Forecasting the future of the independent pharmacy can prove to be just as tricky as predicting the weather. Predictions tend to be all over the map, so we can be sure that a good number of them will be wrong.
Over the last six months meteorologists have reported frightening weather in much of the country, including an epic drought in California and record snowstorms in New England. In the pharmaceuticals industry it seems that business has been mirroring nature.
While TRxADE remains a positive force that helps independent pharmacies thrive, it’s important to take a look at the clouds on the horizon.
Pharmacy Benefits Manager (PBM) Acquisitions
Uncertainty over PBM reimbursements have been responsible for some of the darkest storm clouds hovering over independent pharmacies in recent years. Three significant PBM acquisitions since February may change the forecast again, as acquiring companies implement new systems and new processes.
- With an approximately $2 billion purchase of Envision Rx, pharmacy chain Rite Aide entered the PBM business with a thunder clap heard ‘round the industry. Rite Aide becomes only the second drug chain to own a PBM, following by 10 years CVS Health’s $21 billion purchase of Caremark Rx. The acquisition is expected to hasten Rite Aide’s growth by giving it access to millions of patients whose pharmacy benefits have been managed by EnvisionRx.
- Illinois based PBM Catamaran Corp. acquired Healthcare Solutions for $405 million in cash. Healthcare Solutions specialized in the worker compensation market.
- Magellan Health acquired 4D Pharmacy Management Systems in a cash transaction worth $55 million that could be worth an additional $30 million. 4D Pharmacy Management Systems served 670,000 individuals who were members via government sponsored benefits programs, employers, and managed care organizations.
While none of these transactions, on their own, signal warning signs for independent pharmacies, ongoing mergers and acquisitions in the pharmaceuticals industry continue to change, and in some cases threaten, the environment.
Generic Drug Inflation Not Slowing
Generic retail drug prices rose at record rates in 2014, and show no sign of slowing in 2015.
According to a story originally printed in Drug Benefit News and reprinted by AIS Health, in 2014:
- Branded drug price inflation remained in the 10-12% range
- Generic drug prices jumped from a decrease of 4% in 2011 to an increase of 6.8%
- Generic drug inflation peaked in the 2nd quarter at 11%
Evercore ISI forecasts a 7-10% rate of weighted drug inflation for 2015. As Michael Cherny, a managing director of Evercore ISI’s Health Services and Technology Research Team put it, generic drug prices could rise at “a faster growth rate than we’ve seen in the last couple of years.”
Compare Against Pharmacy Acquisition Cost (PAC) Prices and Save
I advise independent pharmacies to compare prices offered by suppliers with the Pharmacy Acquisition Cost (PAC) price.
PAC is a formulation of pharmacy surveys, published data, and other proprietary formularies that establishes an average wholesale price for generics in the same way that Wholesale Acquisition Cost (WAC) does for brand names. PAC is supplied to TRxADE by Pinnacle Tek and can be found in two types of searches in the TRxADE marketplace.
- Search by NDC or UPC in Orders. Using TRxADE’s Orders tool you can search up to 50 products at one time and compare offers from each of our suppliers simultaneously. In the list of offers for each drug you will find the “PAC” to the right of the supplier’s name. Compare it to the “Price” to see how much you will save.
- Search by Product Name in Opportunity Buys. If you want to look beyond a specific NDC or UPC, search by product name in Opportunity Buys. Every item listed in Opportunity Buys is below the PAC, and you can compare the savings right there.
Orders will give you a faster search (of up to 50 products at one time), while Opportunity Buys will give you more products to choose from. Whichever search you choose, you’ll be beating the generic pricing inflation that is clouding your future.
Create your own forecast for a bright future by comparing prices on TRxADE.