Steve Anderson, NACDS president and chief executive officer

ARLINGTON, Va. — In the currently chaotic public policy environment, the ability of the National Association of Chain Drug Stores to remain both focused and nimble in support of its industry has been a huge asset to the NACDS membership.

As NACDS president and chief executive officer Steve Anderson pointed out earlier this year, the uncertainty in the realm of public policy reflects the daily political turmoil prevalent in Washington, which in turn is impacting the broader business environment.

In the face of disruption on multiple fronts, NACDS has continued to execute what it terms the Access Agenda, a pro-patient and pro-pharmacy program centered on three main principles:

• Preserving patients’ access to care.

• Expanding access to newer services.

• Partnering to create stronger and safer communities.

One specific example is NACDS’ ongoing campaign to maintain pharmacy choice and access for military families and veterans, an effort that currently faces obstruction from the Department of Defense. Another important focus for NACDS is the opioid epidemic.

NACDS is working hard to position the chain drug industry as part of the solution, not part of the problem. As Anderson details in the interview below, the association is advocating unusual measures, such as limiting initial prescriptions to seven days and proactively meeting with state attorneys general to inform them of what retail pharmacy can do.

Other important priorities for NACDS are continued efforts, in concert with allied organizations, to ensure that states reimburse pharmacies appropriately, according to the provisions of the Affordable Care Act. An ongoing lawsuit filed against the state of Washington last year challenges reimbursement rates that fail to even meet the costs of dispensing Medicaid prescriptions.

In addition, the association is continuing to advocate for the drug store industry on direct and indirect remuneration (DIR) fees imposed, often retroactively, by pharmacy benefits managers.

CDR: There is currently a lot of disruption in retailing and in health care. How is that affecting the work of NACDS?

ANDERSON: We’ve had a pretty dramatic transformation in retail generally. Our membership — from traditional drug to food and mass — is having a challenging time right now. The role of NACDS is to make sure that we’re doing what our board tells us, but also to anticipate changes that we know will be coming our way.

I’m having our staff read a book called The Anticipatory Organization, written by David Burrus. This book is almost a road map, from my perspective, of what NACDS has been doing for the last 10 years. It started before President Obama was elected; he was still a candidate, as were a bunch of other Republicans and Democrats.

We began then to position pharmacy as the face of neighborhood health care, and people finally discovered that we were part of the health care system. Joseph Campbell talks about a thread in your life. If you look at the thread of our industry, you can see that we’ve made the right changes at the right time to anticipate where we are today, even though we could never have predicted it.

NACDS is strong financially, and our membership is extremely committed. The issues that we’re engaged in are as important to the bottom line of our member companies now as they’ve ever been.

We’ve launched the Future Value Targeting initiative, which is part of our strategic planning focus. The best way I can describe it is that we’re not only focusing on impacting the lives of patients that come into our stores, but also addressing societal issues, such as the opioid epidemic. We’re also focused on making sure that people have access to their prescription drug benefit under Medicare and Medicaid, and, through the commercial payer system, reducing costs.

We have been highly anticipatory for a world we didn’t know we would be in; because of that, we’re in very strong shape. We’ve got a really committed board of directors. Our bench is deep with the top industry leaders in the country. But we have to be flexible and quick in addressing issues as they arise; we’re up for the task.

CDR: Let me ask you about some specific issues, starting with the Affordable Care Act and the whole government framework for health care. President Trump is trying to undercut the ACA, but it certainly doesn’t seem likely that Congress is going to take decisive action.

ANDERSON: Congress has a lot on its plate, and we have an election in 2018. Will there be full-fledged ACA repeal? No. They are chipping away at it, but the important thing is that we’re fighting very hard to make sure we protect the progress that we’ve made since that dreadful AMP [average manufacturer price] rule out of the Deficit Reduction Act that was so disastrous for the industry when I got here 11 years ago.

