OptumRx Sails Away with Catamaran: Deal Analysis and Industry Implications

Yesterday, UnitedHealthcare, which operates the OptumRx pharmacy benefit manager (PBM), announced its acquisition of PBM Catamaran. Read the press release.

Catamaran has long been considered a likely acquisition target in the consolidating PBM business. Yet I was surprised by the timing and the buyer. UnitedHealthcare will pay a 27% premium, which will probably deter potential bidders.

Below, I review the impact on PBMs, manufacturers, wholesalers, and pharmacies. I also consider how the deal will affect the larger companies.

Sadly, Catamaran’s exit will leave the industry high and dry on nautical metaphors…but not before today’s post docks.

Customized Distribution and Pharmacy Strategies Summit

Customized Distribution and Pharmacy Strategies Summit
May 12-13, 2015 | Philadelphia, PA
www.cbinet.com/distribution

Pharmaceutical distribution channels are dramatically changing due to the impact of the Affordable Care Act and its ripple effect on where drugs are prescribed, delivered and accessed by the patient. Vertical integration with pharmacies, manufacturers and integrated health networks is increasing – this conference is designed to help industry stakeholders respond to these changes in order to position themselves for success. Visit www.cbinet.com/distribution for more information.

Register today! 

Drug Channels readers will save $200 off the standard registration rate when they use code HKD774.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates. Other restrictions may apply.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

How Hospitals Inflate Specialty Drug Prices: The Latest Medical Benefit Reimbursement Data

Hospitals eagerly blame pharmaceutical manufacturers for high specialty drug prices. Yet the new Magellan Rx Management 2014 Medical Pharmacy Trend Report demonstrates how hospitals contribute to drug prices, unashamedly capturing much larger mark ups than do other sites of care. (The full report is free with registration.)

Below, I summarize the report’s findings on drug reimbursement methods and costs for provider-administered drugs paid under a patient’s medical benefit. As you will see, commercial payers often reimburse hospitals based upon the hospitals’ fabricated sky-high “charges.” Meanwhile, physician offices receive drug reimbursement based upon the government’s Average Sales Price (ASP) metric.

Such top-selling specialty drugs as Avastin, Neulasta, and Remicade cost two to three times as much in a hospital outpatient facility than they do in a physician office. (See table below.) This inflates drug costs by thousands of dollars per claim, fuels hospitals’ acquisition of physician practices, and accelerates the growth of the 340B Drug Pricing Program. Read on and be perturbed.

Diplomat Shows Specialty Pharmacy’s Profits and Infusion’s Promise

Diplomat Pharmacy, the largest independent specialty pharmacy, recently released its 2014 10-K SEC filing. (Regular readers know how much I enjoy these corporate filings.)

Diplomat is the only public company (and the only specialty pharmacy) to report its per-prescription gross profits and gross margins. As you will see below, both of these financial metrics grew in 2014. Diplomat’s impressive results are a powerful counterpoint to the argument that specialty pharmacy margins are being squeezed.

Diplomat recently acquired BioRx, its third specialty infusion purchase. My calculations indicate that specialty infusion will now account for almost half of Diplomat’s profits.

Fascinating.

It’s Time to Register for the 2015 Armada Specialty Pharmacy Summit! #Armada15

The 2015 Armada Specialty Pharmacy Summit is only six weeks away! This year’s event promises to be bigger and better than ever. I’ll be there along with Paula, my wife and Drug Channels Institute business partner. See the message below for updated details on this year’s event from our friends at Armada.

Register for the 2015 Armada Specialty Pharmacy Summit

For registered attendees, Armada has a cool mobile app that will help you network. I really like the ability to search the entire attendee list. Download the free app from iTunes or Google Play. (If you're registered for the conference, then your basic profile already exists. Log in to add your photo, details, and make your full profile public.)

For updates, follow Armada on Twitter. This year’s official hashtag is #Armada15. See you in Vegas!

