We’re convinced MLRs remain stable through 2012 and potentially 2013, though we see significant risks of price competition in 2014. Consensus calls for rising MLRs into 2012 and 2013; we think this is premature, so we expect further outperformance from
Dividing PFE as it stands (‘total-PFE’) into two or more entities, for example one having older off-patent products (‘established-PFE’) and one having newer products and R&D (‘core-PFE’), infers that such a division either makes core-PFE a growth company, or opens
Plan sponsors’ (e.g. employers’) contracts with PBMs specify how much the sponsor pays for each prescription handled; plan sponsors’ payments to PBMs typically are determined as a function of the average wholesale price (AWP) of each prescription For brand drugs,
Accountable Care Organizations (ACOs) are CMS-designed and sanctioned groups of Medicare providers that cooperate to produce greater quality of care, and savings in which member providers can share. Under the proposed rule there are few (risk-adjusted) savings available, and few
CMS confirmed to us their intention to publish average manufacturer price (AMP) data to the general public; this is in addition to Secretary Sebelius’ February 2011 commitment to provide average acquisition cost (AAC) survey data to the states We analyze
Despite a slow improvement in general economic conditions, states’ fiscal problems intensify in FY2012, due largely to expiring federal subsidies and declining general and rainy-day fund balances. As a large component of state spending, Medicaid is likely to face more
The common notion of 30 million newly insured in or around 2014 (13% gain) likely overstates reform-related increases in demand for health care Persons without a health insurance offer from a current employer choose coverage on the health insurance exchanges
PFE’s R&D / sales will fall to 10.5% in 2012, down from 13.9% last year. Strictly speaking, with R&D returns < WACC, the only ‘right’ R&D / sales ratio is zero. Assuming R&D returns can be >= WACC (we believe
Suppliers of Commodity Consumables (e.g. BAX, BCR, BDX, COV, HSP, OMI, others ) and Labs (e.g. DGX, LH) are most preferred; both are levered to improving volume comps near-term and reform-related volume gains mid-term; Commodity Consumables in particular escape price
For the first time, because of growth in both rebate percentages and brand drug prices, rebates paid for preferred formulary status now appear to roughly equal the spread in non-preferred (e.g. tier 3) and preferred (e.g. tier 2) co-pays Co-pay