We’ve made great strides in ensuring that pharmacy is being properly reimbursed so that patients will have access not just to their prescription drug benefit, but to all the services that we provide — point-of-care testing, MTM [medication therapy management], immunizations, health reviews.

We’re fighting hard, on a daily basis, to make sure that the gains we’ve achieved in the last 11 years are not lost. We’ve filed a lawsuit in Washington state over inadequate dispensing fees. We’re very aggressive on the components of the ACA. Even though the headlines in the paper are all about ACA, we’re really down to the niche portions of the law, making sure that our members are able to run their businesses profitably.

CDR: Is the work more with CMS [the Centers for Medicare and Medicaid Services] and HHS [the Department of Health and Human Services], as opposed to a large legislative push on ACA?

ANDERSON: Yes. I saw that CMS administrator Seema Verma was in Arkansas recently, meeting with the governor on some of the requirements they have for Medicaid expansion. [Republican] Gov. [Asa] Hutchinson didn’t get all that he wanted in that regard.

When you begin to read the fine print — where NACDS operates — there is a lot going on. We’re well equipped, and we’ve shown what we can do. We saved the industry over $10 billion with the [AMP] lawsuit, and we need to make sure we stay abreast of other issues like it.

CDR: Is that battle primarily at the federal level, the state level, or both?

ANDERSON: Both. We’ve got states that are now carrying out this new reimbursement plan; it’s extraordinary what we’ve done as states implement the policies that have come out of CMS under the new reimbursement rule for Medicaid.

We’re active in Congress, as well as state legislatures and regulatory agencies. If the states are not complying with federal and state law, we take them to court. We did that recently in Washington state, and that issue is still pending. We did it in California and other states as well.

Individual states are really important because Medicaid groups are watching to see how it unfolds, which will determine how they’ll approach the issue. Even though we may be involved in Washington state, the outcome there does have national ramifications.

CDR: This is an aside, but NACDS doesn’t always get as much credit for what it does at the state level as it deserves.

ANDERSON: That’s all right. I send a memo every Friday to the board. As long as the board knows, we’re good.

CDR: It seems to me that perhaps the biggest issue right now is DIR [direct and indirect remuneration] fees. Where does the fight to create a level playing field stand?

ANDERSON: CMS came out with a request for information, and we filed our comments. We adopted new NACDS policies, and we are submitting statements on manufacturer rebates to CMS. Moving forward, it will have a profound impact on everyone; I don’t hesitate to say that it is an extremely high priority issue for our members.

The ball really is in CMS’ court. It’s hard to go to Capitol Hill — we’ve done this — and try to explain to somebody what DIR fees are, and the history of the program, and why we are where we are. Their eyes start to glaze over.

But we’ve had positive support from members of Congress in terms of sending letters to CMS. Our new HHS secretary [Alex Azar], who actually came out of the pharmaceutical industry, has a pretty good knowledge base of the business, as opposed to some other past secretaries of HHS.

We had the 2018 RxImpact Day on Capitol Hill, with more than 450 representatives from member companies and students from schools of pharmacy attending, and DIR was one of our top issues we talked to members of Congress about.

Earlier this month, CMS issued its final 2019 Medicare Part D rule and the 2019 Rate Announcement and Final Call Letter, and these actions were important for several issues on which NACDS is very active. Regarding DIR fee reform, CMS stated that it has the authority to take action that ultimately could make it more clear to pharmacies how much they will be reimbursed for the Medicare Part D prescriptions that they dispense. This is significant in that CMS is indicating that no legislative action would be needed before it could begin a rulemaking process on this issue.

CDR: So HHS understands what’s at stake and is receptive?

ANDERSON: They’re as receptive now as they’ve ever been. The question is timing. This is an immediate issue for our member companies, but the wheels of government run really slowly, especially around health care policy. We’re doing what we can, and our members are committed.

CDR: As I understand DIR, a big part of the problem is that different PBMs are trying to implement it in different ways. Is that the case?

