The End of Generic Deflation

Most people involved in the purchasing and reimbursement of multisource prescription drugs are aware of the deflation of generic drug prices in the U.S.  Factors influencing the deflation include increasing number of generic suppliers and the FDA approving more ANDAs.  Furthermore, the wholesalers and pharmacies have combined their purchasing power and exerted additional pressure on the generic manufacturers to reduce prices.

Why is there constant market pressure leading to generic drug price deflation?  Pharmacies must combat ongoing reduced reimbursement rates from third party payers.  Since pharmacies do not have the negotiating leverage to manage reimbursement rates, they must focus on lowering their cost of goods.  Payers are under continual pressure to win new business and retain current clients by controlling the overall drug spend.  Payers have become more aggressive in lowering generic reimbursement through aggressive MAC pricing.

So, how does the self-reinforcing cycle of generic deflation end?  Which segment will stop this cycle?  At some point, generic manufacturers will determine that certain drugs are no longer profitable and will either stop lowering prices or stop selling the product.  When the number of suppliers is reduced, the inflationary cycle will start again and may lead to rapid price increases as the remaining suppliers take advantage of their new found pricing power.  How and when do you think the generic deflation cycle will end?


Published November 2017

Importing Prescription Drugs

A recent PHSI website poll indicates that 57% of respondents were opposed to allowing US residents to import prescription drugs. Factors that may influence one’s stance on prescription drug importation include drug prices, safety, and regulatory differences. Healthcare providers may be most concerned with the safety of imported prescription drugs. Wholesalers are likely concerned with challenges created by regulation differences. Patients and retail pharmacists may see this as an opportunity for cost savings.

As prescription drug prices become a larger concern for both patients and providers, importation of prescriptions drugs is proposed as part of the solution. Members of Congress have proposed a bill (Affordable and Safe Prescription Drug Importation Act (S. 469/HR 1245)) that would allow importation of prescription drugs from Canada. Introduced in both the Senate and House in February, this bill would allow importation of drugs by wholesale distributors, pharmacies, and individuals. The proposed bill excludes controlled substances, anesthetic drugs inhaled during surgery, and compounded drugs.

According to a September 29, 2016 poll by the Kaiser Family Foundation, 71% of Americans favor allowing prescription drugs to be imported from Canada. Based on recent headlines on brand drug price increases, this support is largely driven by high drug prices. Supporters estimate prices to be 35 to 55% lower when purchasing from Canada. The Harvard Business Review explains prices are lower in Canada due to their single payer health system and concludes that drug importation will not lower drug prices in the United States.

To create safeguards and ensure safety, the bill provides clear definitions of which drugs can be imported, FDA certification of foreign sellers, and supply chain security requirements. Opponents argue imported drugs do not have sufficient FDA oversight to be deemed safe. The FDA describes importation as, “a complex and risky approach- one that evidence shows will not achieve the aim, and is likely to harm patients and consumers.” In addition, the Canadian government does not intend to be responsible for safety and quality of prescription drug exported to the United States.

Both the National Association of Chain Drug Stores (NACDS) and the American Pharmacists Association (APhA) oppose the bill stating, “importation undermines the integrity and security of the US drug supply by posing an unreasonable risk to patient health and endangering public safety.” Furthermore, the bill undermines the Drug Supply Chain Security Act (DSCSA) of 2013 which requires track and trace of prescription drugs, increases the risk of counterfeit drugs, and detracts from value based care. These organizations support improved patient access to safe and affordable prescription medications, but believe drug importation is not the solution.  What are your thoughts on the potential benefits and challenges with drug importation?


Published November 2017

Simvastatin in Multiple Sclerosis

Multiple sclerosis is a debilitating, immune-mediated disease of the central nervous system.  According to the Multiple Sclerosis Foundation, there are an estimated 2.5 million people with MS worldwide.  While novel therapies exist that modify the disease by preventing progression and relapse, these treatments are expensive and come with a host of adverse effects.  Moreover, there are limited treatment options that are FDA-approved for some of the progressive forms of MS.

Researchers are examining existing small-molecule therapies that are not currently FDA-approved for MS to see if they can be repurposed to treat this disease.  For example, simvastatin is an inexpensive cholesterol lowering drug that is being investigated in patients with secondary progressive MS (SPMS).  Preliminary studies have shown that taking high doses of simvastatin correlated with a significant reduction in the rate of brain atrophy over 2 years.  This led to improved disability and quality of life scores.  The phase III clinical trial is underway and expected to last six years, expected to end in 2023.  There are several other generic agents that are being tested in multiple sclerosis in addition to simvastatin including miconazole, minocycline and others. What do you think about repurposing a genericized therapy in a complicated disease state like MS?


