CVS retools management, messaging to pump up PBM biz as Q3 contract losses impact 2010 growth outlook
WOONSOCKET, R.I. If you judge CVS Caremark too harshly based solely on the handful of PBM contracts — even if they were some pretty big contracts — it lost in the short-term, as many investors did in the wake of the company’s Nov. 5 earnings call, you’re missing the big picture.
The key, according to Ryan, is that none of the contracts the company lost had anything to do with the integrated pharmacy/pharmacy services model, or the value of the offering. It was just selling it wrong. That’s something CVS can change about Caremark in time for the 2010 PBM selling season.
Experts say the problem has been that the company has been too focused on retail; when it sold Maintenance Choice, all many human resources execs could hear was, “go to CVS.” CEOs might get it; but the HR types who make the decisions on plan design didn’t. The focus needs to be more on the broader array of offerings CVS Caremark can provide payers to help them cut costs.
Maintenance Choice is a compelling offer, and, to be sure, it has been a solid program for the company. Already it has made a pretty significant impact on CVS’ retail sales — new scripts brought into the stores through Maintenance Choice contributed about 250 basis points to CVS’ pharmacy comps, up 8% in the third quarter, according to the company.
While HR executives may not have understood the story, and may only have heard the retail component of the message, Caremark has many other important assets at its disposal to help payers rein in costs. The PBM will undergo a change in leadership, with Ryan temporarily taking the reins from McClure, and new pharmacy services marketing chief, Len Greer, who has considerable experience selling PBM and disease management services to big payers, will help Caremark fine-tune its message.
The smart money says CVS jumpstarts PBM profitability over the next 18 months or so, when it has the benefit of a new team, telling a new and improved story in time for the 2010 selling season — and just in time for 2011, when it will be up against some pretty soft comparisons on the PBM side of its business.
FDA warns consumers on using sexual enhancement products
BETHESDA, Md. The Food and Drug Administration on Thursday warned consumers that Stiff Nights, a product marketed as a dietary supplement for sexual enhancement, contains an ingredient that can dangerously lower blood pressure and is illegal.
Over the past several years, the FDA has found many products marketed as “dietary supplements” for sexual enhancement that contain undeclared active ingredients of FDA-approved drugs, analogs of approved drugs and other compounds that do not qualify as “dietary ingredients.” The FDA has issued multiple alerts about these contaminated dietary supplements.
Consumers and healthcare professionals should be aware of this problem and the health hazard it presents. Sexual enhancement products that claim to work as well as prescription products are likely to contain a contaminant. Use of such products exposes consumers to unpredictable risk and the potential for injury or even death.
In the case of Stiff Nights, following a consumer complaint, the FDA determined that the product contains sulfoaildenafil. This is a chemical similar to sildenafil, the active ingredient in Pfizer’s Viagra. Sulfoaildenafil may interact with prescription drugs known as nitrates, including nitroglycerin, and cause dangerously low blood pressure.
The product is distributed on Internet sites and at retail stores by Impulsaria of Grand Rapids, Mich. It is sold in bottles containing six, 12, or 30 red capsules or in blister packs containing one or two capsules.
“Because this product is labeled as an ‘all natural dietary supplement,’ consumers may assume it is harmless and poses no health risk,” stated Deborah Autor, director of FDA’s Center for Drug Evaluation and Research Office of Compliance. “In fact, this product is illegally marketed and can cause serious complications.”
The FDA advises consumers who have experienced any adverse events from sexual enhancement products to consult a healthcare professional.
The FDA remains committed to stopping the illegal marketing of unapproved drugs and will continue to protect the public with vigorous law enforcement and criminal prosecution of violators.
Fred’s reports increase in Q3 sales
MEMPHIS, Tenn. Discounter Fred’s on Thursday posted sales of $422.7 million for its third quarter ended Oct. 31, up 1%.
Comparable store sales for the quarter increased 1%, compared with a 1.4% increase in the third quarter last year.
“We experienced a solid sales performance in our pharmacy department during October, highlighted by strong script growth as our Prescription Plus program continues to gain momentum,” stated Bruce Efird, Fred’s CEO. “In the general merchandise departments, sales for the month were below our projected range. For the quarter, overall comparable store sales ended at the midrange,” he said.
“Throughout the quarter, the key states where we are located have experienced unemployment of more than 10% – higher than the national average – resulting in customers who are both frugal and cautious,” Efird continued. “With competitive promotional activity accelerating, we adjusted our approach to maintaining market share by adding increased advertising and price promotions during the quarter. While it brought increased unit volume, total sales were below the required level to offset the added markdowns and advertising expense.”
During October, Fred’s opened four express pharmacy locations. For the third quarter, the company opened one store, eight pharmacies and closed nine stores.