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CVS Caremark taps Lofberg to head PBM business

BY Antoinette Alexander

WOONSOCKET, R.I. As anticipated, CVS Caremark has named a new president for its PBM business. The company’s selection of Per G.H. Lofberg further illustrates CVS Caremark’s growing commitment to the field of personalized medicine and its importance to the industry.

Lofberg will succeed Howard McLure, who retired as president on Nov. 27, 2009, as president of the PBM business. Lofberg served as president and CEO of Generation Health, a genetic benefit management company that now has increased financial and strategic ties to CVS Caremark.

Tom Ryan, chairman, president and CEO of CVS Caremark, had announced plans to hire a replacement by the end of 2009, and told attendees during a recent Credit Suisse Healthcare Conference in Arizona that he was “focusing on someone from the outside” and someone “who understands the PBM business and understands the nuances of the PBM business.”

There are several reasons why the appointment of Lofberg makes sense for CVS Caremark. First, he has more than 30 years of experience in health care and the PBM industry, including the role of chairman for Merck-Medco Managed Care LLC, which later became Medco Health Solutions. Second, CVS Caremark has increased its investment in Generation Health and voiced its commitment to expand pharmacogenomic (PGx) clinical and testing services for its PBM clients.

In taking a deeper look at the selection of Lofberg, it also is somewhat reminiscent of the path that Chip Phillips took within CVS Caremark. As CVS Caremark looked to sell the retail-based clinic model to payers and advance the integration of the various components that make up the total CVS Caremark offering (i.e. PBM, mail order, specialty pharmacy and retail clinics), Phillips moved from the PBM side of the business in 2008 to lead MinuteClinic. In July 2009, it was announced that Phillips had accepted a new role as president of TheraCom, a CVS Caremark company that helps biotech and pharmaceutical companies commercialize their specialty products.

Now this cross-pollination of sorts is surfacing within the field of personalized medicine with the appointment of Lofberg, as CVS Caremark clearly is voicing its commitment to making genomic benefit management an integral part of its PBM offering.

Furthermore, Lofberg discussed some of the parallels with the PBM business during a podcast interview in early 2009 with David E. Williams, a co-founder of MedPharma Partners LLC, a strategy consultant in technology-enabled healthcare services, pharma, biotech and medical devices.

“I think a piece of this resembles the way the PBM business evolved. It has to do with assembling the critical mass of subject matter expertise, and then to build systems that are specifically focused on this business,” Lofberg told Williams. “So, if you go back to the PBM base again, there was really nothing patented or highly proprietary about what the PBMs did. But what ended up happening was that the systems that were built became significantly different from the traditional insurance company medical claims payment systems,” he continued.

“So, we’re hoping that this is a time when payers will want to be early adopters and take a lead in building programs that are going to be incredibly important for them for the next couple of decades,” Lofberg added.

According to Generation Health, genomic testing represents a $3 billion market that is growing 45% annually. There are at least 100 new tests added each year, and they usually are priced at several hundred dollars each.

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Walgreens taps veteran to head CCR

BY DSN STAFF

NEW YORK In a high-stakes campaign to fire up its front-end appeal, reaffirm its relationship with America’s consumers and rejuvenate its same-store sales, Walgreens has gone to its bench.

Walgreens has named one of its veteran operations people, Mike Arnoult, to the key post of VP in charge of Customer Centric Retailing. Until last month, the post was held by Chong Bang, who left the company in mid-December to oversee merchandising at Toronto-based Shoppers Drug Mart.

Unlike Bang, Arnoult is more a seasoned operations manager than a merchant. His appointment is a clear sign that Walgreens has moved beyond the conceptual and launch phase of CCR, and is ready to begin the next phase of the massive project: the expansion of a CCR-based store design across Walgreens’ coast-to-coast network of 7,147 drug stores.

Nevertheless, Arnoult inherits a critical challenge at the retail behemoth. CCR encompasses Walgreens’ massive effort to pull together a sprawling marketing and merchandising operation and focus its efforts more sharply on meeting and anticipating customer demands. Within two or three years, it will transform the chain’s front-end presentation and go-to-market strategy coast-to-coast with a leaner, more condensed merchandise mix; a sharper focus on health, wellness and patient education in the aisles; improved departmental adjacencies and signing; and — Walgreens merchants hope — a better overall shopping experience.