Published November 2017

UPDATE: Track-and-Trace Enforcement Delayed

The FDA is delaying the enforcement of the November 27, 2017 Drug Supply Chain Security Act (DSCSA) deadline for manufacturers to place unique product identifiers on their packages.  The FDA draft guidance from June 30, 2017 provides some relief for those manufacturers struggling to prepare for the upcoming deadline.

There is no change to the requirement, but enforcement is being delayed.  Manufacturers that do not include the unique product identifiers on their packages starting November 27, 2017 are not in compliance.  However, the FDA does not intend to take action against these manufacturers before November 26, 2018 (a one year delay).  This delay does not impact any other aspect of the DSCSA implementation.

More information about Track-and-Trace can be found by the following this link:


Published October 2017

CVS’ ScriptPath Prescription Schedule: Simplifying Medication Labeling

CVS Pharmacy has launched a new service called ScriptPath to simplify how patients take their medicine.  ScriptPath Prescription Schedule is phase one of a larger strategy for CVS to improve the medication adherence in its patients.  Any patient who currently takes 5 or more medications a day qualifies to have a schedule printed in a format where each medication is categorized with instructions on when to take it and how much to take in a large, easy to read, color-coded format.  The idea is to make taking one’s medications appropriately as simple as possible.  Phase Two of this plan will launch in January 2018, which will replace all prescription labels with ones possessing a similar appearance to the ScriptPath sheet.  Ideally, these labels will allow a patient to line up their medications in a row and immediately know which drugs to take at what time and dose.

CVS ScriptPath

Photo Source: CVS Health website.

The ScriptPath Prescription Schedule runs on a proprietary software algorithm that analyzes each prescription drug a patient takes then determines when is the best time for the patient to take the drug, depending on dosing, indication, interactions, side effects, etc.  The recommendations are based on clinical data to ensure the medications are taken at the most effective times.  This schedule determination is an automatic process that is triggered whenever a prescription is filled.  Currently, the dosing times are morning, midday, evening, and bedtime.  Medications are also divided into “routine”, “as needed”, and “other” to further highlight when medications should be taken.

This program will help patients manage a multidrug therapy regiment.  Knowing when a patient should take a once, twice, or three times daily dose, medication adherence should increase, ultimately leading to better patient outcomes.  Using icons and numbers, rather than words or abbreviations, allows language or health literacy barriers to be reduced.  The ScriptPath schedule and labels will act to reinforce the appropriate times for a patient to take their medications.  The CVS software system will require frequent updates, as new therapeutic agents and clinical research or guidelines are continuously being released.  CVS has made a considerable commitment in both clinical and IT resources launch and help maintain the ScriptPath Prescription Schedule.

CVS spent a considerable amount of time in developing a product that was not only functional, but also featured a design that was easy to use and understand.  It is PHSI’s belief that ScriptPath is one of many drug packaging and labeling options that will help improve medication use and adherence.  ScriptPath has the potential to improve medication adherence and health outcomes without increasing the workload of the pharmacist.


Published October 2017

Health System Outpatient Pharmacy – Consolidation

ProMedica is a non-profit healthcare system with locations in northwest Ohio and southeast Michigan. As part of its service offerings, ProMedica operated retail pharmacies under the Pharmacy Counter banner in and around Toledo, OH. In September 2017, CVS announced it was acquiring six ProMedica pharmacy locations. They will close five pharmacies and transfer the prescription files to nearby CVS Pharmacy locations. The sixth location will reopen as a CVS Pharmacy in the near future.

Healthcare systems see the value in offering comprehensive services, including outpatient prescriptions to their patients. With declining reimbursement rates, the number of prescriptions needed to profitably operate a pharmacy continues to increase. In situations with a limited patient population, this leads to challenging questions. Do we invest in technology and automation to lower the cost of dispensing a prescription? Are there better opportunities for our healthcare system to spend our limited time and resources?

If your healthcare system operates retail pharmacies and is unsure about sustained profitability and growth in the future, contact Pharmacy Healthcare Solutions, Inc (PHSI). We have helped health care systems conduct a strategic assessment of their retail pharmacy program to answer these critical questions to determine a viable path forward. This assessment evaluates your current situation, project future prescription volume based on improved marketing, and evaluate improvements from investment in automation and technology. PHSI will create an implementation plan and will assist management, when requested, with executing the plan. If the numbers are not promising to create growth and profitability, PHSI can assist in preparing your pharmacy for sale and evaluating offers from potential buyers for your pharmacy locations.


