Analysis

Last week, Express Scripts detailed its post-merger plans for divesting legacy Medco assets. As I predicted over a year ago, many of Medco’s more ambitious diversification activities are on the chopping block, including United BioSource, Liberty Medical, and the European expansion.

All in all, it looks like a back-to-basics strategy for Express Scripts, which is busy cutting costs and leveraging its bargaining power against manufacturers, pharmacies, and wholesalers. Just ask AmerisourceBergen.

Below, I review these legacy businesses to provide some perspective on the divestitures. But if you ask Express Scripts execs about these moves, don’t be surprised if they act like an amnesiac super spy and reply: “Who was David Snow?”

Posted by Drug Channels Institute, an HMP Global company on Wednesday, August 15, 2012

Labels: Wholesalers, Mergers and Acquisitions, PBMs

I am pleased to welcome CBI’s Pharmacy Benefit Oversight and Compliance Congress as a Drug Channels sponsor. The conference will be held at Planet Hollywood in Las Vegas, NV on November 14-15, 2012.

Many Drug Channels readers will be interested in this event. Participating speakers come from such companies as Aveta, Catalyst Health Solutions, Express Scripts/Medco Health Solutions, Navitus Health Solutions, OptumRx, Prescription Solutions, and UnitedHealth Group.

Read more in the official description below or visit the event website.

CBI is offering a special $400 discount to Drug Channels readers. Just register at http://www.cbinet.com/pbm with promo code MAG639. Thanks, CBI!

Posted by Drug Channels Institute, an HMP Global company on Monday, August 13, 2012

Labels: PBMs, Sponsored Post

When Express Scripts (NASDAQ: ESRX) and Walgreen (NYSE: WAG) split up last January, millions of previously-loyal customers found their way to other pharmacies. CVS Caremark’s (NYSE: CVS) retail business has been the big winner, gaining about one-third of those former Walgreen’s shoppers and a big sales boost.

Now that Express Scripts and Walgreen have made up (sort of), the pharmacy industry will be battling over these ex-Walgreen’s customers. On this week’s earnings call, CVS management explained why they expect to retain at least 50% of the business. And given what they disclosed, I agree. See the highlights below.

Manufacturers should care about these massive market share swings. Some pharmacies are more aggressive at therapeutic and generic substitution. As the African proverb says: When two elephants fight, it is the grass that gets trampled.

Posted by Drug Channels Institute, an HMP Global company on Friday, August 10, 2012

Labels: Pharmacy, Channel Management

The Workers Compensation Research Institute just-released Physician Dispensing in Workers' Compensation, a data-based analysis of the pricing of prescriptions associated with worker’s comp claims. (The report is $25 for members and $45 for non-members.)

The results are less-than-super news:

• In some states, physician-dispensed scripts are more than 40% of the worker’s comp market.
• Physician-dispensed pills were 60% to 300% more expensive than retail pharmacies.
• Some physicians routinely prescribe over-the-counter drugs and are paid large multiples of retail cash prices.
• Repackaging frequently inflates Average Wholesale Price (AWP) for physician-dispensed prescriptions

Although pharmaceutical manufacturers play no part in these schemes, I suppose it’s only a matter of time before the trial lawyers go after the drug makers anyway.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, August 7, 2012

Labels: Costs/Reimbursement, Pharmacy Economics

I am pleased to welcome Elsevier/Gold Standard as a Drug Channels sponsor.

Anyone interested in pharmacy reimbursement and economics should download and read their new white paper: Drug Price Types and Options For A Future Standard. (Free with registration.) It reviews and compares 10 of your favorite price benchmarks, including AWP, AMP, NADAC, and more.

The paper also describes Predictive Acquisition Cost (PAC), a new drug price developed by Glass Box Analytics and distributed by Elsevier/Gold Standard. The companies claim PAC comes closer to a pharmacy's true acquisition cost than those 10 alternatives, making PAC a candidate for an industry-wide standard. (See below or read the white paper.)

While I can't yet vouch for the claims summarized below, I'm certainly intrigued.

Posted by Drug Channels Institute, an HMP Global company on Monday, August 6, 2012

Labels: Average Acquisition Cost (AAC), Sponsored Post

Today’s guest post is from Emma D’Arcy, Senior Healthcare Consultant at Complete Digital, on behalf of eyeforpharma, a Drug Channels sponsor.

