

In reviewing the 13 Fastest-Growing, Private Specialty Pharmacies, I predicted: “Given the eye-popping growth, I suspect that many of these companies will not remain independent for much longer.”

Well, it didn't take long. Yesterday, supermarket chain Kroger (NYSE: KR) announced a merger with Axium Pharmacy, the third-largest company on my list. Read the press release.

In 2011, we estimate that Kroger was the seventh largest U.S. pharmacy, with prescription revenues equal to about $7.0 billion. (See 2011 Market Share of Top Pharmacies.) While Axium’s 2011 revenues were only $155 million, this deal places Kroger firmly ahead of many retail rivals struggling to take advantage of the coming specialty dispensing boom.

Posted by Drug Channels Institute, an HMP Global company on Friday, November 16, 2012

Labels: Specialty Drugs, Mergers and Acquisitions, Pharmacy

CVS Caremark (NYSE: CVS) posted some impressive financial results last week. Today, I highlight three noteworthy developments:

• CVS now expects to retain 60% of the scripts picked up from the Walgreen-Express Scripts imbroglio.
• The now-stabilized PBM business has significant—and growing—synergy for the retail pharmacy business, although the reverse synergy is not as strong.
• With its latest formulary exclusions, the PBM business is pressuring manufacturers even more.

Has CVS Caremark been smart or lucky? A bit of both, actually. And as I explain below, you won’t hear Wall Street clamoring for a break-up anytime soon.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, November 13, 2012

Labels: Co-pay Offset Programs, Channel Management, PBMs, Pharmacy

OK, the election is finally over. And President Obama’s re-election pretty much guarantees that price transparency will continue to ripple through the pharmaceutical industry. See Transparency is Here! CMS Exposes Pharmacy Prescription Profit Margins for a look at the first batch of pharmacy acquisition costs and revenue data, from the Center for Medicare and Medicaid Services (CMS).

The Patient Protection and Affordable Care Act (PPACA) also requires CMS to publish weighted average Average Manufacturer Price (AMP) data, which (sort of) show the average multisource (generic) drug prices paid by wholesalers and large pharmacies. With healthcare reform repeal off the table, I expect the AMP figures to be finalized within a few months.

In the meantime, we can draw some firmer conclusions from the 14 months of draft AMP data. Here are two observations from my number crunching, detailed below:

• Generic manufacturers still sell most of their products for less than 10 cents per pill.
• Over the past five months, the Drug Channels Index of Generic Weighted Average AMPs (IGWAAMPS) dropped by 9.9%.

Don’t forget that these AMP data pose a mega-compliance threat for manufacturers, which have to deal with murky and undefined rules. Gee, healthcare reform will be fun!

Posted by Drug Channels Institute, an HMP Global company on Thursday, November 8, 2012

Labels: Average Manufacturer Price (AMP), Generic Drugs, Costs/Reimbursement, Pharmacy Economics

Last Thursday, Pennsylvania joined the anti-mail pharmacy movement when Governor Corbett signed into law SB 201, a bill requiring consumers to receive equivalent terms at retail vs. mail pharmacies. The law takes effect on March 1, 2013.

At first glance, the PA law may appear to be a big victory for retail pharmacies, because mail pharmacies can no longer have a copayment advantage with consumers. But pharmacy owners should curb their enthusiasm. The law has strong language requiring retail pharmacies to accept “the same pricing, terms, conditions or requirements” as a mail pharmacy. Congratulations, pharmacy owners! You won the legal right to reduce your margins in a frantic, race-to-the-bottom price war!

The law also provides another headwind for mail pharmacy, and therefore is likely to reduce pharmacy benefit manager (PBM) profits. Last night, Express Scripts gave a downbeat assessment of 2013. The anti-mail legislative movement may come up in this morning's 9:30 AM earnings call.

Read on and then post a comment with your opinion.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, November 6, 2012

Labels: PBMs, Pharmacy, Pharmacy Economics

I am pleased to welcome back IIR as a Drug Channels sponsor for its 5th Annual Government Programs Summit. The event will be held March 11-13, 2013 at the Hyatt Regency in Baltimore.

