PHARMACY PROFILE

Industry Challenges Explored,

Business Strategies Honed

 Our Pharmacy Profile centers on the NACDS Annual Meeting held recently at the Breakers in Palm Beach, Fla., and excerpts from three of the speeches presented. Leading off is Tony Civello, chairman, president and CEO of Kerr Drugs and NACDS chairman, followed by Michael Leavitt, Secretary, U.S. Department of Health and Human Services, and David Bernauer, chairman and CEO of Walgreens. 

By Marsha K. Millonig

“Creating a Healthier Future,” the theme of the 2006 Annual Meeting of the National Association of Chain Drug Stores, was echoed throughout the event’s general business programs, strategic exchange appointments and networking sessions.

  The gathering attracted more than 1,300 attendees, including suppliers from all business segments that sell within today’s chain community pharmacies.

 The suppliers — NACDS’s associate members — included manufacturers of prescription pharmaceuticals, OTC medications, health and beauty care products and general merchandise, as well as drug wholesalers. During the many hours set aside for the strategic exchange appointments, the supplier reps met with chain pharmacy leaders to map strategies.

 Joining the chain and supplier attendees at the meeting were representatives of various national and international associations and deans and educators from the nation’s pharmacy schools and colleges.

 The meeting offered two stimulating general sessions addressing today’s business challenges. Leading chain executives and other leaders shared their thoughts on the industry’s transition to a service-based profession rather than a strictly product-focused one.

In addition to its strong substantive content, the annual meeting offered an array of networking opportunities, from the welcoming “Rock and Stroll” extravaganza to the closing dinner where comedian Jeff Foxworthy sent attendees home with smiles on their faces.

 Participants seeking further fellowship stayed an additional day to mix and mingle during “Sports & Leisure” events. And through most of annual meeting schedule, a “Focus on Health” pavilion was open, offering health screenings, fitness advice, and nutritional information.

Marsha K. Millonig is president of Catalyst Enterprises LLC and a special projects editor of Community Pharmacist and its sister publication, HealthCare Distributor.

Civello: Community Pharmacy’s

Survival Demands United Action

The following are excerpts from the remarks by Tony Civello, chairman, president and CEO of Kerr Drugs and NACDS chairman of the board.

“ We’d all agree there have not been many ‘positives’ for us lately. I can’t remember a year that seemed longer or more difficult than the one we have just been through. 2005 was a year that seemed to move in agonizingly slow motion, a year in which we came face to face with the realization that our industry was threatened, that we stood alone, and that we could not take anything for granted ...

“I’m convinced that in 2005 our industry actually headed in the wrong direction. We lost ground on the issues that matter most to us, and go to the heart of our survival ..

“I don’t know about you, but the crisis point for me came in the now-famous comment by President Bush accusing pharmacists of cheating the government when it comes to Medicaid reimbursements. He said, and I quote, ‘It’s not immoral to make sure prescription drug pharmacists are not overcharging the system.’ Like you, I was angry and very sad to hear that comment. It was the first time, and I sincerely hope the last time, when the words ‘immoral’ and ‘pharmacists’ appear in the same sentence ...

 “But the president’s remarks show very clearly what we’re up against. They show how the environment has been poisoned by half-truths and misinformation, so that even the president of the United States does not have the facts correct ...”

*     *     *

“When many of us got our first pharmacy jobs 20, 30, or 40 years ago, we couldn’t imagine some of the market and political forces we find ourselves up against today: Internet sales, mail-order pharmacy, drug importation, erosion of public trust, and a federal government that’s more adversary than ally, while also acting as the country’s largest payor to our industry. But as the industry’s leaders, it is not our job to simply minimize the damage or merely help our industry survive. It’s our responsibility and obligation to ensure that community pharmacy continues to flourish.”

*     *     *

“You heard me say it last year — and I have said it to many of you in our private talks — that I am convinced the future of community pharmacy depends on our ability, really our willingness, to speak with a single voice. That was my challenge to the industry when I spoke at last year’s annual meeting. I believe we have moved a long way in that direction. I’m proud and encouraged by the progress we’ve made. But we haven’t finished the job.

