Yesterday probably didn’t turn out as well as Cardinal Health had expected.

The good news: The company announced the acquisition of Medtronic's Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses for $6.1 billion in cash.

The bad news: Cardinal sharply lowered its outlook for future profits from its pharmaceutical distribution business.

The company cited lower generic drugs prices and “sell-side" pressure from pharmacy customers as two primary causes of its financial woes. Wall Street was unhappy: Cardinal stock closed down a whopping 11%. McKesson and AmerisourceBergen stocks fell in sympathy.

Cardinal Health’s projected profit downturn illuminates a dilemma facing drug wholesalers:

• Generic buying consortia of wholesalers and pharmacies have reduced wholesalers’ acquisition costs for generic drugs

• Independent pharmacies—the most profitable customers of wholesalers—are successfully using their own buying groups to extract lower prices from wholesalers

Independent pharmacies have been backed into a corner—and have responded by pushing back against their wholesale suppliers. Cardinal’s warning highlights the coevolution of profits within the pharmacy channel ecosystem. Expect wholesalers to be increasingly desperate to make up these lost funds.

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In two weeks, Drug Channels Institute and Pembroke Consulting will hit Las Vegas for Asembia’s 2017 Specialty Pharmacy Summit, being held at the wonderful Wynn Las Vegas.

Here are three ways that you can interact with us in Las Vegas:

1) Join me at the opening Featured Session.

2) Learn how Drug Channels can help you.

3) Just say hello!

See you soon!

P.S. To prep for the Summit, check out Chapter 3 (“Specialty Drugs and Specialty Pharmacies”) of our 2017 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

        

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We estimate that for 2016, retail, mail, specialty, and long-term care pharmacies dispensed about $115 billion in specialty pharmaceuticals. (See Our Exclusive 2021 Outlook for Specialty Pharmacy Prescription Revenues.) How many specialty pharmacies are operating in the market? What types of organizations own these pharmacies?

With the help of a renowned mathematician (pictured at right), we collected data about specialty pharmacy accreditation and then categorized each pharmacy location based on ownership. Our exclusive findings:

• The number of accredited specialty pharmacies is still booming. We counted more than 2,500 pharmacy locations with specialty accreditation. (But see our important caveat about this figure below.)

• Pharmacy locations owned by healthcare providers—such as hospitals, health systems, physician practices, and providers’ group purchasing organizations—were the fastest-growing category of accredited specialty pharmacies.

Bottom line: A growing number and diversity of pharmacies are battling for control of the specialty market. Pharmacies owned by PBMs, wholesalers, insurers, retailers, and providers can now prove that they are special. Manufacturers and payers will need to figure out how to handle this increased competition and the associated demands for new network designs.

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The specialty boom continues to drive the pharmacy industry’s revenue growth. We estimate that in 2016, retail, mail, long-term care, and specialty pharmacies dispensed about $115 billion in specialty pharmaceuticals. Specialty drugs accounted for 28% of the pharmacy industry’s prescription dispensing revenues.

We project that in 2021, the pharmacy industry’s revenues will be about $572 billion—and that specialty drugs will account for 42% of that figure. More details below.

The growth of specialty drugs is reshaping the pharmacy and pharmacy benefit management (PBM) industries. This expansion is also drawing hospitals, health systems, and physician practices into the market. Later this week, we’ll take a closer look at the evolving landscape of specialty pharmacy providers.

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Medicaid Drug Rebate Program Summit

September 11-13, 2017 | Chicago, IL

Join KNect365 for the 22nd year of MDRP this September 11-13, 2017 at the Marriott Magnificent Mile in Downtown 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.

Year after year, MDRP Chicago has continued to be the authoritative gathering for everything pricing, rebates, contracting, and collaboration. Ensure you have the most comprehensive educational experience over three days with unparalleled access to government officials creating regulatory rules, the industry leaders interpreting them, and the pharmaceutical executives implementing them.

Collaborate with your peers and benchmark best industry practices to:

• Navigate Regulatory Hurdles
• Understand and comply with state processes, operations and requirements
• Address the impact of AMP Final Rule, 340B Guidance, along with State Policy changes

• Minimize Wasted Resources
• Develop strategies to streamline pricing and reporting
• New Interactive Think Tank & Innovation Theatre – Hear from the industry’s leading service providers as they showcase new technologies and products to improve operations

• Optimize Finances
• Calculate liability and improve accuracy and accountability
  
• Discover the latest in Automation & Customization of finance systems
  

MDRP offers attendees the opportunity for face-to-face meetings between states and manufacturers during our exclusive Dispute Resolution Meetings. These one-on-one meetings can help you realize millions in potential savings!

