Retail pharmacy chain CVS is buying pharmacy benefit manager Caremark in a deal that will create a really big vertically integrated drug company.
Here’s what is behind the deal.
CVS wants more control over its customer base, and with more and more consumers buying their drugs through PBMs, they get more control by creating the industry’s biggest PBM. As I’ve noted before, the market power of PBMs will only increase as Part D becomes the primary force driving retail drug purchasing behavior.
CVS decided that rather than be at the end of the supply chain, it had to move up if it was to control its destiny.

Continue reading The CVS – Caremark deal – why?

The world (at least the very small part of it that I inhabit) has been buzzing about Wal-Mart’s announcement that it will be pricing almost 300 generic drugs at $4 for a 30 day supply. Newspapers, private equity firms, PBMs, drug manufacturers, insurers, policy makers, and politicians are all rambling on about the various significant impacts this will have on the world, among them improving the lives of the uninsured.
I don’t get it.

Continue reading Wal-Mart’s $4 drugs – much ado about not much

In what has to go down as perhaps the least surprising news of the political season, big pharma is panicked that Democrats are going to take over Congress.
Panicked may be too mild a word.

Continue reading Congressionally-induced nightmare

I’m suffering from a severe case of cognitive dissonance, brought on by completely conflicting statements in articles from a single source, the New York Times. In Friday’s business section, Alex Berenson notes that big pharma, led by Pfizer, Lilly, Novartis and Wyeth all enjoyed strong profit gains (free registration required) in the third quarter.
The profits were generated, in large part, by price increases in the US, where Lilly’s prices were up 11%, contributing to a 14% gain in US revenues. Fair enough, prices went up, so did profits.
In the next (virtual) breath, another NYT article quotes the Congressional Budget Office’s as concluding that a Democratic Congress’ efforts to reduce Medicare drug spending by negotiating directly with pharmaceutical manufacturers will not work because private industry is so darn good at negotiating prices. (polemics are mine, but you get the point)

Continue reading Drug-induced dissonance

If this continues, big box and discount retailers will be giving drugs away. With the recent announcements that Target is matching Wal-Mart’s $4 drug price deal, Wal-Mart is speeding up the roll-out of their $4 script program, and K-Mart has had a 90 day supply of 184 generics for $15 offer since May, the price war has started.
Among the criticisms of the Wal-Mart initiative is that only one of the 20 drugs most commonly prescribed is on the discount list. Regardless, the Wal-Mart move has shaken up the pharma market, and forced retail outlets to quickly figure out their stance.

Continue reading Big sale on drugs!