ANDERSON: Yes, it’s a way for people at the end of the year to make up some costs; it’s become a catch-all for almost everything they do, and the bills coming back are massive. But I think we’ve made the case well in terms of the impact this has on patient care. We feel CMS is more engaged on this issue than in the past, and I think that it’s a result of what NACDS has done — working with our colleagues at NCPA [the National Community Pharmacists Association] and others in the industry who are very concerned about DIR fees. We’re all on the same page.

CDR: It is bad for Walgreens and CVS, but can be life or death for small chains and independents. At the Regional Chain Conference, you mentioned that NACDS has a PBM Task Force. Tell me about that.

ANDERSON: The PBM Task Force is part of the NACDS Policy Council. The board of directors and our executive committee set the policy for the association. That’s the instructions that I give to the staff in terms of what we support and pursue on the policy side. We’ve had a PBM Task Force over the years that has worked on PBM issues, and they make recommendations to the Policy Council.

The Policy Council is a diverse group. Sometimes we have government affairs people on it or people who are charged with pharmacy ops within their companies. The PBM issues are generally outside the jurisdiction of those types of people.

We have a good cross section of our members; we try not to have a lot of committees. I worked for an association that had 24 committees, councils and task forces who reported to the board of directors. At the board meetings, all they did was have some chairman of the committee read a report that everybody knew was written by a staff member, and that was it.

We do have, however, an elaborate decision-making process. By the time a matter gets to the board and the executive committee, board members are well versed. They have people who have served on the PBM Task Force. Then, members of the Policy Council gives the details on a whole host of issues to their board members. So, by the time it reaches the board level, and by the time I’m directed to go out and lead the troops on, we’ve vetted it very well.

I’ve worked for associations for a long time, and not everybody agrees on every issue, especially when you work for an industry where your members have completely different business models and operations. None of our members really have the same type of business. We’re not car dealers, as an example, where the basic business model is pretty straightforward.

So, you will have people who will not agree with a particular policy. We still have the First Amendment, so they can express their point of view. We tell people that if it’s not a 100% unanimous decision; we will tell members of Congress in that regard. It’s a marketplace of ideas, and everybody can express them.

CDR: It’s interesting. Business models are becoming increasingly diverse.

ANDERSON: As we speak. That means that I’m very comfortable with our bylaws and policies and procedures, and how we reach final conclusions. NACDS has a huge impact on our member companies, and how they do business. I’ve discovered over the years that there are a lot of other issues where there is consensus. That’s not just true on policies we’re lobbying, but also where we’ve spent a lot of time for the last 11 years — building an image of the industry. There’s complete agreement, 100%, on that.

CDR: DIR is one of the top issues you’re currently dealing with, arguably No. 1. What are some of the others?

ANDERSON: We’ve spent a lot of intellectual capital and financial resources over the last year on the opioid abuse epidemic. We are demonstrating the many ways that pharmacy is part of the solution. There have been lawsuits filed against different segments of the supply chain, with an incredible amount of publicity.

I have to say, when I go into the office of a member of Congress, the opioid abuse and diversion situation is so horrendous that there is a bipartisan effort to try to fix it, because it devastates every community across every county, which means every congressional district.

We’re doing some really interesting things, based on the experiences of pharmacists on the front lines of health care delivery.

CDR: You said you’re doing some interesting things. What are they?

ANDERSON: NACDS adopted four new public policy recommendations, which build on pharmacy’s extensive and collaborative efforts, including compliance programs, pioneering e-prescribing, drug disposal, patient education, security initiatives, fostering naloxone access, and stopping illegal online drug-sellers and rogue clinics.

One of our new policy recommendations is to limit the initial fill to seven days for acute pain. Also, we’ve always been very strong on moving towards electronic prescribing, and now we have a bill that was just introduced in the Senate — similar to the one that had been introduced in the House — that would require electronic prescribing for controlled substances in Medicare Part D. NACDS’ position is that we ought to have electronic prescribing for all medications.