Bang took CCR all the way from conception to realization, streamlining assortments, cutting hundreds of redundant SKUs, and applying new rationale to categories, adjacencies and promotional strategy at the front end. He also oversaw the test and launch of a new Walgreens store prototype, based on CCR principles and a better read of consumer needs.

Arnoult will now take the CCR rollout from a 400-store pilot in Texas to nationwide completion. Given the chain’s aggressive plans for 2010 — nearly 3,000 stores scheduled for a CCR redesign by the end of the year — he’ll need to bring all his proven management skills to bear to coordinate local-market remodeling activities with Walgreens’ operations and merchandising teams.

“We’re evaluating the findings from the Texas stores and doing some tweaking,” company spokesperson Tiffani Washington told Drug Store News in December. “We’ll continue the rollout [of the CCR-based store overhaul program] starting in January.”

Arnoult brings to his task a strong resume in store, district and regional management. His 20-year career at Walgreens includes stints as store manager, district manager and store operations VP, followed by a year as head of online merchandising. He’s a 1990 graduate of Marquette University with a B.A. in communications.

“His ability to build relationships and collaborate across the organization will be invaluable,” Walgreens asserted.

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Bartell to cease filling Medicaid prescriptions at 15 locations

BY DSN STAFF

NEW YORK The Medicaid storm is still intense in Washington as Bartell Drugs has announced that — as of Feb. 1 — it will no longer fill Medicaid prescriptions at 15 of its 57 stores. Limiting access to pharmacies with its payment cuts could spell an increase in other healthcare costs — costs that represent the majority of health expenditures.

As stated in the article, the decision stems from a court decision in Massachusetts in September 2009 that reduced the industry pricing standard.

Bartell stated that — unlike most other insurance providers, including other states — the Washington State Department of Social and Health Services has made no effort to offset this significant reduction, resulting in sizeable reductions in payments to pharmacies.

The intent, according to Bartell, is to return to the established level of compensation prior to the Sept. 26, 2009, court action. As it currently stands, Bartell simply can’t afford to fill the Medicaid prescriptions.

While Bartell currently is the only pharmacy retailer to take such action, it certainly isn’t alone in the battle.

In March 2009, Walgreens threatened to stop serving Medicaid patients in 44 of its stores in the state. The company at that time stated that it operates 111 pharmacies throughout the state, but the 44 pharmacies in question represented more than 60% of its total Medicaid business in the state. However, in May 2009, Walgreens stated that it would continue to serve Medicaid patients when the state agreed to make smaller cuts than it had planned.

But will the court decision in Massachusetts now prompt other pharmacies to follow in Bartell’s footsteps? Perhaps, but if you ask Doug Porter, the state’s director of Medicaid, he will likely say no. In a recent Seattle Times article, Porter was quoted as saying that Medicaid recipients should not worry about other companies following suit and he is “convinced pharmacies can weather this change.” As reported by the Seattle Times, several pharmacies and industry trade groups filed suit in U.S. District Court in Seattle trying to force the state to return its reimbursement rates to those it was paying before the Massachusetts settlement. A hearing is scheduled for Jan. 15.

Last year, the pharmacy groups filed another lawsuit, after an earlier attempt by the state to cut its reimbursement rates. That suit was withdrawn when the state agreed to make smaller cuts than it had planned.

“We are deeply concerned about the health of our patients. Pharmacists are on the front lines of our healthcare system protecting patients by ensuring safe and appropriate medication use. Commercial healthcare payers and Medicaid programs in some states have already adjusted pharmacy reimbursement necessary to maintain patient access to the essential care provided by pharmacies. If Washington Medicaid does not do the same, it can result in reduced access to medicine for our neediest and most vulnerable patients ultimately leading to expensive emergency room visits and hospitalizations,” stated Jeff Rochon, Pharm.D., CEO, Washington State Pharmacy Association, in an NACDS press statement issued in September.

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