PHARMACY

The Butt Stops Here: CVS’ Foulkes recaps busy first year

BY Rob Eder

Innovating on behalf of the consumer.

That’s what has always excited CVS/pharmacy president Helena Foulkes about the business ever since she took her first job in retail, some 22 years ago, at the only retail company she has ever worked for.

By that measure, this past year has been a good one, Foulkes told DSN, in a late October interview, looking back on her first year at the helm of the company’s retail stores, her vision for the business, the biggest influences in her life and career, and what it is that still feeds her passion for retail, a job she calls the perfect blend of “art and science.”

Certainly it has been a busy first year on the job for Foulkes. Consider some of the bigger headlines:

  • The February decision to exit tobacco sales in its stores, a move that became official in October;
  • The changing of its name and corporate logo to CVS Health to better reflect the larger thinking behind the tobacco move and its broader corporate mission to help people live healthier lives;
  • The acquisition of regional powerhouse Navarro Drug in September, a move much more strategic and far-reaching than just the simple addition of 33 stores in Florida;
  • A massive personalization effort around its industry-leading Extra-Care loyalty card, a program Foulkes herself pioneered for the company some 15 years ago; and
  • The solidification of her key leadership team — SVP merchandising and retail pricing Judy Sansone, EVP retail operations Scott Baker and SVP retail pharmacy Josh Flum — a group Foulkes says truly compliment her strengths, and each other’s, and allow her to focus on what she’s best at: staying one step ahead of what the customer wants next.

“I’m really passionate about the consumer, … so for me it’s very natural to think about innovation and growth — I get excited about disruptive things that can really change shopping for our customers, or change health care,” Foulkes said. “It also means I have to have a great team around me who give me that reality check and help me understand, ‘OK, that’s a great vision; now let’s talk about how we execute against that.’”

But if you ask Foulkes what has been the big highlight of her first year on the job, there really are no butts about it.

“What was most exciting for me was to see how our people and our company came together as an organization around our tobacco announcement, and really rallied around our position as a healthcare company,” Foulkes said. “The sense of pride it created, and also our organization’s ability to execute that transition across 7,700 stores so flawlessly, reminded me of all the strengths of our company. And I think in many ways it has challenged and emboldened us to think more about what we can do to innovate on behalf of the consumer to help her on her path to better health, which is really our key purpose.”

As a company, CVS Health has quite a bit to gain from the decision to throw tobacco products out of its stores. Globally, the company continues to serve a growing group of customers outside of its stores — health plans, hospitals and doctors — through the healthcare services side of its business, which is expected to grow considerably in the years ahead. It becomes a difficult proposition for a company like CVS Health to position itself as a partner to those types of organizations, and still sell a product that’s known to kill people, Foulkes explained candidly. For sure, the move creates additional leverage and differentiation in the marketplace, as CVS Health sells its PBM, Specialty Pharmacy and Medicare products and services to payers. Long term, it’s worth a lot more than the $2 billion a year it was making selling tobacco products in its stores.

But as president of CVS/pharmacy, in charge of the retail stores, that $2 billion falls squarely on her P&L. As for the business, as the chain cycles through the short-term impact of being out of a very large category, Foulkes expects the stores to re-emerge a year later “on a much faster growth trajectory,” she said. Sansone and her team of merchants will look to drive more growth from the core of its business — particularly, in health and beauty, which Foulkes describes as the company’s “bread and butter,” but also in other core front-end businesses, like seasonal, where CVS made a significant push on Halloween merchandising this fall.

 Despite any challenges in the short term, Foulkes still swears exiting tobacco was the right thing to do. It’s good business because it is so personal — and not just for Foulkes, who lost her mother to lung cancer, she explained, but also for many of its 200,000-plus associates throughout the company and millions of its customers.

“From a pure consumer perspective, the reaction has been tremendous,” she told DSN. “In our industry, there is not enough differentiation among the players, and we’ve heard lots of stories from our customers telling us, ‘Thank you.’ We know that 7-of-10 smokers want to quit, and what has surprised me the most is the extent to which these stories have emerged.”

In September, the company embarked on a major new ad campaign with a catchy tagline that says everything you need to know about the name change — “CVS Health … Because health is everything.” — and a hot new social media campaign around the hashtag #One-GoodReason.

