Drug Channels News Roundup, April 2014: PFE, WAG, UHC, and AAC

Welcome to my latest round-up of noteworthy news stories from the Drug Channels ecosystem. In this issue:

• Inversion—How a Pfizer/AstraZeneca deal could trigger a Walgreens headquarters move

• Reversion—Why UnitedHealthcare won't block retail co-pay cards…for now

• Subversion—Pharmacies stop New York’s AAC efforts

Plus, The Onion provides valuable advice for pharmacies looking to boost their Medicare star ratings.

Health Plans Get No Satisfaction From Specialty Pharmacies

The just-released EMD Serono Specialty Digest (10th edition) provides a vast playlist of data on health plans’ specialty drug management strategies and tools. You can download it free with registration here: http://specialtydigest.emdserono.com/

This year, I was struck by health plans’ dissatisfaction with specialty pharmacies’ clinical and reporting metrics. For many core services, 50% or more of plans gave specialty pharmacies a rating of 3 or lower (out of a possible 5). The charts (below) show an unexpectedly wide gap between specialty pharmacies’ self-professed capabilities and health plans’ perceptions.

The survey echoes the study I discuss in Employers Pick Specialty Pharmacies Over Retail Drugstores—For Now. That survey found that a majority of employers perceive that clinical programs are comparable or better at retail pharmacies than at specialty pharmacies.

A manufacturer must be careful when contracting with a specialty pharmacy that promises to be your savior, steadfast and true. These new data also reinforce my belief that limited specialty dispensing networks will continue to become larger and more inclusive. Hey, hey, hey: That's what I say.

Contracts, Chargebacks and Rebates Congress

Don’t miss this exclusive opportunity to network with peers on ways to improve the wholesaler chargeback, managed markets contracting, and rebate administration processes at the Contracts, Chargebacks and Rebates Congress. Now in it’s 10th year, the event takes place June 23-24, 2014 in Philadelphia.

Complex government pricing regulations, multiple marketing promotions and the lack of coordination between departments costs the pharmaceutical industry on average $40 million for every $1 billion in annual revenues. Companies need an integrated, streamlined solution to avoid revenue leakage and capture potential savings related to their contract sales.

What Can You Expect in 2014…

• Content track dedicated to Contract and Chargeback Process Excellence

• Content track dedicated to Managed Market Rebate and Discount Strategies

• An in-conference workshop on Unraveling 340B program complexities

Visit www.cbinet.com/chargebacks to learn more!

Drug Channels clients and subscribers can save $400 off of the standard registration rate* with promotional code FNX329. (Cannot be combined with other offers or used towards a current registration. Other restrictions may apply.)

2013’s Top 50 Retail Pharmacies, according to Drug Store News

Drug Store News (DSN) just released it latest rundown of the top pharmacy retailers in the powerfully-titled POWERx Top 50 list. Click here for for this free download.

I highly recommend the POWERx list to anyone who competes with, sell to, or interacts with retail pharmacies. This useful resource provides brief profiles of all 50 organizations. These range from CVS (#1, with $45.6 billion in prescription sales) to Ritzman Pharmacy (#50, with $58 million in prescription sales). Consistent with last year’s list, the largest chain drugstore dispenses nearly 800 times as much as the 50th largest drugstore.

Below, I show DSN's top 20 largest pharmacies and contrast the list with our 2013 list of top retail, mail, and specialty pharmacies.

As a bonus, we also have an exclusive, must-see video of Rob Eder and the Drug Store News dancers.

For 2013, Pharmacist Salaries Rise Yet Again For This Family-Friendly Occupation

Time for our exclusive annual analysis of pharmacist salaries, based on the Bureau of Labor Statistics’ (BLS) latest 2013 Occupational Employment Statistics (OES).

Once again, pharmacist salaries grew faster than overall U.S. wages. The highlights:

• In 2013, the average gross salary for a pharmacist at a retail, mail, and specialty pharmacy was $117,500—up 1.1% from 2012.

• Average salaries for pharmacists at mass merchants climbed above $121,000.

• Of the 820 detailed occupations that BLS lists in the OES survey, the “pharmacist” classification ranked 29th in compensation.

• Retail, mail, and specialty pharmacists’ salaries are 57% higher than the average healthcare figure.

