Profits in the 2018 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies

Time for my annual review of the Fortune 500 list. Every year, this is one of my most popular posts, because it helps us follow the dollar and understand how drug channel intermediaries make money. Our analysis also provides crucial background for understanding the Trump administration’s drug pricing blueprint. Fortune’s 2018 list contains the same seven drug channel companies that the 2017 list did: AmerisourceBergen, Cardinal Health, CVS Health, Express Scripts, McKesson, Rite Aid, and Walgreens Boots Alliance. Using the Fortune data, I explore the profitability and shareholder returns of the largest public drug wholesalers, chain pharmacies, and pharmacy benefit … Continue reading Profits in the 2018 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies

McKesson’s Choppy Cs: Consolidating Customers and Challenging Contracts

Pharmaceutical wholesalers are no longer growth companies. They are struggling with ever larger customers, ongoing generic deflation, and the downsides of specialty pharmacy. McKesson has illustrated these challenges in the financial results for its 2018 fiscal year. (See the links below.) The company projects that its 2019 fiscal year distribution profits will be flat to negative, due to customer losses and/or lower margins from contract renewals. Below, I consider McKesson’s challenges with many of its largest customers, including: CVS Health Rite Aid Albertsons Ahold Delhaize Cigna Like its peers, McKesson faces an uncomfortable conflux of uncommon customer crosswinds. Investors are … Continue reading McKesson’s Choppy Cs: Consolidating Customers and Challenging Contracts

Reflections from #Asembia18: The State of Specialty Pharmacy 2018

Last week, Paula and I had the pleasure of attending Asembia’s 2018 Specialty Pharmacy Summit. The Specialty Pharmacy Summit remains the most important forum in the specialty marketplace. This year, a record 6,500 people learned, networked, and connected in Las Vegas. It was another year of record attendance. (Here’s the official press release.) Drug Channels again salutes Larry and Robert Irene for sustaining and growing an annual event that unites the entire industry. Today marks the eighth year that I will violate Vegas code and tell you what happened there. Below, I offer reflections on the meeting and highlight key … Continue reading Reflections from #Asembia18: The State of Specialty Pharmacy 2018

Cigna-Express Scripts: Vertical Integration and PBMs’ Medical-Pharmacy Future (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from March 2018. Wow. Yesterday, Cigna announced that it would acquire Express Scripts. See the links below. Though Cigna was an unexpected acquirer, the deal confirms the importance of pharmacy and medical benefit integration. It also reinforces the role that pharmacy benefit management (PBM) plays in the drug channel. PBMs are now linked closely to the expensive specialty drugs that treat smaller patient populations, not to the primary care blockbusters of yesteryear. The strategic logic, however, … Continue reading Cigna-Express Scripts: Vertical Integration and PBMs’ Medical-Pharmacy Future (rerun)

The Top 15 Specialty Pharmacies of 2017: PBMs and Payers Still Dominate (rerun)

This week, I’m rerunning some popular posts while I attend Asembia’s 2018 Specialty Pharmacy Summit. Click here to see the original post and comments from March 2018. Below is our exclusive Drug Channels Institute list of the 15 largest pharmacies, ranked by estimated 2017 revenues from dispensing specialty pharmaceuticals. The battle for control of the specialty market accelerated in 2017, though pharmacies owned by pharmacy benefit managers (PBMs) continued to capture most of the market share. The top four specialty pharmacies are all owned or co-owned by a PBM. They accounted for about two-thirds of prescription revenues from pharmacy-dispensed specialty … Continue reading The Top 15 Specialty Pharmacies of 2017: PBMs and Payers Still Dominate (rerun)

Drug Channels News Roundup, April 2018: Copay Accumulators, Express Scripts, Pharmacy Pricing, Amazon, and Almost-Pharmacist Jack Nicklaus

Baseball season is finally here! Oil up your glove, lace up your cleats, and let’s run the bases around this month’s news stories. Remember: Sometimes you win, sometimes you lose, and sometimes it rains. In this issue: Green Monster: The drug manufacturers that are most vulnerable to copay accumulators Pop Fly: Express Scripts wants to pop the gross-to-net bubble? Foul! Fresh evidence that uninsured consumers pay rip-off cash prices at retail pharmacies Strikeout: My $0.02 on Amazon’s decision not to sell drugs to hospitals Plus, from the diamond to the green: the secret pharmacy history of golf legend Jack Nicklaus. … Continue reading Drug Channels News Roundup, April 2018: Copay Accumulators, Express Scripts, Pharmacy Pricing, Amazon, and Almost-Pharmacist Jack Nicklaus

McKesson Leads Another Round of PSAO Consolidation

Last week, McKesson announced the formation of Health Mart Atlas (HMA), a joint venture between McKesson’s Access Health business and American Pharmacy Network Solutions (APNS). Click here to read the press release. The combination extends McKesson’s position as the largest pharmacy services administrative organization (PSAO). PSAOs are the awkwardly named intermediaries that operate between smaller pharmacies and pharmacy benefit managers (PBMs), per our U.S. Distribution and Reimbursement System flowchart. When the Arete Pharmacy Network was formed, in 2016, I predicted that the fragmented PSAO sector would begin a long-overdue consolidation. Given the PBM titans now sitting atop Mt. Olympus, the … Continue reading McKesson Leads Another Round of PSAO Consolidation

EXCLUSIVE: A Record Number of Specialty Pharmacies Now Have Accreditation

It’s time for Drug Channels Institute’s annual update on the accreditation of specialty pharmacies. Our spooky research team (pictured at right) is back! We have counted every pharmacy location that has achieved accreditation by an independent organization. Our exclusive findings: The number of specialty pharmacies with accreditation expanded again in 2017. We identified 729 unique pharmacy locations that by the end of 2017 had achieved accreditation from the three major independent accreditation organizations. The 2017 figure is almost double the 2015 figure. For the second consecutive year, pharmacy locations owned by healthcare providers—such as hospitals, health systems, physician practices, and … Continue reading EXCLUSIVE: A Record Number of Specialty Pharmacies Now Have Accreditation

Drug Channels News Roundup, March 2018: Copay Accumulators, Cancer Drug Costs, Physician Employment, and Insurer Profits

It’s technically spring here at Drug Channels’ worldwide headquarters in lovely downtown Philadelphia. While the last snowdrifts melt into memory, please enjoy this month’s selection of noteworthy news stories. You’ll learn: Why copay accumulators are making national news How hospitals are doubling cancer drug costs Fun facts about the massive shift to hospital-employed physicians Plus, a joke (I think) about how a major health insurer makes money. P.S. Join the nearly 5,400 people who follow me at @DrugChannels on Twitter. I share links to crucial news and reports that you should know about. Read more » Copyright © 2006-2018 Pembroke … Continue reading Drug Channels News Roundup, March 2018: Copay Accumulators, Cancer Drug Costs, Physician Employment, and Insurer Profits

Plan Sponsors Prefer Specialty Pharmacies Over Retail Drugstores

Top ‘o the morning to you! Let’s take a wee look at the Pharmacy Benefit Management Institute’s (PBMI) new 2018 Trends in Specialty Drug Benefits. (Free download with registration.) It’s a great resource for understanding how plan sponsors manage specialty drugs. The new report contains fascinating data showing how sponsors of employer-based health plans view dispensing channels for specialty drugs. As you will see below, employers believe that the capabilities of specialty pharmacies are superior to those of retail pharmacies. They also think that over the past few years, specialty pharmacies’ performance gap has widened for crucial clinical and patient … Continue reading Plan Sponsors Prefer Specialty Pharmacies Over Retail Drugstores