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Fred’s profit rises in Q2

BY DSN STAFF

MEMPHIS — Fred’s reported that net income for the second quarter ended July 28 rose 19% to $6.1 million, compared with $5.1 million in the year-ago period.

Sales rose 4% to $470.8 million from $452.7 million, and same-store sales dipped 1%.

Profit results missed Wall Street expectations, and the discounter has lowered its full-year earnings forecast.

Commenting on the results, Fred’s CEO Bruce Efird said, "As we look ahead to the second half of the year, we expect that the macroeconomic environment in our region of the country will continue to lag the national numbers and anticipate an intensely competitive retail environment during the third and fourth quarters. Expecting little benefit from the economic environment, we have accelerated several major merchandising initiatives, increased our marketing spend for the third and fourth quarter print and electronic media, and have increased the pace of pharmacy acquisitions – all directed at adding and rebuilding customer traffic."

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SoloHealth surpasses 2.5 million consumer interactions

BY Allison Cerra

ATLANTA — SoloHealth announced that the number of consumer interactions made at its SoloHealth Station health-and-wellness kiosks has surpassed 2.5 million.

The data — which have been compiled since January 2011 across approximately 200 kiosks currently in select Walmart, Safeway, Publix, CVS, Sam’s Club and Schnuck’s Markets locations — also included the following results:

  • Each consumer spends an average of four minutes per session with the kiosk;

  • Approximately 33% of users took more than one test, with blood pressure and BMI being the most frequent combination;

  • 57% of consumers tested for blood pressure, the most widely-used single test;

  • Saturdays drove 19% more users than other days;

  • 65% of male and female users are 35 and older;

  • 71% of SoloHealth Station users that are at medium to high risk of hypertension;

  • 51% of SoloHealth Station users that are overweight to obese;

  • 25% of consumers are returning users; and

  • The satisfaction rating on accuracy of results, length of the experience and likelihood to use again stood at 95%.

SoloHealth, which recently announced strategic investments and partnerships with WellPoint and Dell, is expected to tout 2,500 kiosks by mid-2013.

"We believe that awareness and education are keys to a healthy lifestyle, and we’re bringing a free and comprehensive self-service technology to neighborhood retail locations nationwide," said SoloHealth founder and CEO Bart Foster said. "The data has revealed strong consumer engagement rates, even surpassing our original predictions, clearly showing there is an interest and need for this type of access in today’s healthcare environment. We are extremely bullish as we prepare for our nationwide rollout with our retail partners."


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U.S. District Court dismisses most elements of antitrust suit against ESI-Medco

BY Michael Johnsen

PITTSBURGH — U.S. District Court judge Cathy Bissoon on Monday dismissed many of the claims levied against Express Scripts by the National Association of Chain Drug Stores, the National Community Pharmacist Association and nine independent pharmacies, regarding the allegedly anti-competitive nature of Express Scripts’ merger with Medco.

Under the 23-page ruling, however, claims regarding the anti-competitive impact the combined ESI-Medco will have on specialty pharmacies will proceed. "[Plaintiffs] allege the merged defendants will use their increased market power to force consumers away from … specialty pharmacy businesses and into their own mail-order and in-house specialty pharmacies," Bissoon wrote. "The anti-competitive acts alleged by plaintiffs would include forcing patients to use defendants’ specialty pharmacy — regardless of the patient’s wishes — by denying claims for specialty drugs purchased in any other manner."

In her decision, Bissoon identified the four antitrust violations charged by the plaintiffs:

  • First, the retail pharmacy groups alleged that because a combined Express Scripts-Medco would collectively control 72% of the "privately insured lives in the United States," a combined Express Scripts-Medco could account for a significant percentage of a pharmacy’s prescription sales. So much, in fact, that these pharmacies would be unable to negotiate around any reduction in pharmacy reimbursement rates, and would either have to accept those lower rates out of hand, significantly lower overhead costs by restricting services to accommodate those lower rates or go out of business altogether;

  • Second, regarding specialty pharmacies, pharmacy benefit managers are able to enter exclusive distribution agreements with manufacturers of specialty pharmaceuticals and can thereby direct which pharmacies can be reimbursed for adjudicating those specialty prescriptions. "These agreements, which allegedly are entered into by the manufacturers because of [Express Scripts’] size, and which allegedly will become more attractive to drug manufacturers due to [Express Scripts’] increased size post-merger, allegedly create high barriers to new competitors seeking to enter this field," Bissoon wrote. "This product market allegedly becomes even more inaccessible due to defendants’ ability to use its claims adjudication process to block competitors from filling prescriptions for specialty drugs;"

  • Third, because national employers require a pharmacy benefit management service that is national in scope, the choices available to them post merger are restricted now to two PBMs — Express Scripts-Medco and CVS Caremark. "Indeed,the so-called ‘Big Three’ [Express Scripts, Medco and CVS Caremark] allegedly provide PBM services to approximately 90% of the privately insured lives for which large employees are responsible," Bissoon wrote; and

  • Fourth, pharmacies and the mail-order entities owned and operated by the PBMs are in direct competition with one another in any given local market.

Bissoon dismissed without prejudice the portion of the suit arguing that retail pharmacy competes directly with pharmacy benefit managers for prescriptions. "Plaintiffs have failed to allege a cognizable antitrust injury with respect to this claim, and it will be dismissed," Bissoon ruled. However, NACDS, NCPA and the nine independent pharmacies that initially filed the suit in March 29 will have until Sept. 10 to amend the claim.

The plaintiffs’ allegation that they will suffer harm from the merger as consumers of PBM services was dismissed altogether.

Click here to view the entire ruling.


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