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Cardinal Health 2013 RBC: Executives identify new opportunities for independents during opening session

BY Michael Johnsen

SEATTLE — The future is now. Material changes to health care already are impacting how independent pharmacies operate, and Cardinal Health has a host of new products and services to help their independent pharmacy partners capitalize on opportunities within that change. That was a key message for attendees of the standing-room-only opening business session, here, Thursday morning at the Washington State Convention Center, signaling the official start of the annual Cardinal Health Retail Business Conference.

“The future changes in health care you’ve been hearing about, they’re here right now. Your call to action must be to discover new horizons,” Steve Lawrence, SVP of retail independent sales for Cardinal Health, told the packed auditorium, invoking the theme of Cardinal Health RBC 2013, now in its 23rd year. "And I promise you, they’re out there. To thrive, independent pharmacy has to undergo a real revolution. You have to expand beyond a pharmacy [and] become a community healthcare company.”

And the opportunities are out there, Cardinal Health executives said — another key theme of the Thursday morning business session. “This RBC is all about your journey of discovery,” Ron Clerico, VP of marketing strategy and solutions for retail, alternate care and government at Cardinal Health, told attendees. Clerico named three key initiatives that independents attending the show “must see” to help them seize the moment, including the company’s showcase pharmacy design concept, which was among the key highlights on the show floor; its acquisition of Independence Medical and the synergies DME can offer an independent pharmacy owner; and new technology tools from Cardinal Health to help with reimbursement challenges, which are likely to intensify under health reform.

“First is our Cardinal Health Showcase. We’re recreated the pharmacy to give a real-world perspective on how programs and services can be positioned in your business,” Clerico said. “Second, the recent acquisition of Independence Medical will increase our offerings in DME and home healthcare products,” he said.

For the third “must-see,” Cardinal Health announced the launch of enhanced reimbursement consulting services being offered as part of an online portal. “We are providing a dedicated adviser and store-specific reports to help pharmacies better understand and manage reimbursements and profitability, as well as audit risk,” Jon Giacomin, president of U.S. Pharmaceutical Distribution at Cardinal Health, told attendees.

Cardinal Health also announced the introduction of a specialty pharmacy solution called Cardinal Health Specialty Pharmacy Alliance. “Contracting with Specialty Pharmacy Alliance gives you the ability to dispense specialty prescriptions in those cases where [independents] are eligible to purchase the medications,” Giacomin said. Cardinal Health helps handle benefits investigation, patient education, and management and reporting back to the manufacturer. “In addition, they work with the patient’s PBM and the prescribing physician to order refills.”

Independent pharmacy will play an essential role as the final pieces of healthcare reform continue to fall into place, Mike Kaufmann, CEO of Cardinal Health Pharmaceutical Segment, told RBC 2103 attendees. "Not only in providing services to this [expanded pool of] patients, but you can help them sign up for the benefits. As the trusted community resource, you can help your patients sort through the information.”

Cardinal Health closed the opening session with a special treat for attendees — a keynote address from Chris Gardner, best-selling author of “The Pursuit of Happyness.” Gardner holds a special connection to community pharmacists — he served three years as a primary caregiver to his wife, who had brain cancer. “There are some folks in your communities who count on you and what you do every day,” Gardner said. “What you do every day is making a difference in somebody’s life in your community, and you know what, that’s why I came here today,” he said. “I wanted to say ‘thank you’ for those folks.”

To keep up with all the news from Cardinal Health RBC 2013, visit DrugStoreNews.com/Cardinal-Health-Retail-Business-Conference-2013.


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What happens in Vegas … better NOT stay in Vegas

BY Rob Eder

Man, am I sick of that cornball phrase; as if everybody who ever goes to Las Vegas has some kind of rock star night, like lost footage from one of the "Hangover" trilogy movies. The truth is, if you’re reading this now — or in my case, writing this now — your life just is not that glamorous. You’re not going to be hanging out with Mike Tyson all night, and if you wake up one morning and can’t remember the night before, you’re going to have much bigger problems than just a splitting headache.

Let’s face it — if you’re heading to NACDS Total Store Expo, what happens in Vegas BETTER NOT stay in Vegas. You need to make the most out of your meetings, and you’re going to need to show a return for the time and money you invested in the trip, perhaps more so than any other trade event you attend all year. In show business vernacular — TSE IS your Vegas.

That’s the idea behind our cover — your VIP pass, loaded with trends, ideas and products to help you optimize this game-changing show.

Enjoy the issue and if you’re going to TSE, have a great meeting.

And for Pete’s sake, if you see me out there, don’t hit me with, "What happens in Vegas …"

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Trade promotion and performance in cough-cold

BY DSN STAFF

DSN has partnered with Competitive Promotion Report and IRI to create a new series of exclusive reports that analyzes the impact of trade promotion activity on various front-end merchandising categories — DSN Promo Watch.

In this premiere edition, DSN examines the cough-cold business. Following are key findings from the analysis:

  • Average trade spending — defined as all off-invoice allowances and bill backs — is very seasonal in cough-cold, ranging from less than 1% to almost 5.5%;
  • Trade spending was highest in cold-allergy-sinus liquids, averaging 5.4% in November 2012. Yet, it is No. 2 in market share, trailing by an average of 51 points;
  • There is greater proportional trade spending on liquid products and cough syrup than on tablets and cough drops, yet the latter generate greater retailer margin;
  • Increases/decreases in trade spending in tablets have less impact on market share than any other category;
  • There is a direct correlation between trade spending and market share in liquids, cough syrup and cough drops. However, only slight increases in cough drop trade spending leads to sharper market share increases;
  • Cough syrup had the lowest average retailer margin of any cough-cold category over the past two years at 22.6%, 30.5% and 37.8% in the mass, grocery and drug channels, respectively;
  • Cough drops had average market share of less than 10% over the past two years, but the category had the highest margins at 31.0%, 40.9% and 48.3% in mass, grocery and drug, respectively;
  • Tablets captured two-thirds of market share with the second-highest margin on the lowest trade spending;
  • Cough syrup had the lowest average market share at 7.8% and the second-highest average trade spending at an average of 2.4%;
  • Market share increases/decreases perform in inverse relation and lag retailer margin increases/decreases in liquids;
  • In tablets, increases/decreases in retailer margin had less impact on market share;
  • In cough syrup, significant reductions in average retailer margin most often were followed by increases in market share;
  • Margin decreased when trade spending increased in all categories.
  • When average margin reached its highest peak over the last two years at 46% in May 2011, unit sales decreased 36% within 3 months);
  • Unit sales and spending moved in sync in all four categories;
  • When promoted, the average net invoice for liquids, tablets and cough syrup was within a narrow range at $4.78, $4.67 and $4.91, respectively, while the net invoice for cough drops on promotion was $0.75; and
  • In June 2013, tablets saw an increase in average list price from $5.10 to $5.29 (+3.6%); however, average retail price increased less than 1% in July from $9.67 to $9.75.

Sources: IRI, a Chicago-based market research firm (@iriworldwide), Cough & Cold, 116 weeks ended May 19, 2013, total U.S. multi-outlet and CPR Detail Report and Retail Price Report, 116 weeks ended May 19, 2013.

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