Analysis

Remember the hubbub about the gray market and drug shortages? Well, the gray market is even worse than we thought.

Last week, the Manhattan U.S. Attorney unveiled a massive $500 million (alleged) fraud involving Medicaid patients who sold their prescription drugs to aggregators and resellers, who subsequently resold the drugs to pharmacies via “Corrupt Distribution Companies.” (Read the press release)

Kudos to the Department of Justice for catching the crooks, but … Yikes! Anyone interested in pharmaceutical supply chain security should check out the DOJ’s diversion map (reproduced below).

Alas, we once again observe diverted products finding their way back into the legitimate supply chain, when a pharmacy purchases from a shady vendor. Perhaps you won’t be surprised to find out that New York is one of many states without pedigree requirements.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 24, 2012

Labels: Enforcement, Pedigree, Pharmacy

I want to remind you about IIR's 17th Annual Medicaid Drug Rebate Program (MDRP) Summit. The event will be held from September 10 to 12 at the Swissotel Chicago.

Below, Program Director Heather King highlights key items on this year's large and impressive agenda, including sessions on AMP, 340B, the post-AWP world, healthcare reform, and much more. The event is already more than 75% full, so be sure to register soon because the event will probably sell out.

Don’t forget IIR is offering a special 25% discount to Drug Channels readers—up to $850 in savings off the standard rate. Register with VIP code: XP1758DRJL. Thanks, IIR!

Posted by Drug Channels Institute, an HMP Global company on Monday, July 23, 2012

Labels: Sponsored Post

Today's inevitable surprise: Express Scripts and Walgreens Announce New Pharmacy Network Agreement.

Did Walgreen cave? Few people know the truth since (also as expected): "The companies are not disclosing the terms of the new contract."

I suspect that Walgreen bowed to the economic realities outlined in Walgreens is Losing Its Battle with Express Scripts and shareholder disappointment with the questionable Alliance Boots deal. Nonetheless, expect Walgreen's shareholders to breathe a sigh of relief.

Note that "Walgreens will participate in the broadest Express Scripts retail pharmacy network available to new and existing clients." Translation: Express Scripts will still be marketing Express Advantage Network, its tiered network option.

I posted the full text of today's happy talk press release after the jump. Stay tuned for more pharmacy network disruption.

Posted by Drug Channels Institute, an HMP Global company on Thursday, July 19, 2012

Labels: Wholesalers, Narrow Networks, Pharmacy

The Philadelphia Inquirer’s PhillyPharma blog just posted a fascinating—and unexpectedly revealing—Q&A with AmerisourceBergen CEO Steve Collis.

Collis does a nice job explaining the diverse—and sometimes little-known—services that drug wholesalers now perform within the pharmaceutical industry. He also offers some helpful insights into the recently-acquired World Courier business.

Perhaps inadvertently, his interview also highlights the fascinating conflicts and complexities embedded within today’s drug wholesaling business model. For wholesalers like AmerisourceBergen (NYSE: ABC), pharmacy benefit managers (PBMs) like Express Scripts (NASDAQ: ESRX) are simultaneously:

• Customers
• Negotiating adversaries
• Vendors
• Competitors

Read on as your friendly neighborhood blogger unravels these sticky situations.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 17, 2012

Labels: Wholesalers, Narrow Networks, PBMs

I am pleased to welcome CBI’s Pharmaceutical Retail Strategy Summit as a Drug Channels sponsor. The conference will be held at the Hilton Hotel in New Brunswick, New Jersey on September 19 and 20. Read more in the official description below or view the website.

I will be delivering the keynote address on "Innovations and Trends in the Retail Channel." CBI has also arranged a solid lineup of speakers from such companies as Amylin Pharmaceuticals, Boehringer Ingelheim, Covidien, Eli Lilly & Co, Horizon Pharma, Walgreens, and more.

CBI is offering a special $400 discount to Drug Channels readers. Just register with Promo code DRC400.* Thanks, CBI!

Posted by Drug Channels Institute, an HMP Global company on Monday, July 16, 2012

Labels: Sponsored Post

I suggest that you check out Connecting Patients With Specialty Products: Distribution models for biologics and other specialty pharmaceutical products, an article in the latest Biotechnology Healthcare journal.

