Q&A: Joining forces in specialty pharmacy
In July, the National Association of Specialty Pharmacy and the Specialty Pharmacy Association of America announced the two organizations would merge, creating the largest professional and trade association in the specialty pharmacy industry. To find out more, DSN interviewed Larry Irene, CEO of Armada Health Care and SPAARx founder, and Gary Cohen, CEO of NASP.
DSN: Why did NASP and SPAARx decide to merge?
Irene/Cohen: We realized that specialty pharmacy would be better served by one unified organization rather than by two separate organizations with essentially the same agenda. Specialty pharmacy needs to speak with one voice and to come together collaboratively to address industrywide issues. The merger was simply the right thing to do.
DSN: How will the merger improve the work of the new association?
Irene/Cohen: NASP has been creating a platform for collaboration among all industry stakeholders in specialty pharmacy to address the unique challenges and opportunities facing us. As a collaborative combined organization, our appeal to pharmaceutical manufacturers, specialty pharmacy providers, other professional organizations and payers — all focused on the patient and improved health outcomes — will have tremendous synergies. In addition, NASP has already developed an excellent specialty pharmacy education program, both online and at its conferences.
SPAARx was created for similar purposes. The unified organizations will remain on this track. As you might expect, however, it is more efficient to operate one specialty pharmacy association than it is to operate two separate associations. The merger means that there is now only one infrastructure and one set of processes for the industry to support rather than two. Resources are scarce. With the merger, industry stakeholders are assured that the resources they provide, including the time that industry leaders contribute to the association, will be focused on issues that matter to them and to the patients that they serve rather than being split between two organizations with overlapping agendas.
DSN: What does each entity bring to the merger, and where do the synergies kick in?
Irene/Cohen: NASP has done a great job creating its Specialty Pharmacy Education Center, which is the first of its kind in specialty with [more than] 250 hours of online education. NASP s leadership also founded the Specialty Pharmacy Certification Board, which is now run independently and provides opportunity for pharmacists to earn a Certified Specialty Pharmacy credential. NASP makes the preparation for the CSP available online and at NASP conferences, including the NASP 2014 Annual Meeting and Expo, which will be held Sept. 30 to Oct. 3 in Orlando, Fla.
SPAARx was created by Armada Health Care, and will join the board of directors of NASP/SPAARx. Armada has a 10-year history hosting its Annual Specialty Pharmacy Summit and Expo,each May in Las Vegas, and draws thousands of industry attendees during the four-day event. Armada has been a catalyst in driving the specialty pharmacy industry forward, and the good will and results generated over the past decade through its services, solutions and annual meeting in Las Vegas carry tremendous value.
It only stands to reason that the loyalty extended to SPAARx combined with collaboration, education and certification of pharmacists created by NASP will result in highly effective synergies for the industry and the future of the unified association NASP/SPAARx.
DSN: What does this mean for specialty pharmacy providers and community pharmacy at large?
Irene/Cohen: Specialty pharmacy providers and the pharmacy community at large are deeply committed — as we are — to improving patient outcomes. By joining together and making education available to a wider community of pharmacists, we are supporting that commitment. We also expect to provide a way for specialty pharmacy stakeholders to address the professional and business issues that they share.
DSN: What about Pharma — what does the merger mean for pharmaceutical manufacturers?
Irene/Cohen: By 2016, perhaps 40% of prescription drug expenditures in the United States will be for specialty products. Manufacturers, like the rest of us, realize that improved patient outcomes will depend increasingly on the most effective use of specialty pharmaceuticals. As a result, we believe the pharmaceutical industry will be pleased that there is now one unified organization with a strong focus [and the] most up-to-date education in each specialty pharmacy therapeutic category. In addition, we believe it is in the interest of manufacturers to know that pharmacists have furthered their training to achieve the CSP credential. We think the pharmaceutical industry will applaud these educational efforts and find NASP/SPAARx a convenient, appropriate channel for connecting with specialty pharmacy.
DSN: What will be the first strategic priorities for the new association?
