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Peyton Howell, a senior vice president at AmerisourceBergen Corp., had been responsible for business development and running the recently formed AmerisourceBergen Consulting Services unit when she was designated for a new role in late 2012: SVP and president, Global Sourcing and Manufacturer Relations. “Peyton’s appointment clearly demonstrates our commitment to providing value to our manufacturer partners,” said Steve Collis, AmerisourceBergen CEO, at the time.
That commitment took a sudden and dramatic turn four months later when AmerisourceBergen announced a precedent-setting arrangement: a 10-year distribution agreement with Walgreens, the leading (by store count) retail chain in the US. The deal had another implication: Walgreens, together with the company with which it has an evolving partnership, Alliance Boots, would take equity interest in AmerisourceBergen, and the three companies would work collectively on supplier relationships. As Alliance Boots is a major wholesaler and retail operator in Europe and elsewhere, the deal creates an international distribution and retailing giant in pharmaceutical and OTC markets. And with that, Howell’s “global” role takes on an entirely new level of complexity, and “manufacturer relations” will include not just interfacing with suppliers to AmerisourceBergen, but coordinating relationships to supply product on practically every continent. The grand partnership has implications for both life sciences manufacturers and for retail pharmacy’s future.
Pharmaceutical Commerce sat down recently with Howell to find out how the job is going after her first year. Here’s what she had to say.
1. You’ve had an interesting history both prior to joining ABC and since. Tell us about the progression of assignments or businesses you’ve created, and why you chose the path you’ve been on.
One of the things I noticed about healthcare, both during my master’s studies in health administration at Ohio State University and then early in my career, was the importance—and difficulties—of patient access to medicine and care. While working at a healthcare consulting firm, I was approached by Myles Lash, the founder of what would eventually become Lash Group, to help start up a practice focused on pharmaceuticals and biotech manufacturers. That firm grew to about 150 employees when the predecessor to AmerisourceBergen acquired the company in 1998 (it now employs nearly 4,000 of the 13,000 AmerisourceBergen employees).
In that earlier period, the issues surrounding reimbursement and patient access—so prominent today—were becoming important. In the early 1990s we were developing the first generation of patient assistance programs (PAPs) for therapies like HIV and mental health. PAPs and other services like medication adherence programs are now understood to be essential parts of the pharmaceutical commercialization process, both at launch and as products reach maturity. Much of the consulting work I’ve done within AmerisourceBergen since the acquisition has been devoted to those goals. The industry’s current emphasis on specialty products only amplifies that trend.
2. The linkup between ABC, Walgreens and Alliance Boots is a significant milestone in the evolution of drug wholesaling. How has the integration been going? Are the synergies being achieved, and what does the linkage imply for ABC pharmacy customers?
There’s no question that this is an exciting development in the industry. The first thing that comes to mind is how this alliance affirms the value of drug wholesalers like AmerisourceBergen. Until this announcement, Walgreens had a substantial business in direct purchase of pharmaceuticals, especially generics; now much of that will be coming through us.
It’s a positive development too for manufacturers, because now we can approach the relationship strategically—looking at long-term trends in healthcare, and looking with a global perspective. Since June, I’ve had many discussions with manufacturers, and the issue that keeps coming up is how to navigate market access issues, both nationally and globally.
On the surface, there were concerns expressed over how AmerisourceBergen could serve a big chain like Walgreens while also serving the interests of independent community pharmacies. But the reality is that our independent clients see a lot of positives. Their main concern is relations with payers and access to group purchasing organization (GPO) business. Both payers and manufacturers see market access problems in the generally rural areas that many independents operate in, and which are generally underserved by healthcare providers. Our own Good Neighbor Pharmacy network brings together 3,200 independents—that kind of market access power is valued by manufacturers. On the flip side, there is an expectation that best practices in the chain pharmacy environment for programs like medication adherence can be brought over to independents.
Our pharmacy clients are also going to benefit from the growth in our own investments. A new national distribution center is being built in Columbus, Ohio, and another is being expanded in Orlando, Florida. The company has had a major investment going on for several years in an enterprise SAP IT system, and that’s going to provide many benefits, including how we will comply with the new requirements of the Drug Quality and Security Act, and its requirements for recording and tracking shipment information in track-and-trace programs.
3. With “specialty, brand, generic and OTC products” (per the company news release) in your portfolio, you’ve got a broad range of responsibilities. Let’s look at specialty first. From your perspective, what are the most pressing needs of manufacturers entering the specialty arena, and how does ABC assist them?
