Pharmacy Industry News: Courtney Opposes Pharmacy Merger
Courtney Opposes Pharmacy Merger
U.S. Rep. Joe Courtney let the Federal Trade Commission know he strongly opposes the proposed merger of two of the three biggest companies that manage pharmacy benefits, Express Scripts and Medco Health Solutions.
The merger is reportedly valued at about $25 billion.
“Like many of my colleagues, I have concerns that the proposal will lead to further market concentration in an industry—where there are already few choices—without realizing cost savings for consumers,” Courtney wrote in a letter to FTC Chairman Jon Leibowitz. “At the same time, this concentration will squeeze community pharmacies, forcing some out of business and creating job losses.”
He’s not alone in his opposition.
“Our members are very concerned about what this proposed merger will mean to patients, employers, state government and pharmacists,” Margherita R. Giuliano, executive vice president of the Connecticut Pharmacists Association, said in July when the merger was announced.
“These large Pharmacy Benefit Managers already have too much power when it comes to controlling health care dollars and they have clearly placed their own corporate earnings first and foremost. This merger will only broaden the power they wield which will ultimately lead to increased prescription drug costs,” Giuliano said.
Appearing before a House antitrust subcommittee two weeks ago, Express Scripts Chief Executive George Paz and Medco Chief Executive David Snow said the market for PBMs was rapidly evolving and includes more competitors than the top three.
But what worries independent pharmacies the most is not only the management of pharmacy benefits for many insurers, governments, and employers, but also the fact that Express Scripts and Medco own their own mail order pharmacy.
According to a Wall Street Journal article, Medco’s Snow reassured independents at a Sept. 20 Congressional hearing that the company wouldn’t have more leverage to steer customers to fill prescriptions by mail order.
But in Connecticut a deal brokered between the state and the labor unions forces the more than 45,000 state employees to get their maintenance drugs, such as blood pressure medication, through mail order.
And while the state gave independent pharmacies a chance to join the mail order program, it was unable to negotiate any rate since the savings were already locked in as part of the labor agreement.
In Connecticut, pharmacies are looking at potentially losing thousands of state employees as patients, Guiliano said.
“The recent SEBAC agreement negotiated with the state mandates that state employees receive their chronic medications through the mail or at a CVS pharmacy,” Giuliano said. “In the latest proposal, any willing pharmacy will be allowed to participate in the mandatory mail order program at the same reimbursement as the CVS/Caremark owned mail order pharmacy – a situation that in most cases will not be affordable to small
pharmacies.”
Rick Carbray, a CPA member and owner of Apex Pharmacy in Hamden, went on to add that “we are also deeply concerned that this PBM merger could mean the further closure of many Connecticut community pharmacies.“
“This is a sad day because there is a world of difference between the personal one-on-one, face-to-face care that community pharmacies offer. It will ultimately also be a loss for the many state residents who are these pharmacies’ patients, as well as a loss for the State of Connecticut due to the lack of revenue and increased unemployment if pharmacies close.
Fifty years later, card store stays relevant in technology-driven world
Fifty years ago, Duey and Virginia McBride moved to Kitsap County “on a lark” to open a pharmacy where Arnold’s Furniture now stands in Bremerton.
The decision to move from Seattle’s Wedgwood neighborhood to Bremerton came after Duey McBride was convinced by a pharmaceutical drug salesman to check out an empty pharmacy building. The aspiring pharmacist saw possibility inside the vacant store, but he had no idea where it would lead.
“We didn’t know what we were doing when we came over, just a couple of kids with a baby and a 2-year-old,” Duey McBride said.
The couple opened McBride’s Westgate Pharmacy in 1961. Seven years later, they expanded, opening the county’s first stand-alone Hallmark card store at 133 Pacific Ave., next to Puget Sound Naval Shipyard. Before opening the second store, Duey McBride said he didn’t even know what a Hallmark card store was.
Fifty years later, the pharmacy is gone, but three Hallmark stores still carry the McBride family name in Kitsap. Duey and Virginia McBride no longer run the stores, they passed the business on to son Scott McBride and his wife, Stacy Ryan. The family also owns Hallmark stores in Tacoma, Oak Harbor and Anacortes.
“Since I was old enough, I probably collapsed cardboard boxes,” Scott McBride said of his first role in his parents’ business. After graduating from college and then working alongside them for years, he bought the business when his parents retired.
A lot has changed since Duey and Virginia McBride opened their first Hallmark store. The couple operated the stores largely during an era when penned correspondence was the primary way to communicate with friends and family living outside the area. It was a time when handwritten thank you notes were the norm and not a novelty.
In recent years, the family has had to expand its offerings in the shops beyond the birthday, anniversary and get well cards. The stores now offer a bag line by designer Vera Bradley, Christmas ornaments, women’s apparel, Yankee Candle Co. candles, gift wrap and other items to bring in income and stay relevant.
Duey McBride says the change is the result of the Internet and the ever-evolving way society communicates.
“Today, the industry is being overtaken by the Internet, Twitter and Facebook,” Duey McBride said. “There’s no expansion in the (gift card) market at all, it’s shrinking.”
