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Walgreens Q1 sales up 1.4% as it works toward closing Rite Aid deal

BY Michael Johnsen

DEERFIELD, Ill. – Still no announcement that Walgreens Boots Alliance has closed the deal on its proposed acquisition of Rite Aid, but that announcement will come soon, the company stated Thursday morning after posting first quarter sales of $20.7 billion, up 1.4%.

“Overall we are pleased with the progress this quarter, with results in line with our expectations," announced Stefano Pessina, Walgreens Boots Alliance executive vice chairman and CEO. "We continue to anticipate that growth in the second half of fiscal 2017 will reflect the new strategic pharmacy partnerships we announced last year [including PBMs Express Scripts and Prime Therapeutics]. As a result, we have raised the lower end of our fiscal year guidance by 5 cents per share.”

Walgreens operations in the U.S. realized a 1.1% quarterly increase in overall comparable sales. Pharmacy sales, which accounted for 69.1% of the division’s sales in the quarter, increased 2.5% compared with the year-ago quarter. Comparable pharmacy sales increased 2%.

The division filled 237.6 million prescriptions (including immunizations) adjusted to 30-day equivalents in the quarter, an increase of 3%  over the year-ago quarter. Prescriptions filled in comparable stores increased 3.4% compared with the same quarter a year ago, primarily due to continued growth in Medicare Part D volume. The division’s retail prescription market share on a 30-day adjusted basis in the first quarter increased approximately 40 basis points over the year-ago quarter to 19.5%, as reported by IMS Health. Growth in comparable sales resulted from increased pharmacy volume and brand inflation, partially offset by reimbursement pressure and the impact of generics.

Looking ahead, that pharmacy volume growth will continue to grow as Walgreens Boots Alliance continues to assimilate the new TRICARE pharmacy patients the company started serving in December, 2016. That was a significant development in the past year, Pessina told analysts Thursday morning. "The big achievement of last year [was] to create a bridge with the main PBMs and other big players in this industry," Pessina said. "Now we have certain joint ventures, new contracts [and] patients as a consequence of these bridges, but [also] we have something that is much more important  — we have established trust between us and a certain number of companies."

With this trust, Walgreens Boots Alliance expects to generate a number of profit-driving opportunities going forward, Pessina added. "Our relationship with Prime [Therapeutics], with Express Scripts and even with Optima [Health] are creating a new base of collaboration that will go beyond a simple contract," he said.

Retail sales decreased 0.9% in the first quarter compared with the year-ago period, which includes the impact of certain e-commerce operations. Comparable retail sales were down 0.5% in the quarter, though gains in core categories like OTC and beauty helped offset declines in consumables and general merchandise.

Since the end of the first quarter, the company has completed the first phase of the rollout of its new, differentiated beauty offering in more than 1,800 stores.

Walgreens  Boots Alliance confirmed it is actively engaged in discussions with the Federal Trade Commission regarding its pending Rite Aid acquisition, which was announced more than 14 months ago. Also subject to FTC approval is the sale of 865 Rite Aid locations to Fred's for almost $1 billion. "The company is working toward a close of the acquisition in the early part of this calendar year," Walgreens stated.

Walgreens Boots Alliance's international division had first quarter sales of $3 billion, a decrease of 14.4% from the year-ago quarter due to the negative impact of currency translation. Sales increased 0.5% on a constant currency basis.

Pharmaceutical Wholesale, meanwhile, had first quarter sales of $5.4 billion, a decrease of 6.5% from the year-ago quarter. On a constant currency basis, comparable sales increased 4.7%, which was slightly ahead of the company’s estimate of market growth weighted on the basis of country wholesale sales.
 

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Possible repeal of Affordable Care Act takes first step

BY Brian Berk

WASHNGTON, D.C. — The U.S. Senate voted 51-48 in favor of beginning a debate on a budget resolution that could overhaul of repeal the Affordable Care Act.

This vote means the Senate will begin 50 hours of debate on a budget measure that would repeal much of the ACA, also known as Obamacare. This step is the first in a two-step process, which could direct congressional committees to craft a budget reconciliation bill, which would include language to repeal much of the ACA.

Provided in more detail, the repeal resolution includes the following:

  • Reconciliation instructions to authorizing committees so that repeal legislation can move through a fast-track process and can pass with only a simple majority in the Senate, as in the House. These instructions to committees are provided to facilitate immediate action on repeal, with the intent of sending legislation to the new President’s desk as soon as possible.
  • The resolution provides reconciliation instructions to four authorizing committees — Ways and Means and Energy and Commerce in the House, Finance and Health, Education, Labor, and Pensions in the Senate — to achieve at least $1 billion each in deficit reduction over 10 years (fiscal years 2017 through 2026).
  • The resolution calls for the authorizing committees to report legislation to their Budget Committee by Jan. 27. The legislation will be combined for consideration on the floors of the respective Chambers.
  • Reserve funds necessary to accommodate legislation to repeal and replace Obamacare. These authorities permit the Budget Committee Chairs to adjust resolution figures as needed to accommodate patient-centered health care reform legislation in the future.

The vote was heavily based on party lines, with Republicans voting in favor of the resolution that would lead to a repeal of the ACA, while Democrats voted against it. The only senator changing party lines was Rand Paul (R-Ky.), who voted against the measure.

President-elect Donald Trump has long said repealing the ACA would be the first thing on his priority list when taking office.

Chairman of the Senate Budget Committee Mike Enzi stated Obamacare has “clearly failed hardworking Americans.”

“Americans face skyrocketing premiums and soaring deductibles,” he said. “Insurers are withdrawing from markets across the country, leaving many families with fewer choices and less access to care than they had before – the opposite of what the law promised. Today, we take the first steps to repair the nation’s broken health care system, removing Washington from the equation and putting control back where it belongs: with patients, their families, and their doctors.”

Meanwhile, President Barack Obama took to Capitol Hill in an effort to save Obamacare. He also asked Democrats to refer to the Republicans’ new plan as “Trumpcare.”

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Council for Responsible Nutrition relaunches website

BY Brian Berk

WASHINGTON, D.C. — The Council for Responsible Nutrition relaunched its website to enhance the user experience and simplify navigation.

“We wanted our new website to reinforce CRN’s position as the go-to industry source for a variety of stakeholders seeking information about the dietary supplement and functional food industry. The result is a user-friendly website, whether viewed from a desktop, tablet, or mobile phone, with a stronger search engine and a more technically functional platform than our former site,” said Judy Blatman, senior vice president, communications, CRN.

In addition to the public site, www.crnusa.org features a members-only section, intended to be a one-stop-shop for exclusive alerts, announcements and documents.

“Interest in dietary supplements continues to grow each year, and when people are not looking specifically for products, they’re looking for quick access to information about the industry itself — information about science, regulation, legislation, or consumers trends. CRN’s new website is designed to grow with the industry and provide these kind of resources for visitors, whether they are industry executives, consumers, journalists, regulatory agencies, legislative staff, or healthcare practitioners,” said Blatman. “Enhancing CRN’s website both from a visual and technical perspective will allow us to more easily share the story of the responsible industry and show why we’re relevant to the lives of the more than 170 million Americans who take supplements each year.”

The CRN is a trade association for the dietary supplement and functional food industry.

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