HEALTH

Health Choices Coalition urges Congress to repeal OTC restrictions on FSAs

BY Allison Cerra

WASHINGTON — The Health Choices Coalition sent a letter to members of Congress, urging them to repeal legislation that limits coverage of over-the-counter medicines.

The coalition is looking to Congress to repeal a provision in the Patient Protection and Affordable Care Act that prevents consumers from using their flexible spending accounts to purchase OTCs without first getting a doctor’s prescription. Members of the Health Choices Coalition are urging Congress to take action in order to allow consumers to use their FSAs for OTCs.

"This issue is about empowering millions of American consumers to cost-effectively manage their families’ healthcare needs," said Bill Head, VP government affairs for the Consumer Healthcare Products Association, which is part of the coalition. "The availability of OTC medicines through an employer-sponsored FSA provides valuable cost-savings to consumers, increases worker productivity and encourages smart healthcare decisions by both employers and employees — all of which are consistent with the goals of healthcare reform."

The Health Choices Coalition represents physicians, consumers, retailers, manufacturers, pharmacies, pharmacists, patients, pharmacy benefit managers, small businesses and employers.

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Nordic Naturals looks to bring Daily Omega line to mass

BY Michael Johnsen

WATSONVILLE, Calif. — Nordic Naturals is attempting to crack the mass channel code with an initial 200-store test with Walgreens, the company told Drug Store News. Nordic boasts a strong heritage across the specialty channel.

The test market incorporates the made-for-mass brand Daily Omega, a line of three products that helps simplify the choice for the right omega-3 essential fatty acid supplement.

“Daily Omega makes this choice easy by offering three concentrated formulas, two for adults and one for children, where only one soft gel is required daily to support optimal health and wellness,” stated Corinna Bellizzi, retail division sales manager.

The three SKUs include:

  • Daily Omega, with vitamin D3 — formulated for a healthy heart with 500 mg of the omega-3s EPA and DHA in each lemon-flavored soft gel;

  • Daily DHA — formulated for healthy brain and mood with 450 mg of DHA in each strawberry-flavored soft gel; and

  • Daily Omega Kids — formulated for brain and visual function with 275 mg of the omega-3s EPA and DHA in each chewable strawberry-flavored soft gel.

 

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Credit Suisse bullish on GNC

BY Michael Johnsen

NEW YORK — Credit Suisse on Wednesday initiated coverage of General Nutrition Centers, the specialty retailer of supplement and nutritional products and partner with Rite Aid in a store-within-a-store program across more than 1,000 drug store locations.

Credit Suisse characterized the GNC stock with an “outperform” rating and a $24 price target, noting that the retailer’s evolution into multichannel retailing along with a strong management team bodes well for the future of the specialty retailer. The fact that GNC is part of the vitamins/supplements industry — projected to grow 6% over the next five years — doesn’t hurt, either.

“Since [Joe] Fortunato’s ascension, the company-owned domestic store base has grown 10% while net income has quintupled,” Credit Suisse research analyst Gary Balter said. Fortunato assumed the GNC CEO position in 2005. “Annual square footage growth will likely be in the 3% to 4% range for domestic stores, which, when combined with our expectation of low single-digit same-store sales growth, equates to high single-digit top-line growth.”

GNC, however, is not without risk. The product mix still skews heavily against diet aids and sports nutrition, and any disparaging news around one of those products could prove devastating. In the fall of 2002, for example, when criticism around the diet aid ephedra was at its height, GNC’s (then owned by Royal Numico) same-store sales dropped an estimated 7% across its entire store base. Numico reported a $1.45 billion loss that fall.

That loss prompted Numico to sell GNC to Apollo Management in 2003 for $750 million, a deep discount to the $1.8 billion Numico originally paid to acquire GNC. Apollo again sold GNC to Ares Management in 2007 to the tune of $1.7 billion, an indication that the specialty retailer had successfully recovered its corporate value. Rite Aid also could become a negative factor, Balter noted. “Although GNC has predetermined volume and expansion agreements with Rite Aid, the drug store chain has a high debt load and is relatively poorly positioned in the segment,” he wrote. “Rite Aid accounted for 3.5% of GNC’s total sales in 2010. In a worst-case scenario in which all of that revenue is eliminated, we estimate GNC’s EPS hit may be 10 cents (assuming a 25% contribution EBIT margin).”

And retail mall traffic may become a risk given that GNC operates approximately 1,000 mall locations, Balter added. “During the economic downturn, mall stores were hit harder than non-mall stores due to declining mall traffic. We view inflation/deflation as a minor threat, as the company has proven adept at managing the business in volatile pricing environments.”

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