Analysis

Cardinal Health (NYSE: CAH) recently filed its 2012 10-K annual report, for the fiscal year ending June 30, 2012. Here are some enlightening disclosures buried within this always-revealing document:

• Cardinal’s top 3 customers—CVS Caremark, Walgreen, and Express Scripts—accounted for about 57% of core U.S. drug distribution revenues. One of those three is definitely going.
• Deliveries to big customers' warehouses were about one-seventh as profitable for Cardinal as deliveries to individual pharmacy locations.
• In addition to warehouse deliveries, Cardinal delivered about $15 billion of drugs directly to CVS and Walgreens retail pharmacies.
• Cardinal’s contract with CVS Caremark expires in June 2013, and its contract with Walgreens expires in August 2013.
• Despite what you may have heard, Cardinal unceremoniously disclosed that Walgreen has indeed issued a Request for Proposal (RFP) to Cardinal.

Think of this post as an early look at the 2012-13 Economic Report on Pharmaceutical Wholesalers, which will be arriving in a few weeks.

Posted by Drug Channels Institute, an HMP Global company on Thursday, September 6, 2012

Labels: Wholesalers, Channel Management

As we all know, an unprecedented volume of brand-name drugs will lose exclusivity and face generic competition over the next four years. Below, I take a look at the latest projections for brand-name drugs that will be facing generic competition, courtesy of newly-published data from Express Scripts.

A few interesting tidbits based on the latest estimates:

• 2013 generic launches will be only one-quarter as big as the 2012 generic monster.
• Generic launches will rebound and remain high throughout 2014-2016.
• From 2012 to 2016, just 10 blockbusters will account for half of total brand-name revenues lost.
• The generic cliff is now projected to be steeper, with an 84% drop in 2017.

While brand-name manufacturers may feel like they're barking up the wrong tree, drug channel participants—pharmacies, Pharmacy Benefit Managers (PBMs), and wholesalers—will be surfing in true canine style.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, September 4, 2012

Labels: Industry Trends, Generic Drugs

I’m taking a break from blogging this week and rerunning some popular posts from the past 12 months. Click here to see the original post and comments from November 2011.

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In Wake-Up Call for Copay Cards, I point out that pharmaceutical brand managers should pay attention to the growing controversy over co-pay offset programs (coupons or cards).

Guess what? The Pharmaceutical Care Management Association (PCMA), which represents pharmacy benefit managers (PBMs), just released a blistering report that adds fuel to the fire. The title unambiguously sums up the report’s tone: How Copay Coupons Could Raise Prescription Drug Costs By $32 Billion Over the Next Decade.

My manufacturer clients recognize that it's becoming a payer-driven world, which is why the PBM/pharmaceutical manufacturer relationships can often be described as: The best of frenemies!

Below are four questions to help you think about the future of copay cards for manufacturers, PBMs, and pharmacies.

Posted by Drug Channels Institute, an HMP Global company on Friday, August 31, 2012

Labels: Co-pay Offset Programs, Channel Management, Costs/Reimbursement, PBMs, Marketing

Here's a look at 2012's preferred network boom. In the upcoming 2013 Medicare Part D open enrollment period, I expect more than 40% of beneficiaries will choose a plan with a preferred pharmacy network. Click here to see the original post and comments from February 2012.

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The Centers for Medicare and Medicaid Services (CMS) just released the 2012 enrollment data for Medicare Part D Prescription Drug Plans (PDPs). These new data dispel any doubts about preferred pharmacy networks’ consumer appeal.

There are seven Part D PDPs with preferred pharmacy networks in 2012. (See table below.) Highlights from my data crunching:

• Enrollment in preferred network plans grew twice as quickly as overall PDP enrollment.
• Almost one-third of all PDP enrollees are now in a plan with a preferred pharmacy network design.
• The Humana Walmart-Preferred Rx Plan, the preferred pharmacy network PDP launched in October 2010, is now the third-largest PDP.
• Two of the three new preferred network plans in 2012 attracted more than 680,000 enrollees.
• The PDP with Rite Aid as the preferred pharmacy was a bust.

Once again, we see how the power of competition is lowering drug costs for seniors. Needless to say, pharmacy owners who neglected to join a preferred network are complaining.

Posted by Drug Channels Institute, an HMP Global company on Thursday, August 30, 2012

Labels: Costs/Reimbursement, PBMs, Benefit Design, Narrow Networks, Medicare Part D

Yesterday, a U.S. District Court judge dismissed most (but not all) of the antitrust claims from a lawsuit against Express Scripts filed by NACDS, NCPA, and a group of independent pharmacies. See Split Decision: Express Scripts, Pharmacies & Antitrust. You can read the ruling here.

So, today's rerun look backs at the FTC's decision to approve the Express Scripts/Medco Health Solutions merger. As you can see below, my original post includes comments about the then just-filed NACDS/NCPA lawsuit. Click here to see the original post and comments from April.