In this guest post, Emma recaps the recent eyeforphama Real World Evidence webinar, which also included speakers from Bristol-Meyers Squibb and Amgen. More industry-led panels on this topic will be held at the Real World Data and Health Outcomes conference, November 28-29 in Boston, MA.

Please contact Theo Fellgett, VP North America at eyeforpharma (theo@eyeforpharma.com or 201-234-4802) with any questions about the article or event.

Posted by Drug Channels Institute, an HMP Global company on Friday, August 3, 2012

Labels: Sponsored Post, Guest Post

Today's Wall Street Journal has a must-read article on payer strategies: Remember Managed Care? It's Quietly Coming Back.

While the article focuses primarily on managed care's re-emergent love affair with prior authorization, it also highlights payers growing acceptance of narrow and tiered provider networks. These are usually "tiered" networks in which patients incur bigger out-of-pocket charges if they go to providers that aren't in the "top" category. The cost for an out-of-network provider is prohibitive.

The article is a useful reminder that the growth of preferred and limited pharmacy networks reflects broader healthcare changes. Expect plans in healthcare reform's insurance exchanges to feature narrow pharmacy networks.

Posted by Drug Channels Institute, an HMP Global company on Thursday, August 2, 2012

Labels: Health Care Reform, Industry Trends, Narrow Networks, Pharmacy

Missy Franklin isn't the only one celebrating a first place finish today.

This morning, AmerisourceBergen (NYSE: ABC) announced it won the combined Express Scripts contract from Cardinal Health (NYSE: CAH). Here's the press release: AmerisourceBergen Signs Three Year Pharmaceutical Supply Agreement with Express Scripts.

The contract is worth $18.5 billion in revenues to ABC, although it will be minimally profitable. My first-pass, back-of-the-envelope computation suggests that ABC's operating profit from the contract will be 0.15% to 0.20%. That's one reason why the win has "no impact" on the company's financial expectations for fiscal 2013 (starting on October 1, 2012).

CEO Steve Collis has now proven that he can lead his team to victory in a good old fashioned, race-to-the-bottom bid business. Congratulations?

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 31, 2012

Labels: PBMs, Wholesalers

I am pleased to welcome CBI’s 3rd Annual Forum on Strategic Distribution Planning for Specialty Products as a Drug Channels sponsor. The conference will be held at the Hilton Hotel in East Brunswick, NJ, on September 20-21, 2012.

Many Drug Channels readers will be interested in this event. Speakers come from such companies as Bristol-Meyers Squibb, Eli Lilly, Eisai, EMD Serono, Occam Health, Otsuka America Pharmaceuticals, UCB, and Walgreen. Read more in the official description below or visit the event website.

CBI is offering a special $400 discount to Drug Channels readers. Just register with promo code QZN287. Thanks, CBI!

Posted by Drug Channels Institute, an HMP Global company on Monday, July 30, 2012

Labels: Sponsored Post

On Wednesday, the Senate Committee on Commerce, Science and Transportation held an eye-opening hearing titled Short-Supply Prescription Drugs: Shining a Light on the Gray Market.

The Committee simultaneously released a report documenting gray market activity by some well-known companies. Briefly:

• Most drugs enter the gray market through pharmacies.
• These pharmacies usually buy drugs from legitimate Authorized Distributors of Record (ADR), including AmerisourceBergen, Cardinal Health, McKesson, and H.D. Smith.
• While some buyers are “fake pharmacies,” others appear to be legitimate purchasers, such as Walgreens Infusion Services and a Medicine Shoppe franchisee.
• Multiple secondary wholesalers handle gray market products, adding huge mark-ups along the supply chain.

Check out the diversion maps below for a peek at how these companies participate—perhaps inadvertently—in the gray market. There was conflicting witness testimony about who should be blamed. (Links below.) I’ll let you make up your own mind on those competing arguments.

Posted by Drug Channels Institute, an HMP Global company on Friday, July 27, 2012

Labels: Enforcement, Generic Drugs, Pedigree, Pharmacy, Wholesalers, Drug Shortages