IIR bills the Summit as "the largest and most comprehensive program in the Northeast – where pharmaceutical drug pricing, contracting and compliance executives go to get informed, be prepared and stay compliant."

Speakers include government officials from HHS, OIG, OPA, VA, the Office of Pharmacy Affairs, and many State pharmacy boards. There are also lots of industry speakers from such companies as Acorda Therapeutics, AmerisourceBergen, Argus Health Systems, Daiichi Sankyo, Eli Lilly, Express Scripts, Genentech, Horizon Pharma, Johnson and Johnson, Leo Pharma, McKesson, Morton Grove Pharmaceuticals, Mylan Pharmaceuticals, Novartis, Pfizer, Reckitt Benckiser Pharmaceuticals, Upsher Smith, Vertex Pharmaceuticals, and West-Ward Pharmaceuticals.

IIR is offering a special 25% discount to Drug Channels readers. Just register with your VIP code: XP1851DRUG. Thanks, IIR!

Posted by Drug Channels Institute, an HMP Global company on Monday, November 5, 2012

Labels: Sponsored Post

Here's some updated info on Predictive Acquisition Cost (PAC), the new drug pricing measure developed by Glass Box Analytics and distributed by Elsevier/Gold Standard. Elsevier/Gold Standard is a Drug Channels sponsor.

In addition the PAC price benchmark, Elsevier/Gold Standard is also publishing new data on the minimum and maximum PAC for a particular drug. Check out the recent PAC bulletin for details.

Anyone interested in pharmacy reimbursement and economics should also download their white paper: Drug Price Types and Options For A Future Standard. (Free with registration.)

Posted by Drug Channels Institute, an HMP Global company on Friday, November 2, 2012

Labels: Sponsored Post

It’s time for my Halloween roundup of spooky Drug Channels news. Here are today’s terrifying stories:

• Dawn of the DEA: The never-ending battle against wholesalers
• No Fangs: Pharmacy lawsuit against preferred Part D networks is dismissed
• Stake through the Heart: People trust the Internet more than pharmacists
• Frankenbill: New potential legislation on distribution security

Plus, a funny video trick-or-treating lesson … for pharmaceutical sales reps!

Posted by Drug Channels Institute, an HMP Global company on Wednesday, October 31, 2012

Labels: Enforcement, Fun Stuff, Drug Counterfeiting, Pharmacy, Wholesalers, Narrow Networks

Yesterday, McKesson (NYSE: MCK) announced plans to acquire PSS World Medical (NASDAQ: PSSI), paying a 34% premium over Wednesday’s closing stock price. Read the press release.

This acquisition is another solid deal for McKesson. The combined companies will have about 28-30% of the ambulatory (non-acute care) medical-surgical distribution business. Cardinal Health will be distant second, with less than 10% of this business. As with US Oncology, the acquisition once again allows McKesson to snatch another likely target from Cardinal. At a more than-12X multiple of EBITDA, the deal is pricey. [NOTE: EBITDA multiple corrected from earlier version.]

For manufacturers, distributor consolidation once again blurs competitive boundaries between business partners. Companies with both pharmaceutical and vaccine portfolios will feel the most pressure. Read on for a quick look at the med-surg market and the transaction.

Posted by Drug Channels Institute, an HMP Global company on Friday, October 26, 2012

Labels: Wholesalers, Channel Management, Mergers and Acquisitions

The Business of Healthcare Innovation, a new book edited by my friend Lawton Burns of the Wharton School, is a highly-recommended examination of four major business sectors developing innovative healthcare products—pharmaceuticals, biotechnology, medical devices, and information technology.

The second edition brings the analyses (mostly) up-to-date, so it’s a worthwhile and cost-effective purchase, even if you already own the 2005 edition. The chapter on mergers and acquisition is particularly useful. Experienced executives will appreciate the book’s focus on the big picture ideas, while everyone else will benefit from the broad strategic perspectives on each sector.

Read on for my review.

Posted by Drug Channels Institute, an HMP Global company on Thursday, October 25, 2012

Labels: Industry Trends