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By a 3-1 vote, the Federal Trade Commission (FTC) approved Express Scripts’ (NASDAQ: ESRX) acquisition of Medco Health Solutions (NYSE: MHS). The FTC did not impose any conditions on the deal for antitrust approval, so there are no divestitures or conditions. Here’s the Wall Street Journal’s coverage: Express Scripts Closes Medco Acquisition.

Today, I review the FTC’s statement to explain the antitrust reasoning behind their decision. My predictions from last July (in ESRX-MHS: Antitrust Issues) turned out to be a pretty accurate guide to the FTC’s thinking. Pembroke Consulting clients and Gerson Lehrman Group clients can schedule phone calls with me for additional comments beyond what I discuss below.

And, no, this is not an April Fool’s post.

Posted by Drug Channels Institute, an HMP Global company on Wednesday, August 29, 2012

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

I’m taking a break from blogging this week and rerunning some popular posts from the past 12 months. Click here to see the original post and comments from January 2012.

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You should check out the new 2011 ICORE Medical Pharmacy and Oncology Trend Report (free download with registration). This 60-page report provides a wealth of interesting data on the specialty drug benefit management.

The ICORE payer data confirms that the specialty pharmacy channel is displacing buy-and-bill in the physician office market. As I discuss below, this shift is occurring via white bagging of specialty drugs.

Buy-and-bill will not end for all physician-infused drugs, but there are substantial pressures for certain therapies. White bagging has important implications for specialty distributors, pharmacy benefit managers (PBMs), and providers.

And if you're a manufacturer planning for a new specialty drug's commercial launch, then you need to be the "channel steward" and design a strategy to ensure patient access supported by appropriately motivated partners.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 28, 2012

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

I’m taking a break from blogging this week and rerunning some popular posts from the past 12 months.

In case you didn't know, NACDS has decided to stop publishing its long-running and well-regarded Chain Pharmacy Industry Profile. What a shame. This report was a unique, valuable resource for everyone in the drug channel. Below is the September 2011 article that I wrote about the 2011-12 (and as it turns out, final) edition. RIP, Chain Pharmacy Industry Profile!

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The NACDS just released The 2011-12 Chain Pharmacy Industry Profile. (Free to members; $375 for everyone else, including me). As always, it’s chock full o’ useful facts about the pharmacy industry.

The data for 2010 show that independent pharmacies are doing better than you might think. Here’s what I found while rummaging around this year’s profile:

• Independents are not vanishing. For the second year in a row, more new independent drugstores opened than closed.
• Revenues at independent drugstores were up by $1.1 billion last year.
• Average revenues at independent pharmacy outlets were the highest they have been in the past five years. I suspect the data are starting to reflect entrepreneurial pharmacy owners going after the specialty market.
• Despite this growth, independents are a shrinking part of the prescription pie. But the biggest threat comes from large chain pharmacies, not from mail-order pharmacies.

Read on for more details. As always, I welcome your feedback in the comments below.

Posted by Drug Channels Institute, an HMP Global company on Monday, August 27, 2012

Labels: Specialty Drugs, Channel Management, Industry Trends, Pharmacy

Ah, the end of summer approaches. Almost time to pack up the barbeque and send the kids back to school. In the meantime, please enjoy this selection of news stories from the Drug Channels universe.

In this month’s edition:

• The Heat is On: AmerisourceBergen discloses new subpoenas over gray market activity
• The Heat is Off: Big defeat for a bona fide fee AMP whistleblower lawsuit
• Just Hot Air? A semi-reasonable review of the presidential election’s competing Mediscare claims

Plus, The Onion visits a Walgreens pharmacy and is shocked (shocked, I tell you!) by the employees' attitudes.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 21, 2012

Labels: Enforcement, Wholesalers, Health Care Policy, Pharmacy

I want to let you know about the Revitas Industry Summit: Life Sciences, which will held at the Four Seasons Hotel in beautiful Philadelphia, PA, on October 2-3, 2012.

I will be delivering the keynote address, on the politics and economics of pharmaceutical commerce today. I will also moderate an expert panel of executives from branded and generic pharmaceutical manufacturers. We'll be discussing the forces of change in the life sciences business. Should be fun!

Check out the official event details below. The Summit will feature an engaging mix of thought leadership and hands-on best practice sessions. You certainly should attend if your job involves anything related to contract management, pricing execution and management, or compliance automation.

Hope to see you there!

Posted by Drug Channels Institute, an HMP Global company on Monday, August 20, 2012

Labels: Sponsored Post

I will be attending the 2012 NACDS Pharmacy and Technology Conference on August 26 and 27.

I still have a few open meeting slots, so please send me an email if you’d like to arrange a one-on-one meeting in Denver. Hopefully, there will be no crazy hurricanes to prevent me from showing up this year!

To get your weekend off to a fun start, The Onion has some man-on-the-street reactions to Proteus Digital Health's ingestible sensor. Love the third comment!

Posted by Drug Channels Institute, an HMP Global company on Friday, August 17, 2012

Labels: Blog Administration