CHAINS and BUSINESS

Chain store execs look for answers at NACDS show

Pharmaceutical chain executives continue to tackle many critical government and professional issues facing their businesses in 2003 and have turned to their association to help steer them through the choppy waters.

Faced with eroding pharmacy profits, prospects of a Medicare prescription drug plan, cumbersome HIPAA regulations, growing concern over illegal drug importation, and a continuing pharmacist shortage, a record number of chain executives, representing some 45 drug chains, descended on Palm Beach, Fla., last month to attend the 70th National Association of Chain Drug Stores (NACDS) annual meeting. They were looking for answers to these and other pressing business issues.

Setting the tone in his opening remarks, NACDS president and CEO Craig Fuller admitted that when it comes to issues facing pharmacy, "there is a lot at stake." Specifically referencing the issue of a Medicare prescription plan currently being debated in Washington, Fuller reminded the audience, "There are 41 million people qualified for Medicare." Putting that into perspective, he said that number is "larger than the population of California and larger than the populations of New York and Texas combined," with 26% having no prescription coverage at all.

Fuller explained to the chain store execs that 2003 will be a critical year for pharmacy, and while NACDS does not want to oppose a Medicare prescription drug program, any Medicare prescription legislation must contain four "clear and reasonable elements."

"First, there need to be rules that create a level playing field so competitors can compete fairly," said Fuller. He said it should be patients who decide where they shop for their prescriptions, be they mail order or store-bought. Also, the issue of day's supply should be addressed regardless of where the prescriptions are filled.

"The second element is rules of transparency," said Fuller. "[NACDS] believes price concessions have to be made in order to reduce the costs of prescriptions, and the savings should go to the patients. Laws should be written in a way that allow the governmental agency overseeing a prescription drug program to actually understand where the money is going.

"A third element should be rules on risk," commented Fuller. "We've been told that pharmacy really can't be asked to go 'at risk' in a Medicare prescription drug program because there is no 'margin' in our channel to cover risk—and we agree."

And, according to Fuller, the final element that should be written into a Medicare prescription plan should be rules on equal access. "[NACDS] respectfully disagrees with Congressional leaders in the House of Representatives who tell us that they must write provisions into the law that restrict access because such rules lower costs," he said. "That kind of restricted access is neither convenient nor fair to patients or to pharmacy."

Cautioning the execs that "getting legislation is going to be extraordinarily difficult," Fuller said NACDS has built a "strong coalition" that consults "on a regular basis with pharmaceutical manufacturers ... sending a clear signal that this industry is determined to be a constructive and supportive player."

In her opening remarks as incoming chairman of NACDS, Mary Sammons, president and COO of Rite Aid, reiterated the many challenges facing the drug chain industry and picked up on Fuller's coalition theme. "Never before," she said, "have we faced so many challenges—pricing battles, privacy, illegal drug importation, and pressures on Medicaid brought on by the worst state budget deficits since World War II ... and the list goes on and on."

Sammons reminded the chain execs that they are "unique among retailers" in that they have a "dual role as both healthcare providers and merchants. Because of our pharmacies, our customers hold us to a higher standard. And, despite all the good we do, government officials too often forget we operate a business." She urged the chain members to work more closely together with [NACDS] associate members to "capitalize on the dynamic between pharmacy and the front end to drive sales throughout the store." She urged the attendees to use NACDS as a "catalyst to create a forum for collaboration among everyone involved in the drugstore supply channel by working with suppliers on joint marketing efforts and share research that will help move merchandise off the shelves."

Harold E. Cohen, R.Ph.

 

Harold Cohen. Chain store execs look for answers at NACDS show. Drug Topics May 19, 2003;147:51.