Half the states line up against ESI-Medco
If Express Scripts and Medco are right about the projected closing of what their opponents are calling the “mega-merger,” then we might be looking at dozens of more weeks of this.
(THE NEWS: NACDS urges consumers to prevent super-PBM ‘stranglehold’ on medicines. For the full story, click here)
DrugStoreNews.com users are far less optimistic than ESI and Medco executives, that’s for sure. As of Friday, 61% of users voting in the DSN online poll believed FTC regulators would kibosh the deal (1,446 votes), and each week since DSN began following the story in late July, that margin has widened considerably.
Certainly, the feathers continued to fly last week, beginning with the National Association of Chain Drug Stores’ newest ad campaign, which aims to derail the $29 billion deal that would give the new company more than 41% share of all prescriptions filled at retail, about 60% of mail order, and more than 50% of the specialty pharmacy market. The new print ad ran in the Oct. 4 edition of the Washington Post, and admonished readers not to “give Express Scripts and Medco a stranglehold on Americans’ medicines.”
Responding to DSN’s coverage of the story, ESI spokesman Brian Henry noted in a post on DrugStoreNews.com, “Express Scripts greatly values the relationships it has built over the past 25 years with pharmacies of every [type]. Pharmacies are our partners, and we have built business and network relationships that have [ensured] safe and effective service to our customers.”
According to Henry, ESI has “played an important role in helping retail pharmacies gain the benefits of modern technology,” he added, citing payment processing and instant adjudication systems as two examples.
But the NACDS ads were just the tip of the iceberg. Last Wednesday, Reuters surfaced with a report that more than half of the states in the country had “formed a group concerned about the potential merger of the two massive pharmacy benefit managers,” citing a representative from the Pennsylvania state attorney general’s office. Other than Connecticut and Iowa, no other states were identified in the report, however.
While the states do not get a vote either way, with more than 25 states lining up in opposition of the deal, as Reuters reported, it does create extra pressure for FTC regulators who will have to decide the fate of the merger.
On a somewhat related front, Walgreens announced on Friday that it had reached an agreement with ESI related to two large Medicare plans in Puerto Rico that will enable members of those plans to continue to access Walgreens for their medicines, even after the current Walgreens-ESI agreement expires at the end of the year. As previously reported, Walgreens announced in July that it would exit the ESI network, citing unacceptably low reimbursement rates. Collectively, the two plans, MMM Healthcare and its sister plan, PMC Medicare Choice, cover some 200,000 Medicare beneficiaries in Puerto Rico.
Pilla steps into Shoppers during turbulent time
WHAT IT MEANS AND WHY IT’S IMPORTANT — The news that Shoppers Drug Mart has appointed former McKesson Canada executive Domenic Pilla as its new president and CEO not only is significant news in its own right, but also is important as Pilla will inherit a chain that is wrestling with the impact of drug reforms in several provinces and faces its share of competitive challenges.
(THE NEWS: Shoppers Drug Mart appoints Domenic Pilla as president, CEO. For the full story, click here)
Pilla will join Shoppers Drug Mart, effective Nov. 1. He succeeds Jurgen Schreiber, who abruptly stepped down as president and CEO on Feb. 15. Schreiber left Shoppers to pursue a private equity opportunity outside of North America.
Schreiber’s departure had rattled some investors as they bought into Shoppers on the faith that retail maven Schreiber would return the Canadian retailer to consistent quarter-over-quarter growth. Furthermore, Schreiber had resigned while the company’s three-year strategic plan, which promised to result in earnings growth, was still in its fledging stage. Shoppers immediately began a global search for a new CEO and appointed chairman David Williams to serve as president and CEO on an interim basis. With Pilla now set to take the helm at Shoppers, which operates more than 1,190 Shoppers Drug Mart and Pharmaprix stores in each province and two territories, one can be certain that investors will be keeping a close watch.
Responding to the news of Pilla’s appointment, one industry observer posted a comment on DrugStoreNews.com that read: "Domenic Pilla has the strength and range of leadership, the collaborative ability, combined with a deep passion and caring for the pharmaceutical care industry in Canada. Whether it is their associate group, their governance group or their investor relations, I believe he can effectively and sensitively engage all levels of interest in a comprehensible dialogue, which creates happier WIN-WIN outcomes for all levels of the organization."
On July 21, Shoppers reported a boost in second-quarter sales and earnings. Second quarter sales rose 1.4% to C$2.39 billion, driven by sales growth in the front of the store in all regions of the country. On a same-store basis, sales rose 0.8% during the quarter. Same-store prescription sales decreased 0.8% during the quarter, as same-store front-end sales rose 2.4%. Second-quarter net earnings were C$148 million, or 68 Canadian cents per diluted share, compared with C$146 million, or 67 Canadian cents per diluted share, in the year-ago period.
In announcing second-quarter results, Williams stated, "As we continue to work through a difficult year of transition in response to government reform initiatives and the resultant funding and reimbursement pressures this has placed on our pharmacy business, we are encouraged by our performance in the second quarter and our results thus far in fiscal 2011. We continue to make the necessary adjustments to our business model without compromising on our commitment to deliver the best in patient care and customer service. Our ability to deliver growth in the context of this environment speaks to the dedication and commitment of our associate-owners and their teams at store level whose efforts, along with those of our central and regional office employees, have us well-positioned entering the second half of the year."
According to local reports, generic drug reform in Ontario, British Columbia, Alberta and Quebec is hampering prescription revenues and pressuring the bottom line at Shoppers, along with other Canadian pharmacies, both large and small. Ontario and other provinces have outlawed professional allowances that generic drug companies paid to pharmacies in exchange for stocking their products, which pharmacies have indicated costs them hundreds of millions of dollars a year.
Furthermore, Shoppers is involved in a legal battle with the Ontario government over the province’s regulations last year that prevented pharmacies from selling their own lower-priced versions in place of name-brand drugs, according to reports. Meanwhile, many Canadian retail chains have been facing increased competition from U.S. retailers. For example, Target is looking to open its first Canadian stores in 2013, and Walmart already operates more than 300 Canadian stores.
CMS: More than 20 million Medicare patients got free screenings this year
WASHINGTON — A growing number of people with Medicare are using free preventive services provided by the Affordable Care Act, the Centers for Medicare and Medicaid Services said.
Nearly 20.5 million people with Medicare reviewed their health status at a free annual wellness or received other preventive services without any deductible or cost sharing this year, CMS said, while nearly 1.8 million received discounts on branded drugs in the Medicare Part D coverage gap, also known as the "donut hole," between January and August. Free preventive services include screenings for breast, cervical, colorectal and prostate cancer and cholesterol and other cardiovascular conditions, diabetes and others, in addition to annual wellness visits.
"Thanks to the Affordable Care Act, more people with Medicare are getting preventive services like mammograms for free," U.S. Department of Health and Human Services secretary Kathleen Sebelius said. "The new healthcare law is also making prescription drugs more affordable for millions of seniors and people with disabilities."
The CMS also said average Medicare Part D drug plan premiums would remain "virtually unchanged" in 2012, while Medicare Advantage premiums would be 4% lower than in 2011.