First of all, there is no organization comparable to AmerisourceBergen and its Specialty Group that has the breadth of experience in distributing specialty pharmaceuticals, both in the US and in Canada. Specialty products usually require a unique level of feedback between the manufacturer, the physician, the payer and the patient. Prior authorization practices, copay programs and patient follow-up are all critical to product launches, and successful product launches are critical to the mature market characteristics of many drugs.
We’ve worked with many specialty manufacturers to put the right program components together. Another critical element is to be able to document therapeutic value to payers.
All this will take on a new level of complexity as manufacturers go outside the US with their specialty products.
It’s also worth noting the capabilities that World Courier, another acquisition of AmerisourceBergen in the past year or so, brings in. World Courier handles a significant volume of clinical trial materials that sustain clinical trials around the world. Their network represents a platform for specialty distribution, and for our ability to form relationships with drug-development companies early in the development cycle.
Next we also plan to focus on expanding our work in consumer and OTC products and it’s another area of opportunity given our new strategic relationship with Walgreen’s and AllianceBoots.
4. Are the needs of branded manufacturers (as distinct from specialty) so different? What is driving business evolution in this area?
Market access and pricing pressure are common problem areas. We see a lot of potential in bringing best practices on medication adherence to a broader audience. In addition, manufacturers—and payers—have expectations based on product volumes, market share, discounts and other factors. Inside or outside the US, the healthcare delivery landscape is changing. Accountable care organizations (ACOs), integrated delivery networks (IDNs) and other healthcare-provider structures are changing the pharmacy services business. Manufacturers need partners like us to navigate access across all these new structures.
5. Much commentary has been devoted to the impact that the ABC/Walgreens/Alliance Boots linkage will have on generics suppliers. Obviously, there’s the consolidation of buyers, which is usually bad news for sellers. But there’s also the globalization of distribution to consider, too. What’s the message to generics suppliers?
Generics manufacturers are not that different from brand drug companies in that access to markets, scale and volume are very important to them. Both Alliance Boots and Walgreens had their own programs going on with generics manufacturers; now there’s an opportunity to approach the relationships at a higher level and think more strategically and more geographically—for both us and for the manufacturers.
6. ABC has assembled a group of acquisitions (including the company you founded, Lash Group) into ABC Consulting Services, directed at supporting manufacturer activities. What distinguishes this group, inside a major wholesaler, from similar consulting organizations not connected to a major wholesaler, and what distinguishes ABC Consulting from its competitors at major wholesalers?
I’ve mentioned the breadth and depth of experience in this regard. With the relationship with Walgreens and Alliance Boots, we now have the potential to take our experience into other markets outside the US, which is something that manufacturers are looking for from their business partners. The patient support services we have developed in the US aren’t as well established in other countries. This is also where the ability to work strategically with manufacturers will be a benefit. Coming from a wholesale-distribution perspective, we look for combining efficiencies in physical distribution with improvements in coordinating patient access.
7. It’s been said in the aftermath of the Affordable Care Act that we are entering a period of “permanent healthcare reform.” On a personal level, how do you see the impact of your company’s efforts in this era of reform? What are the personal achievements that are most satisfying to you?
The challenges being experienced with ACA are not dissimilar to the first couple years when Medicare Part D came along. It was very difficult for seniors to understand the benefits that the program offered, but today most seniors are very comfortable with it and enjoy its benefits.
AmerisourceBergen has had an office in Washington for many years, and I’ve made numerous visits there in recent years. The company’s consistent message is to advocate for patient access to care, which is something that I’ve been very close to my entire career. The challenge is to be able to address issues of affordability and the ability to improve patients’ lives.
AmerisourceBergen as a company, and myself personally, are involved in numerous charities, mostly involving healthcare. The company has a direct interest in amyotrophic lateral sclerosis (Lou Gehrig’s disease) from a former executive at the company. We’re also active in multiple sclerosis and oncology.
Professionally, I’m involved with a number of organizations, including the Healthcare Financial Management Assn., the American College of Healthcare Executives, the Academy of Managed Care Pharmacy and the Healthcare Distribution Management Assn.
I am particularly proud of our commitment to support patient access to care including affordability and adherence. The focus on making a difference in patient’s lives is part of our mission and is visible at our distribution centers. I will never forget my first visit to our distribution center in Dothan, Alabama that is focused on oncology services and over the area where customer orders are being packaged, a large banner says “A Patient is Counting on You Today.” It really puts everything we do in perspective, whether it’s distribution or reimbursement it’s all about putting patients first.