Irene/Cohen: First and foremost, we are focused on the NASP/ SPAARx Annual Meeting and Expo in Orlando, Fla., Sept. 30 to Oct. 3, which is shaping up to be a wonderful industry gathering and celebration. We also have many operational priorities, such as combining the boards and governance groups, refining our internal operations, opening up our founding membership opportunities to new companies and reaching out to new corporate and individual members. We will continue to build our conference-based and online education program and facilitate achievement of the CSP credential. Beyond that, there are undoubtedly professional and business issues that the NASP/SPAARx leadership would like the newly merged organization to address.
The merger is a very exciting development for specialty pharmacy — the formation of a strong unified association for all stakeholders, dedicated to education, collaboration and advocacy in the service of improved patient care.
Following Alliance Boots model, Walgreens will focus on front-end profitability
As expected, Walgreens this month pulled the trigger on the second step of its Alliance Boots acquisition. The combined operations will create the first global pharmacy retailer with more than 11,000 stores in 10 countries. And despite all the speculation, it will remain a U.S.-based company, with its headquarters in Deerfield, Ill.
So, what’s next for Walgreens?
Look for Walgreens to continue to try to create a kind of retail theater, focused very sharply on the front end of the store. Walgreens will continue to invest in enhanced service in its stores, with more than 26,000 beauty advisors, and a relatively new position, health guides, who assist customers in health and wellness now in 80 stores. That service element is critical to driving front-end sales growth and to larger market baskets.
But it’s also a front end designed to grow margins, much as Boots has done in the United Kingdom. Walgreens, of course, will continue the rollout of its Boots No7 beauty department, which is now doing a brisk business in the Phoenix — and more recently, New York — markets. Baskets with Boots items are bigger than the average beauty basket, according to the company.
“There’s real opportunity in the front of our store,” said Greg Wasson, Walgreens Alliance Boots president and CEO. “[Boots’] operating margins are significantly higher than what ours are, and that’s primarily as a result of that front-end business. If we look across the pond to the Boots model, we have some similar opportunities at the front end of our store.”
Focusing on improving front-end performance is a smart play. Walgreens Boots Alliance may have just become one of the largest generics buyers in the world, but that business is becoming more commoditized. Many of the medicines treating chronic conditions have crested the generic wave, and with the recent increased cost of generics prices, that has pressured pharmacy margins.
“The pressure on the pharmacy is a global issue,” Stefano Pessina, executive vice chairman of Walgreens Boots Alliance, told analysts in early August. “Twenty years ago, Boots was making its money on the pharmacy — so 75% of the profit of Boots was coming from the pharmacy. Today, 75% comes from the front of the store. Are the pharmacies losing money? Not at all. They are still very profitable in Boots, [though] the margin has suffered.”
Does that mean Walgreens will de-emphasize pharmacy? Absolutely not.
But creating a must-shop experience across the front end while maintaining a market leading position in health care is something that Boots has done particularly well. “This is what will happen in the United States,” Pessina said. “I can assure you that after the merger, we will have a step up in the margins of the front of the store. … We have clear plans for it.”
‘Leading change’ at Cardinal Health RBC 2014
WASHINGTON, D.C. — “Leading change.” That was theme for this year’s Cardinal Health Retail Business Conference, held here last month at the Gaylord National Resort and Convention Center, from July 23 to 26. And no doubt, given the rapidly changing healthcare landscape and the increased role that pharmacists are playing in the U.S. healthcare system, that theme resonated again and again throughout the course of the event.
“‘Leading change,’ is all about your vital role in moving healthcare forward,” Steve Lawrence, SVP independent sales for Cardinal Health, told attendees of the opening business session.
More than 8,000 independent pharmacists attended RBC 2014, which kicked off July 23 with a special daylong “Health on the National Mall” event, co-sponsored by Cardinal Health and the National Community Pharmacists Association, in which volunteer pharmacists shared insights with local patients on how to better manage common health issues and chronic conditions, ranging from asthma and diabetes to heart health and weight management.
Drug Store News produced a special co-branded e-newsletter edition to follow all the action at RBC 2014. For complete highlights, visit Drug-StoreNews.com/Cardinal-Health-RBC-2014.