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Managing the Onslaught of Biotech Injectables

Executive Summary

The steady stream of new biologics is putting increasing pressure on both payers and manufacturers to re-evaluate long-standing ways of doing business. The average retail pharmacy--or PBM for that matter--isn't equipped to deal with complexities related to these drugs and hence the need for SPPs--special pharmaceutical providers. SPPs have started up in abundance in recent years to handle therapeutics with difficult administrative regimens and high costs. Biotech companies are using them in a variety of ways.

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Henry Schein's Bid to Move Up the Pharma Value Chain

Henry Schein, the dental and medical supplies distributor, is known for its strong relationship with physicians' offices, where it is a major supplier of med-surge products, equipment, pharma injectables and vaccines. Now it wants to fill in gaps that pharma companies aren't paying attention to--and in the process move up the value chain. It is expanding into specialty pharmacy, and seeking to strike deals with vaccine makers. It also has set up a small business development operation to look for in-licensing opportunities.

Launching Avastin

Genentech Inc.'s launched three major drugs in nine months, two in therapeutic areas new to it and the third in a new drug class. The latter, Avastin, is an oncology drug which stifles growth of tumors by cutting off their blood supply. Sales have exceeded expectations.The very high cost isn't likely deter use--even as payers scrutinize oncology costs more seriously--because of the solid trial data and political sensitivities inherent in rationing drugs for terminally ill patients.

As Specialty Pharmacy Evolves, Biotech Companies Stay Tuned

As biotech products ripen, manufacturers facing the prospect of launching complex, expensive drugs are turning to specialty pharmacy providers for help. A new breed of business, they provide clinical and logistical support. The recent entry of PBMs into the specialty pharmacy arena, along with new Medicare rules, is likely to accelerate pricing pressure on manufacturers and affect their relationships with distributors, payers, and providers.

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