Gen Epipen NOT at Cardinal but at other 2 wholesalers

So, why would you ask would generic Epipen NOT be at one wholesaler when it is at the other 2?  (Suspected answer is below- but not to spoil – let’s introduce the players).

Wholealer 1:  McKesson: – no affiliation with any PBM or a specific retail chain or insurer.  They are however purchasing physician groups such as oncology and are making money in these arrangements no doubt due to the specialty pharmaceuticals dispensed in these clinics.  It was McKesson’s CEO that publicly announced via investor conference call how disappointed they were with lack of pharma price increases going forward.

Wholesaler 2:  Amerisource Bergen:  Partially has some type of “long range agreement with Walgreens”.  Walgreens nor Amerisource Bergen owns a PBM or is owned/affiliated with an insurance company (yet).

Wholesaler 3:  Cardinal Health:  Does not own a PBM – HOWEVER is now affiliated with CVS (who you know owns CVS/Caremark) via the arrangement with RedOak Sourcing http://www.redoaksourcing.com/aboutus.html (Here’s straight out of Cardinal’s 10k) In July 2014, we established Red Oak Sourcing, LLC (“Red Oak Sourcing”), a U.S.-based generic pharmaceutical sourcing venture with CVS Health Corporation (“CVS Health”) with an initial term of 10 years. Both companies have contributed sourcing and supply chain expertise to the 50/50 venture and have committed to source generic pharmaceuticals through arrangements negotiated by the venture. Red Oak Sourcing negotiates generic pharmaceutical supply contracts on behalf of both companies. We are required to pay 39 quarterly payments of $25.6 million to CVS Health which commenced in October 2014. Due to the achievement of a milestone, the quarterly payment to CVS Health will increase by $10 million beginning in fiscal 2016. In addition, if an additional milestone is achieved, the quarterly payment will increase in fiscal 2017 by a further $10 million resulting in a maximum quarterly payment of $45.6 million if all milestones are met. 

Not sure how this 50/50 partnership works as if one party has to pay quarterly payments of the likes of $25mil to the other, not even sure if there is a name for that type of arrangement.  But apparently, its working for both  http://www.bizjournals.com/columbus/news/2015/01/29/cardinal-health-raises-profit-forecast-amid-fast.html, even though pharmacy owners who purchase from Cardinal don’t see and reduction and have complained that in essence they are funding this arrangement as profits are made in large part from their independent pharmacy customers.

 

Mylan’s Epipen BX rated generic IS available at the other 2 wholesalers, McKesson AND Amerisource Bergen wholesalers.  But NOT at Cardinal.  Below is wording of explanation.

On December 16, 2016, Mylan announced a launch of EpiPen® Auto-Injector (epinephrine injection, USP) which they are promoting as an authorized generic to EpiPen®. According to First DataBank and Medi-Span, this new product is currently a BX-rated product which prevents pharmacists in many states from substituting the product without contacting the prescribing physician. At this time, Red Oak Sourcing and Mylan have not reached a distribution agreement on this product as we continue to engage in dialogue with Mylan to fully understand how they intend to launch this alternative product. As we continue to conduct these conversations, our focus is working on our customer’s behalf to better understand Mylan’s launch strategy, possible reimbursement implications, and other potential impacts to you and your patients.

WHAT?  Why would Cardinal care about reimbursement issues?  Cardinal should be stocking prescription items for ALL of their customers.  Independent pharmacies aren’t involved in the RedOak deal and shouldn’t be penalized by lack of availability.  Is it perhaps CVS/Caremark who is “concerned” about the rebates (or lackthereof) for this new product and they aren’t sure what to do now as with this brilliant move by Mylan (making their own generic) bypasses the (unnecessary) complex rebate game manipulated by PBMs.

It simply doesn’t make sense for Cardinal Health NOT to have generic Epipen at this point.  And when things don’t make sense you have to do one thing….. follow the money!