by Adam J. Fein, Ph.D.
(167 page downloadable PDF file; Released January 2013)
 Corporate License: $2,980(Allows for use of the report by an unlimited number of employees within the same organization or enterprise worldwide. View License Terms.) Department/Team License: $1,090(Allows for use of the report by up to 10 employees within the same organization or enterprise. View License Terms.) Single-User License: $390(Allows for use of the report by one individual person.(Allows for use of the report by one individual person. View License Terms.) The $275 billion pharmacy industry is evolving rapidly. In 2012, Americans filled more than 4 billion prescriptions at 62,000 retail, mail, and specialty pharmacies. For anyone who wants to understand and benefit from the forces reshaping the highly competitive U.S. pharmacy industry, the 2012–13 Economic Report on Retail, Mail, and Specialty Pharmacies is an invaluable tool. The completely updated, revised, and expanded 2012–13 Economic Report on Retail, Mail, and Specialty Pharmacies provides an up-to-date, fact-based analysis of the latest industry developments. It thoroughly dissects the pharmacy channel and its interactions with other participants in our healthcare system. The report was researched and written by Adam J. Fein, Ph.D., one of the world’s leading experts on the industry and author of the influential Drug Channels website. Dr. Fein has synthesized a wealth of statistical data, research studies, financial information, and his own unique business consulting experience into a definitive, nonpartisan resource. This report is an essential tool for pharmaceutical manufacturers, wholesalers, pharmacists, pharmacy owners, benefit managers, managed care executives, healthcare policy analysts, investors—anyone who wants to understand and benefit from this ever-evolving industry. After reading the 2012–13 Economic Report on Retail, Mail, and Specialty Pharmacies, you will be able to:
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Report Summary Chapter 1: Industry Overview- Products Dispensed by Pharmacies
- Prescription Drugs and Healthcare Spending
- Industry Structure
- Differences Between Dispensing Formats
- Market Share
- National Market Share by Company
- Regional Market Share and Smaller Drugstore Chains
- National Market Share for Specialty Pharmaceuticals
- National Market Share for Mail Prescriptions
- Overall Growth
- Growth by Dispensing Format
- Recent Growth Trends
- Independent Drugstores
- Mail Pharmacies
- Growth of Clinics and Medication Therapy Management
- Retail Clinics
- Medication Therapy Management (MTM)
- Payment for Prescription Drugs
- Average Prescription Prices
- Consumer Copayments and Coinsurance
- PBM Industry Overview
- Services PBMs Provide for Plan Sponsors
- Plan Administration
- Formulary Development and Management
- Rebate Negotiation with Manufacturers
- Clinical Management Services and Mail Pharmacies
- PBM Services for HMOs
- Retail Pharmacy Participation in PBM Networks
- Pharmacy Networks
- PBM-Pharmacy Relationships
- The Efficiencies of Pharmacy Networks
- PBM Compensation By Plan Sponsors
- Spread Pricing
- Pass-Through Pricing
- Pharmacy Services Administration Organizations
- The Basics of Prescription Reimbursement
- Reimbursement Methodologies for Drug Costs
- Service and Data Fees
- Reimbursement for Brand-Name and Specialty Prescriptions
- Average AWP Discounts
- The AWP Rollback
- Reimbursement for Generic Prescriptions
- Acquisition Cost Methods
- Average Acquisition Cost (AAC) in State Medicaid Programs
- National Average Drug Acquisition Cost (NADAC)
- Direct-to-Payer Acquisition Cost
- Manufacturer Sales Price Methods
- Average Manufacturer Price
- Average Sales Price
- Reimbursement of Mail Pharmacies
- How Prescription Reimbursement, Formulary Rebates, and Consumer Copayments Affect Plan Sponsor Costs
- Overview of Wholesale Suppliers
- Largest Full-Line Wholesalers and Specialty Distributors