“I know the challenges that stand in the way of speaking with one voice. But I made a commitment last year, and I reaffirm that commitment today. In the marketplace, we can remain competitors, celebrate diversity, and work like crazy to beat the rival down the street. But we must speak with a single voice on the common issues that threaten our future. Faced with a crisis — as I believe we are — we need a unified front and a consistent message. We can no longer afford the status quo or business as usual.

“Make no mistake ... we are in the fight of our lives — and there are those who would rather see us disappear than succeed. And if we want to point fingers, I think we know where to start. Right here in this room, including up here at this podium. We are the ones that helped create this crisis by letting our temporary, competitive instincts get in the way of this industry’s need for enduring evolution and progress.”

*     *     *

“Look at it this way. Who wins in Washington and who loses? The same people seem to be winning all the time. The losers, at least recently, tend to be the people represented in this room: community pharmacy.  I don’t think for a minute the winners are smarter or better than we are. But they do have one very important attribute in common: they speak with one voice.

 “For example: The pharmaceutical manufacturers speak through PhRMA, the PBM’s speak through PCMA, and the health insurance companies, through AHIP. When they talk to Congress, there’s no mistaking what they’re saying, what they want, and what they mean. No mixed messages — ever.

“We’re the ones who send conflicting and confusing signals. We’re the ones who come across as fragmented and disjointed. And so, when Congress has to make cuts in health care spending, they come after us to the tune of $6.3 billion. And do you know what one high-ranking lawmaker told me when I asked, ‘Why us…why is community pharmacy taking directs hits of more than $6 billion?’ He said, ‘Because you are the weakest link’ ...

“We are the weakest link? We have 55,000 stores, we’re in every neighborhood in America, we’re staffed by the most trusted, accessible professionals in this country — and we are the weakest link?

“I think it’s time to stop making speeches and stop making excuses. Rhetoric will not get the job done. Only well thought out action plans will! It’s time to fight for our future. It’s time — if necessary — to get confrontational. It’s time to speak with one voice. And it’s time to start winning. A seat at the table is important, there’s no doubt about it. But those 55,000 stores and those trusted professional pharmacists are an asset this industry has been unable or unwilling to fully tap.

“I truly believe we can only be successful if we unlock our “people power” behind a true grassroots effort that stands up to what we know is right. Our message must be clear and concise. We must speak with a unified voice. Policy makers, elected officials, the Administration, and yes, even President Bush, must clearly hear and understand what we are saying.

“The issues we’re faced with are universal. They threaten community pharmacy whether you have one store or a national chain. And they can only be addressed if we all speak as one industry with a coordinated and unified action plan.”

*     *     *

“I’d like to share with you some elements of our game plan. In February, we created the Community Pharmacy Grassroots Coalition ... an industry-based coalition, designed to engage all facets of community pharmacy. While we need the support, effort and infrastructure of our associations, we — the industry members — must be engaged. It is our future that is threatened.

“The coalition will be led by a steering committee that has been chosen to mirror the industry itself, with members from large chains, regional chains, independents, NCPA, NACDS — the whole spectrum. This steering committee will direct the grassroots efforts and be the platform upon which we build the ‘one voice’ campaign … setting goals, focusing on targets, and demanding results.

“They have set an aggressive agenda, ranging from near-term objectives to long-range goals. Here are the three initiatives the coalition has developed for immediate action: First, we’ve got to be better communicators. We have already begun regularly scheduled weekly meetings between both associations. The weekly meetings function as a forum for both groups to have representation in areas of policy, government affairs, and pharmacy outreach. If there needs to be a pharmacy message crafted that speaks to the desires of all of pharmacy, the coalition will be the facilitator. Yes, communication does get results.

“Second, we’re going to be more aggressive about sharing information with our own customers when they come into our stores. Put another way, we’re going to start beating our own drum. We’re talking about signs, banners, and handouts … whatever it takes, as long as it speaks with one voice and delivers a consistent and meaningful message. When you think about President Bush’s comment about ‘immorality,’ you realize the truth is getting drowned out. So we’re going to regain the moral high ground, starting in our own stores.

