The Not-So-Secret Handbook Of Pharmacy Facts

Adam Fein from Drug Channels just published his newest report – 2010-11 Economic Report On Retail And Specialty Pharmacies. If you’re going to spend money on a report, I would suggest you consider this one. You couldn’t Google the information and format it for the price.

He does a great job of aggregating data, looking at trends, creating great charts, and providing an informed perspective on the industry. Let me just pick out a few things to highlight from the report:

  1. He predicts four trends:
    1. Market growth and shift to specialty
    2. Boom-to-bust for generic drugs
    3. Cost-plus pharmacy reimbursement
    4. Preferred pharmacy networks
  2. He talks about the concentration of specialty pharmacies and the fact that 81% of health plans require their members to use 1-2 specialty pharmacies.
  3. He talks about the shifting market share among retail pharmacies and the fact that while only 31% of urban and suburban pharmacies are independents that number jumps to 65% in rural areas.
  4. He talks about the AWP discount that plan sponsors realize at retail compared to mail and how that gap has 58 basis points in 2010. (A key fact in understanding why you have to have the right plan design to save at mail.)
  5. And, one point that I often make (without the exact data) is that people paying cash for prescriptions pay too much. He shows that the gross margin for cash patients at independent pharmacies is a whopping 54% compared to 20% of less for other 3rd party and government reimbursed scripts.

Here’s an example of one of his charts (exhibit 34).

My final commentary on the report is that this should be a read for people trying to work in the industry or new hires in the PBM or retail management. I’m pretty sure all the analysts on Wall Street already read it.


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