Published October 2017

Electronic Prescriptions and Copay Savings Offers

In the quest to lower patient out-of-pocket costs, some pharmaceutical manufacturers have sponsored targeted copay savings messages to pharmacies during the e-prescribing process. This approach seems like a reasonable alternative to physical copay cards.  One reason is that the physical cards are not always used.  Another reason is that when the card is presented to the pharmacy, it is typically done so after the pharmacy has processed the electronic prescription and adjudicated the claim with commercial insurers.  This situation requires pharmacy staff to rework the prescription to add the copay savings information, which increases the wait time for patients. Therefore, messaging copay savings via the e-prescribing process would be a time saver in the pharmacy workflow process.

EMR system vendors are providing the copay savings information in the “notes” field of the electronic prescription, which was never the intended purpose of this free text area.  The notes field intended use is for the prescriber to communicate information to the pharmacy about the patient and the prescribed medication.  National Council for Prescription Drug Programs (NCPDP) created the Coordination of Benefit (COB) segment in the SCRIPT e-prescribing Standard for communications of benefits coverage information that, when the proper information is entered correctly (BIN, PCN, and Cardholder ID), can be used to communicate to the pharmacy the information necessary to process copay savings programs. EMR providers have not widely supported these fields.  One problem is that the COB segment does not include a method to share with the pharmacy information regarding the details (i.e.: financial benefit to patient) for a manufacturer’s savings program. As a result, EMR providers are utilizing the notes field with copay savings offers from brand manufacturers and discount card providers when brand and generic pharmaceuticals are not sponsored by a brand pharmaceutical manufacturer. Therefore, many electronic prescriptions include some type of discount or copay savings offer depending on the EMR provider.

In August 2017, PHSI used our website “Question of the Month”  to ask: “What percentage of the time do pharmacists and techs react to saving offers when seen with e-prescriptions in the notes field?” Survey results are as follows:

Reaction Rate

Percentage of Respondents











These results confirm anecdotal insights PHSI has received from both pharmacy and pharmaceutical manufacturer clients. The frequency of these offers are creating “alert fatigue” for pharmacy staff overlooking or ignoring information in the notes field, which results in poor uptake for sponsored brand copay savings offers.  For now, EMR system providers are receiving a revenue stream for these virtual messages and recognize proper utilization of the COB fields in NCPDP SCRIPT standard is going to require programming and resources to update. Once the programming changes are made, extensive training will be required for the prescriber and pharmacy to manage this process correctly. PHSI believes there is an opportunity to improve the process for EMR systems to communicate relevant information to pharmacies.


Published September 2017

State MAC Laws – Unintended Consequences

Earlier this decade, retail pharmacies were adversely impacted by increasing generic prices on a number of multisource products.  This occurred when some Pharmacy Benefit Managers (PBM’s) did not increase their MAC (Maximum Allowable Cost) prices in a timely fashion to prevent the pharmacy from losing money for generics where the pharmacy cost had increased.  At that time, MAC prices were typically updated by the PBM on a monthly or quarterly basis.  Pharmacy owners complained to their state legislators, and there are now over 30 states with MAC laws that define timeliness for MAC price updates and mandatory access to published MAC prices.  In response, most MAC prices are now updated on a weekly basis.

At first glance, more frequent MAC updates should address the retail pharmacy issue of losing money on generic products where there had been a sizable price increase.  However, there is an unintended consequence that impacts retail pharmacies.   As PBMs are updating their MAC prices more frequently, they are also examining drugs where the cost to the pharmacy continues to decline.  On these products, PBMs are lowering their MAC prices.  These dynamics were discussed in the PHSI webinar “Drugs, Dollars and Dynamics: The Ups and Downs of Generic Pharmaceutical Pricing Webinar”.

The overall impact on pharmacy profitability is negative. PHSI research indicates that the overall Generic Effective Discounts (GER) for multisource drugs continues to decline.  There are many more multisource products declining in price than those increasing.  The unintended consequence is the MAC increases have been more than offset by the reduction in MAC prices.

PHSI has extensive experience in pharmacy purchasing, PBM contracting and reimbursement, including MAC prices and GER calculations.   If you have an interest in learning more about these topics, please feel free to contact Don Dietz by filling out our contact form.