Manufacturers: Get Ready for Global Trade Account Management

The latest Pharmaceutical Commerce includes my new editorial: Manufacturers: Get Ready for Global Trade Account Management. Read the article below or on the PC site.

In the article, I argue that manufacturers should plan for the global expansion of US-based pharmacies and wholesalers. (Examples below.) Some channel companies are now asking—or demanding—that manufacturers establish global relationships.

Many manufacturers, however, are not yet organized to respond effectively to these "requests." I offer four suggestions to help manufacturers prepare for this new world.

It's a world of channels and a world of fears. Let me know what you think.

Express Scripts New Trend O’ Drugs Report: Price Without Value

Last week, Express Scripts released its new 2014 Drug Trend Report. Click here to download the complete report. (Free download.)

As always, there are valuable data here on drug trend (the change in a third-party payer’s prescription drug expenditures). Below, I analyze the highlights for traditional and specialty drugs, including the impact of new hepatitis C therapies.

In one of his plays, clever Irishman Oscar Wilde defined a cynic as “a man who knows the price of everything and the value of nothing.” After reading this report, I wonder if Express Scripts has become a wee bit too cynical about the value of pharmaceutical innovation. Read on and see if you agree.

Medicaid and Government Pricing Congress

Medicaid and Government Pricing Congress
June 3-5, 2015 | Disney’s Yacht and Beach Club Resort | Orlando, FL
www.cbinet.com/medicaid

CBI’s Medicaid and Government Pricing Congress is one of the industry’s largest gatherings of managers and executives responsible for contracts, pricing, finance, accounting and government program compliance. Consistently rated highest for quality of content and practical takeaways, the CBI Congress brings real world topics — including healthcare reform, medicaid expansion, gross-to-net, VA/DoD, TRICARE, 340B, and compliance — all into one forum. This year is no exception as we look forward to the Congress in June!

Register today! 

Learn from an esteemed group of leaders representing leading companies and government agencies. Click here to view the Agenda.

Drug Channels readers will save $400 off of the standard registration rate when they use code KEF549.*

*Cannot be combined with other offers or used towards a current registration. Cannot be combined with special category rates. Other restrictions may apply.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

Take the Generic Drug Price Volatility Survey

Today’s guest post comes from Kay Morgan, Vice President of Drug Products & Industry Standards Clinical Solutions at Elsevier.

As a follow-up to her article Why Are Generic Drugs Getting More Expensive?, Kay reviews recent generic and brand inflation trends.

Elsevier is now conducting a Generic Price Volatility Survey. It will take fewer than 10 minutes. If you complete the survey, then Elsevier will send you a report with the survey results.

Take the Generic Price Volatility Survey 

For more background on this important trend, read Kay's article below and download Elsevier’s free white paper Generic Drug Price Increases: Causes and Impact.

The Top 10 Specialty Pharmacies of 2014

For 2014, about one-quarter of retail, mail, and specialty pharmacies’ revenues came from specialty drugs. Below, you’ll find our exclusive list of the 10 largest pharmacies, ranked by estimated revenues from dispensing specialty pharmaceuticals.

The top three companies—Express Scripts, CVS Health, and Walgreen—accounted for 56% of revenues from pharmacy-dispensed specialty drugs. Over the past few years, however, marketplace and business changes have reduced their share.

To learn more about specialty pharmacy and meet the industry’s key players, be sure to attend the 2015 sPCMA Business Forum and the 2015 Armada Specialty Pharmacy Summit. I’ll be at both, so be sure to say hi!

Zarxio: How Channel Dynamics Will Limit the First U.S. Biosimilar

Last week, the Food and Drug Administration (FDA) approved Zarxio, the first U.S. biosimilar. Zarxio, a provider-administered specialty drug, is a non-interchangeable version of Amgen’s Neupogen. Here’s the official FDA notice.

