Chain drug pharmacies are not just reacting to change in the health care system. They’re driving it.


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Pharmacy chains emerge as catalyst for change

August 27th, 2012

NEW YORK – Chain drug pharmacies are not just reacting to change in the health care system. They’re driving it.

With the health care overhaul now a certainty, and cash-strapped patients heightening their pursuit of cost-effective preventive care and wellness, drug chains are dramatically stepping up pharmacists’ roles.

The Supreme Court’s June ruling upholding the Affordable Care Act means upward of 39 million people will get health insurance, and presumably they will be less reluctant to get and fill prescriptions.

American Pharmacists Association chief executive officer Thomas Menighan noted that the ruling upheld pro-pharmacy provisions of the law, including closure of the Medicare Part D doughnut hole and opportunities for pharmacists to be members of the health care team in medical homes and accountable care ­organizations.

TOP 10 RETAIL PHARMACY CHAINS BY NUMBER OF PHARMACIES

1. Walgreens — 7,908

2. CVS Caremark — 7,400

3. Rite Aid — 4,646

4. Walmart — 4,393

5. Health Mart — 2,993

6. Kroger — 1,950

7. Target — 1,636

8. Safeway — 1,400

9. Shoppers Drug Mart — 1,271

10. Kmart — 945

In the meantime, pharmacies are becoming more relevant to the health care system by virtue of notable internal changes. Walgreen Co., CVS Caremark Corp. and Rite Aid Corp. have all significantly recast their prescription businesses, whether through revamped operations in stores or via integration with related offerings.

Walgreens has both expanded its breadth of pharmacy services and changed the way its pharmacists interact with patients with initiatives such as the rollout of “health and daily living” stores. Few things about the company now are as noticeable as its commitment to health care.

In offering a wider range of health and wellness services Walgreens is causing patients to see their community pharmacy in a different light. “We believe it’s up to us to advance the profession of community pharmacy,” said CEO Greg Wasson. “We’re not waiting for someone else to do it.”

He noted, for instance, that Walgreens pharmacies have become much more than just locations where patients can get a prescription filled. A broadened scope of services has helped make the company a key player in improving walk-in patients’ overall health, while its expansion into specialty and work-site pharmacies has given it a presence in health care well beyond its in-store prescription counters.

CVS Caremark Corp., meanwhile, is well positioned to thrive in the increasingly complex health care market, president and CEO Larry Merlo said this spring.

By leveraging its unique business model — which integrates stores, walk-in clinics and pharmacy benefits management — CVS Caremark can drive innovation in pharmacy care, Merlo pointed out.

“Our purpose as a company is to help people on their path to better health,” Merlo said. “We have executed successfully on our core initiatives, and we are well positioned for growth in 2012 and beyond.”

“When you look at our three business units, they’re all performing very well,” he added. “Our suite of assets is well aligned with the direction of health care.”

Going forward, a core focus for the drug chain will be to hit the “integration sweet spots,” where the company’s business units can work together to enhance pharmacy care and improve patient health outcomes, according to Merlo.

For its part, Rite Aid is empowering its pharmacists by making them more accessible and broadening their services.

“The overall strategy is to be a destination for health and wellness for our consumers,” said executive vice president of pharmacy Robert Thompson.

Two pillars of Rite Aid’s strategy that put pharmacy at the forefront are its wellness+ loyalty program and “wellness store” format. Wellness+ earns members a bigger reward for their prescription purchases and, upon enrollment, gives them 24-hour access to a Rite Aid pharmacist via phone or the Internet. Members of the adjunct wellness+ for diabetes program also get toll-free and online access to diabetes specialists.

The wellness store has the pharmacy as its centerpiece. A path leads customers straight to the pharmacy department, whose prominent prescription pickup and drop-off windows can be seen from throughout the store. The format, too, frequently features a patient consultation room as well as expanded clinical services, including medication therapy management, diabetes care and ­immunizations.

Even as drug store operators ramp up their health care offerings, their core business continues to grow. Last year, the pace of prescription drug sales growth picked up last year, especially for drug chains.

Chain drug pharmacy sales jumped 4.2% in 2011, more than triple the 1.3% growth rate the trade class posted the year before. Supermarket sales edged up 1%, while mass merchandisers recorded growth of 2.5%, down from 3.6% in 2010. Total retail pharmacy sales advanced 3.3% to $275 billion.

Drug chains had the largest piece of the pharmacy pie by far, accounting for just over two-fifths of sales. The next highest share belonged to mail-order pharmacies, which had nearly 24% of sales.

The most medicines launched in a decade brought new, transformative treatment options to more than 20 million Americans in 2011, even as patients visited their physicians and used prescription drugs less often, according to a report from the IMS Institute for Healthcare Informatics.

The report, “The Use of Medicines in the United States: Review of 2011,” found important variations across the country and by patient age. Young people, ages 19 to 25, increased their use of prescription drugs as many for the first time were able to remain on their parents’ health insurance, while seniors 65 and over reduced their volume of prescriptions.

The availability of new generic drugs in a number of chronic therapies contributed to a minimal increase in drug expenditures overall. Total health care system spending on medicines reached $320 billion in 2011, up 0.5% on a real per capita basis.

“2011 was a remarkable year for the volume of drug breakthroughs that became available to millions of Americans,” said Michael Kleinrock, the institute’s director of research development. “At the same time some troubling trends that began in 2009 persisted, with many patients appearing to ration their medical care. The implications of fewer doctor visits and lower drug utilization on patients’ health have yet to play out and require further study.”

Thirty-four new molecular entities were launched in the United States, the most in a decade. First-time therapies became available to treat several types of cancer, multiple sclerosis, hepatitis C and cardiovascular conditions. Orphan drugs, which treat rare diseases affecting less than 200,000 people, also saw the greatest number of launches in 10 years.

*To see lists of the top 100 retail pharmacy chains by sales and by pharmacy count, see the Annual Report of Retail Pharmacy 2012 — which includes business and health care analysis, retail pharmacy profiles and industry trend articles — in the Aug. 27, 2012, print issue of Chain Drug Review.

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