For 2017, KNect365 has 14 confirmed states participating in MDRP:

Stay ahead of the curve by getting the best networking, education, and technology at MDRP Summit 2017.

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

        

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Today’s guest post comes from Vizient™ University Health System Consortium, the nation's largest network of academic medical centers (AMCs) who collaborate to exchange and advance knowledge. Vizient is the nation's largest healthcare performance improvement company.

The five authors of this article are employees of Vizient AMC members. Four of the five are leaders and participants of the organization's Pharmacy Network and its Specialty Pharmacy Committee.

The authors argue that specialty pharmacy programs at health systems provide significant advantages to hospitals, health systems, and patients. They highlight the specific benefits for organ transplant and hepatitis C patients.

Read on for their interesting perspectives.

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Yesterday, Walgreens Boots Alliance (WBA) reported its financial results for the fiscal quarter ending February 28, 2017.

The big news: Prescription activity spiked in Walgreens drugstores. It looks like Stefano Pessina, our global channels overlord and executive vice chairman and chief executive officer of WBA, has a solid strategy for winning U.S. prescription market share.

Back in November, I told The Wall Street Journal: “Walgreens is trying to be the best friend of every PBM that’s not named Caremark.” These latest results show that this aggressive partnering is paying off for its pharmacy business—although its front-end growth was weak and per-prescription profits appear to be down.

Read on for more details—and expect a competitive reaction.

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The new 2016 Medical Pharmacy Trend Report (free download), from Magellan Rx Management, was released yesterday. As always, the report includes a boatload of useful data on medical benefit spending and claims. Click here to read the press release.

Unfortunately, the latest edition also shows how hospitals continue to earn outrageous profits on specialty drugs. Commercial payers still use reimbursement approaches that permit hospitals to inflate specialty drug costs by thousands of dollars per claim.

These hospital mark-ups translate directly into higher drug spending—regardless of how manufacturers set list prices. Using some fairly conservative assumptions about Remicade, I show below how hospitals are earning thousands of dollars more than the drug’s manufacturer does.

Meanwhile, health plans are struggling to shift patients from hospital outpatient settings to physician offices—where costs are lower, at least until those sites are acquired by hospitals.

I suppose that the charts below should be troubling to hospital-based physicians, who can barely control their righteous indignation over drug prices. Alas, it’s always easier to blame pharma companies than to admit that their own hospital employers are driving up healthcare costs.

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PCMA PBM Policy Forum 2017

May 1, 2017 | The Newseum | Washington, DC

In this era of high drug prices and expensive specialty medicines, the role of pharmacy benefit managers (PBMs) has never been more important. PBMs provide employers, unions, public programs, physicians, and consumers with cost savings strategies and clinical services that are essential to the affordability and efficacy of prescription drugs.

Typically, PBMs reduce drug costs by 30 percent for more than 266 million Americans enrolled in private and public plans, most notably Medicare Part D.

PCMA’s annual PBM Policy Forum brings together the private and public sector to deliver important insights into the prescription drug marketplace and to highlight the role of PBMs in managing prescription drug costs and improving health outcomes.

Confirmed speakers:

• Amy Bricker, Vice President, Supply Chain Strategy, Express Scripts
• Alex Brill, Research Fellow, American Enterprise Institute
• William Fleming, Segment President, Healthcare Services, Humana Inc.
• Doug Holtz-Eakin, President, American Action Forum
• Andrea Marks, Chief Analytics Officer, OptumRx
• Mark Merritt, President & Chief Executive Officer, PCMA
• Surya Singh, Executive Vice President & Chief Medical Officer, CVS/Specialty, CVS Heath
• Moderator: Susan Dentzer, President & Chief Executive Officer, Network for Excellence in Health Innovation

Who Should Attend?

The PCMA PBM Policy Forum is designed for policy makers and staff from Capitol Hill and the Administration, as well as healthcare and drug industry advocates from think tanks, patient advocacy groups, industry trade associations, and the media.

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

        

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Spring has finally reached Drug Channels' worldwide headquarters in lovely downtown Philadelphia! (See photo at right.) Before your allergies kick in, please enjoy this month’s selection of noteworthy news stories.

• What has Eli Lilly revealed about its gross-to-net discounts?

• Are CVS Health and Novo Nordisk starting to pop the gross-to-net bubble?

• Who will win the 2017 specialty pharmacy award?

Plus, we celebrate healthcare nonreform by revisiting an innovative infinite-deductible health plan.

P.S. Follow @DrugChannels for my daily curated selection of stories and articles from the drug channels multiverse.

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