Published August 2017

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RealCME App

Medical professionals are required to complete a certain number of Continuing Education (CE) hours. For example, pharmacists in the state of Pennsylvania must complete 30 contact hours of Accreditation Council for Pharmacy Education (ACPE)-approved pharmacist continuing education every 2 years. See the diagram below for more details on the PA requirements for pharmacist license renewals.

The ACPE Continuing Education (CE) Requirements for Pennsylvania Pharmacists[i]:

CME App Rx License Requirements

The RealCME App allows health professionals to complete continuing education requirements on-the-go on their mobile devices. RealCME has been accredited by the Accreditation Council for Pharmacy Education (ACPE) as well as the AMA, AAFP, AANP, AAPA, ANCC, AOA, APA, COPE, and other organizations. This app offers free CE lessons certified by the Johns Hopkins School of Medicine, and is available for free on iTunes and Google Play.

The app offers featured topics and segmentation by topic. The chart below includes the topics from which health professionals may choose.

CME App Topics

Users may choose a desired activity, subject matter, and number of credits upon opening the app. The app will take the health professional through a learning module that has responsive quiz questions interspersed to track the progress of learning. Once successfully completed, the user can enter professional credentials to submit and receive CE credit. A certificate of attendance is also received once a session is successfully completed and states the number of CE credits earned.

Other useful tools offered within the mobile app include a “Planner” that allows you to schedule activities that can later be found under the “Planned Activities” as well as a “Tracker” to list all credits and requirements/goals completed. A “Performance” tab allows the user to see information in chart-format such as your scores when compared to the community average in terms of subject areas, your progress towards goals that you have set through the “Tracker”, and program scores for each completed CE course.

The RealCME App provides a convenient medium for earning CE credits on-the-go for healthcare professionals as it is built for mobile and other portable devices. It is a good option for those who do not get much time to sit down at a computer or in a lecture; however, its limitations lie in the number of available programs which range from 1 to 10.


Free on iTunes:

Free on Google Play:


[i] PA Code: Board Regulation Section 27.32(e): Continuing Education:


Track-and-Trace: Staggered Deadlines May Lead to Workflow Disruption

The Track-and-Trace law, also known as the Drug Supply Chain Security Act (DSCSA) was signed into law November 27, 2013.  The DSCSA outlines the steps and deadlines the pharmaceutical supply chain participants and pharmacy industry must take to build a system that identifies and traces pharmaceuticals.  By November 27, 2023, DSCSA expects the system to facilitate the exchange of information at the individual package level by showing where a drug has been in the supply chain.[1]

Other staggered deadlines occur throughout the ten-year implementation period with one occurring on November 27, 2017.  At that time, pharmaceutical manufacturers are required to place unique product identifiers on their packages.  This identifier is composed of the product’s NDC, a serial number, lot number, and the expiration date, all of which are recorded in a 2D bar code.  Repackagers are required to comply by November 27, 2018.  Wholesalers are required to use the 2D bar code by November 27, 2019, and pharmacies are required to do so by November 27, 2020.

As manufacturers prepare for their 2D bar code deadline, some are including the 2D bar code and the current linear UPC bar code.  Other manufacturers are replacing the linear UPC bar code with the 2D bar code. This is a cause for great concern for some pharmacies.

Although the law and its provisions have been public knowledge for almost 3½ years, those industry segments with later deadlines may not have completed upgrades to use 2D bar codes in their workflow processes.  It is unknown as to the extent how much of the current technology used in pharmacies cannot utilize a 2D barcode.  Packages with only a 2D bar code cannot be scanned by pharmacies without 2D scanning capability to verify the correct product has been selected for dispensing.  This situation may require manual system overrides and increase the potential for dispensing errors.

Entities downstream in the supply chain are evaluating steps needed to minimize disruption in workflow caused by the removal of a linear UPC bar code.  These steps may include installing new 2D bar code readers and associated software.  However, if this technology is not implemented in time, others may need to develop procedural “workarounds.”

In an effort to ensure a smooth transition and compliance with the law, NCPDP work groups proposed working with manufacturers to determine when their packages will be changing to comply with DSCSA requirements and which products will have their linear UPC bar codes replaced with 2D barcodes.

PHSI encourages pharmacies to talk with their software vendors or pharmacy IT support to determine how this issue may affect their organization.

Please read more about the enforcement delay of DSCSA:

PHSI has written about Track-and-Trace since President Obama signed this Act in 2013. Please see the below publications for more information:


[1] Accessed May 18, 2017