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Campaign 2008: No vote of confidence from Rx industry

BY Jim Frederick

WASHINGTON —The battle for the White House between Barack Obama and John McCain has energized millions of American voters and unleashed a national dialogue about the fundamental role of government in the troubled economy, in the healthcare system and in global affairs. But for retail pharmacy leaders, the dominant response to the campaign appears to be skepticism.

“Can I say ‘neither one’ for my voting preference?” joked one industry executive.

He wasn’t the only one with a jaundiced view of the election. A survey of industry leaders reveals a general lack of enthusiasm for the Democratic and Republican choices, and a broad sense that the next president will face enormous constraints in implementing real improvements in the healthcare system.

Both candidates favor expanding health coverage to more uninsured Americans, especially children, although they differ on how much of that coverage burden falls on individuals, corporate payers or government. Both men also promote generic drugs and drug importation to lower costs, the acceleration of health information technology and expedited approval of generic versions of biotech drugs. McCain also promotes in-store clinics as a health savings tool.

Nevertheless, “At this point it’s hard to really say who’s best. They’ve talked in such generalities, I’m not even sure if I have a clear picture of what their plans really are,” said a pharmacy operations executive for one of the nation’s largest food-store chains. “And after the $700 billion bailout, what’s left to do anything for health care? So I’m very skeptical.

“All we know is that the more the federal government becomes the payer, the tighter the profitability for retail pharmacy becomes,” she added.

Many other retail pharmacy operatives are equally leery. “I think both healthcare platforms have some pretty big implications [for retail pharmacy],” noted Chris Dimos, president of Supervalu’s pharmacy division. “But let me balance that by saying I don’t think either one of them will be successful in implementing them in the way that they’ve been articulated.”

Many experts with close ties to Washington agreed. “It’s virtually impossible to do major reform in the next year,” noted Dan Mendelson, president of health and policy consulting firm Avalere Health.

Head to head on the issues that matter most to retail pharmacy

Source: American Pharmacists Association
Issue John McCain Barak Obama
Medicare Part D No specific proposal McCain voted against creation of Part D Supports direct negotiation of Medicare Rx drug prices
Illegal drug importation/ rogue online sellers Supports drug importation with certain safety protocols Supports drug importation from developed countries if proven safe and costs less than in the United States
Medication therapy management No specific proposal; Advocates for coordinated care system that requires single bill for all procedures in place of current system; Focuses on management of chronic disease and payment that rewards quality. No specific proposal; Emphasizes prevention and coordinated care of chronic diseases; Would require health plans in existing and new publicmented healthcare programs to utilize proven disease management programs
Recognition of pharmacist services under Medicare Part B No specific proposal No specific proposal
Behind the counter (BTC) medicines No specific proposal No specific proposal
Retail clinics Supports innovative delivery systems, such as retail clinics No specific proposal

One source at Walgreens summed up the cautionary view of industry leaders. “In terms of the health care debate, they’re not really looking at one candidate over the other, because they think that the country is moving toward a universal health care system,” he noted. “The real issue is going to be providing access for everyone to the medical system. And that’s where they think there’s an opportunity for pharmacies and in-store clinics to play a role.”

Steve Anderson, president and chief executive officer of the National Association of Chain Drug Stores, observed wryly that “presidential campaigns have a tendency to operate in watercolors,” rather than being pinned down to specifics.

One change that will be of critical importance to pharmacy, said Anderson, is whom the next president taps to head such federal agencies as Health and Human Services, the Centers for Medicare and Medicaid Services and the Food and Drug Administration. Also key, he said, will be the outcome of congressional races this fall.

“The Democrats will…probably strengthen their control of the House and Senate,” Anderson predicted, and Democrats may be in a position to build veto-proof majorities even if McCain wins the White House.

“We’ve been positioning ourselves to be an effective voice, no matter [who] is elected,” Anderson said.

One problem with both candidates, said a pharmacy executive at one Northeast drug chain, is that “both favor [drug] importing. And the biggest question from our side is that if they even think about importing, will the insurance companies…start paying us based on the import price?”

The top pharmacy leader for another major supermarket chain noted that while “Republicans have traditionally been more favorable to retail,” the industry’s experience under the Bush administration has been disappointing. Nevertheless, while he likes many of Obama’s proposals for expanding drug coverage and generic utilization, this executive said he’s concerned with how Obama would pay for that increased coverage. “They expect much of the financing…$50 billion to $65 billion a year…to come from savings within the healthcare system, with additional revenue to come from discontinuing tax cuts for those with incomes over $250,000,” he noted of a recent report from the Kaiser Family Foundation. “So to me, that means savings coming from cuts in reimbursements to healthcare providers—doctors, nurses, pharmacists.”

