26
Mar
2020

Pharmacy as the Biomarker of Biopharma’s Strategic Change, After Coronavirus

Jeff Berkowitz, CEO, Real Endpoints

Maybe it was my jarring transition from a decade and a half inside the gilded halls of large pharma to the rough-and-tumble world of retail pharmacy 10 years ago, but I’m a wee bit cautious of the current self-congratulatory tone of the biopharma industry’s response to the pandemic. 

I’ll certainly be delighted if Regeneron and Sanofi’s IL-6 receptor inhibitor sarilumab (Kevzara), Genentech / Roche’s IL-6 inhibitor tocilizumab (Actemra) or Gilead’s antiviral remdesivir work against COVID-19. A vaccine would be the ultimate victory. But biopharmas will likely get well paid for this work.

Not so with most of the folks Robert More listed in his piece yesterday on the uncrowned (uncorona’d?) heroes of the COVID-19 wars. 

I’d like to focus on a group More doesn’t mention — also on the front lines of this crisis and usually — even now — ignored, when not actively disdained, by the flashier, high-science, high-equity end of the pharmaceutical supply chain. I’m referring to pharmacy workers — pharmacists and pharmacy technicians. 

First off: they’re at the front lines with patients handing out drugs, now. Some part-time pharmacy techs get by with just-above-poverty-line average salaries and no benefits. Some of them work for the largest of employers working on 2% net profit margins (despite their highly paid executives), not the 25% net profit margins Big Pharma collects each year. These unsung heroes are tasked, in their 30-second interactions with patients, with checking for drug/drug interactions, making sure the product is dispensed correctly, and address complex reimbursement issues. They are trained to communicate, clearly, so that the patient understands the potential side-effects, etc. … all while being asked to ring up someone’s beef jerky and People magazine. 

Look, I recognize that these people aren’t doing their jobs to be heroic – they need the salary. And right now, those jobs look pretty secure, albeit hardly lucrative.

But I don’t mean merely to deliver a panegyric to dispensing pharmacists. The broader strategic point is that the novel coronavirus is going to make these unsung warhorses more, not less, important to the pharmaceutical industry.

Consider, first, that retail pharmacies have dramatically lowered the cost of healthcare in the US by making vaccines — particularly the flu vaccine — widely available at virtually no cost.  The same distribution model — at consumer-friendly outlets that don’t require appointments and are located within a 5-mile drive for about 80 percent of Americans — is being applied to higher-margin vaccines. Look at the recombinant, adjuvanted shingles vaccine (Shingrix), a $2 billion a year blockbuster marketed by GlaxoSmithKline. Like the humble, cheap, generic flu vaccine, this higher-margin product is largely dispensed at pharmacies – sans doctor visit, sans office copay. 

Now imagine what happens when millions more go for a COVID-19 vaccine jab — not to doctors’ offices, but to Walgreens or CVS or even better their mom-and-pop pharmacy.

It’s not a giant intellectual leap from there to the Minute Clinic vision of CVS/Aetna – or perhaps less ambitious, the permitting of all pharmacies to administer medical-benefit drugs, at vastly lower cost than the current buy-and-bill model allows. Already, pharmas are arguing that, with millions sheltering in place and avoiding medical offices, the Center for Medicare and Medicaid Services, CMS, should pay for home infusion of virtually all non-hospital Part B drugs. How far from there to administration of these infusion medicines in retail pharmacies? 

Given the potential disruption to all those lucrative, doctor-owned infusion centers, drug companies may have to reconsider just who they’re marketing to. They might find that price competition – true market forces to undercut rivals on price – may come to the heretofore largely price-protected, comfortable buy-and-bill world of today. 

More broadly, however, what we predict as pharmacy’s ever more prominent role in what might be called true population medicine could also change pharma. Even in the midst of this pandemic, pharmacies address on a daily basis the most common ailments that plague our nation – cardiovascular disease, diabetes, COPD, and asthma (and maybe soon, NASH). Any one of those diseases kills more people each year than COVID-19 is likely to. 

What pharmacies have lacked are the same tools the pharmaceutical industry has chosen to, and will, develop to solve COVID-19. Instead of working collaboratively throughout the healthcare ecosystem to solve the largest, most vexing problems, the biopharma industry has chosen to focus its attention on the narrowest of problems, rare and orphan diseases which they perceive as being immune from price pressures. (See “We’ve Been Neglecting Common Diseases.” By Alex Harding, Timmerman Report, Jan. 2020).

We recognize the reimbursement challenges of primary care: but COVID-19 represents an alternative view – what can happen when an industry mobilizes to solve the biggest problems in human health.  

Until very recently, senior pharma management rarely spoke to payers, let alone the rest of the supply chain.  Indeed, pharma has historically operated in its own ecosystem – a kind of prehistoric Australia, linguistically and culturally independent (Alexis Borisy – whose new company EQRx aims to disrupt pharma with a strategy enabling radically reduced, payer-friendly pricing, made the same point on the most recent Long Run podcast with Luke Timmerman). 

Indeed, one of the dirty little secrets of our success at Real Endpoints is that we speak to payers and distributors all the time, in their language – translating their concerns and the implications of them back to pharma C-suite executives. We expect that there will be a BC and an AC in pharmaceutical history – before COVID-19 and after. And that pharmacies will be one of the biomarkers of that change.

Next week I plan to write about COVID-19’s impact on payers – and how that will affect pharmaceutical strategy.

Jeff Berkowitz is CEO of Real Endpoints, a health-care advisory/analytics firm delivering solutions that enhance appropriate access to innovation

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