Before payers start counting their billions in savings, let’s disentangle hype from reality for this first biosimilar. As I argue below, reimbursement and channel dynamics will slow Zarxio’s adoption. Other biosimilars may have different market dynamics.

I also speculate about how commercial payers could accelerate adoption by altering benefit coverage and increasing specialty pharmacies’ role. Not that there's anything wrong with that...

Oncology Market Access & Pricing

WHERE ONCOLOGY DECISION-MAKERS MEET

6th Annual Stakeholder Conference on Oncology Market Access & Pricing 2015
June 15-16 | Boston, MA

If you’re leading efforts in the Commercial Oncology space, then this conference is for you: eyeforpharma’s 6th Annual Summit on Oncology Market Access & Pricing 2015 has just been announced for June 15-16 in Boston.

The most relevant and senior event in the space is once again shining with a great line-up – thanks to an extensive study of the market and involvement of eyeforpharma’s excellent industry network.

THE MOST RELEVANT PROGRAM

eyeforphama conducted qualitative interviews with 60+ senior executives. Presenters were hand-picked based on industry referrals to share first-hand insights across four targeted sessions:

• Risk-Sharing & New Payment Models
• Value Differentiation & Patient Services
• Strategic Partnerships with Managed Care Stakeholders
• The Future of Cancer Care in the US

Download the Brochure for all Session Details

AN EXCLUSIVE FACULTY

Here is a sneak peak at some of the speakers presented at launch:

• Edward J Benz, President and CEO, Dana Farber Cancer Institute
• Ana Cespedes, SVP, Head of Global Market Access and Pricing, Merck Serono
• Kevin O’Leary, VP, Strategic Pricing and Reimbursement, Bayer
• Ted Okon, Executive Director, Community Oncology Alliance
• Christine Colby, VP, Global Medical Affairs, Millennium: The Takeda Oncology Company
• Byron Robinson, Senior Director, Global Program Head Oncology, Bayer
• Peter Sandor, VP, Global Marketing, TA Head of Oncology, Amgen

Get the Complete Speaker Line-Up

HIGH-LEVEL DELEGATES

eyeforpharma already confirmed senior participants from: Aetna / Amgen / Bayer / Community Oncology Alliance / Dana Farber / Eisai / Genentech / Gilead / Health Strategies Group / Merck / Millennium / Monitor Deloitte / Novartis / Precision for Value / Premier / RAND / Roche / Takeda…

Join 150+ pharma leaders, payors, specialty pharmacies, provider networks, GPOs, government and community oncology groups.

INDUSTRY PRAISE

Running in its 6th year, the conference is regarded by many as the No. 1 meeting on commercialization and market access strategies for oncology products in the US.

“All formats should be like this…shared learning in a comfortable atmosphere."
-- Jeremy Leffler, Director of Federal Policy, Sanofi

"It's impossible to understand and plan for the future without the insight from the presenters at this conference. To have them all in one place is fantastic!"
-- Phil Johnson, Director of Oncology, Premier

For those who like to stay ahead of the curve in Commercial Oncology, this is a must-attend event.

Make sure to sign up today! Drug Channels readers save $200 on the registration fee when you enter discount code ONC15DC.

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.

CVS Health: Newest Data on Retail-PBM Revenue Synergies

Let’s follow up on last month’s review CVS Health’s Specialty Connect offering by examining the latest disclosures about revenue synergies from CVS Health’s Maintenance Choice program.

Below, I use an obscure footnote within CVS Health’s recently released 2014 10-K SEC filing to quantify these revenue synergies. As you can see in the chart below, CVS Health’s Caremark pharmacy benefit management (PBM) business accounted for a record 35% of CVS retail pharmacies’ prescription revenues. That’s much higher than Caremark’s overall market share.

