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

Payer Power: Why Eli Lilly, Janssen, and Merck Deeply Discount Their Drug Prices

Over the past few weeks, three of the largest pharmaceutical manufacturers—Eli Lilly, Janssen, and Merck—have publicly reported the 2017 gross and net price changes for their U.S. product portfolios, along with average discounts. As far as I know, these are the only manufacturers that have publicly reported these data. See the links below. As you will see, the three companies have provided average discounts from list prices of 42% to 51%. Two of the three companies experienced a year-over-year decrease in average net prices. Payers and PBMs frequently recommend that manufacturers just lower the cost of their drugs. These data … Continue reading Payer Power: Why Eli Lilly, Janssen, and Merck Deeply Discount Their Drug Prices

Five Takeaways About Cigna’s Strategy for Express Scripts

Almost three weeks ago, the health insurer Cigna announced that it would acquire the pharmacy benefit manager (PBM) Express Scripts. Click here to read my initial analysis of the deal. Wall Street remains unimpressed. Ever since the transaction was announced, Cigna’s stock price has dropped by 16%. Meanwhile, Express Scripts’ stock is trading more than 20% below Cigna’s offer price, suggesting that many believe the deal won’t be completed. To soothe rattled investors, Cigna last week filed an intriguing SEC Form 425. It contains 31 questions that you may or may not have been asking yourself about its acquisition of … Continue reading Five Takeaways About Cigna’s Strategy for Express Scripts

Janssen’s New Transparency Report: A Peek Behind the Drug Pricing Curtain Raises Troubling Questions About Rebates

Johnson & Johnson’s Janssen business unit just released its 2017 Janssen U.S. Transparency Report. (Free download.) This is the second annual edition of the report, which provides a comprehensive look at Janssen’s commercial activities. Most notably, Janssen reveals that the list price for its pharmaceutical products grew by 8.1% in 2017. Its average net prices, however, declined in 2017 by 4.6%. Janssen paid $15 billion in rebates and discounts, which subtracted 42% from its list prices. Kudos to Janssen for providing so much disclosure. Below, I review some key takeaways from this valuable report. We’re left with some key unanswered … Continue reading Janssen’s New Transparency Report: A Peek Behind the Drug Pricing Curtain Raises Troubling Questions About Rebates

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

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

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 drugs. Vertical integration M&A has been in the news. But as our data shows, the integration of PBMs and specialty pharmacies has already happened. Read more » … Continue reading The Top 15 Specialty Pharmacies of 2017: PBMs and Payers Still Dominate

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

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, is much more compelling for Express Scripts than it is for Cigna. Perhaps that’s why the stocks reacted so differently yesterday. Express Scripts’ stock closed up 9%, … Continue reading Cigna-Express Scripts: Vertical Integration and PBMs’ Medical-Pharmacy Future

UnitedHealthcare’s Point-of-Sale Rebate Announcement: What’s Next?

Did I just hear the gross-to-net bubble deflate a little bit? This week, UnitedHealthcare announced that it would provide point-of-sale (POS) rebates to 7 million people enrolled in its fully insured commercial group benefit plans. Click here to read the press release. UnitedHealthcare’s action is a big win for patients, though not (yet) a black swan event for pharmacies and pharmacy benefit managers (PBMs). As I explain below, it’s a small but significant move that will trigger new questions about drug prices, patients’ out-of-pocket costs, and channel economics. I’m sure that SpongeBob SquarePants, honorary mascot of the gross-to-net bubble, is … Continue reading UnitedHealthcare’s Point-of-Sale Rebate Announcement: What’s Next?

NEW: The 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers

I am pleased to announce our new our 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers, available for purchase and immediate download. Click here to download a free report overview (including the Table of Contents and a List of Exhibits) Click here to read the press release We’re offering special discounted pricing if you order before March 10, 2018! The 2018 edition has been thoroughly updated, revised, and expanded. This latest edition contains the most current financial and industry data along with information about the strategies and market positions of the largest companies. Many sections and chapters have … Continue reading NEW: The 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers

The Top 15 U.S. Pharmacies of 2017: Market Shares and Key Developments For The Biggest Companies

Next week, Drug Channels Institute will release our 2018 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers. It’s the ninth edition of our popular examination of the U.S. pharmacy distribution and reimbursement system. The exhibit below—one of 160 in our new report—provides a first look at the 15 largest pharmacies, ranked by total U.S. prescription dispensing revenues for calendar year 2017. I also highlight crucial market changes that affected our ranking. As you will see, the big got bigger in 2017. For a sneak peek at the complete report, download the free overview. If you would like to preorder … Continue reading The Top 15 U.S. Pharmacies of 2017: Market Shares and Key Developments For The Biggest Companies