Profits in the 2016 Fortune 500: Manufacturers vs. Wholesalers, PBMs, and Pharmacies (rerun)

This week, I’m rerunning some popular posts, so I finish the forthcoming 2016-17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from June 2016. It's another timely rerun given the past week's discussions over drug channel profits.

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Time for my annual review of the new 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 2016 list contains seven drug channels companies—AmerisourceBergen, Cardinal Health, CVS Health, Express Scripts, McKesson, Rite Aid, and Walgreens. Assuming the Rite Aid-Walgreens deal happens, it will be six companies next year.

Using the Fortune data, I explore the profitability and shareholder returns of the largest public drug wholesalers, chain pharmacies, and pharmacy benefit managers (PBMs). I compare these companies with the Fortune 500’s 11 pharmaceutical manufacturers and a separate survey of independent pharmacies.

It’s politically fashionable to bash drug makers. These data remind us that many other multi-billion dollar businesses make some gold as drugs move through the U.S. reimbursement and distribution system.

Key Insights on Drug Prices and Manufacturer Rebates from the New 2015 IMS Report (rerun)

This week, I’m rerunning some popular posts, so I can finish the forthcoming 2016-17 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors. Click here to see the original post and comments from April 2016. 

It's a timely rerun given the controversy and confusion about EpiPen and PBM rebates. Check out the great discussion in the comments below Thursday’s post. See also my $0.02 in The New York Times: Mylan Tries Again to Quell Pricing Outrage by Offering Generic EpiPen.

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Last week, IMS Health’s IMS Institute for Healthcare Informatics released Medicines Use and Spending in the U.S.–A Review of 2015 and Outlook to 2020. (Free download with registration.)

For the first time, IMS has reported net spending after rebates and discounts, which totaled more than $115 billion in 2015. List prices for brand-name drugs grew by 12.4% while net prices grew by a mere 2.8%. Kudos to IMS for having published these new data, which I hope will advance our national dialogue on drug spending.

Below, I highlight the report’s two most significant charts. Both make me wonder how much longer the industry’s gross-to-net status quo will last.

Real World Evidence & Market Access USA 2016

Eyeforpharma’s Real World Evidence & Market Access USA 2016 Summit
November 9-10, 2016 | Philadelphia

Innovative drugs, with ever-improving outcomes, are the future of any pharma company.

But for most of us, our ability to form partnerships and develop new value propositions in a patient-centric world are now just as important – if not more so. With external stakeholder pressures building, the focus has shifted to developing key partnerships in a patient-centric world.

The transition from volume to value is well underway. Eyeforpharma’s Real World Evidence & Market Access USA 2016 Summit is designed around this transition. Companies seek to find, create, and deliver value so that pharma, payers, providers and ultimately patients can benefit. Of course, it all starts with good leadership, and good evidence – the two pillars of Eyeforpharma’s Real World Evidence & Market Access USA 2016 Summit, now in its 6th year.

With two targeted tracks – dedicated to high-level managed markets, pricing & HEOR strategy, and next-generation real world data technologies – this annual gathering aims to give experts a platform to shape the future of access in pharma, bringing everyone to the table from patients to payers and providers. Exclusive panel debates will bring pharma face-to-face with its key stakeholders, while insightful case studies from Lilly, Novartis, GSK, Pfizer and BMS will ensure attendees go back to their jobs with a deeper, more intelligent understanding of the solutions to the industry’s biggest challenges.

Save a place at this unmissable summit for you and your team today. Use discount code 4639CHANNELS for a $300 discount on registration.

Eyeforpharma looks forward to seeing you in Philly this November!

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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 Payers Contributed to the EpiPen Pricing Controversy

Ronny Gal, Ph.D., a senior analyst at the investment bank Sanford C. Bernstein & Co., just published a great client note on the Mylan EpiPen pricing brouhaha. Ronny graciously agreed to let me share his viewpoints below.

As a contrast to the mainstream media coverage, Ronny offers a grounded, industry-informed perspective. As he notes, payers responded to Mylan’s price actions by shifting costs to consumers. It’s a useful lesson on how drug prices to consumers are really determined.

Drug Channels News Roundup, August 2016: Rite Aid, Teva, Anda, AmerisourceBergen, Specialty Pharmacies, and Walmart

Sigh. Summer is almost over. Time to pack away your bathing suit, send the kids back to school, and savor this curated collection of curiosities, combed from the Drug Channels beach.

In this issue:

• Mini me! Rite Aid finally launches a 90-day program with its PBM

• A warning for big wholesalers? Teva and Perrigo both buy distributors

• Unusual: Specialty Pharmacies’ Fraud Risks with U&C

• Steady On: An enlightening interview with Peyton Howell of AmerisourceBergen

Plus, Walmart demonstrates its true commitment to health and wellness with a bold new food innovation. Be afraid. Be very afraid.

P.S. Check out @DrugChannels on Twitter for my daily links to stuff you should be reading.

