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Strengthening of drug supply chain’s effects on independent pharmacies raises concerns

BY Alaric DeArment

WASHINGTON — The House Committee on Energy and Commerce Subcommittee on Health heard testimony on Thursday morning from representatives of the Food and Drug Administration and several industry trade groups following the introduction of draft legislation that sponsors said would strengthen the country’s pharmaceutical supply chain.

The hearing, Securing Our Nation’s Prescription Drug Supply Chain, focused on what subcommittee chairman Joe Pitts, R-Pa., called in his opening remarks the "downstream" supply chain, which includes pharmacies, repackagers, third-party logistics providers, wholesale distributors and manufacturers. On Monday, Reps. Bob Latta, R-Ohio, and Jim Matheson, D-Utah, introduced a discussion draft of legislation that would amend the Federal Food, Drug and Cosmetic Act to strengthen the supply chain.

Pitts noted that while some supply chain provisions were included in the Food and Drug Administration Safety and Innovation Act, a comprehensive "track and trace" policy has yet to be finished.

"In order to ensure that counterfeit or stolen drugs do not enter the supply chain and harm patients, states have passed laws that require or will require those involved in the downstream supply chain to keep pedigrees or transaction histories of drugs," Pitts said. "Some believe that these differing state requirements should be replaced with a reasonable, practical and feasible federal policy.

Witnesses testifying included representatives from the FDA, the Generic Pharmaceutical Association, the National Community Pharmacists Association (NCPA), the National Association of Boards of Pharmacy, the Healthcare Distribution Management Association and others.

Speaking on behalf of the NCPA, Beaver, Pa., pharmacy owner Tim Davis expressed concerns about what the group calls the potentially burdensome legislative requirements on independent pharmacies and talked about how pharmacies are already addressing problems.

"It is my belief that the United States pharmaceutical supply chain is largely safe and secure," Davis said in his testimony. "Most practicing pharmacists today have a heightened awareness of the possibility of counterfeit or diverted drugs and therefore recognize the critical importance of purchasing medications only from trusted trading partners or wholesalers."

Davis said the "patchwork nature" of state-level drug-pedigree laws creates uncertainty and possible vulnerabilitie. discussions about track-and-trace at the individual unit level are worrisome because the technologies required are not fully developed.

Rep. Morgan Griffith, R-W.Va., echoed Davis’ concerns, noting that his state is largely rural and home to many independent pharmacies.

"People are used to going to those pharmacies; they like those pharmacies," Griffith said while questioning FDA Center for Drug Evaluation and Research director Janet Woodcock, who responded by saying that implementing policies like track-and-trace in a "stepwise way" would be the best approach.

Meanwhile, the Generic Pharmaceutical Association expressed support for making medicines traceable.

"We believe that every American deserves a uniform, nationwide system for monitoring and protecting the medicines they rely on," GPhA SVP policy and strategic alliances Christine Simmon said, expressing support for a "building blocks" approach to securing the supply chain. "To fully realize the benefits of an improved system, it is critical that we construct a path that both improves safety and provides a practical roadmap for implementation."

The GPhA and NCPA both expressed opposition to implementing a system like the one that will soon be implemented in California, saying that its requirement to track and trace throughout the supply chain at the individual level would be overly burdensome.

 

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UPDATE: Shoppers Drug Mart sees boost in Q1 sales

BY Antoinette Alexander

TORONTO — Shoppers Drug Mart announced on Thursday that first quarter sales rose 3.8% thanks to strong volume in pharmacy and continued sales and market share gains at the front end. The company also indicated that it remains on the acquisition track and is "carefully" watching as Target bolsters its presence in Canada.

“We are pleased with our first quarter results. While the regulatory headwinds facing our industry have yet to subside, we continue to outperform the market. The collective commitment of our associate-owners and their teams at store level to provide the best in patient care and customer service is delivering above-market pharmacy volume growth and robust sales and market share gains in the front of the store,” said Domenic Pilla, president and CEO.

