PHARMACY

NACDS conference eyes impact of health reform

BY Jim Frederick

SAN DIEGO —If the retail industry’s premier pharmacy gathering gave any clear signal about the state of chain pharmacy in mid-2010, it may have come from conference chairman Bob Egeland when he quoted singer-songwriter Jimmy Buffett.

Egeland, VP pharmacy for Iowa supermarket chain Hy-Vee, kicked off the opening of the National Association of Chain Drug Stores’ annual Pharmacy and Technology Conference by recalling the words to a Buffett song and admonishing hundreds of pharmacy and supplier executives to prepare—both for a productive meeting and a fast-changing healthcare environment.

“Jimmy sings, ‘My ship she has a rudder, but I don’t know where to steer,’” Egeland told conference-goers at the opening business session here Aug. 28. “So my advice is this: If you haven’t set your course—your top priority for this conference—set it now. And then go and get it.”

The four-day gathering was a showcase of how-to business content, idea brainstorming and talks from prominent policy-making, business and healthcare experts. But dominating the discussion was the uncertainty, opportunity and potential challenge spawned by the massive health-reform legislation signed into law earlier this year.

Egeland, along with NACDS chairman Larry Merlo and organization president and CEO Steve Anderson, spoke of the sweeping impact the new law will have on retail pharmacy—and the fundamental changes already transforming the practice of community pharmacy. “Think about the evolution of the role of the pharmacist, from emphasizing the dispensing of a product to more of a clinician providing a service,” Egeland urged attendees. “You can see the factors that helped to bring that about. They include changes in the education of pharmacists, including the length and scope of their study. There’s also the technology, the changing business models, and the new life-saving and life-improving medications, both prescription and over-the-counter.”

The industry urgently needs to define and assert its expanding role in a health system undergoing major reform, said Merlo, who is president and COO of CVS Caremark. He called health reform “a good thing for the country and for our industry,” but warned that the overhaul would pose challenges for pharmacy operators. For instance, he told conference attendees, “as the government grows as a payer, we can expect to see further margin pressure on reimbursement rates.”

“We’re positioned to help control the costs of health care by advocating for the value…of pharmacy care,” Merlo said. “Pharmacy has the opportunity to be a key contributor to lowering healthcare costs over the long term. If we agree that expansion of access makes sense, we need to begin the work on the cost and quality side of the equation.”

Summing up the state of NACDS in an Aug. 30 speech, Anderson asserted that pharmacy is going through a “historic paradigm change” as pharmacists and pharmacy leaders expand their patient care and clinical capabilities, and provide new solutions to a “broken” healthcare system undergoing rapid change. “We need to build a case for a modern and viable reimbursement system” that takes into account pharmacy’s contributions to health and cost-effectiveness, he told attendees.

Among the other conference highlights: the annual summation of pharmaceutical industry trends by IMS Health VP industry relations Doug Long; an entertaining talk on “The Mood of America: What’s Next?” by Dana Perino, political commentator and former White House press secretary in President George W. Bush’s administration; and a perspective on health care and the economy from David Cutler, Harvard University professor of applied economics and an adviser to President Barack Obama’s presidential campaign.

The four-day powwow kicked off Aug. 28 with two day-long sets of meetings. The Meet the Retailer program gave suppliers a perspective from their retailer counterparts on the most effective ways for them to market their product or service. The annual Meet the Rx Market event was an all-day series of short tabletop meetings designed to bring together retailers and suppliers to focus on new products and services.

Despite the exhaustive nature of the Meet the Rx Market event, retailers and suppliers almost unanimously praised this year’s format, which featured a slightly longer meeting time of 10 minutes and, retailers agreed, a more targeted approach to the individual meetings. Thanks to a more thorough vetting and planning process in advance of the meeting, several participants noted, NACDS was able to pair the right kinds of retail buyers with the right vendors within each supplier company, making the meeting schedule more productive than in past years.

“It’s better this year,” said Glen Santos, director of pharmacy systems development at Rite Aid. “I’ve done this before where the meetings weren’t targeted in advance as much for people with the right expertise. This year it’s a lot more focused; it isn’t just generic sorts of sit-downs between retailers and suppliers.”

Dan Steiber, principal with D2 Pharma Consulting, agreed. “We were able to pick up…meetings we wouldn’t have been able to schedule otherwise,” he told Drug Store News. “You can have a substantial number of meetings in a very concentrated amount of time, and that broadens your opportunities to do more later on the [show] exhibit floor.”

Larry Lotridge, who helps coordinate the Meet the Rx Market meeting schedules for retailers and suppliers as VP conference services for NACDS, said the organization is growing increasingly adept at matching the right pharmacy buyers with the right vendors, thanks to sophisticated computer algorithms and a detailed questionnaire filled out by all participants in advance of the pharmacy conference.

“When we started Meet the Rx Market a few years ago, we basically broke the meetings down into three categories,” he said. “Now we’ve brought it down more to the specific product or service level,…and we organize the meetings around a total of 131 categories. It makes it much more productive for both sides.”

This year’s Meet the Rx Market drew 74 buyers from 42 retail companies, along with representatives of 134 supplier and service companies, Lotridge said, and generated a total of roughly 1,700 10-minute meetings during the day-long event. “For the retailers, all but seven had a completely full schedule,” he added.