Perhaps as passionate as she is about innovating on the behalf of the consumer, Foulkes is almost equally excited about the opportunities around “the retailization of health care,” and the role CVS stores play — and the pharmacists, and in some cases nurse practitioners and/or physician assistants inside those stores.

“The power of the company’s [integrated pharmacy] model is that in the American healthcare system, payers really matter, and so being a PBM allows us to have a conversation with the people who are paying for the bill. But that’s not enough,” she said. “Because payers don’t have relationships with consumers, and we do in our stores. We serve 5 million people a day; we’re in the neighborhoods. What we’ve been able to do is marry the best of those worlds: To have deep relationships with payers, where we’re helping them meet their needs around cost and access, and yet we’re also bringing it to life for the consumer [in our stores] in a way that resonates.”

A perfect example of that — the company’s Pharmacy Advisor program, which identifies potential medication adherence issues and gaps in care for CVS pharmacists at the point of care. “Historically, the stand-alone PBMs have had clinical programs [like Pharmacy Advisor], but the only way they could change patient behavior was with a phone call. What we did was build the integration, so as the patient is picking up their prescriptions in our stores, … the pharmacist has the ability to have a two- to three-minute conversation, ask the right questions and get that patient back on their medication or fill a gap in their care.”

Another opportunity that has Foulkes excited lies in the July acquisition of Navarro Discount Pharmacy — a deal worth much more to CVS than the stores themselves.

“We didn’t acquire Navarro because we saw an opportunity to merge them and improve their performance. We bought Navarro because we know that they really understand the Hispanic customer, and we have a lot to learn. For us the opportunity is not just the 33 stores in Florida, but really to apply those learnings to hundreds of stores in the CVS network,” she said. “We have a lot of stores where the population we serve is 50% or more Hispanic, and today I don’t think we do a good enough job.”

Whereas today, CVS might have “a small 4-ft. section of specialized products” in its Hispanic stores, Foulkes explained, Navarro’s merchants had built in a relevant assortment  of brands “in every single planogram that speaks to that customer, and they have a different value proposition.”

The long-term plan is for the Navarro team and brand name to remain in tact, not only running the stores, but “at the same time, helping us think about how we apply those learnings in CVS stores.”

That’s just the kind of thing that has always fascinated Foulkes about this business — studying the customer and what resonates with her. So by that measure, you could say it’s been a good first year on the job for Foulkes as head of CVS’ retail business. And by any measure, that business is in very good hands.

 

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Study: Automated refill reminder calls drive adherence rates

BY Michael Johnsen

PORTLAND, Ore. — People who received automated reminders were more likely to refill their blood-pressure and cholesterol medications, according to a study published Monday in a special issue of the American Journal of Managed Care.
 
The study, which included more than 21,000 Kaiser Permanente members, found that the average improvement in medication adherence was only about two percentage points, but the authors say that in a large population, even small changes can make a big difference.
 
“This small jump might not mean a lot to an individual patient, but on a population level it could translate into fewer heart attacks, fewer deaths and fewer hospitalizations, which will ultimately have an important impact on public health,” said Bill Vollmer, lead author and senior investigator at the Kaiser Permanente Center for Health Research in Portland.
 
In fact, Vollmer said that even though the study lasted only a year, patients who received both telephone and mailed reminders saw improvements in their cholesterol levels that could lead to improved health outcomes if sustained.
 
According to a recent federal report, Americans with chronic conditions take their medications as prescribed about 50% to 60% of the time. The report estimates that this phenomenon, known as poor adherence, costs the healthcare system $100 billion to $300 billion each year, and results in about 125,000 deaths.
 
The most effective educational and behavioral interventions are often complex and costly, involving multiple components, so recently researchers have been testing less expensive health information technologies like automated calls and mailings.
 
Vollmer’s study took place in 2010-2011 and enrolled 21,752 Kaiser Permanente members in Oregon, Washington, Georgia and Hawaii who had diabetes or heart disease and were taking medications to reduce the risk of a stroke or heart attack. Using Kaiser Permanente’s electronic health record system, researchers identified patients who were either overdue or soon-to-be due to refill a prescription for a statin, ACE inhibitor or angiotensin receptor blocker.
 
