Who Moved My Prescription? Part VI: Abandonment of Branded Prescriptions

When Pharmaceutical Commerce asked me to write this six-part series, there was one main concern on our minds: how to launch a general medicine brand into a progressively changing and fragmenting retail and ecommerce landscape. The historical model of “stick it in wholesale and pull through retail” clearly no longer worked. Almost all the brands launched into this model failed to meet their forecasts. At Blue Fin Group, we received call after call from our manufacturer clients complaining that branded prescriptions were increasingly being turned away by retail pharmacies of all kinds, with estimated abandonment rates reaching 50% to 60%. These were products with strong formulary coverage and reasonable affordability profiles for all forms of payer sponsored lives.

We believed the first signs of this issue became evident with the struggles faced by medications in the specialty lite category: product priced above $650 or below $2,000 a month. A solid example was the original pricing of PCSK9 inhibitors launched in 2015. Our attention at the time was solidly on this specialty lite area, but that product archetype simply proved to be the canary in the coal mine. The reasons for the struggle were that similar access hurdles such as prior authorizations and step edits were driving up the cost to serve, all while reimbursement on the products was in decline and cost of goods was rising.

With the arrival of the general medicine patent cliff came in late 2016, the profitable generic wave machine ended. And adding insult to injury, the government's CPI-U penalty to the generics started on Jan. 1, 2017, effectively ending the ability for generics to increase price after their initial race to the bottom for the first 18 months post-generic launch. We were concerned that this problem could spiral out of control, and we were the only firm talking about this online and on the industry conference stage. In fact, I presented this problem at the Informa Connect Trade & Channel Strategies meeting, which I’ve spoken at for the last 18 years. People in the audience had a look on their faces as if they had no idea what I was speaking about. Unfortunately, our fears and concerns were realized.

Over the past eight years, the situation has not only intensified but has also expanded to include regular branded drugs that were once readily available at every retail pharmacy across the country. Currently, there are about 4,400 branded prescription drugs that comprise a mere 1.5% of all prescriptions dispensed by retail pharmacies. The other 100 brands account for another 6.5% of all prescriptions, with the remainder being generics.

We’ve tried shaking and waking up industry to alert them to the problem. I’d have conversations with retail pharmacy leaders asking us to help educate pharma about the problem. None of the other industry pundits picked up on the gravitas of the situation. And when the direct and indirect renumeration fees went from the back end of the prescription adjudication and reimbursement process, we knew it was going to be like throwing a bucket of gas on an already burning fire.

I credit writing this series for making me realize that, in fact, this started long before specialty lite and the patent cliff. A key event that marked a shift in the classic insurance-based retail pharmacy market (see Figure 1 below) was the reintroduction of cash pharmacy back in 2006 with Walmart’s $4 generics. Most other major retailers followed suit. When 2011 rolled around and we witnessed the launch of GoodRx, I honestly didn’t think much of it. My eye was off the generic ball. I was centered on brands and mainly specialty brands at that. What GoodRx did in hindsight was democratize the prescription. It was the first tool a consumer could use to shop pharmacies and prices. For generics, this was a big deal. Two years after the patent cliff in 2018, the e-commerce pharmacy landscape changed dramatically with the arrival of Amazon Pharmacy, followed by its acquisition of PillPack. Arguably the pandemic masked this issue for a couple years from 2020 to 2022 until the shark-tank minded Mark Cuban’s Cost Plus Drugs further disrupted the market in 2022.

From 2015 through current day, we have seen the increasing prevalence of digital pharmacies, which many manufacturers hoped would function like specialty pharmacies for retail. That model, however, hasn’t proven to deliver any better net revenue effect than retail from the data points we’ve studied with clients. It’s an alternative, but not necessarily a better one. Then, in the 2020 timeframe, came the emergence of tech-enabled hubs, a retail affordable solution that works somewhat like the patient services platforms used for specialty.

So the crux of my series on “Who Moved My Prescription?” parities the dilemma in the 1990s book Who Moved My Cheese? in which every day the mouse comes out of the hole and gets the same cheese, and without explanation, one day, the cheese is simply not there. If everything was working fine, the likes of Eli Lilly and Pfizer wouldn’t be launching direct-to-patient models. And now we are contending with telehealth/ecommerce/cash models that we refer to as lifestyle pharmacies, such as Ro and Hims/Hers. The illustration alluded to above shows the chaos and complexity of the current state of retail.

Today, we’re seeing vastly different approaches and perspectives on the profession of pharmacy, and it’s clear that neither the industry nor drug manufacturers know exactly where to turn. The old guard is trying to reinvent themselves a little too late, and the new guard is hoping to come in and blow it all up. Many manufacturer leaders are hoping this issue will resolve itself or that a new model will emerge to address these challenges.

From working with more than 450 manufacturers, we get a unique view of the industry and we see that branded Rx makers are left with a puzzle. It’s not about signaling the downfall of retail, the rise of e-commerce, or the increasing prominence of cash. Nor is it about promoting new pharmacy models.

Over the three decades I’ve been in this industry, we have taken pharmacies for granted. I’ve actually heard retail pharmacy called a “dumb pipe.” We focused on the science, the doctors, the payers, and the patients. We cared about specialty pharmacy because we could see the prescription journey and tie that back to our own patient services platforms. Specialty was cool. Retail was and is a black box.

So where do we go from here? We educate ourselves. We listen. We seek to understand. We try new things. We experiment. We educate management teams, boards, and investors. We reinvent.

Thank you for sticking with me throughout this series. I’ve learned and reflected a lot in the process. I’m excited to share there I’ve been invited back for another series in 2025; there are still a few more topics that need our attention.

About the Author

Bill Roth is General Manager and Managing Partner of IntegriChain’s consulting business, which includes Blue Fin Group, a strategy consulting company he started in 2001, and the IntegriChain advisory services business.