Pharmacy industry news: Bets On as Industry Awaits PBM Merger Decision
Bets On as Industry Awaits PBM Merger Decision
It could be a watershed year for retail pharmacy as a proposed merger of two of the country’s largest pharmacy benefit managers — Express Scripts and Medco Health Solutions — looms. A ruling is expected within the next several months.
Even before the Federal Trade Commission’s decision, the impact of what it could mean for chain pharmacy is seen in Walgreens’ failure to renew its contract with Express Scripts due to unsatisfactory reimbursement rates. Dropping the PBM network cost the drug chain 2 cents per share in first-quarter results. It did $5.3 billion in prescription sales through Express Scripts in fiscal 2011.
Walgreens is trying to recoup those losses and Express Scripts patients with a transition plan designed to retain some business through discounts.
Meanwhile, Supervalu and CVS are actively soliciting Express Scripts patients. Supervalu’s Jewel-Osco said it is hiring more associates to serve the new business it expects from Express Scripts transfers from Walgreens.
If the largest drug store chain in the country can’t come to terms with the nation’s second largest PBM, imagine negotiations, or lack of them, under a merged entity that would control anywhere from 30% to 60% or more of the PBM market?
Here’s what’s at stake in the $29 billion merger as Dennis Wiesner of
H.E. Butt Grocery told a House Judiciary Subcommittee hearing last year: a network covering 135 million Americans, representing about one in three U.S. prescriptions filled, and control of more than 40% of the national prescription volume, 60% of mail orders and more than 50% of specialty pharmacy.
The fear is such a market dominator can hold retail chain pharmacy hostage by dictating low reimbursement rates and limiting competition. Importantly, the merger could limit consumer choice and health services.
Numerous trade organizations and consumer groups vigorously oppose the merger. Those in favor say it will lower prescription drug costs for consumers through efficiencies gained from the merger. Express Scripts said it expects $1 billion in cost savings.
Wendy Barnes Joins Rite Aid as Group Vice President of Managed Care
Rite Aid Corporation RAD
-0.75%
announced today that Wendy Barnes, a managed care executive with more than 17 years experience in contract negotiations, new business development and hospital administration, is joining Rite Aid as Group Vice President of Managed Care.
In this position, Barnes will be responsible for all aspects of managed care, including contracting, maintaining relationships with managed care organizations, pharmacy benefit managers and third-party payers and developing new strategic partnerships. Barnes will report directly to Chris Hall, Rite Aid Senior Vice President of Pharmacy Services.
“Wendy is a veteran of the managed care industry, and we are excited about the extensive knowledge and experience she is bringing to Rite Aid,” said Hall. “Her expertise will be an invaluable resource as the company executes its managed care strategy in the rapidly changing healthcare environment.”
Prior to joining Rite Aid, since February 2009, Barnes served as a pharmacy contracting and new business development director for Premier Healthcare Alliance, servicing 2,500 hospitals and 78,000 alternate site members. While at Premier Healthcare Alliance, she served as a member of the specialty pharmacy acquisition team and established a first-of-its-kind prescription drug savings program for Oregon state employees. Barnes has also held several hospital administration positions while serving as an active duty Medical Service Corps Officer in the United States Air Force including Vice President of Managed Care, Vice President of Supply Chain and Chief Resource Management and Financial Officer.
Barnes holds a Master of Business Administration degree from the University of Alaska Anchorage and a bachelor’s degree in biochemistry from the United States Air Force Academy.
India, the pharmacy of the developing world – Poser over medicine supplies
India may be more famous for the Taj Mahal, its religious ceremonies, Bollywood films and one of the highest economic growth rates in recent years. But more than all these, India has had positive worldwide impact through its large supplies of low-cost, good quality generic medicines. Millions of lives have been saved or prolonged by this.
Many people go to India to buy life-saving generic medicines from pharmacies and bring them back in suitcases to give to relatives who cannot afford the expensive original products. A decade ago, an Indian company called Cipla produced HIV-AIDS generic drugs that could treat a patient for US$300 a year, far cheaper than the branded product’s cost of $10,000 a patient a year. Today, the Indian drug cost has been cut further to below $80. This has enabled millions more AIDS patients to be treated. India supplies 70% of the HIV-AIDS drugs obtained by Unicef, the Global Fund and Clinton Foundation for developing countries. And 75%-80% of medicines (not only for AIDS) distributed by the International Dispensary Association to developing countries come from India. No wonder India has been termed the pharmacy of the developing world.
Last week, the Indian Drug Manufacturers’ Association (IDMA), which has 700 drug companies as members, celebrated its 50th anniversary. There was much to celebrate, including the industry’s high growth, wide range of medicines, and its contribution to good affordable drugs. But there are also many factors that may hinder the continuation of the companies’ role as chief supplier of medicines for developing countries.
A main factor of the industry’s success has been the government’s move in 1970 to exclude pharmaceutical drugs from product patents. This paved the way for local companies to produce generic versions of the expensive foreign drugs, and within a few decades they had taken over 80% of the local market, while also supplying cheap medicines abroad.
The situation took a negative turn when the intellectual property agreement known as TRIPS was established in 1995 together with the World Trade Organisation. It disallowed countries from excluding medicines from patentability.
However, TRIPS allowed countries to determine the criteria for an invention that can be granted a patent, and the ability of the government to grant a compulsory licence to local companies to produce the patented products if their requests to patent owners to give a voluntary licence do not succeed.
To implement its TRIPS obligations, India passed changes to its patent law in 2005 so drugs could now be patented. However, the new law also contained flexibilities such as strict criteria for patentability (trivial changes to a patent-expired product would not qualify for a new patent), allowance for public opposition to a patent application before a decision is made, and compulsory licensing. India has one of the best patent laws in the world that still gives some space to its producers to make generic drugs. But it is also true that the old policy space has been eroded because many new drugs since 2005 have been patented by multinational companies which are selling them at exorbitant prices.
Indian companies can no longer make their own generic versions of these new medicines unless they successfully apply to the government for compulsory licences, and that is quite cumbersome; or unless they obtain a licence from the patent-owning multinational, and that usually comes with stringent conditions, especially for export. Another worry is that India is negotiating a free trade agreement with the European Union. Such agreements usually contain provisions such as data exclusivity and extension of the patent term, which prevents or hinders generic production. Finally, six Indian companies have recently been bought up by large foreign firms. If this trend continues, the Indian drug market may be dominated by multinationals again. It is uncertain whether they will continue to supply the developing world with cheap generic medicines when this may be in conflict with their own branded products. International health organisations such as Unaids, Unitaid and Doctors Without Borders have raised their serious concerns that these recent trends may threaten India’s role as the chief supplier of affordable medicines to Africa and other developing countries. “Millions will die if India cannot produce the new HIV-AIDS medicines in future, it is a matter of life and death,” said Michel Sidibe, Unaids executive director, during a visit to India last year.
Thus, a strategy is needed that involves the government and the drug companies, that ensures the local drug industry continues to thrive, that it produces not only the existing medicines but also new medicines even if they are patented, and that they are supplied at cheap prices not only in India but to the developing world, too. That was the sobering message that emerged at last week’s 50th anniversary conference of the Indian drug association, even in the midst of congratulations on the achievements of the past.