New administration top of mind among industry executives
“The times they are a changin’,” Nobel laureate Bob Dylan sang in 1964. It’s as true now as it was 53 years ago, especially for the chain drug industry.
With the incoming administration of Donald Trump, all bets are off with health care. The Affordable Care Act appears set for demise, but no one in government will want to be blamed for stripping 20 million people of health insurance and pharmacy benefits. So chain drug retailers anxiously wait to see how the new administration will “repeal and replace” the ACA but perhaps maintain coverage for those who didn’t have it before.
At the same time, retailers in the U.S. and Canada are readying for changes from economic and social shifts outside the political sphere. The movement toward self-care, plus the pressure to contain health care costs, is reinforcing the value of pharmacy’s ability to improve outcomes through accessible and affordable care. But pharmacy operators must also continue to deal with the squeeze on the business from ever-diminishing third-party prescription reimbursements.
Demographic changes and an uneven economic recovery will have their own part to play in the industry’s performance during 2017. The ability to meet the needs of a budget-conscious, increasingly multicultural population and increasing numbers of seniors will go a long way toward determining chains’ results this year.
Here’s a sample of what some chain drug and pharmacy industry executives had to say about the prospects for their businesses and for the sector as a whole in the year ahead.
THE INCOMING TRUMP ADMINISTRATION
“For most everyone in the country, the recent elections will have effects that will reverberate in many sectors, but perhaps none more than the health care industry. The entire Affordable Care Act, Medicare and Medicaid may be significantly disrupted if election rhetoric comes to fruition. This could have a profound impact on the amounts that pharmacies are reimbursed and the levels of service that we are able to provide for those on ACA insurance plans. Everyone in the health care industry will, to a degree, have to wait to see how things proceed.” — Brian Unmacht, president and CEO, Bartell Drugs
“One of the biggest themes in our industry in 2017 will be the impact of the Trump administration on the health care system. It is not clear at this point what changes will occur to the Affordable Care Act or how these will affect us, but we do know that we will have to be nimble in order to take advantage of the opportunities and manage the challenges that we will experience as a result of these changes. Generally speaking, we do believe that the change in administration will have a positive impact on our industry, particularly on the durable medical equipment side of our business with the appointment of Tom Price — who has been a leading advocate of DME — as the next secretary of Health and Human Services.” — Mike Eby, chief financial officer, Discount Drug Mart
“Lower-than-normal reimbursement rates and number of prescriptions filled will continue to challenge the retail pharmacy industry throughout the new year. There is uncertainty about how the new presidency will impact the pharmaceutical industry and drug pricing. Now more than ever, community pharmacies will have to be conscious of controlling their costs while exploring new alternatives to generate new streams of revenue.” — Steve Lawrence, senior vice president of retail independent sales, Cardinal Health
“At Thrifty White, we see opportunity in chaos, so we believe that the ensuing chaos in 2017 will provide a lot of opportunity for retailers. We truly see the glass as half full. With a new administration both at the state level and nationally, it will be important to demonstrate how pharmacy serves a vital role in our communities and in patient care.” — Bob Narveson, president and CEO of Thrifty White Pharmacy
“At Care, we believe that today is one of the most dynamic times to be in pharmacy. For example, look at the recent mergers, consolidations and joint ventures, which only highlight the economic and competitive pressure being felt by payers, providers, consumers and manufacturers alike. With a new administration set to take office in 2017, there will likely continue to be challenges in caring for these people. That challenge should be an opportunity for Care and community pharmacy to differentiate itself from its competitors and continue to effectively address the unsustainable costs associated with medication nonadherence.” — Michael Wysong, CEO, Care Pharmacies
“The latest political results will no doubt have an effect on the 2017 retail landscape, but what the impact will be remains uncertain. However, at Fruth we believe the role of a regional pharmacy will remain the same: to provide quality health care and innovations to promote wellness in our communities. … As a regional chain, we understand that the strength of our pharmacies lies in the relationships between our local pharmacists and our patients.” — Lynne Fruth, chairman and president, Fruth Pharmacy
EVOLUTION OF PHARMACY & HEALTH CARE
“Delivering better health care results in the U.S. requires solutions spanning the various sectors — benefit plans, hospitals, physicians, pharmaceutical manufacturing, wholesaling, community pharmacy and others. Today’s outcomes for quality and access are less than they should be. That is in spite of spending substantially more on health care than other nations. Retail pharmacy’s opportunity is to take a leadership role in developing systemwide solutions addressing all three goals — quality, access and cost. A pharmacy-specific opportunity to enhance patient service is for our pharmacists to gain permission to serve patients in accordance with their qualifications. Today, they are not permitted to do so..” — Martin Otto, chief merchant and chief financial officer at H-E-B and chairman of the National Association of Chain Drug Stores
“Last year at this time, collaboration and developing more innovative partnerships was a significant focus, in helping to improve the patient experience while also addressing some of the challenges within our health care system. Through these deeper relationships, we’re bringing more Americans access to Walgreens’ expert pharmacy and community health care services. In 2017, we expect a continued emphasis on collaboration and care coordination, as we look to deliver even greater value, care and service to our patients and partners, while bringing more innovative models to the marketplace.” — Alex Gourlay, co-chief operating officer of Walgreens Boots Alliance
