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Rite Aid posts third consecutive quarterly profit as company expands Wellness+

BY Alaric DeArment

CAMP HILL, Pa. — Rite Aid posted its third consecutive profitable quarter Thursday morning as it launched the largest extension to date to its loyalty card program and continued growing the latest iteration of its new store format.

The company announced Wednesday the launch of Wellness65+, an extension to the Wellness+ loyalty program aimed at elderly customers, amid sustained growth in the program overall. At the end of first quarter 2014, Wellness+ counted about 25 million active members, defined as those who use their cards at least twice over the past 26 weeks. Members accounted for 77% of front-end sales and 70% of prescriptions filled, both indicating growth over first quarter 2013, while the number of Gold and Silver members, the program’s most frequent users, increased by 4%.

Poly-chronic patients, who are those with multiple chronic conditions, are among Rite Aid’s most important customers, and most of them tend to be elderly. "We think Wellness65+ will give seniors a compelling reason to become loyal Rite Aid customers," president, chairman and CEO John Standley said in a conference call with Wall Street analysts to discuss the results.

COO Ken Martindale said that the company was working on modifying workflows and building Wellness65+ into the daily activities of employees, with pharmacists as the primary staff engaging with patients, but it was not anticipated that the program would create much extra work overall.

Enrollment in Wellness65+ includes an expanded consultation with the pharmacist, and pharmacist-patient consultations in general also have seen growth, as the company registered a 68% increase year-over-year in medication therapy management sessions. While MTM is not a significant contributor to revenue, Standley highlighted its ability to improve health and lower healthcare costs.

The company has also pushed forward with its expansion of the Wellness store format, converting 108 stores to its latest iteration, dubbed Genuine Well Being and originally showcased last year in a Lemoyne, Pa., store. Currently, 905 of the chain’s 4,615 stores have been converted to Wellness stores, with the goal of having about 1,200 converted by the end of fiscal year 2014. Front-end sales at Wellness stores are about 3.5% higher than non-Wellness stores, while pharmacy sales have not tracked as high, but are still positive.

More than 1,500 Wellness Ambassadors — specially trained staff who man the aisles with tablet computers to provide information on health and wellness products and serve as a "bridge" between the front end and the pharmacy — have been hired. Martindale said Wellness Ambassadors also were important for serving as a bridge between the store and the overall community and would play a critical role in pushing Wellness65+.

Wellness65+, Martindale said, would give customers "a pathway for building strong relationships with our associates and understanding how the Rite Aid experience goes far beyond filling prescriptions."

For the quarter, the company reported sales of $6.3 billion, compared with $6.5 billion in first quarter 2013, with the decrease resulting largely from new generic introductions. Same-store sales decreased by 2.5% for the same reason, including a 3.8% decrease in pharmacy sales and a 0.4% increase in front-end sales. Same-store prescription count decreased by 0.1%, and the company noted that it had maintained about 75% of prescriptions from last year’s Walgreens-Express Scripts dispute. Prescription sales accounted for about 67.5% sales overall. Profit for the quarter was $89.7 million, compared with a $28.1 million loss in first quarter 2013.

The company expects fiscal 2014 sales of between $24.9 billion and $25.3 billion and profit of between $22 million and $162 million, as well as same-store sales 0.75% lower or 0.75% higher than fiscal year 2013.


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Sears, Kmart president appointed to RILA board

BY Alaric DeArment

ARLINGTON, Va. — A top executive of Sears and Kmart is among the retail executives appointed to the board of directors of a retail industry lobbying group.

The Retail Industry Leaders Association announced Wednesday the appointment of Sears Holdings Corp. president for Sears and Kmart, EVP and chief merchandising officer Ron Boire. Other executives include CEOs of The Home Depot, 7-Eleven, Petco Animal Supplies and J.C. Penney Co.

"[Ron Boire]’s insight into the issues retailers face every day will bring added wisdom and foresight to this already stellar group," RILA president Sandy Kennedy said. "The contributions of this highly engaged group of retail executives sets RILA apart and allows us to continue to deliver big wins for our members."