Duey McBride doesn’t like the Internet, but he admits it has made it easier to stay in touch with a cousin living in Norway.
His son has a slightly different take on how the industry has changed in recent years. Yes, the business has added new products to its inventory, but greeting cards remain “the backbone of the business,” he said.
“People are always looking to communicate feelings and thoughts and sometimes they struggle to put it in their own words,” Scott McBride said. “Getting a card in a mailbox is more meaningful than an email or a text.”
The family celebrated its 50 years in business over the weekend with customers, offering cake and refreshments and a special sale. Giving back to the community was a long-standing practice of Duey and Virginia McBride when they ran the stores, and it is something Scott McBride and his wife have carried into the next generation. Over the years, the family has raised money for breast cancer research, the Kitsap Humane Society, the YWCA’s ALIVE shelter and Harrison Medical Center’s annual Festival of Trees event.
Business news in brief
Amerisource buys drug-services firm
AmerisourceBergen Corp. said it agreed to buy TheraCom L.L.C., which supplies consulting and reimbursement services for the pharmaceutical and biotechnology industries, for $250 million. TheraCom is a unit of the drugstore operator and pharmacy benefits provider CVS Caremark Corp. The deal is expected to be completed by the end of the year. AmerisourceBergen, Valley Forge, is a distributor of pharmaceuticals. – Paul Schweizer
The Bancorp to buy back stock
The Bancorp Inc., Wilmington, said its board of directors authorized the repurchase of up to 750,000 shares of the company’s common stock, or about 2.5 percent of the total outstanding. The shares are trading at about $7.05, making the repurchase currently worth about $5.3 million. The company operates The Bancorp Bank, which has assets of $2.5 billion and offices in Philadelphia, Exton, Warminster, and several Southern and Midwestern cities, in addition to Delaware.
New UnitedHealth Business Starts Offering Hearing Aids
Health-insurance giant UnitedHealth Group Inc. (UNH) is adding a new dimension to its increasingly broad suite of health-care products: hearing aid sales.
A new UnitedHealth business is launching on Monday four different kinds of hearing aids, made by supplier IntriCon Corp. (IIN), with a goal of helping reach millions of people who don’t get the devices due to high costs and lack of insurance coverage.
The move comes as insurers kick off marketing efforts for their 2012 Medicare-based plans. UnitedHealth is offering new hearing-aid benefits in such plans, but is also selling devices on a retail basis over the Internet, injecting it into a multi-billion-dollar market where major players include European firms Sonova Holding AG (SOON.VX), Siemens AG (SI, SIE.XE) and William Demant (WDH.KO).
UnitedHealth is using its scale–the entire company projects $101 billion in sales this year –plus a proprietary web-based hearing test to offer an alternative to a supply chain it says can lead to devices that are too expensive for many people. The move drew criticism from a professional group for hearing experts, which said online hearing tests can’t replace a face-to-face exam.
“Our goal is to put better hearing within reach of more Americans, including the 47 million with Medicare, which does not cover the significant cost of hearing devices,” said Lisa Tseng, chief executive of the new hearing-aid business, called hi HealthInnovations.
UnitedHealth, based in Minnetonka, Minn., has been expanding its business far beyond the bounds of health insurance. It has a broad array of health-services offerings, including its pharmacy-management business, and it has also acquired physician groups. The latest venture marks UnitedHealth’s first foray into medical-device sales, which the company believes is an industry first.
The U.S. market for hearing aids and other so-called audiology devices is valued at more than $5.7 billion, according to Vancouver-based firm iData Research. About 36 million Americans have hearing loss, and the number is poised to grow as baby boomers age.
The UnitedHealth businesses’ hearing aids will retail for between $749 and $949, which compares with typical prices that can reach thousands of dollars. The new business is also contracting with several UnitedHealthcare Medicare Advantage and Part D drug plans to make devices available to plan members; there will be no out-of-pocket hearing-aid costs for some Medicare Advantage members, the company said.
Previously, the company said industry Medicare plans had some discounts on the devices, but such discounts have been limited by high costs and lack of Medicare coverage.
UnitedHealth is keeping costs low by simplifying the route for patients to get hearing tests and, if necessary, hearing aids. It has an online test designed to work with earphones and is planning a mobile application for smart phones and tablet computers. Based on the results, hi HealthInnovations will custom program hearing devices.
“We’re really leveraging UnitedHealth Group’s scale and our membership base” to keep costs low, Tseng noted. The company will refer patients onto physicians if hearing tests indicate more serious problems, Tseng said.
Therese Walden, president of the American Academy of Audiology, a professional group for hearing experts, said mark-ups for hearing aids cover the cost of important services that benefit patients. An online test can’t take into account all the variables that impact successful treatment for hearing loss, she said, and audiologists help patients maximize the potential of their hearing aids.
“Skimping on the cost-effective tests and care provided by the audiologist, which helps to ensure accurate diagnosis and effective short and long-term care, is not smart,” Walden said.