- Purchasing Strategy of Smaller Pharmacies
- Wholesaler Services for Independent Pharmacies
- Pharmacy Buying Groups
- Self-Warehousing Chains and Mail Pharmacies
- Likelihood of Direct Brand Purchasing by Large Chains
- Overall Drugstore Gross Margins
- Retail Pharmacy Per-Prescription Profits
- Lifecycle Profits for Generic Drugs
- Single Source, Brand Only Period
- Exclusivity Period
- Post-Exclusivity Period
- Maturity Period
- Total Industry Gross Profits from Brand vs. Generic Prescriptions
- PBM Profits from Network and Mail Pharmacies
- Healthcare Reform and Prescription Demand
- Summary
- The Outlook for U.S. Outpatient Pharmaceutical Spending
- Projected Growth in Drug Trend
- The Impact of Healthcare Reform
- Payment for Prescription Drugs Under Healthcare Reform
- The Promise and Perils of the Generic Wave
- Summary
- The Generic Wave
- Retail Pharmacy Generic Price War
- Medicaid and AMP-Based Federal Upper Limits
- Cost-Based Reimbursement and Generic Prescriptions
- The Narrow Network Revolution
- Summary
- Pharmacy Network Models
- Growth in Narrow Pharmacy Networks
- Preferred Pharmacy Networks
- Preferred Networks in Medicare Part D
- Limited Networks
- Capturing the Specialty Opportunity
- Summary
- The Shift to Specialty Drugs
- Limited Networks for Specialty Drugs
- Specialty Drugs in Open Distribution
- Retail Pharmacy Strategies for Specialty Drugs
- The Medical Spend Opportunity
- The Growth of the 340B Discount Program
- Summary
- Overview of the 340B Program
- The Role of Contract Pharmacies
- Flow of Funds with a Contract Pharmacy
- Controversy Over Contract Pharmacies in the 340B Program
Exhibit 1: Share of U.S. National Health Expenditures, by Major Spending Category, 1970-2020
Exhibit 2: Overview of U.S. Pharmacy Market, 2011
Exhibit 3: Average Annual Number of Prescriptions per Pharmacy, 2011
Exhibit 4: Median Wait Time to Fill a Prescription, by Dispensing Format, 2012
Exhibit 5: Customer Satisfaction with Pharmacies, by Dispensing Format, 2012
Exhibit 6: Pharmacist Employment and Salary, by Dispensing Format, 2011
Exhibit 7: Largest U.S. Pharmacies Ranked by Total Prescription Revenues, 2012
Exhibit 8: Year-Over-Year Change in Same-Store Prescription Sales, Jan. 2011 to Dec. 2012
Exhibit 9: Market Share by Chain, Top 20 U.S. Metropolitan Areas, 2011
Exhibit 10: Top 10 Regional Chain Drugstores, by Total Prescription Revenues, 2011
Exhibit 11: Type of Pharmacies Dispensing Specialty Pharmaceuticals
Exhibit 12: Pharmacy Revenues from Specialty Pharmaceuticals, by Company, 2011
Exhibit 13: Fastest-Growing Private Specialty Pharmacies, 2011
Exhibit 14: Share of Mail Pharmacy Prescription Revenues, by Company, 2012
Exhibit 15: U.S. Prescriptions, Annual Total and Growth, 2001-2011
Exhibit 16: U.S. Pharmacy Revenues, Annual Total and Growth, 2001-2011
Exhibit 17: Drugstore Revenues vs. U.S. Retail Sales, 2001-2012:Q3
Exhibit 18: Share of Revenue Growth by Dispensing Pharmacy Format, 2001 vs. 2011
Exhibit 19: Number of Pharmacies by Dispensing Format, 2001 vs. 2011
Exhibit 20: Average Prescription Revenue per Pharmacy Outlet, 2001 vs. 2011
Exhibit 21: Number of Prescriptions by Dispensing Format, 2010 vs. 2011
Exhibit 22: Prescription Revenues by Dispensing Format, 2010 vs. 2011
Exhibit 23: Number of Independent Pharmacies, 1990-2011
Exhibit 24: Equivalent Mail Prescriptions, Annual Total and Growth, 2001-2011
Exhibit 25: Providers of Medication Therapy Management Services, 2012
Exhibit 26: Source of Payment for Outpatient Prescription Drugs, 2011
Exhibit 27: Consumers’ Out-of-Pocket Spending Share of Outpatient Prescription Drug Expenditures, 1961-2011
Exhibit 28: Change in Expenditures for Outpatient Prescription Drugs, by Payer, 2011 vs. 2010
Exhibit 29: Average Pharmacy Revenue per Equivalent Prescription, 1998-2011
Exhibit 30: Top 10 Brand Drugs and Average Retail Prescription Price, by Payer, 2012
Exhibit 31: Top 10 Generic Drugs and Average Retail Prescription Price, by Payer, 2012
