The Big Three Generic Drug Mega-Buyers Drove Double-Digit Deflation in 2018. Stability ahead?

Oral generic drugs keep getting cheaper. The Food & Drug Administration (FDA) has intensified the generic industry’s competitive pressures with record drug approvals. The FDA’s actions, combined with the negotiating leverage of the large generic purchasing organizations, led to 2018’s persistent double-digit deflation in manufacturers’ selling prices for oral generic drugs. Below, we update our analysis of these generic drug mega-buyers. We estimate that for 2018, the three largest buyers  accounted for more than 90% of total U.S. generic drug purchases from manufacturers. In 2019, acquisitions and contract switches will shift market share among these groups, but not diminish their … Continue reading The Big Three Generic Drug Mega-Buyers Drove Double-Digit Deflation in 2018. Stability ahead?

Specialty Pharmacy M&A: Our Look at 2018’s Deals

Let’s kick off 2019 with a quick review of last year’s specialty pharmacy mergers and acquisitions (M&A). Our list (below) includes only deals that were publicly announced in 2018. Pharmacy benefit managers (PBMs) were especially busy. CVS Health bought five specialty pharmacies. UnitedHealth’s OptumRx bought Avella Specialty Pharmacy, the largest independent specialty pharmacy. Diplomat Pharmacy was uncharacteristically quiet during 2018, though it had been one of the most active acquirers in previous years. The specialty pharmacy industry is rapidly maturing, so I expect many more exits in the coming years. Looking to pick up a fast-growing specialty pharmacy? Click here … Continue reading Specialty Pharmacy M&A: Our Look at 2018’s Deals

A System Without Rebates: The Drug Channels Negotiated Discounts Model (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from August 2018. This has been the most impactful article that I have ever published on Drug Channels. Review it and get ready for 2019. P.S. You can also find this material at www.WorldWithoutRebates.com. (Yes, we bought that domain!) Are you ready for a world without rebates? In June, Alex Azar, Secretary of the U.S. Department of Health & Human Services (HHS), summarized his long-range vision for a new drug channel system: “[W]e may need to move toward a system without rebates, … Continue reading A System Without Rebates: The Drug Channels Negotiated Discounts Model (rerun)

Building a New Drug Wholesaler Compensation Model: What Happens as Brand Inflation Slows? (rerun)

This week, I’m rerunning some popular posts before the holidays. Click here to see the original post and comments from July 2018. The challenges facing wholesalers have intensified since this article was originally published, in July. Brand-name drug inflation will likely reach historical lows in 2019, and the prospects for a gross-to-net bubble reset are greater than ever. Have executives at the Big Three companies fully grasped the changes coming to the drug wholesaling business model? For more on the industry, see our 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Today, drug wholesalers make money from distribution in … Continue reading Building a New Drug Wholesaler Compensation Model: What Happens as Brand Inflation Slows? (rerun)

Five Industry Trends for U.S. Drug Wholesalers in 2019

Modern Distribution Management recently published my article 2018 MDM Market Leaders | Top Pharmaceuticals Distributors. It is an excerpt from our 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Below, I republish the section of the article highlighting five significant industry trends affecting the U.S. drug wholesaling industry. I think Drug Channels readers will enjoy this summary as we look toward 2019. Click here to download a free overview of the full 2018-19 report. P.S. I’ll be discussing these and other topics next week in my keynote address at CBI’s 14th Life Sciences Trade and Channel Strategies. Hope to see … Continue reading Five Industry Trends for U.S. Drug Wholesalers in 2019

Surprise Deal: Cardinal Health Sells Its Specialty Pharmacy (Again)

The evolving specialty market has just claimed another victim. Cardinal Health is selling its specialty pharmacy to BioMatrix Specialty Pharmacy LLC, a private-equity-backed company. There was no public announcement, so today’s article counts as another Drug Channels exclusive. Below, I provide background about BioMatrix and the specialty pharmacies that wholesalers operate. Cardinal’s capitulation highlights the challenges for smaller specialty pharmacies. Cardinal operates a small, sub-scale specialty pharmacy that has had difficulty attracting patients. What’s more, Cardinal’s overall size as a $137 billion business couldn’t help its pharmacy gain sufficient access to manufacturers’ and payers’ limited networks. Each of the Big … Continue reading Surprise Deal: Cardinal Health Sells Its Specialty Pharmacy (Again)

NEW: The 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors

I am pleased to announce our new 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, 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 (which highlights some key findings about revenues, profits, and trends) We’re offering special discounted pricing if you order before October 26, 2018. The 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors—our ninth edition—remains the most comprehensive tool for analyzing the economic and business realities of U.S. pharmaceutical distribution. This year’s edition has … Continue reading NEW: The 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors

The Cigna-Express Scripts Deal’s Intriguing Connections With—And Implications For—AmerisourceBergen and Walgreens

Almost there! Last week, the U.S. Department of Justice (DOJ) Antitrust Division closed its investigation of Cigna’s proposed acquisition of Express Scripts. Click here to read the DOJ’s closing statement. As with everything in the U.S. drug channel, there’s more to this transaction than meets the eye. Below, I explain how the transaction will benefit AmerisourceBergen (ABC), which supplies the mail and specialty pharmacies of Express Scripts. But as you’ll see, Express Scripts has been relying less on ABC as a source of supply for its mail and specialty pharmacies. Meanwhile, the new organization transaction will have few degrees of … Continue reading The Cigna-Express Scripts Deal’s Intriguing Connections With—And Implications For—AmerisourceBergen and Walgreens

Preorder Now: Our 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors

On October 9, 2018, Drug Channels Institute will release The 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. It’s the ninth edition of our annual evaluation of the economic and business realities driving U.S. drug distribution. This definitive, nonpartisan resource remains the most comprehensive tool for analyzing the industry. The 2018-19 edition has been thoroughly updated and revised with the latest information. This year, we are providing you with the opportunity to preorder the 2018-19 edition at special discounted prices. This means that you can be among the first to access our new report. Those who preorder will receive … Continue reading Preorder Now: Our 2018–19 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors

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

This week, I’m rerunning some popular posts before the Labor Day weekend. Click here to see the original post and comments from June 2018. 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 … Continue reading Profits in the 2018 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies (rerun)