PBMs push into a bigger share of top drug retailers, says Pembroke Consulting

Adam Fein, president of Pembroke Consulting (Philadelphia) has previewed his 2014-15 Economic Report on Retail, Mail and Specialty Pharmacies, which includes an estimation of 2014 calendar-year sales by the top retailers. While CVS Health, Walgreen (now Walgreen Boots), Walmart and Rite Aid occupy four of the top five slots (Express Scripts is No. 4), their growth more or less tracked overall industry sales. According to his numbers, Walgreen is now the No. 1 chain retailer, in that CVS health includes both a retail chain and a pharmacy benefit manager (which used to be the Caremark PBM). Some PBMs, which are primarily mail-order, showed some dramatic growth, notably the mail-order portion of CVS (which used to be the PBM Caremark)—from $20.2 billion in 2013 to $25.4 billion in 2014, and United Health, from $3.8 billion to $8.9 billion.

“Many of the biggest pharmacies (by revenue) are [now] central-fill, mail pharmacies operated by such PBMs as Express Scripts, UnitedHealth, Catamaran, Humana, and Prime Therapeutics,” notes Fein. “Specialty drugs account for 30% or more of revenues at these pharmacies.” The consequences for specialty pharma manufacturers, and for pharma generally, are significant: the PBMs, with Express Scripts voicing the loudest complaints, have been critical of specialty pharma’s pricing policies, notably over the hepC drug Sovaldi marketed by Gilead Sciences. To the extent that PBMs dominate specialty sales (as compared to specialty drugs generally sold under a medical benefit within hospitals), the retail market will continue to change, with some drugs available only via some channels and even, in the case of Sovaldi, some retailers.

Fein’s report can be purchased next week at www.drugchannels.net.