Wendy future of retail top

Interview: With Merlo, NACDS has sure hand at helm

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WOONSOCKET, R.I. — At a time when the nation’s health care system is embarking on a period of fundamental change, the National Association of Chain Drug Stores is fortunate to have Larry Merlo as its new chairman.

As the president of CVS/pharmacy and executive vice president of CVS Caremark Corp., Merlo brings to the job at NACDS the clout associated with a company that operates one of the top drug chains and pharmacy benefits managers in the United States.

More important, Merlo provides a broad and deep understanding of community pharmacy’s role in health care, which was developed over a career that spans more than three decades.

Merlo shared his views on becoming NACDS chairman and the coming year for the industry in an interview with Jeffrey Woldt, vice president and editorial director of Chain Drug Review. Here is an excerpt of their discussion.

CDR: As the new chairman of NACDS, how do you view the association and its mission?

MERLO: In recent years NACDS has focused on three essential things. One is improving its effectiveness in government affairs, something that is especially important with everything that’s going on around health care reform. The second — and this ties in very closely with the first — is communicating pharmacy’s position as the face of neighborhood health care and the value that NACDS brings to that equation. The third is creating more of a business community, with a variety of forums where buyers and sellers can come together to network and address industry challenges together.

One of NACDS’ greatest assets is the breadth of its membership. We benefit from the engagement between all kinds of retail chains — national companies, regional companies, traditional drug chains, supermarkets and mass merchandisers. On the supplier side, NACDS’ members include pharmaceutical makers and manufacturers involved in the entire range of front-end categories. There’s great strength in that diversity.

CDR: Elaborate on how you see retail pharmacy’s role evolving.

MERLO: There has been a lot of recent research highlighting the importance of medication adherence and how effective it can be in terms of reducing overall health care costs. All of the studies point to the same thing: Every dollar that’s invested in the prescription side of health care saves seven dollars in total costs. That’s a powerful argument for what community pharmacy has to offer.

The challenge we face is to make that better understood. It’s especially important in relation to the role that pharmacists play and the services they provide, including such things as MTM [medication therapy management], disease management and even immunizations. NACDS must work to ensure that this contribution is recognized and that the reimbursement associated with those services is appropriate. The pharmacy profession involves a lot more than just the products we dispense.

CDR: How do you view the coming year — for both the industry and NACDS?

MERLO: The consumer is still looking for value. She’ll continue to be cautious and thoughtful about her spending. I’ve read reports that predict this will change in the second half of the year. We haven’t seen a lot evidence of that at this point in time.

That said, I’m excited about what the next 12 months will bring. It’s going to be a very busy year. There are a lot of exciting things going on in community pharmacy that will help shape the industry for years to come.

*To read the full interview with Merlo, plus industry outlook and trend articles, economic analysis and drug chain profiles, see the State of the Industry report in the April 26, 2010, print issue of Chain Drug Review.


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