the 2017 economic report on us pharmacies and pharmacy benefit managers pdf Saturday, June 12, 2021 8:50:30 PM

The 2017 Economic Report On Us Pharmacies And Pharmacy Benefit Managers Pdf

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Bottles of prescription drugs are filled as they move down an automated line at a pharmacy in Midvale, Utah, September States have a variety of policy options to reduce their prescription drug spending without jeopardizing the health of patients.

Specialty Pharmacies: Industry Trends and Valuation Considerations

Jun 1, Business Valuation. Janiga, ASA. Download the PDF. Specialty pharmacies, which once occupied only a small niche in the pharmacy marketplace, are now a sizeable part of the broader pharmacy industry.

In , specialty medicine prescriptions grew by over five percent, more than twice the rate of other drugs. In this article we provide an overview of the specialty pharmacy industry, assess the tailwinds and headwinds facing the industry, and discuss certain valuation considerations for specialty pharmacies. Figure 1 outlines the top seven pharmacies measured by specialty drug dispensing revenues in Growth: Growth in revenue for specialty drugs is outpacing the growth in revenue for traditional drugs.

Expanding pipeline of specialty drugs: As of , 60 percent of the new drugs awaiting approval from the U. PBMs are closely linked to specialty pharmacies as PBMs attempt to improve the quality of healthcare and reduce prescription drug costs. From Figures 1 and 3 , we observe the top four specialty pharmacies are all owned or co-owned by PBMs.

However, with PBMs now controlling over 70 percent of the market, and as larger companies continue to create vertically integrated systems that are able to control and narrow networks, there have been increasing concerns for independent specialty pharmacies, which are struggling to access specialty medications within payor and PBM networks.

Anti-trust and unfair competition: As industry consolidation and integration continue to occur, there may be continued lawsuits brought forth attempting to challenge this market behavior. For example, although unsuccessful in its claim, Prime Aid Pharmacy brought suit against Humana for violations of the Sherman Act by steering patients to its own specialty pharmacy.

Specialization: Given the increase in competition, smaller specialty pharmacies are focusing on distinguishing themselves so that they can access restricted distribution drugs. Some are underlining a disease-state expertise while others are utilizing a geographic niche by collaborating with regional health systems and insurers. Dispensing restrictions: The consolidation of the specialty pharmacy industry stems, in large part, from techniques used by manufacturers and payors to narrow specialty drug channels.

The number of specialty pharmacies eligible to dispense these costly drugs are limited by the manufacturers, though these actions may be controversial. Additionally, PBMs confine the number of specialty pharmacies selected by the manufacturers by requiring consumers to use the drugstore owned and operated by that PBM.

Oral dosage: Despite the fact that specialty medications have traditionally centered around injectable and infusible formulations, a noteworthy number of specialty drugs in oral dosage forms have recently entered the market. This pattern is expected to continue in the near future and could change the economic and competitive landscapes of the industry.

Decreasing transaction activity: According to the Drug Channels Institute analysis of Braff Group data, there has been a slowdown in merger and acquisition activity, from 20 specialty pharmacy transactions in to 10 transactions in [ix] Figure 4. HealthCare Appraisers considers three standard approaches to determine the value of a specialty pharmacy: the Income, Market, and Cost Approaches. The facts and circumstances of the specialty pharmacy should be considered prior to applying the valuation approaches for any particular valuation matter.

Income Approach: The Income Approach generally attempts to quantify the future economic benefits associated explicitly with the operations of the specialty pharmacy. When applying an income approach in valuing a specialty pharmacy, it is important to consider items affecting cash flows, such as access to limited distribution drugs, the regulatory environment, outlook for reimbursement, as well as the diversification risk-profile of a pharmacy that may, for instance, generate a significant portion of its revenue from a few drugs.

Market Approach: The Market Approach provides an indication of value by drawing reference to prices paid in transactions involving similar companies i. Figure 5 outlines publicly-available valuation multiples for nine specialty pharmacy transactions occurring between and , in which valuation multiple information surrounding the transactions was made public.

Over the historical period analyzed, MVIC-to-revenue multiples have ranged from 0. The previous month, Diplomat Pharmacy communicated it lost one of its largest revenue sources, and had substantial doubt that the company could remain solvent. Given that specialty pharmacies are not capital-intensive businesses, this approach is seldom used for a pharmacy generating positive cash flow, as the approach does not assign any value to the future economic benefits that a specialty pharmacy is expected to generate.

The specialty pharmacy sector continues to evolve, as opportunities and threats to the industry continue to drive transaction activity. When valuing specialty pharmacies, it is important to consider the many areas that may have an impact on specialty pharmacy operations. If you are considering buying or selling a specialty pharmacy, contact the valuation experts at HealthCare Appraisers to discuss how our valuation and consulting services can help facilitate your transaction.

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Specialty Pharmacies: Industry Trends and Valuation Considerations

There may be few issues that unite Americans ahead of the election as do their concerns about the cost of prescription drugs. Gallup reported on results from 1, interviews conducted with adults between July 1 and July This explainer, in addition to providing an initial overview, will address five aspects of the debate about the high costs of medicines. Americans spend far more per capita, on medicines than their counterparts in other wealthy nations, according to the Organization for Economic Cooperation and Development. In this paper, Jamie R.

Jun 1, Business Valuation. Janiga, ASA. Download the PDF. Specialty pharmacies, which once occupied only a small niche in the pharmacy marketplace, are now a sizeable part of the broader pharmacy industry. In , specialty medicine prescriptions grew by over five percent, more than twice the rate of other drugs.

Drug prices: Why prescription medicines remain unaffordable for many Americans

The Enterprise Information Management Center of Excellence can help you: Contact us to talk about how you can get more insight from your specialty information. Files on this page are PDF. Medicine Spending and Affordability in the U.

Fein, Pembroke Consulting, Inc. All rights reserved. This Report is protected by copyright law and may not be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed, or resold, in whole or in part, in any form or manner or by any means whatsoever, by any person without prior written consent. This Report may be cited in commercial documents with full and appropriate attribution.

Dr Galante is the chief medical officer at Precision for Value. Dr Blanford is the executive vice president and managing partner at Precision Xtract. As the health care delivery system continues its transition to a value-based reimbursement model, pharmacies face many of the same market pressures as other health care providers to improve patient outcomes and patient experience while controlling costs.

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