Details below. I also highlight a neat paper that analyzes how the growth of national chains turned pharmacy into a family-friendly, female-majority profession with a very small gender wage gap. It's a new twist on how free-market industry evolution can lead to positive social outcomes.

Pharmaceutical Wholesalers: Business Strategies and Financial Economics

Drug Channels Institute (DCI) is pleased to announce the release of our updated Pharmaceutical Wholesalers: Business Strategies and Financial Economics e-learning module. Click here to view an excerpt of this module.

This e-learning module offers a thorough, interactive grounding in important topics related to the wholesale industry, including: business services, customer relationships, financial economics, and more. It will help:

• Account reps and field teams grasp important, easily-digestible industry concepts for their key accounts

• Internal teams better understand their customers and channels

• Anyone who wants to master the economics of the U.S. pharmaceutical wholesale industry

If you are a qualified potential buyer, you can review the complete module by contacting Paula Fein (paula@drugchannelsinstitute.com), VP of Business Development. You can also set up a meeting with Paula (pictured at right) at the Armada Specialty Pharmacy Summit. #ArmadaSRx14

Click here to view the full description of Pharmaceutical Wholesalers: Business Strategies and Financial Economics.

Download the Armada Specialty Pharmacy Summit & Expo App

Below is a message from our friends at Armada, who developed a cool smartphone app for the upcoming Armada Specialty Pharmacy Summit & Expo.

After using the app for a few days, I can personally recommend it to everyone who is attending. I'm particularly impressed with the ability to search and sort the entire attendee list. Kudos to Armada for helping to maximize the Summit's networking value. Be sure to download this free app before arriving in Las Vegas. Links below.

P.S. If you've signed up for the conference, then your basic profile already exists. Log in to add your photo and contact info.

Get Connected and Download the Armada Specialty Pharmacy Summit & Expo App!

The 10th Annual Armada Specialty Pharmacy Summit & Expo will be held on May 5-9, 2014, at The Wynn in Las Vegas. This annual health care meeting is the industry’s largest gathering of specialty pharmacy stakeholders and related organizations. Thousands of attendees representing over 700 industry companies and organizations are expected. They will gather together to learn how to effectively contract and partner within this segment, manage the specialty spend, and navigate the evolving health care landscape for the specialty patient.

This year, Armada is debuting a new mobile and web app for the Summit, which will serve as a tool to allow all attendees to maximize their networking opportunities before, during, and after the meeting. The app is available for download on iTunes at http://armada.ht/1cMJuNu and on Google Play at http://armada.ht/1cMJT2F.

"We are thrilled to unveil our brand new mobile app in 2014. This dynamic tool will create new opportunities for personalization, connection, and engagement during the meeting," noted Randi Hernandez, senior communications manager, Armada Health Care. "App users can now easily access the meeting attendee list, view speaker slide decks and handouts, and connect with colleagues, all with the swipe of a fingertip."

The mobile app will help conference participants sort through details about fellow attendees (including company and title), send messages, request meetings with colleagues, and personalize event schedules. The app also contains a “Chatter” section, which features attendee comments and displays Tweets related to the Summit.

"With the help of the mobile app, networking connections can be proactive and purposeful, rather than fortuitous," commented Robert Irene, RPh, co-founder and president, Armada Health Care. "Our adoption of this type of technology is important, as we believe these tools can serve as powerful engagement platforms during a conference of this size. Attendees are coming to expect mobile apps at events in addition to printed programs, and we are meeting the demand by helping participants maximize their opportunities for increased engagement and efficiency."

Inside Specialty Drug Dispensing at Physician Practices

As I discuss in Chapter 8 of the 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies, the growth in oral oncology products is encouraging physicians to dispense these products from offices and clinics. These practice-affiliated pharmacies act as “closed door” pharmacies by dispensing only to the practice’s patients.

For an insider’s perspective, check out a great video interview (below) with Ray Bailey, PharmD, Pharmacy Director for Florida Cancer Specialists (FCS), one of the largest U.S. oncology/hematology practices.

