Hard to believe, but this is my 140th post of 2010. Thanks to everyone who read, commented, or forwarded the articles on Drug Channels. I hope you’ve had a fun and educational year. There's a special holiday video from my good friend MC Ad-Elf at the bottom of today's post.
To wrap up the year, here are four big trends that we'll be talking more about in MMXI:
Market Growth and the Shift to Specialty
Boom-to-Bust for Generic Drugs
Cost-Plus Pharmacy Reimbursement
Preferred Pharmacy Networks
Below is an overview of each trend along with a summary of the drug trend forecasts provided by CVS Caremark (NYSE:CVS), Express Scripts (NASDAQ:ESRX), and Medco Health Solutions (NYSE:MHS). If you're curious to know more, I devote the final third of the 2010-11 Economic Report on Retail and Specialty Pharmacies to analyzing these trends.
FYI, the introductory discount on my new pharmacy report ends tomorrow. It’s the perfect stocking stuffer for all the executives on your Christmas list!
The Center for Healthcare Supply Chain Research, the research arm of the Healthcare Distribution Management Association (HDMA), recently released its 2010-2011 HDMA Factbook.
IMHO, the Factbook is an invaluable guide to the economics of the pharmaceutical wholesale industry. The report will be particularly useful if you sell to or buy from pharmaceutical wholesalers because it reveals a lot about wholesaler economics—perhaps more than the participating wholesalers may realize.
As I highlight below, you could credibly use the data in the new Factbook as a rebuttal whenever a wholesaler complains that “their costs have gone up.” You may also question the basis-point economics of your fee-for-service agreement.
The report’s price is lower this year, but I can only give it a qualified recommendation because HDMA stubbornly refuses to make the report available in a convenient downloadable format. More on this subject below, too.
Lewin estimates that Medicaid spending would drop by 14.8% ($2.5 billion) in 2011 if fee-for-service Medicaid prescriptions were “optimally managed,” which means at levels comparable to private plans. A ten-year extrapolation estimates more than $30 billion in savings.
Shocking? Not really. I’ve long been critical of the overly political nature of pharmacy reimbursement under Medicaid. Just look at the windfall to South Carolina pharmacies versus their neighbors (in A Victory for Pharmacy Profits in South Carolina) or the excessive payments to pharmacies under the old Federal Upper Limits (in Won’t get FULed again). Lewin found that higher payments to pharmacies are not even associated with higher generic dispensing rates.
The data seem clear to me. But as always, I encourage you to read the study for yourself and make up your own mind.
I worked hard to make this report a comprehensive resource with the latest facts and data about all aspects of the U.S. pharmacy distribution and reimbursement system—product movement, financial flows, and contractual relationships. The report also does a deep dive on 4 key trends that will affect the market structure and economics of the retail and specialty pharmacy industries:
Market Growth and the Shift to Specialty
Boom-to-Bust for Generic Drugs
Cost-Plus Pharmacy Reimbursement
Preferred Pharmacy Networks
There's a lot of new material since my last update in September 2009. And as always, I’ve packed enough into the report to make it valuable to both newbies and grizzled veterans. You can get all the details here:
I want to let the Drug Channels audience know about PBMI's 16th Annual Drug Benefit Conference to be held at the Arizona Biltmore Hotel in Phoenix, AZ, on February 16-18, 2011.
I will be delivering the keynote address on The Future of the Pharmacy Industry. My talk will outline the dramatic changes impacting the pharmacy industry and discuss how payers should prepare for dramatic shifts in the current business model. Check out the complete event details below.
The footer on every page of the website states: "This site paid for by: Michael Cohen, Stewart Rahr and Bradley Gerstman & David Schwartz of Gotham Government Relations." See below for the email that Mr. Rahr reportedly sent to his personal email list.
The exhibit below, one of 40 in my new report, shows my estimates for market share of prescription revenue by company for calendar year 2010. I estimate that the top six dispensing retail and specialty pharmacies—CVS Caremark, Walgreens, Medco Health Solutions, Rite-Aid, Walmart, and Express Scripts—will account for 62.2% of U.S. pharmacy dispensing revenues in 2010. These data reflect the industry-level trends highlighted in New Data on Pharmacy Industry Market Share.
Don’t get too frightened by the data. Almost one-third of revenues still come from retail and specialty pharmacies beyond the 11 companies in the table. Total revenues from this more numerous group are a still-substantial $85.5 billion.
Hard to believe, but this is my 140th post of 2010. Thanks to everyone who read, commented, or forwarded the articles on Drug Channels. I hope you’ve had a fun and educational year. There's a special holiday video from my good friend MC Ad-Elf at the bottom of today's post.