The analysis provides another motivation for Rite Aid’s acquisition of EnvisionRx. Rite Aid, however, is a multi-regional chain with prescription revenues that are one-third of CVS retail's revenues. Question to ponder: can it create the same elixir with Envision, which has revenues that are only 6% as big as Caremark's?

With the Cordis Deal, Cardinal Goes Its Own Way With Med-Surg

Yesterday, Cardinal Health announced its purchase of Johnson & Johnson’s Cordis medical device business. Read the company’s informative fact sheet.

The deal supports Cardinal’s medical supply focus on Physician Preference Items (PPI)—products with limited clinical differentiation but high brand loyalty from doctors. These items drive hospitals bananas, so Cardinal sees an opportunity to help its customers standardize on the lowest-cost cardiovascular, wound management, and orthopedic products.

It’s a sensible transaction that continues Cardinal’s diversification from its core drug distribution business. For its overall business mix, Cardinal is following a different path than AmerisourceBergen and McKesson. Cordis also provides Cardinal with some intriguing international expansion opportunities. See my analysis below.

IIR's 7th Annual Government Programs Summit

This is the Only Government Programs Event You Need to Attend

How many Government Programs events do you attend a year? IT ONLY HAS TO BE THIS ONE! IIR's 7th Annual Government Programs Summit on March 23-25, 2015 in Arlington is the one-stop-shop for all things government programs, merging regulatory compliance and financial calculations to maximize revenue potential. IIR is delivering the greatest number of government officials AND experts from pharma and biotechs — all under one roof! They'll provide policy answers to strategic, compliance, operational, technical and tactical issues on all things government programs.

IIR’s got you covered on:

• 340B Program—HRSA, SNHPA, Pfizer, Vertex, Jansen, Hospira, Eli Lilly, Bristol-Myers Squibb
• Medicare Part B & D—Sunovion, Daiichi, Actavis, Sanofi
• Medicare & Medicaid—Jazz Pharmaceuticals, NCPDP, NACDS, GAO, Johnson and Johnson, BIO, GAO
• States & State Supplemental Programs—Alabama, Oregon, Utah, Novartis
• VA, FSS & TRICARE—VA Office of Inspector General, Daiichi, Amneal

Download the Agenda for Full Speaker and Session Details

Plus We're excited to announce that John Coster, Director, Division of Pharmacy, Center for Medicaid and CHIP Services (CMS) is confirmed to open on March 25th, 2015! Hear directly from him, as he provides insights and updates on:

• Policy and operational issues affecting the Medicaid pharmacy program
• Latest Medicaid DUR survey report
• Issues and challenges facing the Medicaid pharmacy program

Register Online Now with Code XP2051DRUG to SAVE 15%

In addition to John Coster, hear from:

• Health Resources and Services Administration (HRSA)—Krista M. Pedley, PharmD, MS, CDR, USPHS, Director, Office of Pharmacy Affairs
• VA Office of Inspector General (VA)—Michael Grivnovics, Director, Federal Supply Schedule Division, Office of Contract Review
• US Government Accountability Office (GAO)—Carolyn L. Yocom, Director, Health Care Team
• National Association of Chain Drug Stores (NACDS)—Don Bell, Senior Vice President & General Counsel
• National Council for Prescription Drugs (NCPDP)—Phillip Scott, SVP Business Development
• Safety Net Hospitals for Pharmaceutical Access (SNHPA)—Jeff Davis, Counsel, Legal and Policy Affairs
• Biotechnology Industry Organization (BIO)—Erin Estey Hertzog, Director, Reimbursement & Health Policy

NEW! Calculate liability and optimize accuracy and accountability at the newly included full-day summit on Gross-to-Net! Invite your GTN and finance peers to join and experience true collaboration by breaking down interdepartmental silos through candid conversations and networking you can only have onsite at the event.

Register Online Now with Code XP2051DRUG to SAVE 15%

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The content of Sponsored Posts does not necessarily reflect the views of Pembroke Consulting, Inc., Drug Channels, or any of its employees.