Profits in the 2019 Fortune 500: Manufacturers vs. Managed Care vs. Pharmacies, PBMs, and Wholesalers

Time to dive into our 12th (!) 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. Fortune’s 2019 list contains only six drug channel companies: AmerisourceBergen, Cardinal Health, CVS Health, McKesson, Rite Aid, and Walgreens Boots Alliance. Consolidation and vertical integration have transformed the channel—and the Fortune rankings. Below you will see our list of the companies that disappeared from the roster. We therefore have added to our analysis the four managed care and insurance companies on … Continue reading Profits in the 2019 Fortune 500: Manufacturers vs. Managed Care vs. Pharmacies, PBMs, and Wholesalers

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

This week, I’m rerunning some popular posts while I attend Asembia’s 2019 Specialty Pharmacy Summit. Click here to see the original post and comments from January 2019. 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. … Continue reading Specialty Pharmacy M&A: Our Look at 2018’s Deals (rerun)

The Specialty Pharmacy Boom: Our Exclusive Update on the U.S. Market

It’s time for Drug Channels Institute’s annual update of the number of U.S. specialty pharmacies. As always, I had outstanding research assistance. (See photo at right.) But even we can’t count the total number of pharmacies dispensing specialty drugs, since any pharmacy can designate itself a specialty pharmacy. We therefore counted every pharmacy location that had achieved accreditation by an independent organization. Our exclusive findings: As of the end of 2018, more than 900 unique pharmacy locations had achieved specialty pharmacy accreditation from one or more of three major independent accreditation organizations. The 2018 figure marks a 25% increase over … Continue reading The Specialty Pharmacy Boom: Our Exclusive Update on the U.S. Market

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