Pharmacy, politicians promote national health IT system


Despite widespread support from retail pharmacy, policymakers and other health care stakeholders, the rollout of a nationwide electronic prescribing system has been a gradual process of fits and starts. A national e-prescribing network—and its closely related larger-scale corollary, a national health information technology system—has been stymied by technology hurdles and passive resistance among the hundreds of thousands of prescribing physicians whose support is critical to its success.

Those hurdles may soon fall for good. Pharmacy leaders, lawmakers, Bush administration policymakers and technology vendors all are pushing for the rapid adoption not only of e-prescribing, but what is likely to be a sweeping transformation of the entire U.S. health care system through health IT. That system will involve the gathering, storage and transmission of privacy-protected patient records to link physicians, pharmacies, clinics, hospitals, labs, health plans and patients in an electronic web of up-to-date information about patients’ current health, current treatment, medication therapy, lab results and prescription history.

For community pharmacy, the revolution can’t come fast enough. Perhaps more than any single trend now under way in health care, e-prescribing and health IT will link pharmacists with prescribing physicians and other stake-holders as part of a truly integrated health care team on behalf of the patient.

In a recent address, former Walgreen Co. chairman David Bernauer pointed out some of the benefits that health IT could shed on pharmacy, the health care system and patients themselves. “Electronic medical records will give pharmacists, doctors and payers clear visibility into adherence,” said Bernauer, who is chairman of the National Association of Chain Drug Stores. “Doctors will finally know what their patients are taking. Pharmacists will know the outcomes doctors are seeking. And payers will have better outcome evidence.”

Another benefit for pharmacy and for the pharmaceutical industry, Bernauer said in his first address as chairman is a marked improvement in patient adherence with their drug therapy. “Very recently, IMS did a study for us on docs who switched from paper to electronic scripts,” Bernauer said. “They found that, on average, 11 percent more new scripts made it to the pharmacy after the docs switched to e-scripts.”

Other industry stakeholders agree that the shift to e-prescribing will drive patient compliance. “Today, 20 percent of prescriptions go unfilled,” said Mark Merritt, president of the Pharmaceutical Care Management Association. “E-prescribing improves medication adherence by providing physicians with information on each patient’s medication history and more affordable prescription options. This real-time information allows the physician to know which medications the patient is actually taking, counsel them on the importance of sticking with their therapies, and discuss more affordable options if cost is an issue.”

Bernauer predicted that a national e-prescribing and health IT system is “on the verge of an explosion” as the forces driving adoption of health IT come together. Indeed, pharmacy leaders in states like Rhode Island have already joined with technology vendors and e-prescribing platform providers like SureScripts in a series of successful demonstrations of paperless prescribing on a regional and local-market scale.

Also driving adoption: a new plan by the Centers for Medicare & Medicaid Services to eliminate the “fax exception” that Congress extended to doctors as part of the Medicare Modernization Act of 2003. Under that exception, Congress allowed doctors to continue to fax prescriptions to pharmacies for scripts filled under the Medicare Part D drug benefit program.

CMS’ proposed rule would require doctors to shift to a paperless system by Jan.1, 2009. The new rule also would require all electronic prescriptions to comply with the NCPDP Script Standard.

Acting CMS administrator Leslie Norwalk called the proposed rule change “an important new initiative to encourage the use of electronic prescribing to improve the speed and accuracy of care furnished to [Medicare] beneficiaries.”

SureScripts president and chief executive officer Kevin Hutchinson said of the plan, “[Health and Human Services] Secretary [Michael] Leavitt is delivering on his promise to use the federal government’s leverage as the nation’s largest health care insurer to promote health IT adoption.”

Health information technology is one of those rare public-private initiatives that draw wide support from both sides of the aisle in Congress and from the Bush White House. A broad cross-section of House and Senate lawmakers—ranging from such liberal standard bearers as Sen. Edward Kennedy, D-Mass., to conservative Republicans, such as Congressman Phil Gingrey of Georgia have co-sponsored or supported legislation to transform the U.S. health care system through electronic record-keeping and communications.

One such bipartisan bill is the Health Information Technology Act of 2007, introduced earlier this year by Sens. Debbie Stabenow, D-Mich., and Olympia Snowe, R-Maine. The bill would provide tax incentives and a five-year, $4 billion federal grant to promote investment in health IT technology.

“The result of using 19th century technology in a 21st century health care system is higher costs, increased errors and decreased quality of care,” Stabenow said.

“Our health care system must and will change. The only question is whether we change the system, or it changes us,” noted Rep. Patrick Kennedy, DRI, another vocal champion of data-driven health care who co-chairs the 21st Century Health Care Caucus in Congress. “Moving health care into the Information Age is the critical first step to building a sustainable, high-performing 21st century health care system.”

