Drug chains ask for delay in DME competitive bid rule
WASHINGTON —The chain pharmacy lobby is urging Congress to delay a plan by federal health officials to force retail pharmacies to submit competitive bids in order to sell durable medical equipment, including vitally needed diabetic supplies used by millions of Americans.
In an urgently worded written testimony to the House Committee on Energy and Commerce Subcommittee on Health, the National Association of Chain Drug Stores warned that imposing competitive-bidding requirements on retail pharmacies could make it much harder for diabetic patients to obtain glucose test strips and other needed supplies. The result, the group warned lawmakers, could jeopardize diabetes treatment and monitoring, driving up health costs and adding to the nation’s health-cost burdens.
NACDS’ testimony came during a hearing Sept. 15 on Medicare’s competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies. The pharmacy group asked Congress to freeze a plan by the Centers for Medicare and Medicaid Services to expand competitive bidding—which has undergone “Round 1” pilot testing in several markets around the United States—until the impact of the program on Medicare beneficiaries’ access to healthcare services and supplies is fully analyzed.
In particular, NACDS urged caution in expanding the program to include retail pharmacies and diabetic testing supplies. “To ensure that community pharmacists continue to play a role providing quality healthcare services and decreasing medical costs, it is vital that Medicare beneficiaries have continued access to medications and supplies through community retail pharmacies,” NACDS said.
“CMS has repeatedly stated that it plans to expand the competitive bidding program into the retail pharmacy market,” the group testified. “However, expansion of the…program to the retail setting will limit beneficiary access, possibly resulting in lower-quality services, leading to increased medical costs. This is especially important should the program be expanded into the area of diabetic testing supplies,” the organization added. “Any disruption in the ability of individuals to receive their diabetic testing supplies could result in increased illness and increased medical costs, both of which would be avoidable if beneficiaries continue to have access to their supplies at the retail level.”
At his last analyst day, Ryan sets out course for future CVS Caremark
NEW YORK The theme of CVS Caremark’s 2010 analyst meeting held Friday morning here in New York was “Enhancing Shareholder Value.” And that was appropriate as the company used the morning to brief Wall Street on how it plans to lead the industry for years to come in pharmacy services and health care, as well as in the front end of the business, thanks to several recently introduced and upcoming initiatives.
One could say the meeting was a special event, marking the last analyst meeting for chairman and CEO Tom Ryan, who will retire as CEO in May 2011, after 36 years with the company. (As previously reported, Larry Merlo has been named president and COO, and is expected to succeed Ryan as CEO.)
America’s healthcare challenge is opportunity
Ryan kicked off the meeting with a look at some of the healthcare challenges facing the country — all of which represent opportunities for CVS Caremark to demonstrate its leadership in expanding the role of pharmacy.
It is no secret that healthcare costs are rising rapidly, and chronic diseases are on the rise among Americans, Ryan explained. “We have to find a way to deal with this more cost-effectively and more efficiently as a country. Why do we think this is a big opportunity for us? We think this is going to improve our mail-choice business; we think this will improve our MinuteClinic business; we think this is going to drive pharmacy business growth over the next 10 years,” Ryan told analysts.
Ryan also noted the concern over a shortage of primary care physicians, which only stands to get worse as the population ages and more than 30 million Americans gain coverage through healthcare reform.
One area CVS Caremark will look to demonstrate its leadership in is medication nonadherence, which is a nearly $300 billion annual drain on U.S. health care. Nonadherence is a preventable cost, and CVS Caremark is working to help payers drive down that cost, Ryan said.
Enter such innovative offerings as CustomeRx Savings Initiative, Maintenance Choice and Pharmacy Advisor. Through such programs and the leverage of its broad-reaching network, which includes its PBM, MinuteClinic business and retail locations, the company is working to improve outcomes and reduce costs.
For example, its CustomeRx Savings Initiative aims to improve patient’s lives by advocating lower-cost treatment options whenever possible. It is estimated that this year alone, pharmacy interventions will save patients $50 million in out-of-pocket costs by filling scripts for lower-cost alternatives.
“The legislation that was recently passed certainly solves the access [problem], but what has to come has to be a greater focus on both quality and cost,” Merlo added. “Our integrated assets have the unique ability to offer innovative, high-quality, practical solutions that accomplish three things: provide greater access, convenience and choice to pharmacy care; deliver solutions that improve the health of those we serve; and lower the overall cost of health care.”
CVS Caremark also is looking to pharmacogenomics, or genetic benefit management, to drive improved health outcomes and help mitigate costs.
Per Lofberg, president of Caremark Pharmacy Services, discussed how the company is “building the PBM for the next decade.” Clearly, a key factor here is the 12-year collaboration it recently inked with Aetna. As reported, CVS Caremark announced in late July a 12-year agreement with Aetna to provide PBM services to roughly 9.7 million Aetna PBM members and administer about $9.5 billion in annual drug spend, a deal that is believed to be the largest and longest new-term contract ever to have been negotiated in the PBM industry.
“The Aetna deal is clearly a watershed for our company, and actually for the industry as a whole. It was the result of an extensive and exhaustive competitive bidding process, which we obviously view as a significant validation of our integrated model and economics that we can bring to the table, as a result,” Lofberg said. He also noted that the deal is expected to leverage the full-spectrum capabilities of CVS retail, the PBM and MinuteClinic offerings.
In the stores
Of course, with so much focus on other parts of the company, certainly CVS/pharmacy ( i.e., the stores) and the front-end of its business still remain a key component of the company’s future growth plans.
Discussing front-end sales and profitability was Mike Bloom, EVP merchandising and supply chain. According to Bloom, such innovations as store clustering, store brands, its ExtraCare loyalty program and beauty are a big part of the company’s strategic plan.
As reported by Drug Store News, CVS took the wraps off its Urban Cluster store concept, which has a significant focus on consumables and is designed to be a convenient shopping destination for urban dwellers. The company expected to have 300 of its stores converted to the concept by the end of the year, and a total of 1,300 to 1,400 stores reset to the concept over the next few years.
With regard to store brands, the retailer expects its private-label penetration to grow to more than 20% in the next two to three years. To drive that growth and take a leadership role in private label, CVS went back to the old drawing board. The result is a whole new private-label program the company plans to introduce early next year.
“The first thing we did is we conducted customer focus groups where we identified the need for an opening price point value brand. We then defined that the brand would consist of everyday essential products that would help get her through her day,” Bloom explained. Enter Just The Basics, which will launch in February 2011 with more than 100 items. The brand represents a functional, value-priced, smart simplicity positioning.
Turning to beauty, a $3 billion business at CVS, the company is leveraging the success of its Healthy Skincare Center concept and has launched a pilot of a smaller format that will enable it to expand the department into more of its stores, Bloom said.
It addition, it will launch in January an ExtraCare Beauty Club, under which customers will receive a 10% “shopping pass” for signing up, $5 in Extra Bucks for each $50 spent on beauty and $3 in Extra Bucks on cardholders’ birthdays.
Roche buys rights for danoprevir from InterMune
BASEL, Switzerland Swiss drug maker Roche has bought the rights to an investigative treatment for hepatitis C, Roche said.
The company announced Thursday that it had purchased global development and commercialization rights to the drug RG7227/ITMN-191 (danoprevir) from InterMune for $175 million.
Roche said the drug had shown promise in preclinical and early clinical development. The two companies have been developing the drug since 2006.