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Drug prices in 2019 are surging, with hikes at 5 times inflation

Price hikes on prescription drugs are surging in 2019, despite vows from lawmakers and the Trump administration to rein in pharmaceutical costs.

So far in 2019, more than 3,400 drugs have boosted their prices, a 17% increase compared with the roughly 2,900 drug price increases at the same time in 2018, according to a new analysis by Rx Savings Solutions, a consultant to health plans and employers.

The average price hike for those 3,400 drugs stands at 10.5%, or about 5 times the rate of inflation, the study found. About 41 drugs have boosted their prices by more than 100%, including one version of the antidepressant fluoxetine — also known as Prozac — whose cost has surged  879%, Rx Savings Solutions said.

The price increases come at a time when lawmakers and consumers are increasingly concerned about the escalating cost of medications, which are far outpacing wage growth and the cost of living. Four of 5 Americans believe the cost of prescription drugs is unreasonable, according to a study earlier this year from the Kaiser Family Foundation. About one-third of patients say they’re skipping prescription medicine because of the cost, the survey found.

“In the political climate we live in and the conversations we’re having, that there are more drug price increases this year — you would think that wouldn’t be the case,” said Michael Rea, founder and CEO of Rx Savings Solutions. “It defines the difficulty that consumers have.”

Triple-digit price increases seen

To be sure, the hikes on more than 3,400 drugs represent a small share of the overall pharmaceutical market. But for patients who rely on one of those medicines, the costs can add to rapidly rising health care expenditures and create dilemmas about how to pay for their care.

Aside from fluoxetine, other commonly used drugs with big price increases in 2019 are:

  • Mometasone 0.1% Topical Cream. This topical steroid has increased 381% this year, Rx Savings Solutions found.
  • Promethazine/Codeine 6.25-10mg/5mL solution. This pain reliever and cough medication rose 326%, Rx Savings Solutions said
  • Guanfacine 2mg tablet. This ADHD treatment rose 118%, the study found.

An “inelastic market”

Drug prices are rising because of a combination of pressure from shareholders to deliver higher profits and what Rea calls an “inelastic market.”

“It’s a good that people need, in many cases in order to stay alive,” he says. “You have a lot of flexibility to drive prices higher and higher.”

That’s an issue with insulin, which Type 1 diabetics require to stay alive. Even though the medication was discovered nearly a century ago, its price has more than doubled over 5 years, causing financial hardship for many diabetics and prompting some to ration the medication to cut costs. In some cases, those decisions have proved fatal.

Ask pharmacist if cheaper versions available

Consumers should try to find as much information as they can about their treatment options, such as whether another version of the drug or a similar medication, might offer a better value, Rea says.

Researching drug prices can also deliver savings, he says. Until recently, pharmacists weren’t allowed to provide pricing data because of their contracts with pharmacy benefit managers, but a Trump administration rule now bars these gag orders. Still, you’ll have to ask your pharmacist for price data, because they don’t have to volunteer it.

It soon may get slightly easier to get basic cost information under a new rule announced by the Trump administration last month, which will require pharmaceutical companies to reveal the price for many prescription drugs in TV commercials. The rule is expected to go into effect over the summer.

Even so, it can be difficult for consumers to get a handle on actual prices, given rebates and discounts offered by insurers and their pharmacy benefit managers off of inflated list prices.

“We don’t have an open and efficient market,” Rea noted. “Those things lead to this environment and to higher prices.”

Source: CBS News

Could a California Grocery Worker Strike Spur a Nationwide Movement?

When Sharon Hechler started working in Arcadia, California as a cashier for the supermarket chain Albertsons 46 years ago, she never intended to make it her lifelong career.

“Then, I found out I loved it,” she told Civil Eats. “Once upon a time, it was a great job. We had some of the best pay, the best benefits. So, I thought I was set for life.”

That shifted when the variety of grocery store chains in Southern California “kept gobbling each other up,” Hechler said. “Now, there’s like two major companies, and they’re setting the tone for the consumer and the worker, and greed has set in.”

Hechler says that she can’t remember the last time she received a pay raise and that many of her colleagues have fared far worse than she has.

“The [people] I work with they are counting out their pennies to buy a pound of hamburger, and I see them working every day,” she said. “It’s not fair.”

On August 1, Hechler was one of a few dozen grocery store workers picketing outside a Ralphs in Pasadena, with signs that read, “put people over profits” and “fighting to defend quality jobs.” Workers have been picketing outside Southern California grocery stores since United Food and Commercial Workers (UFCW) locals voted in June to authorize a strike against the Albertsons—which also owns Safeway, Vons, Pavilions, and 16 other retail chains—and Ralphs, the largest subsidiary of Kroger (which also owns 15 other retail chains).

If a strike does take place, it would be the first time in 15 years that Southern California grocery store employees took part in a work stoppage. A mass action this fall could yield powerful results for grocery store workers, since their counterparts in Oregon and Washington are also mobilizing. On August 24, UFCW Local 555, which represents Oregon and part of Washington, voted to authorize a strike against Albertsons, Fred Meyer, QFC, and Safeway. Instead of a work stoppage relegated to one region, grocery stores could strike up and down the West Coast, paving the way for a national movement akin to the fast-food workers’ Fight for $15.

The UFCW locals in Southern California voted to authorize a strike after grocery store workers were offered less than a 1 percent salary increase, a particularly paltry sum in one of the country’s most expensive regions, especially considering Albertsons reported making $5.2 billion in profit on $18.7 billion in sales in its latest quarterly earnings report. In Los Angeles, the median annual income is $54,501, but the median annual income for a food and beverage store cashier in the U.S. is just $23,780.

