All GLG News Analyses Filed Under: Healthcare Services

Adam FeinFounder & PresidentPEMBROKE CONSULTING INC

McKesson settlement is next step in the demise of AWP

December 2, 2008

Analysis of:McKesson Agrees To Settlement In Pricing Suits | online.wsj.com

McKesson Corp (MCK) settled its pending class action suit for $351 million and set aside a further $143 million reserve for certain future claims. The settlement removes a source of uncertainty for McKesson, but also signals the beginning of the end for the Average Wholesale Price (AWP) benchmark. Average Wholesale Price (AWP) data for pharmaceuticals is still being published, but will continue to lose appeal as a reimbursement benchmark for pharmacies and Pharmacy benefit managers (PBMs).

WellPoint Pilot Program May Have Unintended Costs and Create Regulatory Backlash

November 19, 2008

Analysis by: GLG Expert Contributor

Analysis of:WellPoint Pilot Program Will Provide Coverage For Members To Travel To India For Certain Non-Emergency Procedures | www.medicalnewstoday.com

The WellPoint program may not reduce overall costs and could very well trigger regulatory backlash, particularly if bundled with existing products.  Providers will likely pursue cost shifting from other product lines to compensate for losses from lucrative elective procedures that have moved off-shore.  Specialty physicians can also be expected to play tough in negotiations to protect market share.  Delivery of services off-shore also creates significant challenges for continuity of care and malpractice risk.  Off-shore services present regulators with crucial policy challenges beyond those of quality and outcomes, including: 1) the need to protect volume in essential facilities; 2) potential impacts that lost volume might have on quality for non-commercial patients; 3) Issues of network adequacy; and 4) implications of a two-tiered system of care.  Separately packaging and selling these services may be required.

Who Wll Certify the Providers?

November 19, 2008

Analysis by: GLG Expert Contributor

Analysis of:WellPoint Pilot Program Will Provide Coverage For Members To Travel To India For Certain Non-Emergency Procedures | www.medicalnewstoday.com

So let me get this straight: In the US, doctors and hospitals are vetted endlessly, recertified yearly, and made to meet some stringent standards before Wellcare will admit them to its network. But in the interest of saving a few bucks, they will "allow" members to go elsewhere, where they are unable to control vetting and quality.

The Dismal Science

October 28, 2008

Analysis by: GLG Expert Contributor

Analysis of:Financial Meltdown Hits Home | modernhealthcare.com

Credit will likely get tighter before it eases.  1) Bank Letter of Credits will be called upon to provide liquidity, making less funds available to be lent out.  2)  Car manufactures and other industries dependent on consumers purchaing with the use of credit. 3)  Traditional sources of debt for hospitals will decline, making it tougher for hospitals to purchase equipment and expand.  4) All this leads to a contraction of the money supply and a recession.

Adam FeinFounder & PresidentPEMBROKE CONSULTING INC

Dangers of Rogue Online Pharmacies

October 14, 2008

Analysis of:Online Overdose | columbusdispatch.com

The Columbus Dispatch published a six-part expose/overview about the diversion and sale of controlled substances. Mike Pramik, the reporter who wrote all six parts, has pulled together a must-read series. Since the Dispatch is also Cardinal Health’s (CAH) hometown paper, there are some good insights into the ways that Cardinal has dealt with the challenges of selling to potential rogue Internet pharmacies.

Adam FeinFounder & PresidentPEMBROKE CONSULTING INC

Cardinal Health Finally Resolves DEA Issue

October 9, 2008

Analysis of:Cardinal Health Resolves Controlled Substance License Suspensions | ir.cardinalhealth.com

Last week, Cardinal Health (CAH) announced agreements with the Drug Enforcement Adminstration (DEA) regarding its license suspensions for controlled substances. These suspensions had a negative impact on the company's sales and market position. The company even publicly apologized for its actions during the suspensions. (See Cardinal Health Apologizes to Customers - Council Site). With the formal agreement, it can now get back to business and focus on the core problems with its pharmaceutical distribution business.

Adam FeinFounder & PresidentPEMBROKE CONSULTING INC

Cardinal Health Invests in China

October 6, 2008

Analysis of:Pharmaceutical distribution at the heart of Cardinal Health's China strategy | www.interfax.com

Cardinal Health (CAH) is rapidly growing its Chinese drug distribution business, while expanding manufacturing in India (but not China). This strategy is especially interesting given Cardinal’s planned separation of its supply chain division from clinical & medical products. The era of global wholesalers is coming, with or without a U.S. importation law.

Adam FeinFounder & PresidentPEMBROKE CONSULTING INC

Wal-Mart + Caterpillar: The Future of PBM & Pharmacy?

October 2, 2008

Analysis of:Caterpillar in prescription drug trial with Wal-Mart | in.reuters.com

Wal-Mart Stores (WMT) announced an innovative new program with Caterpillar (CAT) that provides $0 co-pays on 2,500 generic drugs for 70,000 beneficiaries (employees, retirees, spouses, dependents). As I see it, the deal does not represent a direct frontal assault on PBMs such as Express Scripts (ESRX) or Medco Health Solutions (MHS). Instead, Wal-Mart is subtly undermining the PBM’s economic model, which is overly dependent on margins from generic drugs by mail. Wal-Mart’s program highlights these “excess” margins by offering an alternative channel choice. I’m also intrigued by the competitive comparison with CVS Caremark (CVS). Many of CVS Caremark's new benefit options try to create channel neutral choices (my terminology) within a restricted retail network. For example, Maintenance Choice is their drug benefit option that lets patients choose a 90-day supply from mail order or a local CVS retail outlet at the same cost or co-pay.

GE Healthcare & Living Independently Group -- Behavioral Health meets Aging in Place

September 29, 2008

Analysis by: GLG Expert Contributor

Analysis of:GE Healthcare Forms Strategic Relationship with Living Independently Group | pressroom.gehealthcare.com

GE Heathcare announced on 9/24 "that it will distribute and co-market Living Independently's QuietCare products globally." QuietCare "alerts caregivers to behavioral changes that may signal potential health issues or emergency situations." This represents an intersection between the health and aging in place marketplaces. 

Delay in price tagging - who to blame?

September 19, 2008

Analysis by: GLG Expert Contributor

Analysis of:Medicare overpaid on drugs with new generics, report says | www.latimes.com

This brief news is warning againts any procedural delay to market prices of generic versions of brand-name drugs. The eventual outcome is unexpected overpayment for generic brand. Is this a problem arising from computer pricing or a stratetgic decision making issue on how to label generic drugs in the competitive market?   

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