“Third, we must mutually create an infrastructure and reach out for funding to conduct a comprehensive campaign. Elements of the campaign will be far-reaching, starting with baseline surveys, research, and education. We will then execute tactics and strategies such as: grassroots mobilization, congressional visits to pharmacies, public relations campaigns, Washington fly-ins, and paid media. If you are asked to support the coalition — whether it is involvement, feedback, or funding — know that your help is critical. We have a lot to lose without your support.

“There is another great opportunity for the coalition…and that is to work with CMS [the Centers for Medicare and Medicaid Services] on the newly-formed Pharmacy Quality Alliance. This alliance will work to develop quality criteria which moves pharmacy closer to a model where it is rewarded — not only for dispensing medications to patients, but for ensuring that those medications are the most appropriate for the patient’s condition. That would be a landmark change!

“We must migrate from a reimbursement model that compensates us for fulfillment to a model that compensates us for professional services. When we speak with a congressman or when they visit our stores, we’re not going to talk in terms of NACDS or NCPA. We are going to be talking about our entire industry — community pharmacy — the role it has played for generations, and the role it will continue to play.

“We have already sent a strong first signal. Bob Hannan, in his first week [as NACDS interim CEO], along with Bruce Roberts, CEO of NCPA, sat down together with Dr. Mark McClellan, administrator at CMS. This meeting was the first time ever that both organizations came together with one message.

“We will continue to build on this momentum. Now, all of this may not sound like a radical change … but in critical ways, it is. Clearly, we are in a crisis situation, and we need new strategies and new tactics. I believe we now have the right ones. We’re going to focus on the grassroots. Be more confrontational if necessary. Demand that our members of Congress be accountable. And speak with one voice in support of our industry.

“Make no mistake. It is our intention to continue to make every effort to work with our partners from PhRMA, the administration, and Congress. But, the future of community pharmacy is in our hands. As leaders, we owe this profession more than the simple survival, more than mere damage control. The opportunity for innovative progress and sustained growth of community pharmacy is in our custody.”

HHS’s Leavitt: Part D Experience

May Lead to ‘Sense of  Balance’  

The following are excerpts of remarks by Michael Leavitt, Secretary, U.S. Department of Health and Human Services. Secretary Leavitt spoke to the assembly via video connection.

(Regarding the introduction of Medicare Part D) “I believe pharmacists have been the heroes in all this — 30,000 pharmacists standing at pharmacy counters every day, one at a time working through problems with customers. We could not be more grateful or appreciative.”

*     *     *

“In 1965, Medicare was placed into being. Medicare got better in 1966. It got better than that in 1967. The same thing is going to happen with the prescription drug benefit. We are improving every day. Many of you are aware that we’re filling more than 21 million prescriptions a day now. The systems problems have smoothed out. They’re not perfect, but they’re getting much better every day.

“We’re now starting to look forward to what I refer to as Medicare Part D 2.0. We will inform our efforts on the future about what we’ve learned in the past, and we will get better at this. And we’re going to streamline the process. We now know more of what consumers want. Consumers are better informed. The pharmacies are better at using the system. We’ve become better at what we do. The plans are more mature. Medicare 2.0, or Part D 2.0 is going to be even better. You’ll see more standardization. I think you’ll see us working to streamline the process of appeals, streamline the process of making changes.”

*     *     *

“Yesterday I released, along with other trustees of the Social Security system, a report on the Medicare Trust Fund. It’s very clear that if we don’t get better, we’re going to get beat. Economically we cannot sustain an economy that ultimately will have to put 8 to 14 percent of the gross domestic product into health care. Health care is a vital, important part of our lives. But unless it can be done in the context of everything else that has to happen, our economic

“I’m optimistic that it will not. I’m optimistic that the kinds of things we have done with the Medicare Part D program will in fact lead us into a sense of balance. And I look forward to working with the NACDS and others within the industry to assure that that occurs.”

