Drug Channels News Roundup: February 2012

Time for my monthly look at noteworthy news stories from hither and yonder throughout the Drug Channels universe. I hope these articles keep you busy during your extra leap day tomorrow.

In this issue:

• More Dirty Docs—A new diversion cancer drug story
• AARP vs. PBMs—A new target?
• Specialty Pharmacy—A worthwhile roundtable discussion

Plus, the British Medical Journal publishes a peer-reviewed scientific research paper that analyzes "whether the acute consumption of cannabis (cannabinoids) by drivers increases the risk of a motor vehicle collision." Can you guess the shocking answer?

Government Programs Summit (sponsor)

I am pleased to welcome back IIR as a Drug Channels sponsor for its 4th Annual Government Programs Summit. The event will be held March 14-16, 2012, in Baltimore.

IIR tells me that this will be the first conference since CMS issued its Proposed Rule. Comments are due by April 2, so this will be a very timely networking and learning event. Plus, you'll hear directly from CMS Policy, Technical and Operational officers. For some fun pre-reading, see the five expert analyses in More Analysis of the Proposed AMP Rule.

So, get your AMP on and register today! IIR is offering a special 25% discount to Drug Channels readers. Just register with your VIP code: XP1751DRUG. Thanks, IIR!

Full details from IIR below.

To Limit Counterfeits, Build a Solid Channel Strategy

Over the past week, I've looked critically at the counterfeit Avastin situation. See Greedy Physicians Invite Fake Avastin Into the Supply Chain and What's Behind Counterfeit Drug Demand.

Today, I take a more normative approach by describing elements of commercial channel strategy that support product security and reduce the risk of counterfeit infiltration. In my experience, a good channel strategy complements such traditional anti-counterfeiting tools as package design, security features, pedigree, track-and-trace, and aggressively prosecuting the bad guys.

Below, I discuss the rationale for limited networks for specialty drugs and provide 6 channel strategy guidelines that manufacturers can use to improve product security. Please add your own suggestions below.

What's Behind Counterfeit Drug Demand

The trail of counterfeit Avastin is becoming clearer, with Egypt emerging as the likely origin point. See Fake Avastin's path to U.S. traced to Egypt.

Unfortunately, the latest information supports my contention about the economics behind the counterfeit purchases. The fake product entered the U.S. supply chain through good ol' fashioned, financially-motivated diversion. I stand by my initial observation: Greedy Physicians Invite Fake Avastin Into the Supply Chain.

Today, we'll take a deeper look at what went wrong. Tomorrow, I'll explain how a manufacturer's commercial channel strategy can support product security and reduce the risk of counterfeit infiltration.

Join me at the Specialty Pharmacy Business Forum

I want to let the Drug Channels audience know about PCMA’s new Specialty Pharmacy Business Forum on April 3-5, 2011, at the always-superb Encore at Wynn Las Vegas. Click here to see the complete event details.

This event promises to be an important new meeting for anyone working in the rapidly growing specialty pharmacy marketplace. I won’t be speaking, but will definitely be attending. PCMA is expecting more than 800 people, so the networking and connections should be outstanding.

PCMA is also launching a new online community site so any attendee can request and pre-schedule onsite meetings in private facilities provided by PCMA. I'll be signing up when it launches, so you can search and schedule time with me. PCMA is setting aside 11 hours for business meetings.

Read on for more details or check out the agenda for yourself. See you in Vegas!

Greedy Physicians Invite Fake Avastin Into the Supply Chain

Here’s some very scary news. Counterfeit versions of Genentech’s Avastin (bevacizumab) were discovered at 19 physician practices. See the FDA’s notice and Roche’s official statement.

The real crime? This situation was completely avoidable.

From what we know so far, these 19 medical practices knowingly purchased the fake product from a non-authorized distributor. By looking for a "good deal" outside of the legitimate channel, the physicians in charge of these practices were foolish, irresponsible, and unethical. Patiens caveo. (Patients Beware.)

Read on and see if you agree.

The 2012 Part D Market: The Big Get Bigger

Following last week’s look at preferred pharmacy network plans, I got multiple requests for a broader market overview of 2012 enrollment data for Medicare Part D Prescription Drug Plans (PDPs). On Valentine's Day, what could be more romantic than a Part D day!

Below, I present a summary of the largest Part D plans and parent organizations. The big story is enrollment concentration:

• The top 10 Part D plans include 68% of enrollees in a stand-alone plan.
• Three companies—UnitedHealthcare (NYSE: UNH), CVS Caremark (NYSE: CVS), and Humana (NYSE: HUM)—now operate plans for almost 6 out of 10 enrollees.