7th Specialty Product Distribution and Channel Optimization Summit

7th Specialty Product Distribution and Channel Optimization Summit
October 26-27, 2016 | Princeton, NJ

This October, navigate evolving trends, models and strategies to propel commercial success and ensure patient access at the 7th Specialty Product Distribution and Channel Optimization Summit. Key stakeholders within the supply chain continuum representing manufacturers, GPOs, wholesalers, PBMs, hubs, specialty pharmacies and health plans unite to address the complexity and evolving need to effectively customize channel strategies.

Perspectives and Innovative Insights Representing:

AHIP • Avella Specialty Pharmacy • Biogen • Blue Cross Blue Shield of Michigan • Blue Fin Group • Center for Pharmacy Practice Accreditation • Cleveland Clinic • DHL • D2 Pharma Consulting • Depomed • Fairview Pharmacy Services • Gentry Health Services • Incyte Corporation • Intarcia Therapeutics • Mallinckrodt Pharmaceuticals • Managed Health Care Associates • MAXOR • McKesson • Mylan • New Era Alliance • Onco360 • Orsini Healthcare • Polaris • Raptor Pharmaceuticals • Theratechnologies • UCB

For more information, please download the complete agenda or visit www.cbinet.com/specialtydistribution.

Drug Channels readers will save $400 off of the standard registration rate when they use discount code ZSA458.*

*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.

Retail Pharmacist Salary Growth Stalls, while Hospital Pharmacists’ Salaries Rise

There’s some bad news in our latest exclusive annual analysis of pharmacist salaries, based on the Bureau of Labor Statistics’ (BLS) recently released Occupational Employment Statistics (OES).

In 2015, the average gross base salary for a pharmacist at a retail, mail, and specialty pharmacy was $119,517—up a paltry 0.1% from 2014. Retail employment grew slowly, with slightly fewer pharmacists working at drugstores and mass merchants.

Meanwhile, employment at mail pharmacies and hospitals grew. Pharmacists who work at hospitals also got some good paycheck news: Their salaries rose by 1.6%. The share of pharmacists who work at hospitals grew, too.

My $0.02? The pharmacy industry’s ongoing shift from traditional to specialty drugs is altering long-standing pharmacist employment patterns. Pay attention.

Catching Up with Valeant and Walgreens—and Their New Best Friend

Attention, trainers! Time for an update on Valeant and its relationship with Walgreens Boots Alliance (WBA), the biggest and most difficult to catch Pokémon.

Last week, Valeant revealed that in the first six months of 2016, its sales via Walgreens were about $150 million. That’s almost half of Valeant’s entire dermatology business.

Valeant also stated that prescriptions dispensed by Walgreens are now profitable. This evolution is due largely to the company’s new relationship with CoverMyMeds, which will try to catch all of the scripts that require prior authorization.

Grab your Poké Ball and battle with my analysis and commentary below. Let’s go!

AMP Final Rule: Your First Chance to Discuss the Application, Implementation, and Impact at MDRP

Medicaid Drug Rebate Program Summit 2016 is a platform to connect with 550+ MDRP executives and 100+ industry experts and deep dive into the most critical elements of the rule and provide you with instruction on how to manage them. Roll up your sleeves and work with colleagues to best embrace the adjustments you need to make.

Get a Front Row Seat Today and Participate LIVE at the Event!

Register Now to SAVE $200 off the Current Rate.
Use Code XP2158DRUG

See how MDRP 2016 will facilitate industry comments to CMS across all three days of the conference:

• Deconstructing the Average Manufacturer Price (AMP) Final Rule: A Step by Step Analysis of the Key Implications of the Final Rule—Celgene Corporation, Eli Lilly, & Amgen

• Identification & Alternate Rebate Formula for Line Extensions—Hogan Lovells US LLC

• Bundling—IMS Health

• 5 i AMP: Eligibility, Calculations & Implications—King & Spalding

• Retail Communities Pharmacies: Identification and Impact of The Final Rule—National Association of Chain Drug Stores (NACDS)

• Impact of The Final Rule on COT—Model N

• Service Fees: Bona Fide or Constructive Price Concessions—Hogan Lovells US LLP

• Revenue optimization: What Should Manufacturers be Doing in this Period of Change?

Download the Brochure Here for Full Agenda and Speaker Details

PLUS! Get 340B Updates directly from HRSA during the main conference from Krista M. Pedley, Director, Office of Pharmacy Affairs, HRSA and Michelle Herzog, Deputy Director, Office of Pharmacy Affairs, HRSA.

Register Now to SAVE $200 off the Current Rate! Use Code XP2158DRUG

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.

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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.

Bringing Calm to the World of Complex Specialty Therapies

Today’s guest blog post comes from Nicole Hebbert, Vice President of Patient Access and Engagement at United BioSource Corp. (UBC).

Nicole discusses next generation patient support centers, a.k.a., hubs, that leverage technology to address patients' challenges between diagnosis and access to therapy. She also provides insights about how a hub can best operate as a central point of contact and information for all the stakeholders.

UBC offers electronically-enabled patient access solutions that are customized to meet the unique needs of each patient population. Click here to learn more about UBC's new suite of electronically-enabled patient access services.

