Mail-order bill just scratches surface of future PBM market
WHAT IT MEANS AND WHY IT’S IMPORTANT — This isn’t just about mail order in New York state. This is about the future of the pharmacy benefit management market and what payers are more likely to spend their money on. It’s about choice. And because of that, this is just another story in what has been a very busy news cycle on the PBM front, driven primarily by the anti-mandatory mail-order bill battle in New York, reactions to two contradictory studies on patients regarding mail order and adherence, and continued challenges to the proposed ESI-Medco merger.
(THE NEWS: N.Y. state mail-order bill would raise drug costs, reduce access, FTC says. For the full story, click here.)
In New York, the state senate voted 60-2 to approve a bill that would ban mandatory mail in the state; the vote was unanimous in larger state assembly. While the Federal Trade Commission merely offered its opinion that the bill would raise drug costs and governor Andrew Cuomo — who is expected to receive the bill for either his signature or his veto on Aug. 19 — can choose to ignore FTC altogether if he chooses to.
The PBM lobby, however, clearly is happy for FTC comments. Meanwhile, community pharmacy leaders maintain that the FTC’s arguments are based on flawed data from a 2005 Government Accountability Office report that found that mail is cheaper than retail. The problem — noted Craig Burridge, executive director of the Pharmacists Society of the State of New York, in a radio interview last week with Northeast Public Radio affiliate WAMC — is that the GAO report compares average cash prices at retail to average mail-order prices, rather than the average third-party cost at retail.
It is important to note that the New York state bill would require retail pharmacies to match the mail-order price on the cost of a 90-day prescription.
As the situation in New York continues to unfold, a study funded by CVS Caremark and published in the current issue of the American Journal of Managed Care found that adherence rates in the first year among newly diagnosed diabetic and cardiovascular disease patients were significantly lower among mandatory mail customers.
Those results seem to contradict the results of another adherence study funded by the PBM Prescription Solutions and published in the Journal of Medical Economics that found adherence rates among patients on oral diabetes medicines were better among mail-order patients (49.7%) versus retail pharmacies (42.8%).
In the end, these types of studies that measure what payers get for their pharmacy benefit costs, and how these costs affect total healthcare spending and patient outcomes, will outweigh the short-term cost savings of mail order versus retail pharmacy — that is, if there actually is a savings in the short term. Which side will payers — including the government, which is due to become a much larger healthcare payer in 2014 — pay attention to?
It is interesting to note that in all of these debates, CVS Caremark, with its massive retail and PBM operations, seemingly has emerged as “Switzerland” in all of this. Theoretically, even the cynic’s cynic would have to believe the CVS Caremark studies are closer to the actual truth than anything coming from the pure-play PBM camp.
Elizabeth Arden, Liz Claiborne amend licensing agreement
NEW YORK — Elizabeth Arden has amended its long-term license agreement with Liz Claiborne to acquire the trademarks for the Curve fragrance brands and selected other smaller fragrance brands.
The amendment also includes a lower effective royalty rate for the remaining licensed fragrance brands, including Juicy Couture and Lucky Brand fragrances, reduces the future minimum guaranteed royalties for the term of the license and requires a pre-payment of royalties for the remainder of calendar 2011.
The company stated that it paid Liz Claiborne $58.4 million in cash in connection with the transaction and expects it to be modestly accretive to earnings for fiscal 2012 and more accretive beginning in fiscal 2013.
“We believe this transaction allows us to increase our investment behind these brands and accelerate their growth, particularly internationally,” stated E. Scott Beattie, chairman, president and CEO of Elizabeth Arden.
Pret A Target: Café chain Pret A Manger to add Chicago CityTarget location
MINNEAPOLIS — Target is adding fresh, handmade food to its small-format store in Chicago, the mass merchandiser said.
Target announced that Pret A Manger would open a location inside the State Street CityTarget when the store opens next July. The London-based café chain sells sandwiches, soups, salads, coffee and other items, and operates stores in several U.S. and U.K. cities and Hong Kong.
"We believe Pret A Manger will help us provide guests in downtown Chicago with the exceptional, complete shopping experience they have come to expect from Target," Target SVP grocery Annette Miller said. "Our Chicago CityTarget guests can pop in for a fresh sandwich or salad during their regular visits to our store for groceries or apartment essentials."
Target is opening the first round of small-format stores in Chicago, Seattle, San Francisco and Los Angeles next year, with the goal of offering city residents, commuters and tourists the convenience of one-stop shopping, affordable groceries, everyday essentials, fashions and designer collections.