Add Shire Pharmaceuticals to the list of companies that should be wondering about the integrity of its pharmacy and wholesale channels.
In October 2008, a shipment of Carbatrol and Adderall XR was stolen en route from Shire’s manufacturing facility to its own distribution center. Two weeks ago, Shire notified its trade accounts that "Carbatrol from the stolen lots has started to appear in our expired returns and more stolen product may still be on the market."
Pharmaceutical cargo thefts are on the rise, but every stolen drug needs a buyer for the fenced goods.
Here's a rundown of noteworthy news stories from the Drug Channels universe in August.
In this edition, we look at the latest bogus study of drug prices from AARP, get an update on CVS Caremark’s (NYSE:CVS) PBM selling season, hear more about NACDS' secret AMP letter, and learn how McKesson (NYSE:MCK) avoids taxes using an Irish subsidiary. Blimey!
Speaking of the secret AMP letter, please say hello if you see me in the audience this Sunday morning at the NACDS meeting in San Diego during Medicaid Expansion and Changes to Pharmacy Reimbursement. Then join me for a brunch of eggs, spam, bacon, spam, spam, and AMP!
I am pleased to announce that I have joined the Editorial Board of Drug Benefit News (DBN), one of my must-read publications about the pharmacy, managed care, and pharmacy benefit industries.
If you enjoy Drug Channels, then you should subscribe to DBN. Just so you know, there's nothing in it for me in making this suggestion.
BTW, you will understand a lot more about me and the Drug Channels blog when I tell you that three of my favorite publications are:
Check out Docs Falling Behind In Race To Help Patients With Genetics, a physician's thought-provoking perspective on the beneficial role of Pharmacy Benefit Managers (PBMs) in accelerating pharmacogenomics—using a patient’s genetic information to optimize drug therapy.
While I can't speak as a medical professional, I'm not surprised to hear this viewpoint from a leading physician. PBMs have powerful incentives to invest in personalized medicine tools that will improve clinical outcomes and manage utilization for their clients. As I see it, successful implementation of these services will be one way for PBMs to maintain spreads within the PBM economic model.
You can complement this article with Genomics: What Lies Within for a good discussion of the DNA sequencing market from The Economist.
IIR is offering a special 25% discount for Drug Channels readers, which will save about $700. Just mention VIP code XP1558DRUGCH when registering.
I have also learned that CDR Krista Pedley, the new Director of the Office of Pharmacy Affairs (OPA) of the Health Resources and Services Administration, will be at the event. Her appointment was announced on July 14.
You can meet CDR Pedley at 1:35pm on Thursday September 16th, Track B, at the session "Changing PHS Regulations, 340B Entity Expansion and Enforcement" with a presentation by Devin K. Williams, Program Management Officer, US Public Health Service, Office of Pharmacy Affairs (OPA).
The MDRP promises to be a valuable and timely event. Check out the agenda for full details.
Medco Health Solutions (NYSE:MHS) continued its expansion into fee-based clinical services with the acquisition of United BioSource Corporation (UBC). Press Release
The high-level logic of the deal seems logical given Pharmacy Benefit Manager (PBM) industry dynamics and Medco's pharmacogenomic investments.
However, I'm a little puzzled by the strategic fit because United’s customers are manufacturers. PBMs have grown by aligning with the interests of plans sponsors (employers and health plans) rather than with brand-name or generic drug manufacturers.
Is an innovative PBM succumbing to business model creep and management hubris?
The new junk bond offering will further reduce the risk that Rite-Aid will vanish in a puff of smoke. McKesson (NYSE:MCK), which sells about $13 billion in drugs to Rite-Aid, will also be relieved.
Wow, this company has more lives than a cat with an afterlife.
Of course, restructuring an excessive debt burden is not the same as saying the future looks rosy. Recent same-store sales trends don’t dispel Rite-Aid’s nickname as “the turnaround that never turns around.” The NYSE is once again threatening to delist Rite-Aid if its stock stays below the price of a Sausage McMuffin.
FWIW, below is a quick primer on their debt load and the new offering.
The Patient Protection and Affordable Care Act requires CMS to implement a new definition of Federal Upper Limits (FUL) based on a new definition of Average Manufacturer Price (AMP) “without regard to whether or not final regulations to carry out such amendments have been promulgated.” In the July 20 letter, NACDS and NCPA make a compelling case that “a proposed rule with comment period be published so that the reimbursement approach is fair to all parties involved.”
CMS will either back down and delay implementation of the new FULs or face the prospect of intense litigation that CMS doesn't have the juice to win. Adam’s odds of new FULs in 2010 are now 7-1 against. Thus, the current bogus FULs will likely remain in place a bit longer. (See Won't Get FULed Again.)
My little ol’ blog post about the Centers for Medicare & Medicaid Services’ (CMS) drug price RFP—CMS Wants Public Transparency to Pharmacy Profits—triggered some heavy-duty maneuvering by the industry’s major lobbying organization.
The Pharmaceutical Care Management Association, which represents pharmacy benefit managers (PBMs), put out a scorching press release on Tuesday citing Drug Channels titled CMS Turns ‘Transparency’ Spotlight on Drugstores.
As I describe below, this survey will gather data on both retail pharmacy prices as well as the prices paid by pharmacies to wholesalers or manufacturers. Plus, CMS intends to post these data on its website.
Translation: The whole wide world will have transparency to drug prices and costs, potentially at the National Drug Code (NDC) level. Toto, I've a feeling we're not in Alabama anymore.
Think about what the publication of these data could mean:
Pharmacies and Pharmacy Benefit Managers (PBMs)—Transparency to average dispensing spreads between ingredient cost reimbursement and acquisition cost
Brand-name Drug Manufacturers—Visibility into channel management and fee-for-service discounts
Generic Drug Manufacturers—Visibility into sales and discounting strategy
Payers and PBMs—Availability of new reimbursement benchmarks to replace Average Wholesale Price (AWP) and Wholesale Acquisition Cost (WAC)
Few “Interested Vendors” have applied, so read on if you want the job.
With little fanfare, NACDS just released its new estimates of 2009 pharmacy revenues and prescriptions. See Industry Facts-at-a-Glance.
Check out the charts below for my summary of prescription revenues and number of prescriptions for the five major drug dispensing formats. The data nicely illustrate key trends that are transforming the pharmacy industry:
The shift to high-cost specialty pharmaceuticals
The dampening effect of generic drugs on retail revenues
The slowdown in mail prescription growth
The slow-motion decline of independent pharmacies
Don't just take my word for it. Please post your thoughts and predictions about these newly-released data in the comments below.
If you happen to bump into me at the meeting, please introduce yourself and tell me what you think about the Drug Channels blog. Very negative comments should be preceded by the offer to buy me a beer.
I'll also be pleased to discuss the innovative pharmacy benefit program illustrated below.
Add Shire Pharmaceuticals to the list of companies that should be wondering about the integrity of its pharmacy and wholesale channels.
