INSIGHTS AND PERSPECTIVES

Editor’s note: Commitment is key

Albertsons is a standout among pharmacy operators

BY Seth Mendelson

Good for the goose, good for the gander?

Not always. Take, for example, QuickCheck, a New York area-based convenience store operation that announced in late October that it was closing its nine pharmacies in stores scattered throughout New Jersey to focus on its vibrant fresh food and beverages business.

By most accounts, the chain no longer saw the value in operating a pharmacy and, some said, its top officials have come to realize that if you want to be in the pharmacy business, it is a case of being all in or all out. They chose out.

Albertsons, who earlier this month was the recipient of Drug Store News2018 Pharmacy Innovator of the Year Award, is a case of being all in with the pharmacy. As we discuss in our cover story this month, Albertsons officials are making it clear that they are covering all the bases and leaving no stone unturned with their pharmacy operation in order to better serve their patients and maximize the financial potential of the category.

That is a hefty task. The Boise, Idaho-based chain operates roughly 1,800 pharmacies across 35 states and under 20 different banners, including its namesake Albertsons banner, as well as Safeway, Vons, Jewel-Osco and Acme operations. Thousands of pharmacists and other employees are involved in this part of the business, and the logistics of keeping everyone happy — customers and employees — is complex and confusing. Government regulations, keeping up with new technologies, and drugs and healthcare issues, including working with insurance companies, only dramatically compound the situation.

But Albertsons’ officials get the job done and, as we came to see in a few days of interviews at the company’s headquarters in Boise, they get it done by creating an intricate strategy built around teamwork. They also get it done by concentrating on “scripts, standards and service,” and paying a huge amount of attention to their consumer needs at the pharmacy.

The pharmacy operation of the future will look much different than it did just a few years ago, and even now. The retailers who stay ahead of the curve will continue to thrive in this business. Albertsons, it appears, is one of those retailers that plan on being at the forefront of this industry for the near term and well into the future. We are proud to recognize them for their efforts and many successes.

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Innovation doesn’t wait

BY Dave Wendland

For my final Drug Store News contribution for 2018, I wanted to wrap up my series on “The ideas I haven’t thought of yet,” with a focus on the topic of retail innovation.

Each day there’s another headline announcing additional store closures, slipping same store sales, or some hot new internet start-up capturing sales from the traditional brick-and-mortar market. However, buried deep inside the newspaper – well below the fold – there’s a different kind of story. A success story boasting of creativity and filled with enthusiasm. That’s what this article is about. Innovative approaches which are exceeding expectations and captivating the imaginations of shoppers.

Convenience
Who ever imagined that buying a car from a vending machine could be possible? Well, get familiar with Carvana, a leading e-commerce platform for buying, financing, and selling used cards. On December 13th the company unveiled its newest Car Vending Machine in Indianapolis joining other cities in Texas, Tennessee, Florida, North Carolina, Maryland, Arizona, Ohio, and Pennsylvania that already were home to similar seven story-high towers.

The company claims that by removing the traditional dealership infrastructure and replacing it with technology and exceptional customer service, Carvana offers consumers an intuitive and convenient online car buying and financing platform.

Where else has convenience surfaced in the physical retail space? Can anyone say Amazon Go? With reported plans to expand its network to about 3,000 cashier-less Go stores by 2021, the convenience store will truly become convenient.

Experience
If you want to see a busy retail store that still resides in many malls across America, think Lush Cosmetics. So what are they doing about it – they plan to triple the size of their average store over the next three years. This, according to reports in the Financial Post about a year ago stating, “The retailer, known for showcasing its unwrapped rainbow-hued like baked goods in baskets and on shelves at its 250 stores, is grappling with an enviable business problem: after seven years of double-digit same-store sales growth, many of its locations have become too crowded during peak shopping times.”

What is the draw? An atmosphere that is experiential, fun, and engaging. And they’re paying attention to the trends in the market by offering products free of preservatives to appeal to the vegan or gluten-free shopper.

Personalization
My favorite recent example of personalized shopping is from an unlikely mass market brand…Nike. A global brand, whose famous swoosh is as recognizable across the globe as McDonald’s golden arches, the bite from Apple’s fruit, or Google’s unique typography.

The retail landscape has shifted considerably over recent years, forcing Nike to consider innovative options such as their newest flagship program. Their new store design energizes the in-store experience and offers opportunities that consumers simply can’t get online, such as testing out new products in real sporting activities before buying. Most importantly, the store also bolsters Nike’s digital strategy with full integration with the Nike app, meaning that even if customers walk out without making a purchase, their data is stored and accessible, and a path to future purchases.

And, if it’s customization that the shopper wants, Nike’s NIKEiD customization service allows customers to design shoes unique to their tastes — at a premium, of course.

Expertise
Although I’m neither a fisherman nor a hunter, I love Bass Pro Shops/Cabela. Why? It’s largely because their staff is absolutely passionate about everything outdoors. They simply look like they are having a grand old time and are knowledgeable, engaging, and sincere. This winning attitude combined with one-of-a-kind displays and store imagery makes these environments nothing short of magical.