Sen. Sheldon Whitehouse, the Rhode Island Democrat who defeated long-time moderate Republican Sen. Lincoln Chafee last fall, praised efforts in his own state through the Rhode Island Quality Institute, local physicians and pharmacies, and stakeholders like SureScripts, to promote health IT. As a result, he said, Rhode Island has made “great strides in e-prescribing and intensive care unit reform.”

Nevertheless, Whitehouse said, “America is still decades behind,” and he called for “urgent federal action to support a national health information technology system.

“The savings here are enormous,” Whitehouse asserted during a rally on Capitol Hill in support of National Health IT Week in May. “[The] Rand [Corp.] estimates $81 billion. That was the low-end number for Rand; their high-end estimate was $346 billion a year.

“With savings like that around, why is it not happening? Because there are attributes of our health care system, in the way that it is structured, that disable those efforts—the way it’s reimbursed, the way people talk to each other,” Whitehouse said. “If we can cure those problems we can unleash a torrent of activity that will bring to health care the same kind of savings and efficiency that other industries have already found.”

Gingrey, a physician and cosponsor of another bill called the National Health Information Incentive Act, asserted that “the future of American health care will be determined in large part by our adoption of health information technology.” He called the current health system in the United States “woefully behind in using technology to reduce medical errors and streamline care.

“Our ATMs shouldn’t be more advanced than our medical records,” Gingrey asserted.

Rep. Charles Gonzalez, the Texas Democrat who co-sponsored the bill with Gingrey, said it would foster adoption of health IT by family physicians with its offer of grants, loans and tax incentives to offset the costs of technology.

Not to be outdone, the Bush administration’s fiscal 2008 budget plan for the Dept. of Health and Human Services includes a request of $118 million for the Office of the National Coordinator for Health Information Technology, an increase of $57 million over prior-year levels. That budget request is in line with the White House goal, as stated in the budget, “for most Americans to have secure personal electronic health records by 2014.”

The funds will support the creation of a set of standards for the gathering, storing and transmission of health information technology standards and a test of what the government calls “IT priority projects” in as many as 12 regions of the country. Specifically, HHS in its pilot programs will be looking to test the rollout of American Health Information Community priority initiatives, electronic health records, chronic-care management of patients using IT records, biosurveillance and ways to empower consumers in their own personalized health care and health record-keeping.


Leave a Reply

No comments found



Which area of the industry do you think Amazon's entry would shake up the most?

Grocer sings new tune in community involvement


Meijer is taking another step in community relations, to the tune of promoting and selling CDs of local musicians.

The Michigan-based 176-unit grocery chain launched the Outside the Mainstream promotion in February with a solo CD from Josh Davis, a singer from Lansing, Mich., whose Fool Rooster CD was recognized by Performing Songwriter magazine for its lyric.

Each month, the chain is featuring a new performer in its circulars, which are sent weekly to 7 million households in Ohio, Michigan, Illinois, Indiana and Kentucky, according to company vice president of public affairs Stacie Behler. Meijer purchases 1,000 of the artist’s CDs and offers them for sale in all the chain’s stores for $7.49.

“The goal of the program is to bring some of the talent that we find in our own backyards to a wider audience than they can normally reach by themselves,” Behler said. “And by supporting this with a low price and a feature in our circular, hopefully it will lead people to gamble on the purchase of music that is worthy of discovery.”

Meijer, according to Behler, is trying to create regional loyalty to its stores by promoting local talent.

CDs chosen for promotion, according to the chain, must have a UPC and be professionally duplicated. Submitted CDs are sorted according to state and chosen on the basis of whatever state will be featured that month and how different the music is from the previous month.

Featured in April is Michigan-based Potato Moon with its CD “The Life of The Lonely Jones.”


Leave a Reply

No comments found



Which area of the industry do you think Amazon's entry would shake up the most?

CVS wins Caremark battles

BY Antoinette Alexander

WOONSOCKET, R.I. —The battle for Caremark Rx has finally come to an end. And, to the dismay of Express Scripts, CVS has emerged the winner, creating a $75 billion pharmacy benefit management powerhouse that is likely to serve as a benchmark for additional mergers within the industry.

“CVS/Caremark will offer end-to-end services, from plan design to prescription fulfillment, as well as the opportunity to improve clinical outcomes, which will result in better control over health care costs for employers and plan providers,” stated Tom Ryan, president and chief executive officer of CVS/Caremark, late last month when the deal closed. “The company will improve the delivery of pharmacy services and health care decision-making, enabling consumers to benefit from unparalleled access, greater convenience and more choice.”