FCS operates Rx to Go, a specialty pharmacy that acts a central fill service for FCS’s 81 locations. Rx to Go dispenses more than 3,000 prescriptions per month. Most are oral oncolytics. (Note that Dr. Bailey misspoke on the video and said "3,000 prescriptions per day.")

As this video illustrates, manufacturers developing a specialty channel strategy should consider practice-affiliated pharmacies. It also highlights why Express Scripts partnered with Raintree Oncology Services.

Walgreens Faces Post-Alliance Boots Inversion Pressure

According to yesterday’s Financial Times, powerful investors are actively lobbying Walgreens to move its headquarters to Europe. Here’s the story: Walgreens urged to leave US to gain tax benefit.

Yes, this is the infamous “tax inversion” strategy that I analyzed in last month's Inversion Uncertainty: Is Alliance Boots Really Acquiring Walgreens?

Walgreens responded to the news story with a surprisingly vague statement about its plans. Hmmm. Is management buying time, or seriously considering a move? Read on for details over controversy.

Oncology Management

At IIR's Oncology Management Summit, taking place July 21-23 in Philadelphia, you will walk away with solutions to the most critical issues within the cancer care value chain: excessive costs, access to affordable care, incorporating new technology, and meeting new value and quality standards for patient-centered care. Pioneers in oncology share never-before-heard research and perspectives to drive your programs and patient care strategies forward.

Register now and save 15%! Use code: XP1914DRUG

www.IIROncologySummit.com

2014 Event highlights include:

• NEW! Delve into the role of specialty pharmacy in oncology during the pre-conference summit
• NEW! Sessions on the impact of Big Data as it transforms cancer care management
• More than 40 dedicated sessions with a focus on economic and cost issues, quality and value of patient access & care, and data and technology driven strategies

Don't miss out on this unprecedented opportunity for to connect with ALL KEY STAKEHOLDERS across the cancer care continuum.

DOWNLOAD THE BROCHURE at www.IIROncologySummit.com.

Weighing Express Scripts’ Drug Trend Forecast Errors, Sovaldi Pricing, and PBMs’ Pricing Control

Yesterday, I focused on Untangling Express Scripts’ 2013 Drug Trend Report. Today, I explore the report’s unexpectedly large forecast errors for traditional drug trend, and what they mean for PBMs’ formulary management.

As I document below, 2013 drug trend was positive and higher than Express Scripts’ forecast for three major traditional drug therapy classes, none of which had a major generic launch. Express Scripts blamed the higher-than-expected trend on manufacturers’ drug pricing.

To coincide with its new drug trend report, Express Scripts launched an attack on drug prices, focusing on Gilead’s hepatitis C pill Solvaldi (of course). Dr. Steven Miller, Express Scripts’ chief medical officer, even implied that Sovaldi could “lose all its market share” when competitors launch. (Full quote below.) No surprise if you had read Express Scripts Plans a Specialty Drug Price War last December.

Given Express Scripts’ difficulty in projecting traditional drug trend for therapy classes without new generic launches, the tough talk may be premature. Read on and see if you agree.

Untangling Express Scripts’ 2013 Drug Trend Report

Express Scripts has just released the latest edition of its long-running Drug Trend Report. Start with the Table of Contents. Be forewarned: the report is now a nearly unusable series of more than 100 web pages. (See my tech-whining below.)

If you look hard enough, you’ll find valuable insights into our changing industry, along with data on 2013’s drug trend (the change in prescription drug expenditures of a third-party payer). Here are my highlights:

• Drug trend for traditional drugs increased by 2.4%, a big turnaround from last year’s -1.5% decline. 

• Drug trend for specialty drugs increased by 14.1%, its lowest rate since 2007.

• Specialty drugs accounted for 27.7% of total spending, up from 24.4% in 2012.

• Specialty spending remains highly concentrated within four therapy classes.

Tomorrow, I’ll look at Express Scripts’ tough talk on hepatitis C drug prices and how this new report illustrates PBMs’ challenges in controlling these costs.

Web Gem: Preferred Pharmacies’ Market Share Data

Just in time for the Phillies’ Opening Day, the Medicare Payment Advisory Commission (MedPAC), an independent agency that advises Congress on the Medicare program, just wound up and delivered its latest Report to the Congress: Medicare Payment Policy (March 2014). As always, this annual box score report is in a league of its own. It provides an invaluable Medicare Part D status report, including stats on program design, enrollment trends, benefit design, costs, and prices.

