Specialty Pharmacies and PBMs Penetrate the 340B Program—And How Manufacturers Should Respond

In two recent Drug Channels articles, I have documented the phenomenal growth in pharmacies participating in the 340B Drug Pricing Program and the superior profits that pharmacies earn from the program. Today, I turn to the less well-known role of specialty pharmacies and pharmacy benefit managers, which are now significant participants as 340B contract pharmacies. Below, we present our first exclusive analysis of how independent and PBM-owned specialty pharmacies have deepened their relationships with hospitals and other 340B covered entities. We estimate that nearly 10% of all specialty prescriptions are dispensed by 340B contract pharmacies, which makes this channel one … Continue reading Specialty Pharmacies and PBMs Penetrate the 340B Program—And How Manufacturers Should Respond

Amazon Buys PillPack: Six Pharmacy and Drug Channel Implications

It’s official! After more than a year of speculation and rumors, Amazon has entered the pharmacy business with its acquisition of PillPack, a small mail pharmacy. Consider this move to be the end of the beginning for the pharmacy industry’s evolution. The stock prices of pharmacies and pharmacy benefit managers (PBMs) predictably plunged yesterday as everyone freaked out. CVS Health, Walgreens Boots Alliance, and Rite Aid collectively lost more than $11 billion in stock market value. Below, I offer my initial observations on the transaction and its impact. But let’s all keep some perspective here. This is a small first … Continue reading Amazon Buys PillPack: Six Pharmacy and Drug Channel Implications

Meet The Power Buyers Driving Generic Drug Deflation (rerun)

This week, I’m rerunning some popular posts before the holiday week. Click here to see the original post and comments from February 2018. Wholesalers and retailers have deepened their relationships via generic purchasing consortia—and generic drug makers are feeling the pain. Example: Novartis’ Sandoz business unit reported that its fourth-quarter 2017 sales dropped by 17% “due to increased industry-wide pricing pressure and continued customer consolidation.” (source) Below, we examine the four generic drug mega-buyers behind this pressure: Red Oak, Walgreens Boots Alliance, McKesson and ClarusOne, and Express Script’s EconDisc. We estimate that in 2017, these four organizations accounted for an … Continue reading Meet The Power Buyers Driving Generic Drug Deflation (rerun)

The Gross-to-Net Bubble Topped $150 Billion in 2017 (rerun)

This week, I’m rerunning some popular posts before the holiday week. Click here to see the original post and comments from April 2018.  You can also reach this post at www.GrossToNetBubble.com. 😉 In 2017, the gross-to-net bubble—the ever-growing pile of money between a manufacturer’s list price for a drug and the net price after rebates and other reductions—hit a new high. Based on new data from IQVIA, manufacturers of brand-name drugs in 2017 reduced list price revenues by an astonishing $153 billion. Those reductions came primarily from rebates, discounts, and other payments to the drug channel. That figure has grown … Continue reading The Gross-to-Net Bubble Topped $150 Billion in 2017 (rerun)

Drug Channels News Roundup, June 2018: Fake News from AHIP, Azar Blasts Rebates, Sanofi’s Pricing, Asembia in Vegas, and Justice for Gingers

Summer is here! Before you launch your incredible vacation, please enjoy these super Drug Channels stories: AHIP misrepresents drug spending data HHS Secretary Azar tells Congress about “a system without rebates” Sanofi discloses a major gross-to-net gap and declining drug prices Asembia shares video highlights from Las Vegas Plus: a major social justice win for your humble correspondent. P.S. Follow my daily links to neat stuff at @DrugChannels on Twitter. Recent tweets have covered new drug spending data, M&A news, pharmacy benefit manager (PBM) activities, retail clinics, copay accumulators, track-and-trace, and more. Read more » Copyright © 2006-2018 Pembroke Consulting, … Continue reading Drug Channels News Roundup, June 2018: Fake News from AHIP, Azar Blasts Rebates, Sanofi’s Pricing, Asembia in Vegas, and Justice for Gingers

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

Drug Channels News Roundup, May 2018: CVS Caremark, Albertsons/Rite Aid, Copay Accumulators, and A World Without PBM Rebates

It’s almost June—wedding season! Our invitation to the recent royal nuptials apparently got lost in the mail, but I invite you to our own monthly shower of noteworthy news: More questions about CVS Caremark’s profits in Ohio’s managed Medicaid programs Albertsons and Rite Aid reveal new details about their pharmacy plans HIV service organizations warn of patient dangers from copay accumulators Plus, we revisit the classic Drug Channels black swan article for hints to a future without PBM rebates. P.S. @DrugChannels on Twitter is now approaching 6,000 followers. Throw some rice and enjoy my daily tweets of interesting news, stories, … Continue reading Drug Channels News Roundup, May 2018: CVS Caremark, Albertsons/Rite Aid, Copay Accumulators, and A World Without PBM Rebates

Who Best Managed the Drug Spending Slowdown in 2017: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?

It’s time for Drug Channels’ annual analysis of drug spending. For 2017, we again turn to the annual trend reports from four large pharmacy benefit managers (PBMs)—CVS Health, Express Scripts, MedImpact, and Prime Therapeutics. (See their report links below.) Below, I compare who’s better and who’s best among the PBMs and share additional observations about the 2017 trends. We offer four key conclusions: Drug spending grew by only 1.5% in 2017, continuing a multiyear decline in the growth rate. Total drug spending declined at more than 40% of plan sponsors. Spending on traditional drugs dropped by mid-single digits. For specialty … Continue reading Who Best Managed the Drug Spending Slowdown in 2017: CVS Health, Express Scripts, MedImpact, or Prime Therapeutics?

The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption

Last Friday, the U.S. Department of Health & Human Services (HHS) released American Patients First, a report billed as “The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.” This administration’s blueprint offers a thoughtful diagnosis of U.S. drug pricing along with the unintended consequences and warped incentives of our drug channel system. The report also proposes a very long list of more than 50 regulatory and legislative fixes. It therefore doesn’t translate to quick action or simple sound bites. Many people are discounting the plan as no big deal and therefore underestimating how radically the system could … Continue reading The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption