- The Battle for Control of Specialty Drugs: An article by yours truly
- No Go for ACO? So Says an FTC head honcho
- Cash-n-carry: The generic drugs price war gains momentum
- Pfizer’s Plan: My NPR interview on the generic market
The Battle for Control of Specialty Drugs
In this Pharmaceutical Commerce article, I explain how and why specialty distributors, specialty pharmacies and healthcare providers are competing for a dominant position in specialty drug delivery and reimbursement. The article summarizes one of the key forces of change from Chapter 5 of the 2011-12 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Please let me know if you have any comments or feedback.
Accountable Care Organizations Will Likely Lead to 'Higher Costs and Lower Quality Health Care'
Avik Roy at Forbes summarizes negative comments by FTC commissioner J. Thomas Rosch on Accountable Care Organizations (ACOs). If you are interested in ACOs, I recommend reading the full speech (available here) because it has a good overview of key competitive issues. Here is Mr. Rosch's scorching conclusion:
“...there is a significant risk that, like Medicare and Medicaid generally, any purported cost savings from the program will be offset by higher costs to payors in the commercial market. Against the very meager prospects for cost savings, there is a very real risk that some ACOs will be formed with an eye toward creating or exercising market power. The net result of the Shared Savings Program may therefore be higher costs and lower quality health care – precisely the opposite of its goal.”Save at the Drugstore
Given the launch of generic Lipitor, this article is a timely reminder that competition will put pressure on generic prescription profits throughout the channel. Many generic drugs can be purchased for literally pennies per pill, so we are seeing a growing cash-pay market and mail/retail payments rates getting closer (per Retail and Mail Pharmacy Economics Start Converging.) I’ll have more to say about the coming consumer-directed generic price war.
Pfizer Tries To Hang Onto Cash Cow– Lipitor
In this 8-minute radio interview, I explain the competitive dynamics of the generic drug market to Here and Now, a syndicated National Public radio show. While I rarely include my own items in the news roundup, I think this summary has general interest. As a friend told me recently, I have the perfect face for radio!
Death to Pennies
This an awesome, must-watch video…unless you are a huge penny fan. Click here if you can’t see the video.
Adam:
ReplyDeleteI heard your interview on NPR and in general thought your views were right on. The one exception was your comment that retail pharmacies would benefit the most. As you know well, while the "spread" you describe does exist, PBMs and other payers are quick to put a MAC on any new generic products, which eliminates any substantial spread. While Medicaid and Medicare plans might be slower to MAC these drugs, they use tactics, such as requiring use of a particular manufacturer's product, that shifts the economic advantage from the pharmacy via the spread to the PBM or State program via rebates - exactly what Pfizer is doing with regard to Lipitor. Ultimately, once the 6 month exclusive marketing expires, the drug price will drop and the generic will very quickly be subject to a MAC or FUL. Any benefit to retail pharmacies, if it ever exists at all, has a limited life of no more than 6 months.
John,
ReplyDeleteYes, the post-180 day situation is much different. After 18 to 24 months, pharmacy gross profits will typically be much lower than during the 180-day exclusivity period. The actual spread in the post-180-day period depends on:
=> The rate at which acquisition costs drop as multiple manufacturers enter the market=> The rate at which pharmacy reimbursement for the generic drug gets reduced, a.k.a. “MAC'd down”
FYI, I did mention this dynamic in the interview, but it was edited out.
Adam
Adam -
ReplyDeleteI was reading the article on specialty drugs today and the "white bagging" practice versus buy-and-bill. The issue of moving from medical to pharmacy has been something the PBMs have been trying to address for 5+ years (at least). I haven't seen any significant success in this area. Have you (other than press releases)?
Do you expect that ACOs or PCMHs or other changing reimbursement models for the providers will change their reaction to this PBM strategy?
Thanks.
George
George,
ReplyDeleteYes, white bagging is real and growing. Check out my new pharmacy report for details. And stay tuned to Drug Channels this week for the latest data.
Adam