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Support for comparative effectiveness research grows

BY Alaric DeArment

WASHINGTON — A survey of 114 researchers, government officials, insurers, employers, business leaders and trade groups found nearly one-third say comparative effectiveness research will have a "moderate improvement" on healthcare decision making over the next 12 months.

The survey, conducted by the National Pharmaceutical Council, was the third in an annual series. The 31% who foresaw a moderate improvement from CER marked a 7 percentage-point increase from 2012. Over the next three to five years, 51% of respondents said there would be a moderate improvement, while 31% foresaw a moderate improvement over the next five years. Meanwhile, 24% said there would be a "substantial improvement" over the next three years, while 55% said such an improvement would occur over the next five years.

"The potential for CER to reshape the healthcare landscape is real, but the survey indicates that the actual impact is still on the horizon," NPC president Dan Leonard said. "Many healthcare stakeholders are not seeing an immediate impact from CER, but they do expect CER to have a larger impact on decision making during the next five years."

The NPC said the survey indicated that as the implementation of the Patient Protection and Affordable Care Act picks up speed, healthcare stakeholders have growing expectations for the use of CER as a tool for improving healthcare decision making.

The survey also found that more and more stakeholders are looking to the Patient-Centered Outcomes Research Institute as a leader in the CER effort. The survey found that 73% of respondents viewed PCORI as leading on established research priorities, while 67% said the same about the National Institutes of Health, and 65% said that about the Agency for Healthcare Research and Quality. At the same time, the NIH is still viewed as playing a leading role by 69%, but that number is down from last year’s 85%, while 66% have the same view of the pharmaceutical industry, and 61% said that about PCORI, figures nearly unchanged from 2012. Most researchers, respectively 82% and 67%, expect the work conducting research to fall to academia and the pharmaceutical industry.

"We’re expecting many groups to have a significant voice in the CER conversation during the coming years," said NPC director for health services research Kimberly Westrich. "Yet we’ll likely see a clearer picture emerge as the research priorities identified in the last year yield results that stakeholders can use."

Compared with 2010 data, the survey indicated that respondents believe efforts to advance research standards and move toward integrated purchasing decisions have increased slightly during the past three years, with 16% saying there were no widely agreed-upon research standards, compared with 38% in 2010. The respondents who said there were widely agreed upon standards rose from 7% to 10%. Those who thought purchasing decisions took an individual, "stilted" view of services declined from 62% to 39%.

 

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Cardinal Health braces for August contract expiration with Walgreens

BY Michael Johnsen

DUBLIN, Ohio — In the wake of a new partnership announcement between Walgreens and AmerisourceBergen, Cardinal Health announced on Tuesday that its pharmaceutical distribution contract with Walgreens that is scheduled to expire at the end of August 2013 will not be renewed.

"Although we are not yet ready to provide fiscal 2014 earnings guidance, our portfolio has considerable balance and we have prepared strategies to mitigate the impact of a Walgreens nonrenewal," stated George Barrett, Cardinal chairman and CEO. "Based on this, we will target a 2014 non-GAAP diluted earnings per share from continuing operations to be at least similar to the fiscal year 2013 guidance range of $3.42 to $3.50 we provided in our fiscal 2013 second quarter earnings release. We intend to provide more color on fiscal 2014 during our fiscal 2013 third and fourth quarter earnings calls."

The company also noted that earnings for the current fiscal year 2013 would not be negatively impacted as the current Walgreens agreement remains in place throughout fiscal 2013.

Sales to Walgreens, one of Cardinal Health’s two largest customers, generated approximately 21% of consolidated revenue for fiscal 2012.  For this period, approximately 60% of revenue from Walgreens was classified as bulk sales, which, as described in the Form 10-K for the fiscal year ended June 30, 2012, has significantly lower segment profit as a percentage of revenue than non-bulk sales. 

After the expiration of its contract with Walgreens, Cardinal anticipates a significant net working capital decrease based on reduced inventory and accounts receivable, partially offset by reduced accounts payable. Based on the expected working capital decrease and other factors, it is anticipated that the expiration of the Walgreens contract will result in a meaningful net, after-tax benefit to cash flow from operating activities in fiscal 2014.

 

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RadioShack continues to build retail team, naming Michael De Fazio SVP store concepts

BY Michael Johnsen

FORT WORTH, Texas — In a SEC filing, RadioShack last week confirmed it had recruited Michael De Fazio, one of the architects behind Duane Reade’s new store formats, to help the small-box specialty retailer recapture some of its lost retail pizzazz. 

As SVP store concepts, De Fazio joins a team that includes Troy Risch, who came to RadioShack from Target as EVP operations in December, and Huey Long, formerly of Wal-Mart and now RadioShack EVP strategy and consumer insights who also signed with RadioShack in December. 

Heading up that new RadioShack team is CEO Joe Magnacca, who with De Fazio, helped re-configure Duane Reade and later Walgreens as go-to shopping destinations and helped redefine what consumer’s connotation of what shopping in the drug channel entailed. 

Magnacca told analysts in late February that he likes how the new team at RadioShack is shaping up. "What you’ll see is that there’s a customer-first mentality inside our business, and probably has been for 5 or 6 weeks, that we’ll continue to build on. … We have a marketing strategy that touches different communities in different ways, and our objective is to really use social, mobile and mass media in a way that will encourage and drive traffic," he said. 

But RadioShack is still looking to round out its executive team. "We spent a lot of time looking at the [executive] team and where the voids are inside our business," Magnacca said. "Clearly, as you know from previous calls, we’re still without a chief merchandising officer inside our business. So that’s definitely a void," he said. "The work that I’m currently doing and assessing, it is getting very specific to roles and functions, so whether it’s store development, renovation programs, et cetera, and what expertise do we have inside our business. Again, I’m going to take much more of a four-wall view of the store and look at the voids as it relates to that and start to build the transformation story and putting the right people in place to ensure we can do that."

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