Monday, June 10, 2013

Stock Pick: Drug Scares and Pharmacy Security Create Opportunity for Small Player By Peter Pham Jun 10, 2013 2:51 pm Quality control fears and a changing legislative landscape are producing new niche business models in the pharmacy sector.

Last month, one of the raging news stories concerned the problems cropping up over compounded drugs, specifically steroids, and contaminated doses reaching and poisoning patients.  With the Affordable Care Act now being phased into effect the restrictions on pharmacies and doctor’s ability to prescribe drugs will continue to become more onerous. The latest bit of legislation in the war on Oxycontin for example, is making its way through the Oklahoma government, where it will be flat-out illegal to write a prescription for hydrocodone.

In its zeal to combat the problem of prescription-drug addiction, Oklahoma is taking the extreme approach and going beyond what was done to combat prescription abuse in Florida. Pain sufferers will have to get something else for pain relief.

This will likely force those people to procure their medication from an online pharmacy, but, according to LegitScript, more than 95% of the websites that sell medications online are not reputable. The trend in medicine in the US is more regulation, not less, and with that will come greater liability placed on the pharmacist, if history is our guide . So, in this sense, the major retailers -- such as Walgreen Company(NYSE:WAG) and CVS Caremark Corporation (NYSE:CVS) -- will de-emphasize this part of the market, and instead allow specialty pharmacies to take on that risk. That will also allow the big retailers to turn attention to the growing market for diabetes drugs and other treatments.

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