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Report: Consumers in exchanges receiving federal assistance may experience inconsistent reductions

BY Michael Johnsen

WASHINGTON – A new analysis from Avalere Health released Tuesday found that consumers in exchanges receiving federal assistance to reduce their out-of-pocket costs may experience inconsistent reductions in spending depending on the plan they choose. Specifically, the data show broad differences in how issuers amend plan designs to meet cost-sharing requirements for those receiving cost-sharing reductions. While almost all plans reduce deductibles and out-of-pocket caps in CSR plans, many plans do not lower cost-sharing for other treatments and services, particularly specialty drugs.

“Many people assume that the lowest-income exchange enrollees will have reduced cost-sharing across all services, but the reality is quite different,” said Caroline Pearson, VP Avalere Health. “While all plans must have reduced out-of-pocket limits for individuals earning less than 250% of poverty, how consumers will reach those limits differ significantly. For example, consumers may not experience reduced cost-sharing amounts for drugs or physician visits in many plans.”

Avalere also found that average maximum out-of-pocket limits in CSR plans are lower than those required by the Affordable Care Act. Specifically, among 87% AV CSR plans, the average out-of-pocket limit is $450 (or 20%) lower than required, while among 94% AV CSR plans, the average out-of-pocket maximum is $1,140 (or 22%) less.

“Issuers will continue to have flexibility in how they design cost sharing reduction plans in 2015,” said Dan Mendelson, CEO Avalere Health. “Looking ahead, consumers who qualify for cost-sharing reductions should look closely at how the plan benefit is structured because it could have a major impact on their actual out-of-pocket costs.”

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Dollar General targets expansion to three new states, launches digital coupon offering

BY Michael Johnsen

GOODLETTSVILLE, Tenn. — Dollar General on Tuesday announced it will be bringing its brand of EDLP discounting to three new states next year — Oregon, Maine and Rhode Island. The major discount retailer will begin construction on stores in Maine and Rhode Island this fall with plans to expand into Oregon in early 2015. 

"It’s exciting to announce plans to add stores in three new states, which will give Dollar Gernal locations in all northeastern states and a presence in the pacific northwest," stated Rick Dreiling, Dollar General chairman and CEO. "Announcing this expansion simultaneously with our 75th anniversary in 2014 further demonstrates Dollar General’s enduring legacy of Serving Others and providing customers quality, convenience and everyday low prices."

"Dollar General looks forward to serving customers in Maine, Rhode Island and Oregon with the incredible value and affordability that has enabled us to build such a loyal customer base in the 40 states we currently serve," said Todd Vasos, Dollar General COO. "Customers who are new to Dollar General in these states will enjoy our convenient locations, easy-to-shop store formats and wide variety of merchandise at consistently low prices."

Stores in Maine and Rhode Island will be served by its Bethel, Pa. distribution center that recently celebrated its grand opening and Oregon stores plan to be served by its Lebec, Calif. distribution center that opened in April 2012. 

Noting that Dollar General’s core customers nationwide are looking to the discount retailer for affordability, the company also announced it will be rolling out an omnichannel element responding to that need this fall in partnership with Coupons.com. “Later in the year we will launch a DG digital coupon platform to accept digital manufacturer’s coupons and capitalize on this growing trend in retail,” Dreiling told analysts. “Using this platform, we will be able to deliver individualized content, such as national, manufacturer coupons and DG exclusive offers to participating customers with the goal to drive trips and basket size,” he said. “For our customers the DG digital coupon platform is flexible, personal and, most importantly, incredibly easy to use.”

Dollar General will be piloting the offering in 1,000 stores over the next few weeks with a national launch scheduled for October.

The dollar store operator is likewise focused on broadening its private label offering in an effort to underscore that value message.

“Affordability has now become the focus of our core customer,” Dreiling said. “What affordability means to our core customer, today, is the trade-off between price and quality that best fits her budget.” Dollar General tweaked 49 planograms over the course of the first quarter to meet this need with more affordable items cutting across 90% of the discount retailer’s departments. As part of that, Dollar General added 40 SKUs to its Smart and Simple store brand platform, mostly across food, paper and home cleaning.

The news comes with Dollar General’s first-quarter results for the period ended May 2. Net sales increased 6.8% to $4.5 billion in the 2014 first quarter. Same-store sales increased 1.5%, resulting from increases in both customer traffic and average transaction amount. Sales increases in consumables significantly outpaced the company’s non-consumable categories, led by increased sales of tobacco products, perishables and candy and snacks. Sales were impacted by unfavorable weather conditions during much of the quarter, a competitive retail environment and continued financial pressures on the company’s core customers.

"Dollar General’s first-quarter, same-store sales improvement of 1.5% was driven by growth in our consumables business and, overall, reflected the challenges of unfavorable winter weather, heightened competition and the current economic environment," Dreiling said. "Even as these factors weighed on our sales results, we saw trends improve as we moved through the quarter and we delivered EPS of $0.72, which was in line with our guidance,” he said. "We continue to grow both our customer traffic and average transaction amount as our merchandising initiatives reinforce our affordability and value messaging."

Looking forward, Dollar General plans to open 700 stores this year and to remodel another 500.

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Sandoz obtains rights to Upsher-Smith’s branded potassium chloride line of products, Klor-Con

BY Michael Johnsen

PRINCETON, N.J. – Sandoz on Tuesday announced an agreement with Upsher-Smith to obtain exclusive U.S. distribution rights for its branded potassium chloride line of products, Klor-Con, and market them under the Sandoz name.

“This agreement expands and strengthens our current relationship with Upsher-Smith and helps us create a leading potassium chloride business,” stated Peter Goldschmidt, president of Sandoz. “With our extensive distribution system, we will be able to improve patient access to these products, while increasing efficiencies and effectiveness.”

Potassium chloride is used to prevent or to treat low levels of potassium in the blood (hypokalemia). Currently, Sandoz distributes generic potassium chloride.

This agreement broadens the Sandoz portfolio of potassium chloride to include branded potassium chloride. Sandoz will distribute the full line of Klor-Con products, including tablet, capsule, powder and effervescent forms.

Sandoz’s and Upsher-Smith’s agreement will be effective July 1, at which point Sandoz plans to begin marketing the full potassium chloride line of products to customers.

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