Nice Article on the Specialty Pharmacy Outlook

If you're looking for some weekend reading, I highly recommend Connecting Patients With Specialty Products: The Future of Specialty Drug Distribution, from the latest Biotechnology Healthcare journal. (Free download)

Jack McCain, the reporter at BH, did a really nice job of explaining future trends in specialty pharmacy, including such topics as specialty-at-retail and buy-and-bill. As you'll see, I contributed to the article, along with some other consultants.

And in case you're curious to learn more, I provide a few related resources below.

Drug Channels News Roundup: September 2012

Hard to believe that autumn is upon us already. Time to pack away your golf shirts and bust out the sweaters. But before you start raking the leaves, check out these news stories from the Drug Channels universe.

In this issue:

• Global Pharmacy—A lightweight article on Walgreen and Alliance Boots
• Catching the Bad Guys—How stolen drugs ended up in retail pharmacies
• Bona Fide Service Fees—Challenges for generic manufacturers
• Meet Mr. Collis—A humanizing profile of AmerisourceBergen’s South African CEO

Plus, the Onion looks at popular autumn activities.

NEW: The 2012-13 Economic Report on Pharmaceutical Wholesalers

I am pleased to announce the availability of my new report: the 2012-13 Economic Report on Pharmaceutical Wholesalers. We’re offering 10% off the regular price if you order before October 12, 2012.

I worked hard to make the 2012-13 Economic Report on Pharmaceutical Wholesalers into an essential resource for pharmaceutical manufacturers, wholesalers, pharmacy buyers, benefit managers, managed care executives, healthcare policy analysts, investors—anyone who wants to understand and benefit from the forces reshaping the highly competitive U.S. drug wholesaling industry.

This completely updated, revised, and expanded report gives you a comprehensive overview and analysis of the latest financial and industry data, including 62 data-packed exhibits. There are many new sections and topics covered in this year's edition. As always, the report provides detailed analyses of the Big Three public wholesalers: AmerisourceBergen, McKesson, and Cardinal Health.

Enjoy!

Join me at the 8th Annual Trade and Channel Strategies Conference

I am pleased to welcome CBI’s 8th Annual Trade and Channel Strategies Conference as a Drug Channels sponsor. The conference will be held at the DoubleTree hotel in Philadelphia, Pennsylvania, on December 5 and 6, 2012.

Over the years, this meeting has proven to be a great networking event for anyone with channel strategy and trade responsibilities. CBI has arranged a solid lineup of speakers from such companies as Acorda Therapeutics, AmerisourceBergen, Amylin Pharmaceuticals, Bracco Diagnostics, Covidien, Depomed, Express Scripts, the FDA, Insys Therapeutics, Integrichain, Pfizer, Purdue Pharma, and Walgreens. I will be kicking things off with a keynote address on "The Evolving Drug Channel."

Read more in the official description below or visit the event website. CBI is offering a special $500 discount to Drug Channels readers. Just register with promo code DCC500. Thanks, CBI!

Tinkham Veale II, 1914-2012

Today, I want to acknowledge Tinkham Veale II, who built the predecessor to AmerisourceBergen. Mr. Teale passed away this week at age 97. Read the Wall Street Journal obituary.

Along with Cardinal Health’s founder Bob Walter, today’s pharmaceutical distribution industry can be traced directly to Mr. Veale, who built and ran consolidator Alco Standard for many years.

Here’s a brief history.

A Look at Drug Benefit Design in 2012

The just-released 2012 Kaiser/HRET Employer Health Benefits Survey (EHBS) delves into employer-sponsored health coverage at more than 2,000 companies. As you might expect nearly all (99%) covered workers in these plans have a prescription drug benefit.

In today's article, I review the latest findings on benefit design and consumer cost-sharing amounts. Some highlights:

• Three-tier plans remain the most common benefit design, although 1 in 7 employees now have a plan with four or more tiers.
• Most plans use copayments rather than coinsurance. Dollars spreads between copayment tiers have widened over time.
• Coinsurance is much more common for the higher-tier drugs. About half of employees face unrealistic coinsurance burdens for higher-tier specialty drugs.

Summary charts below. Don't let my brief lesson give you the wrong impression. The full report is a whopping 242 pages.