With the close of the transaction—ultimately valued at $27 billion—CVS/Caremark has moved into a strong, competitive position. The combined company will be No. 1 in pharmacy sales, PBM-managed lives, specialty pharmacy sales and retail-based health clinics. It will be No. 2 in mail services.

That adds up to a lot of extra leverage for the retail health care juggernaut with suppliers, as well as insurers and payers.

In terms of synergies, CVS expects to realize between $800 million to $1 billion in revenue synergies in 2008, and significantly more thereafter. The company expects about $500 million in cost savings, largely related to better purchasing.

“We would like to note that every deal that both CVS and Caremark have done historically has yielded synergies significantly in excess of original guidance,” stated Citigroup analyst Deborah Weinswig in a recent research note. “We believe this deal will be no exception.”

Charles Boorady, also of Citigroup, believes that if the company achieves cost savings from the drug-procurement process, it likely will come from a combination of the following: manufacturers accepting the lower price or offering greater rebates, the wholesalers and distributors accepting lower prices and manufacturers bypassing the wholesalers and selling directly to the combined CVS/Caremark entity.

While many industry observers view the merger as a boon for the companies, it undoubtedly will have major implications on the industry, in general, as vertical integration is a new paradigm that—if successful—could clear the way for more mergers moving forward, with Medco and Express Scripts likely being the next targets.

“The fragmentation in the past may be the reason why vertical integration did not work, but the sheer scale of the CVS/Caremark company may be able to make it work,” Boorady said. “The only test will be whether customers buy into the concept or the concerns over the perceived channel conflict will outweigh it.”

Either way, Boorady sees it as a win-win for rival PBMs. “I see Medco and Express Scripts winning either way. If this integration works, they are likely to be the ones that are acquired next. If it doesn’t work then they could stand to gain customers that prefer a standalone [PBM] instead of a vertically integrated model.”

Another issue such a deal brings to the forefront is network restriction. If customers are willing to restrict the retail pharmacy so that employees can get their prescriptions filled at a single chain, or just a few chains in the market, then it will make the synergy from a vertical integration more obvious, according to Boorady.

However, this has been a concern for several years and has yet to materialize.

“I think most employers have concluded, and will continue to conclude, that the sheer hassle factor that you are putting on your employees by making them go to a CVS instead of a Walgreens, or vice versa, isn’t really worth what little savings you can get relative to other things you can do that present less of a hassle to the employee but can save a lot more money,” Boorady said.

However, prior to the deal, CVS Pharmacare controlled a provider network of more than 56,000 retail pharmacies. Meanwhile, Caremark’s network numbered more than 60,000 retail pharmacies, so it is unlikely that the combined company, post-merger, would suddenly pull back the size of its network—particularly, if the end goal is to remain attractive to insurers and payers and competitive with stand-alone PBMs.

According to William Blair & Co. analyst Mark Miller, the combined company is facing its first big test as it expects an announcement on the large Federal Employee Program contract—currently up for negotiation—as early as May. Three years ago, Caremark won this contract from Medco and it is likely that the two PBMs, among others, will bid for this business aggressively.

“While there are many moving parts to these types of negotiations, this will be the first big test for the new CVS/Caremark, and may provide some incremental perspective on the current state of the competitive environment,” Miller stated in a research note.

In related news, CVS/Caremark has announced the members of the company’s board of directors. As previously disclosed, the 14-member board was evenly split among designees from CVS and Caremark.

Former Caremark chairman and chief executive officer Mac Crawford has been elected chairman of the board of the combined company. Ryan will continue to serve as president and chief executive officer.

The following individuals named to the board from CVS are:

Ryan, president and chief executive officer of CVS/Caremark Corp.

David W. Dorman, senior advisor and partner, Warburg Pincus LLC.

Marian L. Heard, president and chief executive officer, Oxen Hill Partners.

William H. Joyce, chairman and chief executive officer, Nalco Co.

Terrence Murray, former chairman and chief executive officer, FleetBoston Financial Corp.

Sheli Z. Rosenberg, former vice chairman, president and chief executive officer, Equity Group Investments LLC.

Richard J. Swift, former chairman, president and chief executive officer, Foster Wheeler Ltd.

The following individuals named to the board from Caremark are:

Mac Crawford, chairman of CVS/Caremark Corp.

Edwin M. Banks, founder, Washington Corner Capital Management LLC.

C. David Brown II, chairman, Broad and Cassel.

Kristen E. Gibney Williams, former executive of Caremark’s Prescription Benefits Management division.

Roger L. Headrick, managing general partner, HMCH Ventures; president and chief executive officer, ProtaTek International

Jean-Pierre Millon, former president and chief executive officer, PCS Health Systems

C.A. Lance Piccolo, chief executive officer of HealthPic Consultants


Leave a Reply

No comments found



Which area of the industry do you think Amazon's entry would shake up the most?