Amazon’s tributary into the pharma market

Yep. Another Amazon story. We promise to dial it back a notch going forward. Unless we don’t. Way back in April it was rumored (and reported by InsightCity) that Wal-Mart would buy the online pharmacy PillPack. Well, that didn’t happen, but don’t cry for PillPack because according to a press release, Amazon just did. While you can’t cry for PillPack, if you watch the World Cup, you can cry for Germany. FYI, PillPack delivers medications in pre-sorted dose packaging for people taking multiple prescriptions. Want to know why we keep harping on Amazon (and Apple and Wal-Mart)? Witness the market power they have via an almost immediate downgrade of Walgreens after the PillPack announcement. In fact, “Walgreens, CVS and Rite-Aid lose $11 billion” in market cap after the announcement. The question now becomes, what will Wal-Mart do?

Brother, can you spare 770 billion dimes?

CVS Health is going to need a few more dimes than the guys in Blazing Saddles. Why? Because CVS agreed to buy Aetna insurance for $77B. Apparently CVS wants to win the contest for the longest press release title ever: “CVS Health to Acquire Aetna; Combination to Provide Consumers with a Better Experience, Reduced Costs and Improved Access to Health Care Experts in Homes and Communities Across the Country.” Why the merger? According to a Reuters article, “Expanding the (CVS) clinics could eventually save the combined company more than $1B annually by substituting low-cost treatments in CVS stores for more expensive hospital visits.” While the impact on patients is unknown, remember CVS stopped selling tobacco products in 2014, so we’re saying there’s a chance this is a good thing.

More like nope-iods

CVS has announced a new policy to help curb the opioid crisis. According to NBC News, the pharmacy giant will now supply a maximum of 7 days of pills to patients prescribed the highly addictive medicine. According to a recent study conducted by the CDC, the average number of days for an opioid prescription rose to nearly 18 in 2015 compared to about 13 days in 2006—so CVS capping their dispensing at 7 days is a big deal. That feels a bit like saying, “if you really want to abuse opioids, you’re gonna have to make two trips to the drug store.” Nothing like more time in traffic to make you want to swallow a fistful of Vicodin.

2. The war on drug stores heats up

Recent power plays in the prescription drug industry make J.R. Ewing’s actions seem like child’s play. If you don’t track the specialty pharmacy market, you should. This is a $100B industry that is growing rapidly. Think high-priced drugs used to treat Hep C and Cystic Fibrosis. According to the New York Times, large PBMs might be trying to force out independent specialty pharmacies. In Alabama, BCBS recently told patients that they cannot have their prescriptions filled at CVS. This is a big deal. It means patients have to sever long-standing relationships with pharmacists, especially difficult with specialty indications. This is all part of an emerging trend to narrow networks. Look it up. You will be glad you did and you’ll be smarter.

3. Drugs aggressively axed from CVS Health’s fomulary

In creating its 2017 formulary, the pharmacy benefits manager CVS Health, said “Hit the road, Jack,” to a number of drugs.  Some products like Sanofi’s insulin blockbuster Lantus and Amgen’s Neupogen were given the boot in favor of biosimilar counterparts. Ten other drugs were left high and dry for being “hyperinflationary,” including several drugs made by Valeant, Concordia, and Novum Pharma. Some rare disease and cancer drugs were also nixed. These formulary cuts should translate to cost savings for CVS Health but are worrisome for patients who may no longer have access to needed products.  This is also concerning for drug makers, particularly if other PBMs follow suit.