“The competitive marketplace challenging retail independent pharmacists will continue in the new year, and pharmacists must remain focused on patient outcomes and utilizing the right tools and technology to enhance their daily tasks for continued innovation. Our Medicine Shoppe and Medicap Pharmacy franchisees pride themselves on being a community health care destination. We anticipate they will strive to continue providing the products and services that help improve the health of their communities in 2017.” — John Fiacco, vice president, Medicine Shoppe International
“Genoa’s success is reflective of the industry’s continued emphasis on patient-centered care. We are no longer talking about how the industry is ‘moving towards’ value-based reimbursement. Pay for performance is not the ‘future’ of health care anymore; it is happening now. What we will see in 2017 is a twist on the age-old health care goals of improving care while reducing cost, shifting the focus to solutions that reduce the total cost of care for a patient. ” — John Figueroa, chief executive officer, Genoa
“The evolution of pharmacy practice in Canada continues to present new opportunities for pharmacy services. Pharmasave pharmacists, with their trusted patient relationships, well positioned to fulfill a significant role in the delivery of community health care services, are providing care in areas such as medication management, injection services, diabetes care, travel health, minor ailment prescribing and a full range of patient care programs. Pharmacy teams are embracing the changes in the profession and improving patient outcomes for Canadians by leveraging their unique role as the country’s most accessible health professionals.” — Carmen Churcott, CEO, Pharmasave Drugs National
GROWING THE BUSINESS
“At CVS Pharmacy, we think of our front-store business as the front door to the pharmacy and a major opportunity to drive growth. We’re on a journey to elevate categories like health and beauty, help customers discover our innovative store brand products, expand personalization, and continue to invest in our innovative digital properties. We’re going to be devoting more floor space to products like vitamins, cosmetics, allergy treatments and healthy snacks, meeting customer demand and emphasizing our health expertise. This year, customers will start to see ‘Discovery Zones’ in-store, highlighting new and emerging products, such as our growing healthy drink, food and snack options, including our innovative store brands. Customers will even see new end-cap displays elevating over-the-counter products at the front of our stores. On the beauty front, our beauty and skin care products will be showcased with new displays that emphasize healthy and advanced skin care, and we will be carrying even more premier beauty products.” — Helena Foulkes, president, CVS Pharmacy
“The economy and consumer spending on natural health and beauty remain robust, and we see expenditures in both areas expanding in 2017. In the next year we plan to open new stores, increasing our presence in Southern California, all while continuing to aggressively grow our e-commerce business. With regard to our pharmacy business, we see challenges in the areas of managing reimbursement rates, dealing with the expansion of preferred or closed networks, and positioning the company to take advantage of the continued growth in specialty pharmacy. We are focused on continued expansion of compounding services, which further differentiates Pharmaca in the pharmacy space. And finally, we are focused on furthering the integrative model by having pharmacists consulting with customers about potential drug-induced nutrient depletion.” — Richard Willis, CEO, Pharmaca Integrative Pharmacy
“As we look forward to 2017, there is an inherent need for independent pharmacies to leverage their collective strengths under one brand. In relation to this, Benzer is providing pharmacy franchise opportunities to spur growth in the U.S. following the introduction of the franchise model early in 2016. With an increased focus on quality, the foundation of the Benzer franchise strategy is to help independent pharmacies have a lower financial investment with high returns.” — Alpesh Patel, president, Benzer Pharmacy
“It’s certainly not business as usual for pharmacists — their time is more valuable than ever, as they juggle their expanding role in a patient’s health care journey with the business side of maintaining a successful pharmacy. Pharmacies need strong partners who can provide them with the services and expertise they need to diversify and grow their businesses while ensuring patients receive the high-quality care they deserve.” — Robert Mauch, executive vice president at AmerisourceBergen and president of AmerisourceBergen Drug Corp.
“From health care reform on Capitol Hill to payment models shifting from fee-for-service to outcomes-based reimbursement, to an evolving patient experience, the health care market is facing myriad changes. For pharmacies to compete and grow in this dynamic environment, they will need to innovate, diversify their businesses and expand the clinical services they offer. AmerisourceBergen and Good Neighbor Pharmacy are innovating with our pharmacy partners to continue to position them to be valued, differentiated and vital members of the health care team.” — Brian Nightengale, president, Good Neighbor Pharmacy
“In 2017, Canada is expected to introduce legislation to legalize marijuana. This is a groundbreaking initiative. At London Drugs, we firmly believe that medical marijuana should be dispensed from pharmacies. Pharmacists are in the perfect position to monitor, review, educate and counsel patients on the proper use of medical marijuana. As the research on the pharmacological effects of marijuana continues to evolve, pharmacists will be able to properly disseminate this information to the medical users.” — Clint Mahlman, executive vice president and chief operating officer at London Drugs
TECHNOLOGY & SERVICES
“A patient’s engagement in their personal medication management helps ensure the best pharmacy care. That’s why last year we launched a smartphone mobile application that enables patients to send their prescriptions directly to their pharmacists. This reduces redundant paperwork and creates more opportunities for face time between pharmacists and their patients. … As we look forward to 2017, our priorities are centered on engaging pharmacy owners and their patients. We are working to unlock the power of data as a tool for independent pharmacists to better understand their patients’ care needs and grow their business.” — Richard Brennan, senior vice president of retail banner management services, McKesson Canada
*To read the full 6-page Retail Forecast report, please see the Jan. 2, 2017, print edition of Chain Drug Review.