The DEA Nabs CVS and Walgreen

The Drug Enforcement Administration (DEA) continues its aggressive attack on the pharmacy supply chain with new penalties for CVS Caremark (NYSE: CVS) and Walgreen (NYSE: WAG).

Full details below. Here are the headlines:

• Two Sanford, FL, CVS pharmacies will no longer be able to dispense controlled substances. Unless I’m mistaken, “revoke” means “never again.”
• A Walgreens distribution center was hit with a suspension order for shipments to six of its own pharmacies.

We only have access to the government’s facts, so no outsider can know what truly happened. However, I do believe that targeting pharmacies is a step in the right direction, because it moves closer to the patient and prescriber.

Does misery love company? Ask Cardinal Health and AmerisourceBergen.

A New Reality Check on Co- Pay Offset Programs

The Zitter Group recently released the Co-Pay Offset Monitor (COM), an intriguing mid-2012 snapshot of co-pay offset programs.

The research identified 419 co-pay offset programs from 440 unique brands and 131 pharmaceutical manufacturers. In addition to a boatload of benchmarking data, the report challenges some widely-held beliefs about these controversial programs:

• Only 3% of the 440 brands with co-pay offset programs had a generic equivalent, undercutting a major criticism of these programs.
• Seven out of ten biologics have a co-pay offset program, compared to only 44% of traditional brand-name drugs.
• Twenty-four manufacturers sponsored 5 or more programs for their promoted brands.

Read on for the details. Anyone interested in understanding the topic or benchmarking current programs should get access to this research. Indubitably.

No regrets? TRICARE Shuts Out Walgreen

Despite the fact that Walgreen and Express have kissed and made up, the Department of Defense’s TRICARE program decided not to add Walgreen back into their network. Read the official announcement.

Whoa. This is bad news for Walgreen, which is battling to win back the 22 million consumers whose prescription benefits are managed by Express Scripts. (Details below.) Last fall, the company even made an extra effort to retain the TRICARE business, so the rejection must be doubly humiliating.

Walgreen didn’t even bother to spin the news, declining comment to the Wall Street Journal and ignoring the issue in its newsroom. I wonder if Walgreen's executives have a twinge of regret for how this whole situation has played out.

And no matter how you view the Walgreen/TRICARE news, it’s clearly another compelling data point for preferred and limited pharmacy networks.

Cardinal Health's Big Customers: Mo Money, Mo Problems

Cardinal Health (NYSE: CAH) recently filed its 2012 10-K annual report, for the fiscal year ending June 30, 2012. Here are some enlightening disclosures buried within this always-revealing document:

• Cardinal’s top 3 customers—CVS Caremark, Walgreen, and Express Scripts—accounted for about 57% of core U.S. drug distribution revenues. One of those three is definitely going.
• Deliveries to big customers' warehouses were about one-seventh as profitable for Cardinal as deliveries to individual pharmacy locations.
• In addition to warehouse deliveries, Cardinal delivered about $15 billion of drugs directly to CVS and Walgreens retail pharmacies.
• Cardinal’s contract with CVS Caremark expires in June 2013, and its contract with Walgreens expires in August 2013. 
• Despite what you may have heard, Cardinal unceremoniously disclosed that Walgreen has indeed issued a Request for Proposal (RFP) to Cardinal.

Think of this post as an early look at the 2012-13 Economic Report on Pharmaceutical Wholesalers, which will be arriving in a few weeks.

A New Generic Wave Update, Courtesy of Express Scripts

As we all know, an unprecedented volume of brand-name drugs will lose exclusivity and face generic competition over the next four years. Below, I take a look at the latest projections for brand-name drugs that will be facing generic competition, courtesy of newly-published data from Express Scripts.

A few interesting tidbits based on the latest estimates:

• 2013 generic launches will be only one-quarter as big as the 2012 generic monster.
• Generic launches will rebound and remain high throughout 2014-2016.
• From 2012 to 2016, just 10 blockbusters will account for half of total brand-name revenues lost.
• The generic cliff is now projected to be steeper, with an 84% drop in 2017.

While brand-name manufacturers may feel like they're barking up the wrong tree, drug channel participants—pharmacies, Pharmacy Benefit Managers (PBMs), and wholesalers—will be surfing in true canine style.