Read on for Nicole’s thoughts.

Six Retail Chains Now Dominate the Still-Booming 340B Contract Pharmacy Business

The pharmacy industry’s role in the 340B Drug Pricing Program continues to expand.

Our latest analysis finds that nearly 18,000 pharmacy locations contract with 340B-eligible covered entities. That accounts for more than one in four U.S. retail, mail, and specialty pharmacy locations.

Walgreens remains the biggest player, with about the same number of locations as those of Walmart, CVS, Rite Aid, Kroger, and Albertsons combined. If Walgreens acquires Rite Aid, it will account for more than 4 out of 10 340B contract pharmacy locations. Despite retail chains’ dominance, I didn’t hear NACDS even mention 340B during this week’s Total Store Expo.

Amidst the contract pharmacy boom, we’re still left wondering what’s really going on. How many prescriptions do contract pharmacies provide at discounted prices to uninsured, underinsured, and low-income patients? Who is really benefiting from the contract pharmacy business?

Patient Assistance Programs (PAP) Legal Update

PAP Legal Update
September 21-22, 2016 | Alexandria, VA
www.cbinet.com/papupdate

As a critical update to CBI’s longstanding Patient Assistance Programs (PAP) Conference, this PAP Legal Update forum provides insight into key and pressing legal issues, emerging legislation and compliance considerations driven by the OIG to ensure that PAPs can continue to serve patients while compliantly remaining within the boundaries of laws and guidelines.

Advanced Discussion on Key Issues and the Path Forward for Patient Programs:

• Complexities of patient access programs in an era of ambiguity
• OIG’s jurisdiction relative to PAPs, Co-Pay Foundations and hub services
• Impact of the most recent OIG Special Advisory Bulletin
• Legal nuances and restraints with co-pay assistance and foundation support
• Compliant reimbursement services around patient coverage and benefits
• Projected evolution of PAPs and patient support programs

For more information, please download the complete agenda or visit www.cbinet.com/papupdate. Drug Channels readers will save $400 off of the standard registration rate when they use discount code UMF446.*

*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.

Seven Takeaways from the New 2017 CVS Health and Express Scripts Formulary Exclusion Lists

This week, the two largest pharmacy benefit managers (PBMs)—Express Scripts and the CVS/caremark business of CVS Health—released their 2017 formulary exclusion lists. They are available below for your downloading pleasure.

For 2017, Express Scripts made relatively few changes to its list, which has fewer products than it 2016 list. CVS Health, however, expended its list to 154 products, compared with 124 products last year. CVS also got much more aggressive with specialty drugs.

Read on for my head-to-head comparison, including comments on such high-profile specialty categories as hepatitis C, inflammatory conditions, biosimilars, and more.

McKesson’s Growth Slowdown

Last week, drug wholesaler McKesson released its latest quarterly earnings, which confirmed the slowing revenue growth in its U.S. drug distribution business. The slowdown was not surprising, given the many market changes that I have highlighted here on Drug Channels. If Walgreens Boots Alliance completes its acquisition of Rite Aid, then McKesson will face another year of challenging revenue growth.

McKesson is working to counter the slowdown with acquisitions, cost cutting, its new Walmart deal, a strong oncology presence, and the impressive expansion of its Health Mart franchise. Manufacturers and pharmacies should expect McKesson to become more aggressive as it adjusts to these new realities.

See the chart below for a quantitative perspective on McKesson’s past few years along with my commentary on a few other highlights from the company’s quarterly report.

Electronic Benefit Verification & Prior Authorization Summit

Electronic Benefit Verification & Prior Authorization Summit
October 25-26, 2016 | San Francisco, CA
www.cbinet.com/eBenefit

CBI’s 7th Annual Electronic Benefit Verification & Prior Authorization Summit convenes an elite multi-stakeholder speaking faculty, including manufacturers, associations, health plans, solution providers and prescribers to discuss challenges and share best practices regarding the implementation and operational management of electronic patient service technology.

Gain key insights on pressing issues including steps to integrate electronic prior authorizations and benefit verifications into existing systems, streamlining information exchange between key stakeholders, improving formulary management and prior authorization processes and much more!

REGISTER TODAY

Visit www.cbinet.com/eBenefit for more information. Drug Channels subscribers will save $300 off the standard registration rate when they use discount code BYU636.*

Gain Insights into the Integration and Management of Patient Access Technology:

• Hear case studies and discuss steps needed to integrate electronic prior authorizations (ePA) into existing systems
• Understand the future of benefit verification solutions, and identify steps needed to achieve real-time verifications
• Compare and contrast critical updates and innovations in patient access technology
• Explore the integration of patient portal technology and understand how this technology impacts patient autonomy
• Determine the connection between formulary data management and prior authorization processes
• Facilitate efficient information exchange between key stakeholders, including manufacturers, health plans, health systems, PBMs, and prescribers to expedite workflow

*Discount expires October 24, 2016; applies to standard rates only and may not be combined with other offers, category rates, promotions or applied to an existing registration. Offer not valid on workshop only or academic/non-profit registrations.

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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.