News Roundup, June 2015: Diplomat, Burman’s, CVS, Target, and the Drugstore Outlook

Summer vacation is here! Before you launch your July 4 festivities, please enjoy these Drug Channels fireworks:

• The valuation behind Diplomat’s acquisition of Burman’s specialty pharmacy

• A Wall Street perspective on the CVS-Target deal

• The outlook for drugstore chains

Plus, we revisit a stirring patriotic message from Sam the Eagle. Happy 239th birthday, America!

P.S. Follow @Drug Channels on Twitter for my daily updates on news and other intriguing ideas.

Profits in the 2015 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies

Time for my annual review of the latest Fortune 500 list. Every year, this is one of my favorite posts, because its helps us to “follow the dollar” and understand how drug channel intermediaries make money.

The 2015 Fortune 500 list contains eight drug channels companies—AmerisourceBergen, Cardinal Health, CVS Health, Express Scripts, McKesson, Omnicare, Rite Aid, and Walgreens.

Using the Fortune data, I explore the profitability and shareholder returns of the largest drug wholesalers, chain pharmacies, pharmacy benefit managers (PBMs), and pharmaceutical manufacturers. I compare these companies with the Fortune 500’s 11 pharmaceutical manufacturers and a separate survey of independent pharmacies. I doubt you will be hungry for more analysis in one hour.

Alex Gourlay Shakes Off Walgreens' Old Strategy and Hints at PBM Plans

Crain’s Chicago Business has just published The Plan to Save Walgreens, a fascinating interview with Alex Gourlay, the former Alliance Boots executive who is now president of Walgreens. Kudos to Brigid Sweeney for another insightful article about Walgreens.

In the article, Gourlay concedes that Walgreens faces challenges, outlines his strategic priorities, and hints at the company’s plans to acquire or partner with a pharmacy benefit manager (PBM).

Gourlay seems upbeat, as if he has music in his mind saying it's gonna be alright.

Highlights and my PBM acquisition speculations below, along with comments on what this week’s CVS-Target deal might mean for Walgreens.

CVS Aims at Target: Deal Analysis and Marketplace Implications

Wow! I didn’t see this one coming.

Yesterday, CVS Health announced that it will acquire Target’s pharmacy business and operate the pharmacies as a CVS-branded, store-within-a-store format. Read the press release.

Below, I review key deal terms and what they mean for CVS and Target. I also consider derivative impacts on McKesson, Cardinal Health, Diplomat Pharmacy, and Catamaran. I’ll discuss Walgreens in an upcoming post.

This marks the first big pharmacy outsourcing arrangement by a mass merchant or supermarket. Will more deals follow?

Hub Models and Program Design

CBI’s 5th Hub Models and Program Design
September 29-30, 2015 | San Diego, CA
www.cbinet.com/hubswest

CBI’s 5th Hub Models and Program Design conference is the ONLY conference that addresses concerns of all key stakeholders, including perspectives from patient advocates, specialty pharmacies, and manufacturers.

With mounting cost pressures and increased demands for affordable, value-based treatment options, bio/pharmaceutical teams face an increasingly competitive market, for both specialty and non-specialty products. Increasingly, industry must strategize to manage the most critical challenges associated with product and patient services.

CBI’s Hub Models and Program Design conference provides executives with strategies for developing and integrating hub programs and other patient-centric services to ensure product access and maximize reimbursement. Join us in San Diego this coming September to benefit from content tailored to answer your most pressing questions. Visit www.cbinet.com/hubswest for more information.

Drug Channels subscribers will save $400 off of the standard registration rate when they use discount code ARP946.*

Register today! 

*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.

The 90-Day at Retail Boom

Below you'll find our exclusive analysis of the prevalence of 90-day prescriptions, categorized by dispensing format. As you will see, 90-day scripts have nearly doubled at retail pharmacies. They now account for more than one in nine prescriptions at chain stores and supermarkets.