The study, which examined the PROMPT reminder program, had three arms: usual care, an automated telephone call intervention and an enhanced intervention that included reminder letters and live calls for those who didn’t respond to the automated calls, as well as personalized health reports and educational mailings.
 
The interactive voice calls lasted about two-to-three minutes, reminding patients to refill their prescription and then giving them an option to be transferred to an automated refill line, or in some cases to speak with a pharmacist.
 
At the beginning of the study, participants were taking their medications a little more than half the time. Adherence levels went up among all participants, but they increased by more (1.6-to-3.7 percentage points) among participants who received the reminders.
 
People in the enhanced intervention also saw significant reductions in their cholesterol levels. This effect was most pronounced for the subset of people who started out with levels above 100 mg/dl, which is considered uncontrolled. On average, this group had a 3.6 mg/dl greater reduction in cholesterol compared to people in the usual care group who started out with uncontrolled cholesterol, but received no calls or mailings.
 
Two Kaiser Permanente regions participating in the study are continuing the medication reminder program for patients who are behind on refilling their blood-pressure and cholesterol medications.
 
The study authors are also conducting a cost analysis to examine whether the intervention is a good value for the money.
 
The study was funded by a CHOICE grant (RO1HS019341) from the Agency for HealthCare Research and Quality.
 
In another Kaiser Permanente study published in 2012, researchers found that automated reminders were very effective in boosting adherence for patients who had failed to promptly fill their first prescription for statins.
 

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HDMA: Pharmaceutical sales reach nearly $305 billion

BY Michael Johnsen

ARLINGTON, Va. — Pharmaceutical sales through HDMA-member traditional primary distributors reached nearly $305 billion in 2013, according to the 85th Edition HDMA Factbook (2014-2015), published Monday by HDMA’s nonprofit research foundation, the Center for Healthcare Supply Chain Research. This number reflects a nearly 2% increase from the previous year. Additionally, more than 90% of pharmaceutical sales are completed through HDMA-pharmaceutical distributors.  
 
“The new Factbook provides a unique snapshot of the work that goes into delivering health care to millions of people each day,” said Jeff Watson, president of Apotex and chairman of the center’s board of directors. “It is a useful resource for anybody seeking to learn about the dynamics of the pharmaceutical industry.”
 
As reported by IMS Health, total U.S. spending on pharmaceuticals also increased, reaching $329 billion in 2013 from $319.1 billion in 2012. For distributors, specifically, prescription products continue to make up the majority of their net sales, accounting for 98%. Of these prescription product sales, branded-prescription products were unchanged from 2012 at 64%; brand-name specialty products accounted for nearly 21% of sales; and, unlike previous years of growth, generic sales decreased slightly to 13%.
 
HDMA traditional distributors kept an average inventory of nearly 56,000 SKUs in 2013, received from nearly 1,400 manufacturers. On a typical day, more than 98,000 units were picked per distribution center (each order having an average of nine lines picked), with nearly 5,000 orders handled. As many as 83% of distributors use automated-picking methods. Approximately 15 million prescription medicines and healthcare products are delivered by distributors each business day. 
 
“HDMA-member distributors continue to provide value in the pharmaceutical supply chain by delivering millions of products each business day with accuracy and efficiency,” said Karen Ribler, EVP and COO of the Center. “With the impending regulatory requirements of the Drug Supply Chain Security Act, it will be interesting to see the dynamics of the industry evolve as new technologies are introduced.” 
 
Published annually, the HDMA Factbook is a comprehensive resource illustrating traditional distributor-performance metrics and trends in the pharmaceutical supply chain, with data collected at the corporate level of HDMA’s membership and reputable secondary sources. The book provides insights into such areas as distributor demographics and characteristics, finance, operations, information systems, customers and market characteristics, as well as international distribution. 
 
This 2014–2015 edition is produced with support from Boehringer Ingelheim Pharmaceuticals; Apotex Corporation; RDC-Rochester Drug Cooperative; TEVA Pharmaceuticals USA; AstraZeneca Pharmaceuticals; Ranbaxy; Smith Drug Company, Div. J M Smith Corporation; and Pharmacy First. 
 
 

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