Pharmacy industry sizzles following FTC approval of Express Scripts-Medco merger
WHAT IT MEANS AND WHY IT’S IMPORTANT — You can’t uncrack an egg. That’s the preliminary reply Express Scripts gave to the district court hearing the case filed by the National Association of Chain Drug Stores and the National Community Pharmacist Association to block the merger between Express Scripts and Medco. The pharmacy industry’s concern, however, revolves around what kind of beast will hatch from this ESI-Medco merger if that cracked egg isn’t unscrambled.
(THE NEWS: Super PBM merger approved; NACDS, NCPA file emergency motion to block merger. For the full story, click here.)
The judge in that case on Thursday approved a request from ESI that the full response to the suit be submitted under seal, given the sensitivity of the newly merged business information they would need to share. So much for transparency. A hearing on an NACDS-NCPA preliminary injunction request will be heard April 10 in the afternoon, according to court documents. To weigh in on a DSN poll on whether or not the merger will be scuttled in the courts, click here.
Altogether, now that Express Scripts and Medco have received the Federal Trade Commission blessing, the consequences for retail pharmacy could be severe. Community pharmacists have testified over and over that the consolidation of these pharmacy benefit managers places more of their prescription business into one of two buckets — and that without either a competitive PBM marketplace or the economies of scale tipping into their favor, any take-it-or-leave-it-style negotiations over reimbursement rates will force those independents to pull their pharmacy shingles down altogether.
Though Express Scripts chairman, president and CEO George Paz did testify before Congress just before Christmas last year that it would not be the merged PBM’s intent to shut down independent pharmacists. On the contrary, the new Express Scripts Holdings would negotiate higher reimbursement rates for independents than they do with the "big-box retailers," he said.
"We believe our country needs those small pharmacies, and they don’t have the buying power. They don’t have the ability to do what the big, big pharmacy chains — the Walgreens, the CVSs, the Rite Aids in this world — can do, so our job is to go out and negotiate and try to get better deals for them so they can in fact stay in business," Paz testified. Nobody believes him — at least no one in the community pharmacy space.
That was before the United States Senate Committee on the Judiciary in December. (To view the video of that testimony, click here, Paz’s testimony quoted above is about 90 minutes into the 144-minute session.)
There also has been a lot of speculation on Wall Street as to how this will impact Walgreens, the one pharmacy that last year did walked out on Express Scripts’ pharmacy network, in part because of less-than-robust reimbursement rates. Express Scripts in 2011 represented 10.7% of Walgreens’ prescription business, and Walgreens’ Medco book of business was bigger still (125 million prescriptions in calendar 2011 and 108 million in calendar 2012 versus 88 million Express Scripts prescriptions in fiscal 2011. Not apples to apples comparisons but a sense as to the relative magnitudes).
Does a merged ESI-Medco call Walgreens’ participation in the Medco pharmacy network into question? Both Walgreens and Express Scripts Holdings have publicly stated no, contracts are in place and they will be honored. The street speculates that the closer Walgreens comes to the end of that Medco contract, the more pressure the Chicago chain will be under to accept any Express Scripts terms. However, the week before that merger was given the regulatory green light, Walgreens president and CEO Greg Wasson reiterated that Walgreens’ operating principle would remain the same: to be fairly reimbursed for the full cost of adjudicating a prescription.
Many analysts don’t believe Walgreens will walk away from both Express Scripts and Medco pharmacy networks, combined. But then again, they didn’t think Walgreens would exit the Express Scripts pharmacy network in January, either.
For Walgreens, this may become a proof of concept opportunity. Walgreens is banking on more payers and employers taking advantage of the kind of lower healthcare outcomes Walgreens has been able to drive through the totality of its operations — retail pharmacy, specialty pharmacy, retail clinics, worksite clinics, infusion and respiratory centers, and mail order. "We feel good about the value we’re offering as more and more PBMs, health plans and others approach us to develop unique member services and benefits that can be offered to clients," Wasson told analysts a week ago. "We’ve never been this busy this early in a [PBM selling] season and every indication is that this will be the most active selling season in recent memory."
Lifting state barriers on the types of vaccinations Rx can deliver equals greater access
WHAT IT MEANS AND WHY IT’S IMPORTANT — The release by Walgreens of case studies that detail how retail pharmacy can expand access to immunizations is obviously important on several fronts, but it really makes one stop and wonder: What could be done if laws didn’t vary by state in terms of what types of vaccinations pharmacists can deliver?
(THE NEWS: Walgreens immunization studies: Pharmacy instrumental in helping states combat disease. For the full story, click here)
The studies demonstrated the impact of three Walgreens initiatives aimed at increasing immunization rates: off-clinic hour vaccine administration (defined as times when traditional physician offices and clinics are closed), a pharmacist-led meningitis vaccination program and expansion of access to immunization services in underserved areas.
The results? Impressive. For example, a pharmacist-led meningitis vaccination program in Texas drove the number of vaccinations provided by Walgreens pharmacists dramatically year over year from 41 in January 2011 to 11,229 in January 2012. The program was implemented in support of a Texas state mandate requiring all college students younger than 30 years of age to be immunized for meningitis before the January 2012 semester and clearly demonstrates that community pharmacies can support state government initiatives and improve public health.
Then there’s pertussis. Many cases of pertussis are not diagnosed and so are not reported. Yet over the past five years, between 10,000 and 27,000 cases have been reported each year. According to the Centers for Disease Control and Prevention, the last peak year nationally was in 2010 when more than 27,000 cases were reported.
Or what about pneumococcal vaccines? The Centers for Disease Control and Prevention stated that all adults 65 years of age and older should receive the PPSV vaccine. However, the CDC indicated that the percent of adults 65 years and older who had ever received a pneumococcal vaccination is only 59%.
Again, just imagine what could be done if laws didn’t vary by state in terms of what types of vaccinations pharmacists can deliver.
Clearly, there’s a need for greater education on the importance of immunizations and a need for greater access. Lifting the barriers for those pharmacists who practice in states that have such restrictions is a big step in the right direction.
Par launches generic version of Provigil
WOODCLIFF LAKE, N.J. — Par Pharmaceutical has started shipping its generic version of a drug for sleep disorders, the company said Friday.
Par announced the launch of a generic version of Provigil (modafinil), used to treat such sleep disorders as narcolepsy and work shift sleep disorder.
The launch occurred under an agreement between the Federal Trade Commission and Teva Pharmaceutical Industries, which acquired Cephalon, the maker of Provigil, in October 2011. On Thursday, Teva — which launched an authorized generic version of Provigil on March 29 — said the Food and Drug Administration has found it was the sole first filer of a regulatory approval application for generic Provigil.
Mylan sued the FDA in a federal court in response to the decision, saying that Teva had forfeited its right to submit an approval application for generic Provigil that challenged what was now its own patent, and that Mylan should be recognized as the first-to-file company instead.
Provigil has annual sales of about $1.1 billion, according to IMS Health.