Post VAWD Requirement: Insight and Strategies
After an eventful 27 months, OptumRx’s VAWD requirement will likely be fully enforced on vendors of OptumRx’s pharmacy network, starting January 1, 2019.
OptumRx Extension Letters
On December 10, 2018 OptumRx confirmed that the company will not be providing any future extension letters to wholesalers:
“As referenced in the extension letter provided through 12-31-2018, that was the final extension OptumRx will be offering. We encourage you to continue the VAWD accreditation process through NABP, and that you submit your accreditation certificate to us once it is received.”
Three members of AIPW attempted to reopen the original 2016 case against Optum Rx for preliminary injunction on November 13, 2018 (read here
). However, that motion was quickly denied the very next day because, per the Judge, the movants were “neither parties to this case nor the legal representatives of any party” and therefore “do not have any authority to file a motion” in regards to the already confidentially-settled case.
It is generally expected that another lawsuit will be organized before the end of the year, but this time seeking a Temporary Restraining Order (TRO). TRO’s, in general, are approved on a higher standard than a Preliminary Injunction (the initial legal strategy), so it will be a tough battle to win.
The “secondary” generic drug industry will be significantly impacted come January 1. Over the past 20 years, a specific set of wholesalers have based their entire business model on price arbitrage. The following excerpt is from piece previously published by Pharmaceutical Commerce (read here
“Secondary wholesalers (aka “independent” wholesalers) play a unique part of the pharmaceutical distribution business. Although, little loved by the largest manufacturers and wholesalers, their existence is entirely legal—and valuable to the overall healthcare system. These wholesalers function by arbitraging pricing among primary wholesalers (who purchase drugs directly from manufacturers) and other sources of drugs, to deliver better pricing to pharmacies and other drug purchasers. Often they are a valued backup to the prime-vendor contracts that pharmacies have with the major wholesalers, in that they can deliver drugs in short supply, or at better prices, than the prime vendors.”
These players deflated generic drug pricing across the independent pharmacy market simply because the pricing provided to larger pharmacies by primary vendors and manufacturers was so much better than the pricing provided to smaller pharmacies. This phenomenon created enough margin that the larger pharmacy with lucrative pricing and an intermediary distributor (in many cases, one and the same) could spread said margin into a viable business.
With no more market arbitragers, it is generally expected that independent pharmacies will face higher generic drug pricing as manufacturers and primary vendors gain more control of their downstream supply chain.
What to Do Now?
For those wholesalers that do not foresee earning VAWD Accreditation before the December 31 deadline, the options are slim. Current strategies include: (1) selling the business/customer files, (2) using a VAWD-Accredited intermediary, (3) joining the upcoming TRO lawsuit and/or (4) pivoting markets served (from independent pharmacy to government, hospital, in-office dispensers, HTF, etc.).
Pharma Solutions is equipped to assist wholesalers with each of the four strategies. For more information, please reach out.
Based just outside of Philadelphia, Pharma Solutions provides actionable guidance and excellent administrative services with a focus on client care across Compliance, Commercial, and Quality solutions. Our mission is to improve the health and welfare of the American public by providing solutions and implementing best practices for companies in the pharmaceutical supply chain.