Their website boasts, “We are driven by our passion to inspire people to enjoy, love and conserve the great outdoors. We work together based on the essential values of respect, teamwork, quality and ingenuity to create extraordinary experiences for our customers and guests.” It is this unique attitude that makes their expertise shine.
Make no mistake, innovation is all around. All that a person has to do is look around at other industries and other consumer touchpoints and then apply it to the retail supply chain. Here are a few out-of-the-box examples to get your creative juices flowing. I’ll be eagerly watching to see what innovation you bring to your retail operation, your brand, or your team.

Washington, D.C. Metro
Although beleaguered by its share of challenges through the years, Washington Metro has also received its share of accolades, including best metropolitan transportation system in the country. What I believe is a learning opportunity for retail is the navigation system that makes traversing the vast subway relatively simple and painless. How can a similar navigation system be developed in the visual brick-and-mortar, virtual, or mobile space to ensure shoppers are managing their path to purchase as effectively as possible and being presented logical “connections” along their journey?

Pinkberry
Although other frozen yogurt shops could have been cited, the concept of providing healthy choices, customization, and unique experiences describe the Pinkberry operation. Shoppers not only demonstrate their loyalty by frequenting this shop, they also engage, promote, and encourage others to experience Pinkberry. What are retailers doing today to create this type of brand advocacy and evangelism?

Chick-fil-A
Certainly “please” and “thank you” matter. So does an organization that remains true to its values and extends their commitment consistently through the in-store experience, their social media, website, and all other touchpoints.
What’s most important to your retail operation? Are you so deeply committed to your core values that they are shared across all of your interactions with your shoppers?

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2018 policy in review: Pros, cons and promise

BY Lindsay Bealor Greenleaf

As 2018 comes to a close, many of us will spend a brief moment reflecting on the year, pondering our highs and lows, our successes and failures. The most motivated among us will take the extra step to identify areas of our life where there is room for improvement, like getting to the gym or finishing a column before the eleventh hour.

Rather than limit reflection to our personal lives, how about taking a trip down memory lane to revisit prescription drug pricing reforms?

Let’s start off on a positive note by recalling favorable policy changes and proposals.

In May 2018, the Trump administration proposed several positive policy changes in its drug pricing “Blueprint,” including: a proposal to modify the Anti-Kickback Statute safe harbor that allows for rebates; a proposal to require a percentage of rebates be applied at the point of sale to reduce patients’ out-of-pocket costs; and a proposal to promote value-based purchasing in federal programs by enabling tools like indication-based pricing.

A few months later, in September, Congress voted to prohibit “pharmacy gag clauses,” which is language middlemen known as pharmacy benefit managers insert into contracts with pharmacies that prevent the pharmacist from telling a customer when they can pay less for a drug by simply forgoing insurance.

It is ludicrous to think that using insurance could actually be worse for patients, and even more ludicrous that a pharmacist would be prohibited from helping them save money. Considering a recent USC Schaeffer study found that 23 percent of prescriptions paid at the pharmacy counter by commercially insured patients are overpaid, this reform to prohibit pharmacy gag clauses marks a significant win for patients.

However, this year also included several troubling policies put forth by the Trump administration.

In August, the administration enacted a policy change allowing Medicare Advantage plans to force seniors to “step through” an undesired drug before being granted access to the physician-administered therapy prescribed by their doctor. Beginning in 2019, this “fail first” policy will significantly harm patients suffering from some of the most complex and debilitating conditions, like cancer and rheumatoid arthritis.

In October, the Trump administration proposed the “International Pricing Index Model,” which would impose international reference pricing for Medicare patients’ physician-administered drugs.

Compared to the rest of the world, the United States places a high value on access to therapies, which is why Americans currently enjoy access to cancer treatments two years earlier than other developed countries. If the administration chooses to swap today’s payment design for a model that links to socialist countries’ payment designs, we are at risk of losing the speedy access to innovative therapies that we enjoy today. Americans could be forced to wait in line for cures, or worse: there will be nothing to wait in line for.

In November, the administration targeted longstanding patient protections in the Medicare Part D program by proposing to weaken the “Protected Classes,” which currently guarantee coverage for cancer, HIV, epilepsy, mental health and transplant-rejection drugs. A recently released proposed rule would allow plans to expand the use of prior authorization and step therapy, as well as exclude a Protected Class drug from coverage if its price increases faster than inflation. If finalized, this policy change would hinder access to treatments for Medicare’s most vulnerable patients.

While 2018 brought a mixed bag of reforms, we can find promise in the future.

With Democrats winning control of the House, we expect them to spend the next two years developing and voting on aggressive drug pricing legislation, including policies to allow the government to negotiate prices in Medicare, which is essentially government price setting, as well as expand the government’s power to seize patents if they do not approve of a manufacturer’s price. But with Republicans maintaining control of the Senate, it is unlikely that any of these ill-conceived policies will be enacted next year.

Since regulators are immune to the slowdowns that result from midterm election campaigns and the changing of the guard, we expect the Trump administration to continue its current pace of policymaking.

Going into 2019, we hope that the administration sets aside some time to observe the implications of recently enacted changes before barreling through with another series of reforms. Mindful observation and reflection is important, especially when it comes to policy, because it is difficult to assess how well one policy is working while numerous other policy changes are simultaneously underway.

Only by slowing down and measuring the effectiveness, as well as the consequences, of this past year’s policy reforms can we be confident that these changes are productive and protect patients’ access to critical therapies.


Lindsay Bealor GreenleafLindsay Bealor Greenleaf is director at ADVI, a healthcare consulting firm representing life science companies and healthcare provider organizations.

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