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At his last analyst day, Ryan sets out course for future CVS Caremark

BY Antoinette Alexander

NEW YORK The theme of CVS Caremark’s 2010 analyst meeting held Friday morning here in New York was “Enhancing Shareholder Value.” And that was appropriate as the company used the morning to brief Wall Street on how it plans to lead the industry for years to come in pharmacy services and health care, as well as in the front end of the business, thanks to several recently introduced and upcoming initiatives.

One could say the meeting was a special event, marking the last analyst meeting for chairman and CEO Tom Ryan, who will retire as CEO in May 2011, after 36 years with the company. (As previously reported, Larry Merlo has been named president and COO, and is expected to succeed Ryan as CEO.)

America’s healthcare challenge is opportunity 

Ryan kicked off the meeting with a look at some of the healthcare challenges facing the country — all of which represent opportunities for CVS Caremark to demonstrate its leadership in expanding the role of pharmacy.

It is no secret that healthcare costs are rising rapidly, and chronic diseases are on the rise among Americans, Ryan explained. “We have to find a way to deal with this more cost-effectively and more efficiently as a country. Why do we think this is a big opportunity for us? We think this is going to improve our mail-choice business; we think this will improve our MinuteClinic business; we think this is going to drive pharmacy business growth over the next 10 years,” Ryan told analysts.

Ryan also noted the concern over a shortage of primary care physicians, which only stands to get worse as the population ages and more than 30 million Americans gain coverage through healthcare reform.

One area CVS Caremark will look to demonstrate its leadership in is medication nonadherence, which is a nearly $300 billion annual drain on U.S. health care. Nonadherence is a preventable cost, and CVS Caremark is working to help payers drive down that cost, Ryan said.

Enter such innovative offerings as CustomeRx Savings Initiative, Maintenance Choice and Pharmacy Advisor. Through such programs and the leverage of its broad-reaching network, which includes its PBM, MinuteClinic business and retail locations, the company is working to improve outcomes and reduce costs.

For example, its CustomeRx Savings Initiative aims to improve patient’s lives by advocating lower-cost treatment options whenever possible. It is estimated that this year alone, pharmacy interventions will save patients $50 million in out-of-pocket costs by filling scripts for lower-cost alternatives.

“The legislation that was recently passed certainly solves the access [problem], but what has to come has to be a greater focus on both quality and cost,” Merlo added. “Our integrated assets have the unique ability to offer innovative, high-quality, practical solutions that accomplish three things: provide greater access, convenience and choice to pharmacy care; deliver solutions that improve the health of those we serve; and lower the overall cost of health care.”

CVS Caremark also is looking to pharmacogenomics, or genetic benefit management, to drive improved health outcomes and help mitigate costs.

Per Lofberg, president of Caremark Pharmacy Services, discussed how the company is “building the PBM for the next decade.” Clearly, a key factor here is the 12-year collaboration it recently inked with Aetna. As reported, CVS Caremark announced in late July a 12-year agreement with Aetna to provide PBM services to roughly 9.7 million Aetna PBM members and administer about $9.5 billion in annual drug spend, a deal that is believed to be the largest and longest new-term contract ever to have been negotiated in the PBM industry.

“The Aetna deal is clearly a watershed for our company, and actually for the industry as a whole. It was the result of an extensive and exhaustive competitive bidding process, which we obviously view as a significant validation of our integrated model and economics that we can bring to the table, as a result,” Lofberg said. He also noted that the deal is expected to leverage the full-spectrum capabilities of CVS retail, the PBM and MinuteClinic offerings.

In the stores 

Of course, with so much focus on other parts of the company, certainly CVS/pharmacy ( i.e., the stores) and the front-end of its business still remain a key component of the company’s future growth plans.

Discussing front-end sales and profitability was Mike Bloom, EVP merchandising and supply chain. According to Bloom, such innovations as store clustering, store brands, its ExtraCare loyalty program and beauty are a big part of the company’s strategic plan.

As reported by Drug Store News, CVS took the wraps off its Urban Cluster store concept, which has a significant focus on consumables and is designed to be a convenient shopping destination for urban dwellers. The company expected to have 300 of its stores converted to the concept by the end of the year, and a total of 1,300 to 1,400 stores reset to the concept over the next few years.

With regard to store brands, the retailer expects its private-label penetration to grow to more than 20% in the next two to three years. To drive that growth and take a leadership role in private label, CVS went back to the old drawing board. The result is a whole new private-label program the company plans to introduce early next year.

“The first thing we did is we conducted customer focus groups where we identified the need for an opening price point value brand. We then defined that the brand would consist of everyday essential products that would help get her through her day,” Bloom explained. Enter Just The Basics, which will launch in February 2011 with more than 100 items. The brand represents a functional, value-priced, smart simplicity positioning.

Turning to beauty, a $3 billion business at CVS, the company is leveraging the success of its Healthy Skincare Center concept and has launched a pilot of a smaller format that will enable it to expand the department into more of its stores, Bloom said.

It addition, it will launch in January an ExtraCare Beauty Club, under which customers will receive a 10% “shopping pass” for signing up, $5 in Extra Bucks for each $50 spent on beauty and $3 in Extra Bucks on cardholders’ birthdays.

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Roche buys rights for danoprevir from InterMune

BY Alaric DeArment

BASEL, Switzerland Swiss drug maker Roche has bought the rights to an investigative treatment for hepatitis C, Roche said.

 

The company announced Thursday that it had purchased global development and commercialization rights to the drug RG7227/ITMN-191 (danoprevir) from InterMune for $175 million.

 

 

Roche said the drug had shown promise in preclinical and early clinical development. The two companies have been developing the drug since 2006.

 

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