*     *     *

(Regarding the impact of Medicare and Medicaid pay provisions on pharmacies’ margins) “I know that the economic model of the entire industry is changing. I have observed that very directly and heard from literally dozens and dozens of pharmacists directly on this subject. It’s clear to me that the change from weekly pay ... has been a significant change, and that the relationship between the pharmacy and the plans has been defined by contracts that need to be enforced.

“We’ve made clear to the plans that if we’re not paying the pharmacies according to contract, that we’ll use our enforcement ability to do everything necessary to assure that that occurs ...

“If we find a circumstance where the distribution system of prescription drugs is substantially harmed by whatever the economic equation is, we will in fact not be serving major parts of this country. And we can’t allow that to happen.”

*     *     *

“I do see a substantial change in the pharmacy business coming in the future. I believe, as we get to a more personalized medicine, where we begin to see drugs that are created that require more personalization, that we will see the role of the pharmacy change. I believe that in the future, not tomorrow, not perhaps next year, but certainly five and ten years from now, we will see pharmacies that are deeply involved in the keeping of records for patients, that there will be a direct connection between the clinical records and in some cases, research records and the individual electronic medical records.

“I believe that the future in terms of the pharmacy being at the firing line of medicine is nothing but bright. But it’s very clear to me that the role will change and that we’ll all have to adapt, and that means our economic models will have to change as well in the way we compensate pharmacies.”

Bernauer: Five Factors Will Favor Rx Compliance
 

The following are excerpts from the remarks of David Bernauer, chairman and CEO of Walgreens. Bernauer is the NACDS vice chairman.

(Discussing the huge issue of patients’ non-compliance with prescribed medications, and five factors that could change the situation.) “The first one is e-scripts. Then, electronic medical and personal health care records … Standard messages ... RFID ... and finally, pay for performance in pharmacy ...

“But let’s start with e-scripts ... getting an accurate script to the pharmacy. Now, what’s that got to do with compliance? ... I think it’s [a large issue] because there’s a real pall over drugs and medication in this U.S., because of all the press they get. And one of the biggest things people see out there in the press about drugs is errors. And I think there’s a strong psychological impact to that, just as well as all the problems with drugs being pulled off the market for various reasons ...

*     *     *

“Electronic medical records, personal health care records, are going to drive ... information to the doctor. He’s going to see whether his patient is compliant or not. In the pharmacy, [the pharmacist will] know what the doc’s intent is. With today’s systems, it’s pretty easy to tell if you’ve slipped off your ACE inhibitor. But we don’t know if that’s because the doc wanted you to, because he put you on a different course of treatment, or that you went to another pharmacy.

“But guess what? Once we’ve got these records in place, we’ll be able to message the doctor [to determine whether] you’re still supposed to be on that ACE inhibitor ...”

*     *     *

“Message standardization. This might be the single silver lining out of the debacle we had at the beginning of Medicare Part D. I’ve never seen focus in the industry on message standardization like we’ve seen over the last four months ...

“There’s much better productivity time with ... clear messaging. Our pharmacists spend an enormous number of hours on the phone every single day, trying to get clarity from a plan, from a doctor ... what their intent is. And it’s unnecessary. We should be spending that time with a patient, not on the phone.”

*     *     *

“RFID ... How does this help us? Well, there are some things like the elimination of counterfeits, which ... is going to make the patient more comfortable ...

“But also, we’re never going to have to worry, in a full RFID world, about dispensing a drug that’s on a call-in list, or worry about expiration dates. Because we’ll have [the information] right there in the package, and our systems will identify it and stop somebody from dispensing it ...

“A huge amount [of drug abuse] is through theft in pharmacies ... and it’s very difficult to catch ... Well, with RFID, we’ll know the minute that stuff goes off the shelf ... We’re going to dramatically stop that kind of theft.”

*     *     *

“And finally — what may be the most exciting thing to me — is pay for performance. This is talking about transforming pharmacy in our stores ... actually measuring the effectiveness of pharmacists in affecting how that patient is taking their medication, whether they are doing it properly or not. We are going to be able to measure that as all these technologies come into place."

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