Sales for the quarter ended March 23 totaled Canadian $2.49 billion, up 3.8% compared with the year-ago period. Same-store sales rose 2.5%.

Net earnings were C$119 million, marginally higher than net earnings generated in the year-ago period. On a diluted basis, net earnings per share were 59 Canadian cents compared with 56 Canadian cents in the year-ago period.

Pharmacy sales climbed 3.3% to C$1.21 billion, and pharmacy same-store sales increased 1.6%. The company reported that pharmacy volume growth was particularly strong in Ontario, driven in part by the implementation of a program to waive the C$2 co-pay on eligible prescriptions for seniors, and in Western Canada where the company completed a number of acquisitions in the second half of the year. During the quarter, the company acquired four drug stores and one long-term care pharmacy.

“We were able to close five deals within the first quarter of 2013. So we were very pleased with the activity we’re seeing to date. The team is actively engaged throughout all parts of the country with a focus on Ontario and Western Canada with regard to acquisition opportunities. And so it is our intention and plan to continue with the pipeline of closing on acquisitions,” Bradley Lukow, EVP and CFO, told analysts. “… We are very targeted and disciplined around the economics of acquiring scripts.”

The retailer noted that year-over-year the average prescription value at retail declined 4.8% during the first quarter, largely due to further reductions in generic prescription reimbursement rates under the recently implemented and ongoing drug system reform initiatives in most provincial jurisdictions, along with rising generic prescription utilization rates.

At the front end, sales were C$1.28 billion, an increase of 4.3% compared with the year-ago period, led by strong growth in food and confection, cosmetics and OTC medications. Same-store front-end sales rose 3.3% during the quarter.

In recent months, Canada has seen increased competitive activity in retail. For example, Target Canada is disrupting the market with the recent openings of its first stores in Canada and its goal to open 124 stores across Canada throughout 2013. In light of this, one analyst inquired about the potential impact from Target.

“In the first quarter we didn’t have a large presence of Target … it is too early to tell given the number of stores they have opened. We are obviously watching it carefully and we are deploying programs that we designed last year in reaction to new entry but, at this stage, certainly in the first quarter, there is no impact [from] Target and too early to tell right now in terms of their impact,” said Pilla, who noted that store traffic at Shoppers Drug Mart is up 1.8% and basket size is up 3.2%.

When asked about the recent news that the Alberta government will reduce generic drug prices from 35% to 18% of brand name drug prices, effective May 1, as part of its Budget 2013 and asked whether other provinces may follow suit, Pilla told analysts, “There have been other provinces that have also announced their budgets since Alberta announced the level of 18% but we have not seen anybody follow that level in Canada so far. Of course, Alberta implementation is slated for May 1 and it is still unclear what the Alberta prices will be following that implementation.”

 

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Supervalu sales down as company goes through ‘transitioning’ period

BY Alaric DeArment

MINNEAPOLIS — Supervalu posted sales of $3.89 billion and a loss of $1.41 billion in fourth quarter 2013, the company said Wednesday.

That result compared with sales of $3.98 billion and a loss of $424 million in fourth quarter 2012.

For the fiscal year, sales were $17.1 billion, compared with $17.3 billion in fiscal year 2012, while the company incurred a loss of $1.46 billion, compared with a $1.04 billion loss the year before.

"This past quarter was largely about transitioning the company for the future, and I am proud of the many things we accomplished in my first 60 days," Supervalu president and CEO Sam Duncan said. "I brought in Ritchie Casteel as Save-A-Lot’s new president and CEO, and he has already right-sized that organization’s overhead and, along with me, met with a number of licensees to understand what we can do to help drive sales and improve the overall operating model."

Retail food sales for the quarter were $1.09 billion, compared with $1.14 billion last year, while Save-A-Lot had sales of $969 million, compared with $984 million last year. The company’s independent business had sales of $1.83 billion, compared with $1.86 billion in fourth quarter 2012.

 

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