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Battery makers upgrade power sources, get more shelf space

BY Mike Duff

LOS ANGELES and ST. LOUIS, Mo. As new products keep rolling in from major battery brand manufacturers, retailers are updating their marketing to maximize the potential of increasingly specific product functions.

On Aug. 18, Energizer announced the launch of its new Advanced Lithium battery, one designed to reliably power wireless gaming accessories, digital cameras, hand-held games or MP3 players.

Five weeks earlier, Panasonic introduced the EVOLTA battery, which it characterized as the world’s longest lasting AA alkaline battery cell in more devices. EVOLTA represents a certain resistance to battery specialization. “We see the trend in batteries going toward more ‘middle-drain’ applications as the reduction in power consumption needs of appliances has resulted in less high-drain devices needing primary battery power. EVOLTA eliminates the confusion for consumers and gives them confidence that our battery will perform well across many applications,” said Matt Sora, vice president of sales and marketing.

While others keyed on batteries, Duracell focused on the kind of line extensions. Among the new products debuted was Duracell Daylite, the cornerstone of new flashlight line designed to take LED lighting to the next level, the company stated, by capturing and using 100 of the light generated versus 70 percent in more typical instances. The flashlight introduction came hard on the heels of the debut of Duracell’s My Pocket Charger and the PowerSource Mini, which were developed to complement cell phones, BlackBerrys and MP3 players.

Ultimately, said Duracell spokesman Kurt Iverson, battery producers are bringing technology to bear in developing more effective, longer lasting products that use innovation to provide power more efficiently. “In the case of the Daylite flashlight, it’s getting a product to work using less battery power and still produce a brighter beam of light,” he said.

The involvement of major battery brands in a range of portable energy dependent items certainly is stretching traditional brand boundaries and merchandising concepts as well.

Jacqueline Burwitz, spokeswoman for Energizer said that, while the brand remains the one that keeps on going and going, the company’s merchandising support has evolved with its product line. “It has changed. Now it’s a matter of pairing the right battery with the right device,” she said.

Battery makers have encouraged many retailers to create ancillary product display spaces that complement the products they power, but drug chains haven’t necessarily bitten, as many prefer to depend on a battery center merchandising program. “We have those sections,” said Stacy Rinehart, a USA Drug spokeswoman. “We have our batteries in those displays.”

That doesn’t necessarily mean, however, that drug chains aren’t changing to the existing market.

Rather than develop secondary displays, Walgreens focuses on appropriately expanding its battery centers to make it easier to shop for specific applications, said Robert Elfinger, a company spokesman. 

“The battery section has grown significantly,” he said. “Customers are starting to understand that high-draining devices such as digital cameras are getting specific batteries, and they are looking for some of the new high-tech batteries. We’re expanding the battery sections to accommodate them.”

Thus, drug chains, for the most part, feel as if a battery center, usually conspicuously positioned, makes sense in terms of both attracting customers and return from floor space, as it can keep pace with developments in the category if properly configured to changes in the market.

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Survey says 40 percent of shoppers plan to start holiday gift-shopping before Halloween

BY Jenna Duncan

WASHINGTON The National Retail Federation today released results of its 2008 Holiday Consumer Intentions and Actions Survey, run by BIGresearch, showing that the average American holiday shopper plans to spend more than $800 each on holiday shopping.

The NRF’s survey results showed that 40.2 percent of consumers said that they will begin  holiday shopping before Halloween and survey respondents plan to spend about $832 on average on holiday items. This average reflects only a 1.9 percent increase over last year’s average total: $816.69. It’s the lowest anticipated spending increase NFR launched its survey in 2002.

Forty percent of survey respondents said that sales and/or promotions is the biggest lure to where they will shop, while 12.6 percent said they will seek “everyday low-prices.” Only 5.6 percent said they would choose holiday shopping locations based on convenience and 5.2 said it depends on customer service.

NRF president and chief executive officer, Tracy Mullin, said, “Retailers are going into this holiday season with their eyes wide open, knowing that savings and promotions will be the main incentive for shoppers. No one is canceling Christmas because money is tight, but consumers will be sticking to their budgets and looking for good deals when deciding where to spend this holiday season.”

Survey repondents also said they would spend about $51.43 each on decorations, $32.43 for greeting cards and postage, $95.04 on candy and food and $22.61 on flowers. The Internet has seen steady rates of shoppers: 44.2 percent of the shoppers in the survey said they were buying gifts online, flat from 44.3 last year. NRF has said that it predicts holiday sales to increase 2.2 percent over last year, for a total of $470.4 billion.

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