We have another policy position on prescription drug monitoring programs. They are so different in each state; we really need uniformity and interoperability on these issues. Our members are also engaged in formulating drug take-back programs, and we have a policy recommendation on that topic as well. We participated in the Opioids Summit at the White House recently, and Kellyanne Conway talked about what pharmacies are doing regarding drug take-back; it is being recognized by opinion leaders, policy makers, legislators, and regulators as a viable partial solution. We are also meeting with the state attorneys general to tell them what pharmacy is doing to combat opioid abuse. We’re helping to be part of the solution, not part of the problem.

CDR: Is the Trump administration stepping up to the plate on this?

ANDERSON: They have a lot of priorities. I sense that, personally, the president feels strongly that the administration has to be engaged in it. There’s something happening almost all the time. The secretary of HHS, the secretary of Homeland Security, the deputy secretary of state, the secretary of HUD [Housing and Urban Development] were all at the Opioids Summit. The White House Office of National Drug Control Policy was created to bring all these different agencies together to focus on this issue.

The states, the AGs and the governors are also involved in this issue. Several hundred lawsuits are pending in the states. So there’s a lot of activity at the federal, state and local levels.

CDR: Where do things stand on the provider status issue? That’s been a longtime objective of the industry. There’s support in Congress, but it never seems to quite come together and get enacted.

ANDERSON: We are making significant progress. The question is what vehicle you can find in order to make provider status a reality. With every bill that‘s considered by Congress, you need a score from the Congressional Budget Office, estimating how much it’s going to cost. We’ve been having good and productive conversations with the sponsors of the legislation in order to bring the cost down, so it will be considered, we hope.

One of the issues that we’re really focusing on is pharmacy’s great potential in helping to bring down health care costs overall. Pharmacists are the most accessible health care providers available. But the Congressional Budget Office has a tendency to engage in a static, rather than a dynamic, method of scoring, and they don’t extrapolate how much we’ll actually save by having pharmacist provider status legislation enacted.

According to the American Colleges of Schools of Medicine, the shortage of primary care physicians is going to be at an all-time high in 2020, so we have to make sure we push this bill through. We’re keeping our pedal to the metal. There’s not a lot of appetite for general health care legislation anyway, particularly in an election year.

CDR: Is there consensus within NACDS as to what pharmacists should be able to do, what additional services they should be providing?

ANDERSON: There’s a lot of consensus, and a lot of interesting pilots are being conducted. We’ve got immunizations, point-of-care testing, medication therapy management and education. We provide a wide range of services. When we talked about provider status, we just focused on Medicare Part B.

There is consensus. Always in Congress, you don’t get 100% of what you want. But if we can get an initial bill enacted, it will be very beneficial for the American people. Then, hopefully, we can work on expanding those services, as we move forward.

CDR: Tricare is a perennial issue. Every year it’s a new fight.

ANDERSON: We’re lobbying very hard to make sure we can have a working group put together with a good cross section of people. The assistant secretary for manpower at the Defense Department was confirmed recently, and this issue this came up. He said he wanted to learn more about it. We’re just working to make sure that we can try to reach consensus within the industry.

There’s a lack of consensus within the drug supply chain anyway. When that happens, the decision makers have a tendency to take a pass. We’ve had constructive conversations with the manufacturers on this issue. So, we’re hopeful that we might be able to do something with the new assistant secretary of defense going forward.

CDR: You’ve had discussions with pharma on Tricare; how about the broader policy goals of NACDS? Are you working to forge alliances?

ANDERSON: We always have coalitions going. That’s the way you get things done in Washington. When members of Congress know that organizations have had differences in the past, but you can say that they’ve reached consensus on a particular issue, that goes a long way toward getting your public policy goals achieved. And it’s not just at the federal level. We work the same way at the state level as well.