Jack McCain, the reporter at BH, did a super job of boiling down the complex specialty distribution market into a succinct summary of current trends and product models.

See below for a chart illustrating the complexity of specialty drugs’ product flow under the pharmacy benefit. I helped out with the article, so you'll see some quotes from me, along with comments from consultants such as Elan Rubinstein and Ron Krawczyk.

Part 2, focusing on emerging trends, will appear later this year.

Posted by Drug Channels Institute, an HMP Global company on Thursday, July 12, 2012

Labels: Specialty Drugs, Wholesalers, Channel Management, Pharmacy

I’m a bit tardy is writing about the 2012 edition of the EMD Serono Specialty Digest, a valuable report on payer and managed care strategies for specialty drugs. (Free with registration. Warning: the site is kludgy and doesn’t play nicely with all browsers.)

The report is chock full o’ data, so below I pluck out a few interesting factoids about benefit coverage and health plan tactics. To manage specialty drugs, plans are focusing on both utilization management and channel management.

I encourage you to read the whole report because it shows how benefit coverage, patient out-of-pocket costs, and reimbursement methods for specialty drugs vary dramatically among plans. These differences, along with health plan tactics, highlight contracting and channel strategy challenges that I encounter in my consulting work with biopharm manufacturers.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 10, 2012

Labels: Specialty Drugs, Channel Management, Costs/Reimbursement, PBMs, Benefit Design

Time for my annual update on Drug Channels readership and sponsorship activity. Here are the headlines. (Details below.)

• Drug Channels traffic averages about 40,000 page views per month, which is another year of 30%+ growth.
• We have more than 5,440 subscribers (via email, twitter, or RSS). Thanks to social media, email forwarding, and search engine traffic, many more people read the site each month.
• We continue to draw readers from throughout the industry.
• In the past 12 months, Drug Channels ran many successful campaigns and generated significant ROI for our sponsors. Email me if you want details on reaching the Drug Channels audience.
• Our reader survey provided a lot of positive feedback and some constructive advice. A few highlights below.

Stay tuned in October for a site redesign and the official launch of an exciting new educational offering from Drug Channels. In the meantime, please keep emailing me your comments, complaints, topic suggestions, or kudos.

Posted by Drug Channels Institute, an HMP Global company on Monday, July 9, 2012

Labels: Blog Administration

Hot on the heels of its Alliance Boots deal, Walgreen just picked up regional chain USA Drugs for a cool $438 million. The deal includes 144 retail stores (operated under various names) located in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee—plus a generic drug wholesale business. Details in the official press release.

This is a logical, tuck-in acquisition that builds regional scale à la Duane Reade. The deal won’t be enough to stop the narrow network trend or force Express Scripts back to bargaining table, but it does add heft to an already big player and fit with broader pharmacy industry trends. Investors were comforted to know that management still has some sensible ideas about capital allocation. See below for details.

BTW, the deal implies a small customer loss for McKesson (NYSE:MCK), while Cardinal Health (NYSE:CAH) picks up a bit more incremental volume at lower profits.

And here's a drug channel puzzler: Will Walgreen—now the biggest non-US wholesaler—continue to operate USA Drug's SAJ Distributors subsidiary, a $100 million+ drug wholesaler serving about 1,000 independent pharmacies?

Posted by Drug Channels Institute, an HMP Global company on Friday, July 6, 2012

Labels: Wholesalers, Mergers and Acquisitions, Pharmacy

Happy 236th birthday, America! After a week in which many of us became amateur constitutional scholars, stay cool and enjoy these noteworthy news stories from the Drug Channels universe.

• Meet Mr. Wasson—A humanizing profile of Walgreen’s CEO
• Meet Mr. Barrett—A humanizing profile of Cardinal Health’s CEO
• Meet Some Criminals—A behind-the-scenes of a Florida pill mill

Plus, Dr. Stephen T. Colbert, DFA, provides FDA-mandated laughs on side effects labeling.

Posted by Drug Channels Institute, an HMP Global company on Tuesday, July 3, 2012

Labels: Enforcement, Wholesalers, Pharmacy