In Chapter 14 (starting on page 353), MedPAC calculated the share of pharmacies listed as “preferred” by the largest Part D Prescription Drug Plans (PDPs). (The key data are reproduced below.) For 2013, MedPAC found that:

• Most PDPs contracted with more than 95 percent of pharmacies in their respective regions.

• Part D plans typically designated about one-third of these pharmacy players as “preferred.”

• The two largest co-branded plans—Aetna CVS/Pharmacy and Humana Walmart—had the smallest preferred networks.

Although CMS withdrew its attempt to strike out preferred networks, I expect that the agency will try again. As I explain below, MedPAC’s analyses and recent letter to CMS provide a game plan for preferred networks’ future. Meanwhile, manufacturers should catch up on their spring training with Pharmacy Benefit Networks: The Big Squeeze.

Managed Care Market Strategies

As one of the longest running annual conferences dedicated to managed markets professionals, CBI’s Managed Care Market Strategies, June 23-24 in Philadelphia, brings together key stakeholders to discuss how to demonstrate product value and identify payer needs. This is a unique opportunity for manufacturers to review proven strategies, develop new means of demonstrating product value and maximize a product’s position in an evolving managed market environment.

What to Expect in 2014 – The Most Interactive Format Yet!

• Featuring 2 Think Tank sessions designed to provide a multi-faceted exchange of ideas
• Hear multiple payer and manufacturer perspectives as they participate in the exclusive Stakeholder Examination debate session
• Delve deeper and engage with presenters in the Ask the Experts discussion panels
• Gain payer perspectives to determine better resource allocation decisions for marketing and contracting
• Examine how healthcare reform will impact future business relationships with payers, increase cost and evidence/value scrutiny
• Leverage outcomes, medical and specialty data to support and redefine the product value story

Download the agenda or visit www.cbinet.com/managedcare to learn more!

Drug Channels readers can save $400 off of the standard registration rate with promotional code SAZ999. (Cannot be combined with other offers or used towards a current registration. Other restrictions may apply.)

Op-Ed: Health Groups Fail to Exert Influence for Tobacco-Free Pharmacies

I had a little fun with this year’s April Fools’ Day post, but there is a serious debate about the pharmacy industry’s role in tobacco sales.

Below is an guest editorial from two of the physicians behind TobaccofreeRx, a group that advocates against the sale of tobacco products in pharmacies. The authors criticize such groups as the American Heart Association and the Department of Health and Human Services.

They conclude: “Corporations that choose to sell tobacco products should no longer be granted licenses to dispense medications or provide other health care services.”

What do you think?

BREAKING NEWS: Walgreens to Start Selling Marijuana in Retail Drugstores

The great tobacco-in-pharmacy debate just got A LOT more interesting! This morning, Walgreens announced plans to start selling marijuana in the states that have legalized cannabis. Read the press release.

Here’s a key quote from the press release:

“Marijuana is used in the treatment of several conditions, including glaucoma, cancer, and multiple sclerosis,” said Walgreens spokesperson Calvin Broadus. “Walgreens will offer an industry-leading consumer experience and the widest selection of primo strains, including such top sellers as Black Rhino OG Kush and Strawberry Cough. While our competitors are abandoning smokers, we remain proudly at the Corner of Happy and Hacking®.”

Beginning with locations in Washington and Colorado, Walgreens will launch a new "High Experience" retail store format. Each store will feature a special Weed Corner™, a dedicated space where consumers can attend education events and purchase everything they need for a cannabis-based lifestyle. The press release mentions such items as rolling papers, lighters, Doritos, Hacky Sacks, Funyons, and the Grateful Dead’s seminal 1970 album, “American Beauty.”

The new store format will also sell OTC products from Alliance Boots’ private label brand, including Formula No. 420 Redness Relief Eye Drops.

Walgreens promises “Friendly Service and Expert Advice” and consultations with board-certified dealers who will diagnose and treat families' everyday ganja needs. These dealers can even write prescriptions if needed for things like bachelor parties, Phish concerts, or like, whatever, dude.

Read on for important information about this bold strategic move.