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Congress gaining greater appreciation around the value of self-care

BY Michael Johnsen

WHAT IT MEANS AND WHY IT’S IMPORTANT — Self-care saves cents. It’s really that simple. As a nation, if we’re going to get serious about reversing escalating healthcare costs, it starts by gaining a better appreciation for the value nonprescription remedies can bring to the overall healthcare table. It starts by removing counterintuitive regulations that serve as a disincentive against employing self-care options as the first line of treatment. It starts with passing bills like the Medical Flexible Spending Account Improvement Act (S. 1404) and the Restoring Access to Medication Act (S. 1368/H.R. 2529). And it needs to start now.

(THE NEWS: Bill seeks to eliminate ‘use it or lose it’ provision in FSAs. For the full story, click here.)

The FSA Improvement Act removes one of the more significant disincentives to the adoption of money-saving tools by the average joe by allowing participants to withdraw funds — and pay taxes on those funds — at the end of the year. According to regulations today, FSA participants looking to manage and reduce their out-of-pocket healthcare costs make their best guess as to how much overall healthcare spending they’ll be doing in the coming year. Those who overestimate that healthcare need and still have FSA funds at the end of a plan year forfeit that money as part of what has become known as the "use it or lose it" provision. That certainly places a damper on participation, because who wants to gamble with a tool that’s supposed to reduce healthcare spending only to find that more dollars were lost than saved?

According to the bill’s sponsors, the original reason for adopting the “use it or lose it” provision was to prevent FSAs from being misused as tax shelters. With annual contributions capped at $2,500 beginning in 2013, that no longer will be necessary.

And the Restoring Access to Medication Act, introduced in mid-July, would remove the erroneous prescription requirement in order that nonprescription remedy costs be reimbursed by FSAs that was imposed by the 2010 Patient Protection and Affordable Care Act.

The good news in all of this: Congressional leaders seem to have a greater appreciation around the value-role over-the-counter medicines play as part of the bigger healthcare picture. But the proof is in the numbers. According to research released last year by London & Associates, patients scheduled 525 million appointments with their family doctors in 2008. At least 10% of those appointments would not have been necessary had the patient visited their local pharmacy for an OTC remedy before scheduling that appointment. Eliminating only half of those unnecessary appointments would save some $5.2 billion in overall healthcare costs each year and would give the doctors an additional half-hour per day on average, allowing them to focus on more urgent patient needs.

Saving money and improving the healthcare experience to boot, all thanks to increased utilization of OTCs and the healthcare professional behind the pharmacy counter? That’s what really makes sense.

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Retailers look to own multichannel consumers

BY Alaric DeArment

WHAT IT MEANS AND WHY IT’S IMPORTANT — Traditional retailers today are marshalling their online resources to complement their brick-and-mortar stores, and retail pharmacies have an opportunity to use websites, social networking, smartphone applications and various combinations thereof to own multichannel customers.

(THE NEWS: BTS shoppers plan to use Web-enabled smartphones, social networks to save this year. For the full story, click here.)

In the coming years, there’s a good chance that more and more consumers will turn to such technologies as online coupons and apps that allow smartphones to be used like credit cards, making the multichannel customer increasingly important to retailers’ marketing strategies.

As Drug Store News reported in its May 30 issue, Walgreens has found that multichannel customers carry three times the value of single-channel customers, as about half of those visiting Walgreens.com end up going to the store. Walgreens SVP e-commerce Sona Chawla noted mobile phones are helping to bring the online and offline channels together.

Social media offer another new channel. Walgreens uses Facebook to collect customer feedback, while CVS Caremark used Facebook and Twitter to launch a Beauty Club program. Meanwhile, Kroger created a Spanish-language microsite to target Hispanic customers for its baby products line.

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Merlo to Senate committee: Lowering corporate tax rate can help reduce healthcare costs, bolster economy

BY Antoinette Alexander

WASHINGTON — Lowering the maximum corporate tax rate could allow CVS Caremark to accelerate investments in U.S. jobs, technology and infrastructure — all of which could ultimately help lower healthcare costs and bolster the economy. That was a key message that CVS Caremark president and CEO Larry Merlo had for the Senate Finance Committee during a recent hearing.

Merlo, who appeared July 27 before the Senate Finance Committee during a hearing, "How the Tax Code Affects Hiring, Businesses and Economic Growth," said that the current U.S. tax structure puts companies that heavily reinvest their earnings in core domestic operations, such as CVS Caremark, at a competitive disadvantage. Merlo suggested that changes to the U.S. tax structure are needed to make companies more competitive.

"In order to continue to be successful in an increasingly global marketplace, CVS Caremark must control costs, raise capital and efficiently reinvest its earnings. . . . Our high effective tax rate not only limits the amount of earnings available to us for reinvestment in our core business; it also makes CVS Caremark less attractive to global investors," Merlo testified. "We are committed to growing our business in the U.S. Without a consequential rate reduction, tax considerations will have to be an even more significant component of our overall investment analysis."

Merlo said CVS Caremark is committed to making significant future investments in service offerings, technology, employees and other improvements to the company’s infrastructure and operations. Those investments are geared toward lowering the overall cost of health care and improving consumer health, he noted. He said that a reduction in the corporate tax rate would allow the company to address larger healthcare issues.

"Our company currently reinvests approximately $2 billion back into our business each year, and we are committed to making significant future investments in our service offerings, technology, training, drug adherence programs, retail clinics and other improvements. Our investments are geared toward lowering the overall cost of health care in this country and improving consumer health," Merlo testified.

The hearing was designed to solicit opinions regarding the nation’s corporate tax structure from American business leaders. Also testifying at the hearing were Michael Duke, president and CEO of Walmart; Thomas Falk, chairman and CEO of Kimberly-Clark; and Gregory Lang, president and CEO of PMC-Sierra.

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B.Barrett says:
Aug-18-2011 08:20 am

While lowering the corporate tax rate can reduce health care costs and bolster the economy through increasing jobs, it won't. At least not at CVS. Lower tax rates will increase profits, increase shareholder dividends, and increase stock portfolios. All of CVS's PBM subscribers have contracts, many of them with multi-year terms. Customer pharmacy purchases are usually predetermined co-pays set by PBMs, or designed to be a percentage of AWP, neither of which would change because of lowered tax rates. Labor costs would be the same, as a lower corporate tax rate does not effect Medicare or Social Security taxes, and the need for labor in the stores would neither increase or decrease based on a lower tax rate, eliminating the discussion of job creation. The current tax rate has not, in anyway, hindered CVS's growth through purchases like Peoples, Revco, Eckerd, SavOn, Osco, MinuteClinic, Long's, or Caremark. Lowered corporate tax rates would have the same effect lowered very high income tax rates have had, less industry and less jobs. Maybe the Senate should only hear 'testimony' from people who don't have millions of stock shares and options in the company begging for lower taxes.

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