One of the most valuable relationships NACDS has is with the members of the National Alliance of State Pharmacy Associations (NASPA). We work extremely closely with those organizations at the state level. Becky Snead does a great job running that group, and we’ve got a great relationship with it.

The relationship we have with Morning Consult has been invaluable in terms of perceptions that the American people have about pharmacy that we convey to decision makers. We’ve broken down the polling and the survey work by congressional district. So we can go in and tell one of the 435 members of Congress what people think of the value of pharmacy, and what their position is on provider status, as an example. Or, we can go into all 100 U.S. senators and have the same data for states.

CDR: That’s great.

ANDERSON: It’s very powerful going to members of Congress and saying here’s how the people in the 10th congressional district of Virginia view our issues. This isn’t just about a national survey. We’re a diverse population. We want to show that we’re part of the solution, not the problem, on local as well as a national level.

CDR: I want to ask you just about the front end, which is more important than ever in light of the pressure on profit margins in pharmacy. How is NACDS addressing that part of the business?

ANDERSON: One of the hidden gems of NACDS that not a lot of people know about is our Retail Advisory Board. It comprises both chain and associate members. They sit down and try to identify issues of common concern that they can work on. Sometimes they are policy issues, but generally they’re not. They’re industrywide issues, where chain and associate members can get together and help solve problems.

For example, we’ve been studying Millennials forever. We had a fascinating presentation on Generation Z that A.T. Kearney made at the Regional Chain Conference. It was really educational in terms of the impact of social media and these influencers. These people are teenagers who have a lot of dollars at their disposal, and they’re going to be the next generation of customers. They are completely different from the Millennials.

More broadly, we’ve done a quadrant analysis of how larger and smaller manufacturers and chains work with each other, and the dynamics that can be considered to maximize productive and successful relationships. The value equation for all of these companies’ participation in NACDS and the Retail Advisory Board is very good. We don’t get involved, nor can we, in the operational side of our member companies. But they can get together and try to reach consensus within a legal framework on how to make the industry stronger, and they do a really, really good job.

The Retail Advisory Board, which includes many industry leaders, is very important, as we always are looking at making our meetings better. It played a major role in the planning of Total Store Expo, and remains instrumental in helping make TSE successful in terms of the programming, and how we take that trade show to market.

CDR: Are you satisfied with the current lineup of NACDS meetings?

ANDERSON: Yes, but we’re always trying to improve. We look at it on a daily basis, because all association meetings have changed considerably over the years, and they will continue to do that, especially as this industry transforms, in light of your earlier question, in terms of disruptions, both in health care and in retail.

There’s no substitution for relationships. Relationships have driven NACDS since our founding, and this is our 85th anniversary, which is extraordinary. The things that some of our founding members said back then are things that I’m still saying today — how NACDS members are going to collaborate for the betterment of the industry and the American people. They’re the same message points.

Our Annual Meeting is the gold standard — not just in pharmacy or health care, but for any association — in terms of meetings. I have many friends who are CEOs of other associations who have heard about the NACDS Annual Meeting, and they want to replicate it, but they can’t pull it off. It’s all based on those strong relationships we have.

I’m delighted how TSE has grown into an event that is greater than the sum of its parts when we merged our Marketplace, Pharmacy and Technology, and Supply Chain conferences. But things never stop changing. Our members are always looking for a return on their investment in everything we do, from dues to trade shows.

CDR: In your remarks at the Regional Chain Conference, you talked a lot about collaboration. What is NACDS doing to try to foster that? There’s already a great deal of it that the association helped bring about in the industry, but I assume you’re always thinking of ways to enhance that.

ANDERSON: Yes, we are. I get together with the senior staff once a week and the question of how we foster more collaboration is something we talk about all the time, based on particular issues that we’re engaged in. The strength of NACDS has always been collaboration, both on the retail side and on the associate side, in order to advance the industry. So, everything I’ve told you is a result of collaboration.