These data provide more insight into the market share trends revealed in 2014’s Winners and Losers: Prescription Market Share by Dispensing Format, which we published on Tuesday. Retail pharmacies are accepting lower reimbursements for 90-day prescriptions to compete with mail pharmacies, which have consequently lost market share.

So grab your flannel shirt, blast your Jagged Little Pill CD, tickle your Elmo, and let’s take a spin through the 90s.

2014’s Winners and Losers: Prescription Market Share by Dispensing Format

In April, IMS Health released Medicines Use and Spending Shifts: A Review of the Use of Medicines in the U.S. in 2014. (Free download with registration.) While reading it then, I discovered a serious error in its data. After I pestered IMS for a few weeks, it finally acknowledged the mistake and has just issued a revised report. (Let’s hope IMS is more careful with its paid data services.)

Using the revised data, we can at last analyze 2014's market share by outpatient dispensing format. The results are a little surprising.

In 2014, 90-day prescriptions accounted for one in nine retail scripts. After converting these scripts to 30-day equivalents, we found that chain drugstores dispensed an astounding half of all U.S. outpatient prescriptions. Mail pharmacies were the big losers, while independent drugstores grew slightly. Full details below.

Medicaid Drug Rebate Program Summit

IIR’s Medicaid Drug Rebate Program Summit is Back!
September 30 - October 2, 2015
Chicago, IL

Join IIR and celebrate 20 years of MDRP this September 30 - October 2, at the Chicago Marriott Downtown Magnificent Mile in Chicago, IL. This is your opportunity to benchmark best practices and gain solutions to overcome new operational challenges brought on by AMP Final Rule, 340B, Medicaid Expansion, Class of Trade, Fair Market Value, FSS, VA, OIG, and other critical government programs.

See why this is THE ONE MDRP event you can’t afford to miss!

Click Here to Register Now and SAVE $100 off the current rates.

Be sure to use Discount Code: XP2058DRUG

Download the Brochure Here for Full Agenda and Speaker Details

More details below!

Cardinal Health Buys Harvard Drug Group: Perspectives on Wholesaler Consolidation

Cardinal Health does it again! This morning, it announced the acquisition of Harvard Drug Group (HDG) for a cool $1.115 billion. Read the press release.

HDG, with revenues of about $450 million, was one of the larger second-tier drug wholesalers. Given HDG’s current private equity ownership and current leadership, a deal was inevitable.

Cardinal Health’s multi-year acquisition spree has made it the buyer of choice for smaller drug distributors. See my deal list below. I suspect many folks at next week’s HDMA meeting will be asking: Who’s next?

Pharmacist Salaries Keep Rising, Hitting $119K in 2014

Time for Drug Channels’ exclusive annual analysis of pharmacist salaries, based on the Bureau of Labor Statistics’ (BLS) recently released Occupational Employment Statistics (OES).

In 2014, the average gross salary for a pharmacist at a retail, mail, and specialty pharmacy was $119,400—up 1.6% from 2013. The higher salaries correspond with the pharmacy industry’s better-than-expected profit picture, as I noted in Surprise! Government Data Again Show Rising Drugstore Profits. Employment headed in a different direction, with slightly fewer pharmacists working at drugstores and mass merchants.

Full details below. I also highlight a new Health Affairs analysis of pharmacy school graduates. The new pharmacist pipeline also looks pretty full. Will we have too many pharmacists, or not enough?

Speed to Therapy Strategy Summit

CBI’s Speed to Therapy Strategy Summit
August 11-12, 2015 | Philadelphia, PA
www.cbinet.com/speedtotherapy

CBI’s Speed to Therapy Strategy Summit is the industry’s only event that delivers an interactive, multi-stakeholder forum to examine the key challenges of time to fill. The delay to receive medication is an enormous burden carried not only by patients, but also by manufacturers as they work to ensure access.

Collaborate with colleagues across the industry to devise best practices and develop effective solutions to shorten patient wait time and increase speed to therapy. Visit www.cbinet.com/speedtotherapy for more information.

REGISTER TODAY! 

Drug Channels subscribers will save $400 off of the standard registration rate when they use discount code KDH266.*

*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.