MD Labs brings pharmacogenetics to masses
As health care continues to shift to an evidence-based model, ensuring patients are on the right therapy — right from the start — is a critical part of delivering improved health outcomes. Enter MD Labs and the company’s RxIGHT Pharmacogenetic test, which uses the DNA from a cheek swab sample to help determine the best course of pharmacotherapy for an individual patient across 200 medicines — a number that’s growing.
“Pharmacogenetics as an industry, the technology, the training, the awareness, has really come to a head,” MD Labs president and founder Matthew Rutledge told Drug Store News. “This has become something that we can bring to the masses.”
The new RxIGHT Pharmacogenetic Test, which retails for $399, can eliminate trial-and-error prescribing of medicine, in which a doctor prescribes a medicine and measures the impact of that course of therapy after the fact, rather than quickly identifying the most appropriate course of therapy.
It drives adherence and — perhaps most importantly — improves outcomes.
“This is the biggest [product] that we have seen coming out of the pharmacy,” said Scott Emerson, corporate president, chairman and CEO at Emerson Group, which is representing MD Labs to retail pharmacy. MD Labs’ solution advances the potential of pharmacogenetics by a factor of 10, he said, comparing this test to others on the market today.
“The role of the pharmacist as a person’s medication specialist [will change],” Rutledge said. A medicine that works in 70% of the population is great, but what does the other 30% do? “Now we can tailor it to one specific person [and] help that 30% not experience the problems and get on the right medication right from the start. That is fundamentally going to change the pharmacist’s role in the equation.”
Pharmacogenetics technology will elevate the role of the pharmacist, Rutledge added.
“Physicians have really stepped back from pharmacogenetics technology — they realize they don’t have the time to meaningfully integrate this into their practice,” Rutledge said. “The one person who is the key focal point for this is the pharmacist, and physicians are understanding that more and more.”
“We’re standing on the shoulders of a lot of great research,” Rutledge said. In the past few years, pharmaceutical manufacturers have been investing in pharmacogenetic performance of their medicines. “The history of this technology has gotten to the point where we are able to take it to the masses, to retail pharmacy, and make it available and make it affordable.”
6 things you should know about the Walgreens-Rite Aid deal
Walgreens Boots Alliance made headlines late last month with its announcement that it would acquire No. 3 retail pharmacy player Rite Aid in a $17.2 billion deal that would give the new company about 25% combined share of the U.S. retail prescription drug market.
Below are the six things you need to know about the deal.
1. Rite Aid owned a small PBM — what will Walgreens do with it?
In February, Rite Aid acquired EnvisionRx, a pharmacy benefit manager that manages 21 million lives as part of a $5-billion enterprise. Does this put Walgreens into the PBM business à la CVS Health? Not necessarily.
“[EnvisionRx] is an important but relatively small PBM business,” said Alex Gourlay, EVP WBA and president of Walgreens. “It’s in the top 10, but not a big one. Once we get beyond the closure of the FTC review, [we need to] understand more about the business and how it could really help us understand access in America better.” In the short term at least, it seems Walgreens will be content to watch and learn what it can from the PBM.
2. What happens if the deal falls apart?
The merger agreement between WBA and Rite Aid must be consummated in exactly one year (Oct. 27, 2016), or the deal is off. And while that deadline could be extended to Jan. 27 if necessary, not completing the transaction could prove costly for the partner who walks away first.
If the deal collapses on account of Rite Aid, the Pennsylvania retailer will pay a $325 million termination fee and an additional $45 million to cover expenses. Conversely, Walgreens will forfeit $325 million to Rite Aid if it’s not able to secure regulatory approval of the deal, a figure that could double to $650 million if Walgreens “enters into, consummates or announces certain acquisitions within eight to 12 months of the date of the merger agreement [with Rite Aid].”
3. Wholesaler agreements — Rite Aid was partnered with McKesson, Walgreens with AmerisourceBergen … what can we expect?
Last year, Rite Aid signed an extension with McKesson through March 2019. But WBA owns a 5.2% stake in AmerisourceBergen today and can increase that allotment to 23%. At the very least, McKesson will be pressured to deliver significant value through the duration of its contract.
“You don’t have to assume the fact that we will change the contract or will move the contract,” Steffano Pessina, EVP WBA and CEO of Walgreens, said. “[But] it’s obvious that we will try to extract as much value as possible.”
But don’t count McKesson out.
“When we expanded the relationship last year, Rite Aid was attracted to closer ties to McKesson because of our generic purchasing scale, our sourcing expertise, our leading industry distribution capabilities … and the significant working capital and cash flow benefits available through this closer relationship,” McKesson chief John Hammergren told analysts after the WBA/ Rite Aid deal was announced. “Since that time, McKesson has added significant additional scale to our generics program.”
4. What will the FTC do?
It all depends on how you define retail pharmacy. If retail pharmacy is defined strictly by channel, and a Walgreens Boots Alliance/Rite Aid deal essentially creates a drug channel duopoly with CVS Health, then there’s a chance the FTC could oppose the deal.
If the definition of retail pharmacy is opened up to include such pharmacy operations as Walmart and Kroger, then it’s a much larger retail pharmacy world out there. Walgreens is willing to divest as many as 1,000 locations. If the deal is approved, Rite Aid’s store density will beef up WBA’s position in California and the Northeast.
5. Where will the synergies come from?
Walgreens Boots Alliance has earmarked $1 billion in internal synergies. And given WBA’s penchant for delivering greater synergies than initially projected, that may be on the low end of what’s possible. First, there will be cost synergies as WBA drives efficiency through the collective WBA/Rite Aid enterprise, reducing duplicative supply chain costs and other overhead items.
But the real prize here will be revenue synergies, the deal opens up more doors for Walgreens to drive front-end profits and will accelerate Rite Aid’s remodel program. As of Rite Aid’s second quarter, 1,859 stores featured the Wellness model, representing only 41% of the store’s base. There could be a lot of upside in upgrading and remodeling the remaining stores. According to Seeking Alpha’s Moid Shaikh, that could move Rite Aid’s current operating margin of 3.2% closer to WBA’s operating margin of 5.5%.
6. What about tobacco?
CVS Health may have celebrated its one-year anniversary in quitting tobacco sales this past September, but don’t expect WBA/Rite Aid to make the same move anytime soon. When asked about it, Gourlay suggested that WBA remained focused on investing to help people quit smoking. “Our Balance Rewards for Healthy Choices program we launched about 12 months ago has been incredibly successful, and we’ve chosen to invest there,” he said. “Our fundamental choice is to invest to help people who are ready [and] prepared to stop.”