Exhibit 32: Drug Trend, Traditional vs. Specialty Drugs, 2002-2012
Exhibit 33: Common Pharmacy Benefit Plan Designs
Exhibit 34: Distribution of Cost-Sharing Formulas for Prescription Drug Benefits in Employer-Sponsored Plans, 2012
Exhibit 35: Average Copayments by Prescription Drug Tier, 2001-2012
Exhibit 36: Cost-Sharing Arrangements for Prescription Drug Benefits in Employer-Sponsored Plans, 2012
Exhibit 37: U.S. Retail Prescription Claims, by PBM, 2012E
Exhibit 38: Medicare Part D PDP Enrollment, by Parent Organization, 2012
Exhibit 39: Services Provided by Pharmacy Benefit Managers to HMOs, 2011
Exhibit 40: Key Components of PBM Compensation
Exhibit 41: Ten Largest Pharmacy Services Administration Organizations, 2012
Exhibit 42: Methodologies for Computing Estimated Acquisition Cost (EAC)
Exhibit 43: Percentage of AWP Billed to Employers for Brand-Name Prescriptions, Retail vs. Mail, 1999-2012
Exhibit 44: Benchmark Drug Price vs. Pharmacy Invoice Price, 2010
Exhibit 45: Plavix (clopidogrel bisulfate), Average Revenue per Prescription, September 2012
Exhibit 46: Brand Reimbursement Rates, Retail vs. Mail Pharmacies, 2012
Exhibit 47: Generic Reimbursement Rates, Retail vs. Mail Pharmacies, 2012
Exhibit 48: Example of Prescription Economics for Payer
Exhibit 49: Full-Line Drug Wholesaler Sales by Type of Customer, 2011
Exhibit 50: Specialty Distributor Sales by Type of Customer, 2011
Exhibit 51: Drug Distribution and Related Revenues at Big Three Wholesalers, 2011
Exhibit 52: Market Share with Smaller Pharmacies, by Wholesaler, 2012
Exhibit 53: Pharmacy Franchise and Marketing Programs of Large Drug Wholesalers
Exhibit 54: Pharmacy Buying Groups and Wholesaler Relationship
Exhibit 55: Largest U.S. Pharmacies and Their Primary Wholesale Suppliers
Exhibit 56: Cardinal Health, Share of Warehouse vs. Direct Store Deliveries, FY2012
Exhibit 57: Overall Gross Margins for Chain and Independent Drugstores, 1993-2010
Exhibit 58: Total Gross Profits for Chain and Independent Drugstores, 2000-2010
Exhibit 59: Overall Gross Margins for Drugstores, 2011
Exhibit 60: Average Pharmacy Gross Profit and Gross Margin per Prescription, Brand-Name Drugs, Fall 2012
Exhibit 61: Average Pharmacy Gross Profit and Gross Margin per Prescription, Generic Drugs, Fall 2012
Exhibit 62: Average Prescription Gross Margins at Independent Drugstores, 2006-2011
Exhibit 63: Typical Time Path of Per-Prescription Gross Profits, Brand vs. Multi-Source Generic
Exhibit 64: Average Pharmacy Gross Profit and Gross Margin per Prescription, Brand-name Drug vs. Newly Launched Generic, September 2012
Exhibit 65: Share of Retail Prescription Revenues, by Channel Participant, 2012
Exhibit 66: Projected Growth in National Health and Outpatient Prescription Drug Expenditures, 2011-2021
Exhibit 67: Median Prescription Expenses per Person, by Age, 2010
Exhibit 68: Drug Trend Forecasts, 2012-2014
Exhibit 69: Impact of Healthcare Reform on U.S. Spending on Outpatient Prescription Drugs, 2009-2021
Exhibit 70: Source of Payment for Outpatient Prescription Drugs, 2001-2021
Exhibit 71: Projected Brand Revenues Lost Due to Generic Launches, 2011-2021
Exhibit 72: Top 10 Brand-Name Drugs Facing Generic Competition, 2012-2016
Exhibit 73: Per-Unit Average Acquisition Cost for Generic Drugs, November 2012
Exhibit 74: Summary of Pharmacy Network Design Options
Exhibit 75: Medicare Part D PDPs with Preferred Pharmacy Networks in 2013
Exhibit 76: Plans Enrolled in CVS Caremark’s Maintenance Choice Program, 2008 to 2012
Exhibit 77: CVS Pharmacies’ Share of CVS Caremark's PBM Retail Network Claims, 2007-2012
Exhibit 78: Public Payer Share of Selected Specialty Drugs, 2012
Exhibit 79: Infused Therapy Sourcing at Oncology Practices, by Distribution Channel, 2011
Exhibit 80: Total Number of 340B Contract Pharmacies, 1999-2013
Exhibit 81: Retail Drugstore Chain Participation as 340B Contract Pharmacies, 2012
Exhibit 82: Flow of Funds and Product for 340B Contract Pharmacy Network
