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WAG fires another salvo in bid to outflank ESI

BY Jim Frederick

Another quality regional drug chain is about to be a memory.

Walgreens scored another expansion coup last week with its announcement that it will absorb Pine Bluff, Ark.-based USA Drug, ranked No. 31 in sales on the DSN PoweRx list of the nation’s top 50 pharmacy retailers. The deal, valued at $438 million, includes all of the storied holdings owned by founder and pharmacist Stephen LaFrance, including 144 stores in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee; corporate offices; the company’s big and highly automated distribution center in Pine Bluff; and the wholesale and private-label business owned by Stephen L. LaFrance Holdings and members of the LaFrance family.

For Walgreens, the deal is the latest in a series of strategic moves in the wake of a costly dispute with pharmacy benefit management giant Express Scripts over the pharmacy benefit manager’s contract reimbursement rate. Since the service contract between the two entities expired in January, effectively shifting prescription and front-end business away from the chain’s 7,980 drug stores, Walgreens has seen a significant reduction in both sales and earnings.

Its most recent financial results, for the third quarter of fiscal 2012, underscore the impact. For the three-month period ended May 31, net earnings for Walgreens dropped 10.8% from the same period last year, to $537 million, with sales down 3.4%. Prescription sales slid 6.6% on a company-wide basis and a sobering 9.9% in stores open more than a year. Absent Express Scripts’ fulfillment contract, Walgreens filled 192 million scripts in the three-month period, a decrease of 8.4% from the prior-year third quarter.

Nevertheless, it looks like Walgreens is rising to the challenge. For one thing, it’s clear that the retail pharmacy giant is holding firm in its refusal to participate in unprofitable PBM fulfillment contracts, even at a real cost to its top and bottom lines [a decision which has won the company praise from small-scale pharmacy operators without the clout to stand up to PBM take-it-or-leave it terms]. For another, the company has repeatedly signaled its determination to move on with or without ESI.

How? In part by bypassing the PBM route and going directly to employers and other health plan sponsors with a growing menu of easily accessible health and pharmacy services, and in part by building up its pharmacy network through purchases like USA Drug that company strategists hope will make Walgreens almost impossible for any PBM to ignore when putting together local provider networks.

Drug Store News‘ Michael Johnson does a fine job of analyzing the ramifications of the buyout for Walgreens as it works to regain its equilibrium and growth momentum without the millions of Express Scripts members no longer filling their prescriptions at the chain. But are there enough other successful regional pharmacy players out there as potential takeover candidates in other markets to make that strategy viable on a national level?

And will all of Walgreens’ moves be enough to overcome the loss of ESI’s millions of patients?

Only time will tell. What do you think?

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Pharmaca Integrative Pharmacy unveils full beauty experience

BY Michael Johnsen

BOULDER, Colo. — Pharmaca Integrative Pharmacy on Monday unveiled its new Natural Beauty Bar department at its Pacific Palisades location. Offering a variety of spa services, the Natural Beauty Bar serves as an expansion of Pharmaca’s beauty offerings with waxing and threading services and makeup and lash applications, among other services.

"We’re thrilled to be extending our hands-on practitioner model from skin care and makeup expertise to these beauty services," said Tiana Ukleja, Pharmaca’s health and beauty category manager. "The Natural Beauty Bar was conceived in response to an increasing demand from customers for waxing and cosmetic services that utilize salon-quality skin care and cosmetics, Ukleja said. “These are services that women used to have to go elsewhere for. We hope that they’ll take advantage of being able to pick up their favorite beauty products and get a brow wax, all-in-one spot."
 


The 1,000-sq.-ft. Natural Beauty Bar centers around two areas: the brow bar, including two chairs for waxing and threading services, and the makeup area, with four chairs available for makeup application and makeovers. The bar is surrounded by Pharmaca’s selection of natural skin care and cosmetics from such brands as Jane Iredale, Dr. Hauschka, Evanhealy and Suki.

Customers who spend $100 on cosmetics or facial care products at Pharmaca will receive a complimentary mini-makeover at the Natural Beauty Bar. Additionally, members of Pharmaca’s Feel Better Rewards loyalty program can take advantage of a frequent buyer program: For every five brow shaping services they purchase (either waxing or threading), they’ll receive a sixth for free.

To kick off the opening of the Natural Beauty Bar, Pharmaca will host grand opening festivities July 27 through July 29.

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Instinct introduces Raw Boost, Frozen Raw Bites

BY Allison Cerra

ST. LOUIS — Instinct is expanding its portfolio to include two new products.

Instinct Raw Boost kibble integrates Instinct’s unique freeze-dried raw formulas with its grain-free kibble, while the Instinct Frozen Raw Bites raw product that provides pet parents the convenience of a simple "scoop and serve" form of feeding and thaws in minutes.

Instinct Raw Boost is available in three protein formulas for dogs: chicken, duck, and venison, as well as two protein formulas for cats: chicken and duck. The Instinct Frozen Raw Bites are available in four protein formulas — chicken, beef, duck and lamb — for both dogs and cats.

"Our No. 1 priority is healthy, happy pets and we’re continually providing solutions to pet parents that are high in protein and free of fillers," Instinct senior brand manager Eric Emmenegger said. "The benefits of feeding raw are transformational. Through consumer feedback we receive, we’ve heard stories from pet parents who were at the end of their rope trying to find a food that their pets could eat. By switching to a raw diet, many saw substantial changes in their pet’s well-being. Our new Instinct Raw Boost kibble and Raw Bites simplify feeding raw for pet parents, providing pets the complete and balanced nutrition they need and the great taste they crave."

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