To analysts: Walgreens investors will have something to be thankful for next year
NEW YORK — Walgreens took to the road the week before Thanksgiving to talk turkey with analysts on why Walgreens is a good bet going into 2012, even if the pharmacy won’t be participating in the Express Scripts pharmacy network this coming year.
Walgreens EVP and CFO Wade Miquelon spoke to the number of initiatives that Walgreens is currently pursuing in an effort to become America’s first choice for health and daily living before two analyst conferences Wednesday. However, many of the analysts were more interested in how Walgreens plans to drive prescription growth in spite of its discontinuance in the Express Scripts pharmacy network.
The Express Scripts business represents 7% of Walgreens’ total business and about 10% of its pharmacy business. Miquelon advised analysts modeling Walgreens’ business to go ahead and exclude Express Scripts from their revenue forecasts because the two companies are still "miles and miles apart" in their negotiations.
Miquelon also was asked about Medco, and if the proposed Express Scripts/Medco merger is approved, what does that portend for Walgreens? While Miquelon declined to compare Medco to Express Scripts, "there’s a big question mark — not only on an ‘if’ but [also] on a ‘when,’" he said. And the longer that proposed merger takes, the more contractual opportunities will open for payers to sign on with another pharmacy benefit manager. "You’d be hard-pressed to find a large [Express Scripts] customer that doesn’t want … to get out," Miquelon said. "No large customer is going to accept a narrow network [i.e., one without Walgreens] for insignificant or no savings."
But Miquelon isn’t worried about walking away from Express Scripts. "I have never been more bullish of the [Walgreens pharmacy] business than I am now," he said. "Every large group that we’ve talked to — every single one — over time say they must have Walgreens in their network," Miquelon added, so eventually any prescriptions lost on Jan. 1 stands a strong chance of returning beginning Jan. 2.
Miquelon explained that Walgreens’ hard stance against Express Scripts is based on two principles: fair reimbursement, both in terms of no reimbursements lower than acquisition costs and in terms of comparable to the industry, and fair treatment of all payers. It’s not worth cutting a low-reimbursement deal with one pharmacy benefit manager if that cannot be replicated across the board, he explained. "This company is not going to compromise on this principle of holdng the line on fair reimbursements."
Before each of the calls was dominated by Express Scripts queries during the question-and-answer sessions, Miquelon provided the foundation for Walgreens business going into next year. "We have 40 million people per week coming into a Walgreens, whether it’s for the pharmacy or the front end," Miquelon said. Walgreens boasts 1,600 24-hour stores, Miquelon said. "America lives close to Walgreens. … Two-thirds live within 2 miles and 80% within 5," he said. But more importantly, Walgreens also is becoming ubiquitous to the customer with its pursuit of multichannel platforms. "We are transforming the drug store experience and what that [means] is to be the leader in health care and daily living."
To that end, Walgreens has targeted 1,000 locations for deeper fresh-food offerings in communities "where oftentimes people don’t have transporation [and] they’re 3 miles from the grocery store," Miquelon said. Walgreens also is "raising our game in beauty" with higher-end prestige offerings, he said. And the Chicago retailer is expanding its total healthcare positioning with the convenience of vaccinations available at all stores (6.4 million flu shots were administered last year, and 4.6 million this year-to-date), the test-market of a pharmacist serving as a healthcare concierge and the extension of its healthcare reach through Take Care Clinics both in-store and across worksites. "We are stepping out of the traditional drug store channel into something else," he said.
Miquelon presented at the Morgan Stanley Global Consumer Conference the morning of Nov. 16 and that afternoon at the Lazard Capital Markets 8th Annual Healthcare Conference.
FDA approves drug for rare bone marrow disorder
SILVER SPRING, Md. — The Food and Drug Administration has approved a new drug for treating a rare bone marrow disease, the agency said Wednesday.
The FDA announced the approval of Incyte’s Jakafi (ruxolitinib), calling it the first drug specifically approved for treating myelofibrosis, a disease in which the bone marrow is replaced by scar tissue, resulting in blood cells being made in the liver and spleen. The disease causes such symptoms as enlarged spleen, anemia and low white blood-cell count, as well as fatigue, muscle and bone pain, and pain and discomfort under the rips and in the abdominal area.
"Jakafi represents another example of an increasing trend in oncology where a detailed scientific understanding of the mechanisms of a disease allows a drug to be directed toward specific molecular pathways," FDA Office of Hematology and Oncology Products director Richard Pazdur said. "The clinical trials leading to this approval focused on problems that patients with myelofibrosis commonly encounter, including enlarged spleens and pain."
Walgreens general counsel named to Unigene board
BOONTON, N.J. — Unigene Labs, a developer of peptide-based therapeutics, on Wednesday appointed Walgreens’ Thomas Sabatino Jr. to its board of directors.
"[Sabatino’s] extensive industry experience and impressive track record — specifically, his knowledge of the legal and regulatory landscape for pharmaceutical companies — will be invaluable as Unigene continues to execute against its business transformation," Unigene chairman Richard Levy said.
"Unigene has emerged as the leading oral peptide delivery company with validated technology platforms. I am extremely impressed with the management team’s progress thus far," said Sabatino, EVP and general counsel for Walgreens.
Sabatino joined Walgreens in September after having held general counsel roles with United Airlines, Schering-Plough, Baxter International and American Medical International.
After beginning his career with a law firm and then moving into corporate law, Sabatino was named president and CEO in 1990 of privately-held medical products manufacturer and distributor Secure Medical. In 1992, he joined American Medical International, a Dallas-based for-profit hospital chain with 40 acute care hospitals. Three years later he rejoined Baxter International and was named SVP and general counsel in 1997. Sabatino moved to Schering-Plough in 2004 as EVP and general counsel for global law and public affairs.
In March 2010, he was appointed general counsel of United Airlines and immediately took a leading role in its merger negotiations with Continental Airlines. Sabatino left United Continental Holdings in 2011 after completion of the merger.
Sabatino earned a Bachelor of Arts degree from Wesleyan University in 1980 and his law degree from the University of Pennsylvania in Philadelphia in 1983. He is a member of the bar in Massachusetts, Illinois, California and New Jersey. He serves on the board of directors and the executive committee of the Association of Corporate Counsel; serves on the advisory board of Corporate Pro Bono; and is on the General Counsel Committee of the American Bar Association.