There are a lot of moving pieces for an association. It may look easy from the outside, but you have a group of competitors, both retail members and associates. They decide they’re going to walk into the room and help solve an issue that they can do under law. To me, that’s what trade associations are about.

It goes back to that relationship issue I was talking about earlier. We have the most senior people in our industry engaged in NACDS. To me, that is a testimonial to the importance that we have in the industry and for the member companies.

In the old days, people used to be engaged in their association just because they thought it was a good thing to do. Now, it’s vital.

CDR: We talked about the need to protect and enhance the image of the association and the industry. We talked about this being NACDS’ 85th anniversary. I also know that when [H-E-B’s] Martin Otto was chairman, you started to urge NACDS to maintain a startup and think tank mentality. How do you see all that coalescing?

ANDERSON: I think we’ve gone full circle. The Anticipatory Organization by David Burrus is all about disruption. It’s all about transformation. It’s all about how companies have to think completely differently.

What we try to do at NACDS is to make sure we’re doing that; we are a place where ideas come and percolate. It’s often said that states are the great laboratories of our country, and generally when a few states start enacting things, all of a sudden it becomes a national issue because you can shape that issue there and then. That’s good. We’re always looking for new ways to address what seem like old issues, and how we position that in terms of our messaging.

NACDS is probably one of the most cutting-edge organizations I know. Now some people will find that to be an oxymoron, because when they hear the word association they think of a rather rigid and inflexible group that always accommodates the lowest common denominator so they can reach consensus.

Our board and the members of the various committees that we talked about are from very forward-thinking companies. You have to be if you want to be successful in retailing and health care. We’re making sure that NACDS reflects that, because associations can’t survive if they’re not responding to the members. If people don’t want to be engaged in the association, you’re done. If anybody just sits around and celebrates how great they’ve been for the last 85 years, they’re probably not going to see their 90th. We are always looking for ways to build on our strengths.

I love associations, for countless reasons. And I love sitting around talking to people who have been in this association previously, and to see what they were working on, and what was important to them.

But how do you translate that common purpose into policy issues that are completely different? E-commerce was not anything they really could have even begun to anticipate back then, but it’s the same type of industry in terms how we want to help improve the lives of people. We just have to adapt accordingly. How we communicate our message, including the use of social media, is really important. You have to say it in about two paragraphs. I don’t want to say that we’re the USA Today of association work, but there are so many different things that you need to look at.

We really do focus like a startup because we zero-base everything out for the year, and then see what’s hot. A lot of these issues stay forever because Congress has a tendency to work on issues forever.

The Future Value Targeting initiative that we started when Martin Otto was chairman continues. Under [current chairman] Alex Gourlay [of Walgreens Boots Alliance] we’re spending a considerable amount of time on what we call “shared value,” although some people might prefer the terms “community engagement” or “corporate social responsibility.” The goal is to communicate what our members are doing for society, because that’s important to consumers. They want to buy the products and go to the stores of companies that they think benefit society in general. To me, that’s really what Future Value Targeting is all about.

CDR: How is NACDS getting that message out?

ANDERSON: We’re partnering with Deloitte, and you will see a report issued at the Annual Meeting. Some of the preliminary data was distributed by the 450-plus pharmacy advocates who visited members of Congress during RxImpact Day in March.

NACDS has always been focused on health-related issues, things like diabetes prevention and treatment that fall into the category of shared value. But when you look at the extraordinary measures our members took when the three hurricanes hit our country last year, those are the more traditional corporate social responsibility issues. We’re now communicating much better in terms of what our members did across the board.

CDR: In some respects, NACDS members responded more quickly than the government did.

ANDERSON: When our members have stores five miles or less from 90% of the American people, we’re already there, embedded in the community. That’s what our shared value message is all about. It’s not just being the most accessible health care provider, but the most accessible good citizen in the community.