The 2013 also includes Walgreen president and CEO Greg Wasson; Target Corp. chairman, president and CEO Gregg Steinhafel; Dollar General Corp. chairman and CEO Richard Dreiling; Walmart president and CEO for the company’s US division William Simon; Whole Foods Market co-CEO Walter Robb and others.

 

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Most wasteful healthcare spending results from poor adherence, study finds

BY Alaric DeArment

PARSIPPANY, N.J. — More responsible use of drugs could save the U.S. healthcare system more than $200 billion per year, according to a new study by the research arm of IMS Health.

The IMS Institute for Healthcare Informatics found that better adherence, more careful prescribing of antibiotics and increased generic use could reduce the country’s total annual health expenditures by 8%. The study, "Avoidable Costs in U.S. Healthcare: The $200 Billion Opportunity from Using Medicines More Responsibly," looked at six areas contributing to higher-than-necessary cost, namely medication nonadherence, delayed evidence-based treatment practice, misuse of antibiotics, medication errors, less-than-optimal use of generics and poor management of older patients using multiple drugs. Together, these lead to an estimated 10 million hospital admissions, 78 million outpatient treatments, 246 million prescriptions and 4 million emergency visits per year.

"As our study makes clear, drugs are often not used optimally, resulting in significant unnecessary health system spending and patient burdens," IMS Institute executive director Murray Aitken said. "Those avoidable costs could pay for the health care of more than 24 million currently uninsured U.S. citizens. Reaching a meaningful level of consensus and alignment among stakeholders, based on measured and proven success models, is a key step to unlocking the $200 billion opportunity identified in our study."

While medication among patients with cardiovascular disease and diabetes has improved somewhat over the past four years, it continues to be the largest problem, with nonadherence driving about $105 billion in avoidable costs. While the problem has multiple and complex causes, the use of analytics and collaboration between pharmacists, providers and patients appears to be helping.

Meanwhile, $40 billion came from delays in evidence-based treatments. The study focused on disease states where patients are either not diagnosed early or don’t start treatment immediately, with the largest avoidable effects seen in diabetes; for diabetes patents, delays increase outpatient visits and hospitalizations.

Misuse of antibiotics causes about $34 billion in costs and contributes to bacteria resistant to them. Another $1 billion is spent on inappropriate antibiotic prescriptions, often given to patients with viral infections. But there are signs that efforts to drive responsible use of antibiotics are helping as well.

A large number of efforts are underway to address the causes of avoidable spending, including giving pharmacists a greater role, new kinds of interventions and greater collaboration between patients, healthcare professionals and others.

Coinciding with the release of the IMS report was the Department of Labor’s release of its monthly Consumer Price Index data for 2013, which showed a 0.7% decrease in drug costs, the largest one-month drop on record. The IMS Institute had found in May that drug spending dropped for the first time in more than 50 years in 2012, to $325.8 billion.

"Both of these findings point to the importance of the billions of dollars in consumer savings from generic medicines," Generic Pharmaceutical Association president and CEO Ralph Neas said. "Today’s CPI report on drug cost reductions reinforces the need to preserve every possible avenue for drug manufacturers to bring affordable generic medicines to market, including patent settlements with consideration. The findings are particularly timely in light of the recent Supreme Court decision on FTC v. Actavis, which provides a lawful pathway for companies to resolve disputes through settlements."

Meanwhile, the National Association of Chain Drug Stores heralded the release of the IMS Institute report, saying it validated the role of retail pharmacies.

"As the face of neighborhood health care, community pharmacies have contributed mightily to the progress that the IMS Health report has found in the areas of improved medication adherence and the use of generic drugs," NACDS president and CEO Steven Anderson said. "By identifying $200 billion per year in avoidable costs, the report serves as an invitation for policymakers, private payers, employers, the entire healthcare delivery system and patients to better leverage the value of community pharmacy to improve health and healthcare affordability."


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