Despite this concentration, PBMs such as SXC's InformedRx (NASDAQ: SXCI) or CatalystRx (NASDAQ: CHSI) have minimal Part D penetration. Is yesterday's CatalystRx/AARP (non-Part D) deal a signal of things to come?

SFE & Commercial Excellence Summit (sponsor)

I am pleased to welcome eyeforpharma’s 10th Annual SFE & Commercial Excellence Summit as a Drug Channels sponsor. The conference will be held at the DoubleTree in Somerset, NJ, June 12th – 14th. Read more in the official description below or download the brochure.

This event should be particularly valuable for Drug Channels readers with commercial, managed markets, or contracting responsibilities. Last year’s sessions covered topics such as specialty drugs, key account management, and demonstrating value to the payor. eyeforpharma is lining up an impressive roster of speakers again this year.

Please take a moment to check out this worthwhile event.

Humana-Walmart Preferred Network Plan Wins Big in Part D

The Centers for Medicare and Medicaid Services (CMS) just released the 2012 enrollment data for Medicare Part D Prescription Drug Plans (PDPs). These new data dispel any doubts about preferred pharmacy networks’ consumer appeal.

There are seven Part D PDPs with preferred pharmacy networks in 2012. (See table below.) Highlights from my data crunching:

• Enrollment in preferred network plans grew twice as quickly as overall PDP enrollment.
• Almost one-third of all PDP enrollees are now in a plan with a preferred pharmacy network design.
• The Humana Walmart-Preferred Rx Plan, the preferred pharmacy network PDP launched in October 2010, is now the third-largest PDP.
• Two of the three new preferred network plans in 2012 attracted more than 680,000 enrollees.
• The PDP with Rite Aid as the preferred pharmacy was a bust.

Once again, we see how the power of competition is lowering drug costs for seniors. Needless to say, pharmacy owners who neglected to join a preferred network are complaining.

Cardinal Fights a Misdirected DEA

Does the Drug Enforcement Administration (DEA) understand the distribution system for legitimate, prescription drugs? It sure doesn't look that way.

The DEA once again went after Cardinal Health (NYSE:CAH) by suspending the company’s controlled substances license at its Lakeland, FL, facility. Late Friday, Cardinal successfully won a temporary restraining order against the DEA. See Cardinal Health’s statement.

Kudos to Cardinal Health CEO George Barrett for standing up to an overzealous DEA. When this happened in 2007, Cardinal’s tentative and indecisive response led to major business losses, from which the company has never fully recovered. I'm curious to see how CVS Caremark (NYSE:CVS) reacts to last Friday's raid at 2 of its Florida stores.

As I explain below, the DEA started targeting wholesalers and manufacturers because they can't stop the real criminals—the patients abusing prescription drugs, the physicians running “pill mills,” and the pharmacies dealing these drugs.

And don’t even get me started on how the DEA has created a shortage of ADHD meds by putting manufacturers under their thumb…

More Analysis of the Proposed AMP Rule

In Monday’s New AMP Rule Targets Bona Fide Service Fees, I highlight just a few of the many issues raised by the proposed rule regarding Average Manufacturer Price (AMP).

By April 2, CMS will receive many detailed comments. But who can wait that long?

So, here’s my pre-Super Bowl round-up of 5 especially useful and insightful analyses of the proposed rule. These reports and articles are written by lawyers and government pricing experts, so they are scarily-specific and have many more details than my cursory overview.

As a bonus, I also include a look at how much Americans will be eating (by food type!) on Sunday and share the new Ferris Bueller commercial. Ooooh yeah.

VA Contract Odds Improving for McKesson

As I discussed in last week’s Big Trouble in the VA Contract: Who will win?, McKesson (NYSE:MCK) has been facing questions about “improper buying” under its Department of Veterans Affairs pharmaceutical prime vendor (PPV) contract.

Yesterday’s House Committee on Veterans’ Affairs hearing seems to exonerate McKesson. The VA took responsibility for the open market, non-contracted purchases and complimented McKesson on its performance. Good news for McKesson, bad news for taxpayers. Here’s the Washington Post’s summary: VA: Buying medications outside of contracts was just an effort to help veterans.

Below are some highlights from the testimony along with my updated but still-unscientific guess at which wholesaler will win the contract. BTW, there was also an interesting discussion about drug shortages and how McKesson manages supply and handles allocations.