Since March, the grocery store workers have been negotiating for higher pay and to keep their existing health benefits, but after 26 bargaining meetings, they have yet to agree on a new contract with their employers. On August 26, UFCW 770 in Los Angeles issued a statement notifying its membership that all Southern California locals will hold meetings September 9 “to vote to accept or reject the employers’ final offer.” The local said that it has also filed “unfair labor practice charges” against Ralphs and Albertsons for reportedly prohibiting workers from participating in union activity outside stores.

Ralphs did not respond to Civil Eats’ request for comment about the negotiations, but Albertsons sent the following statement: “Albertsons, Vons, and Pavilions remain committed to reaching an agreement that will provide our employees with a competitive compensation package that includes good wages, maintains their affordable health care, and provides for their retirement while, at the same time, continuing to keep our company competitive in the Southern California market.”

Kathy Finn, the secretary-treasurer of UFCW 770 in Los Angeles, said that the picketing and strike authorizations taking place throughout the West Coast this summer are part of a strategic effort. Still, workers are losing patience as the grocery store chains have resisted meeting the UFCW’s terms related to pay, benefits, hours, and scheduling.

“There have been more than enough negotiations to have gotten this done,” Finn said. “The companies are stalling because it’s in their best interest to stall, to save money by stalling. But our workers have been falling farther and farther behind. Housing is very expensive; the cost of living has gone up faster than the wages. Everyone needs to get a fair wage increase.”

The Struggles of Grocery Store Workers

Mary Müeller-Reiche has worked for Kroger, the nation’s largest supermarket chain, for 12 years. She started out at Kroger stores in West Virginia and Ohio and is now a cashier and sales manager for Ralphs in Los Angeles. Despite her years of experience, the 33-year-old has little to show for it.

“My husband and I have extra roommates to afford the rent,” she said. “We’re not making enough to have our own place.”

Müeller-Reiche said that she would like to be able to afford her own apartment and start a family, but that’s difficult to do on the wages she earns. While she declined to share her salary with Civil Eats, she said “it could be better” as she stood outside a picket line earlier this month at a Pasadena Ralphs.

“There’s people who work very, very hard, and they’re just not getting the pay that they deserve [for the work] that they’re putting into the position,” Müeller-Reiche added.

She pointed out that it can take several years before workers get annual pay raises. Before then, raises are based on hours worked and given incrementally rather than annually.

“It’s a march of the dimes—we like to call it,” Müeller-Reiche said. “Every so often, you get a dime increase, and that really, really doesn’t do much of anything. Maybe we might get a pizza party now and then, but pizza doesn’t pay the rent.”

In the early 2000s, wages for grocery store workers began to decline. In 2010, according to a 2014 report from the Food Labor Research Center (FLRC) at the University of California, Berkeley, the median hourly wage for food retail workers was just $11.33, a drop of $1.64 from roughly a decade earlier. Low wages have led to these workers experiencing twice the level of food insecurity as the general public.

Jessica Bartholow, a policy advocate for the Western Center on Law and Poverty and a former grocery store employee, said food retail workers in California are in an unfortunate predicament; as of 2014, 36 percent relied on public assistance at an annual cost to the state of $662 million.

“Grocery store workers make up one of the biggest groups of workers in California’s economy,” Bartholow said. “When they’re paid low [wages], the state feels the impact. I worked as a bagger, and we didn’t have a lot of money. It’s really hard seeing food come to your line and not being able to purchase [it].”

The FLRC report placed much of the blame for the plight grocery store workers face on the rise of general merchandise retailers such as Walmart, Target, and Costco. Competition from such stores has led unionized supermarket chains to compete with Walmart’s low-price/low-wage model, the researchers contended.

“[Grocery store] workers used to get decent healthcare and wage increases, but the competition from these non-union segments are chipping away at the things we took for granted,” said Saru Jayaraman, director of the FLRC. “Strikes are still the only way that these workers have to demonstrate their power.”

The popularity of “natural” and gourmet food chains have also placed additional pressure on grocery store chains, but this hasn’t stopped traditional supermarkets such as Albertsons from seeing rising revenues.

“These corporations are making so much money; they just don’t want to share,” Albertsons checker Sharon Hechler said. “It’s just not right.”

And workers who attempt to supplement their income by getting a second or third job run into challenges because of scheduling issues. According to UFCW 770’s Finn, workers know their schedules about a week in advance, but because they change from week to week, the supplemental jobs they take on must also be flexible. Irregular schedules also make it hard for parents who work in grocery stores to coordinate childcare.

“It’s very much a gender issue since childcare disproportionately falls on women,” said Stephanie Seguino, a University of Vermont professor of economics. “In low-quality jobs, people don’t have autonomy over their work schedule. It’s really a serious issue with many parallels to the fast-food workers.”

The Benefits of Improving Working Conditions

Paying workers more isn’t likely to hurt grocery stores. In fact, it may help them. Retailers such as Costco, Whole Foods, and Trader Joe’s pay workers some of the industry’s highest wages and continue to see market growth and rising revenues. Additionally, paying workers more has been shown to cut down on turnover, which causes companies to lose money as they pay to replace former employees and train their replacements. Grocery store employees stay in their jobs for an average of 1.75 years, the FLRC study found, but those earning a living wage remained for a median of 5.5 years.

“You want to have people who stay in the industry for a long time, who know food safety and safe-handling practices,” she said. “Public safety depends on them. Also, there are a lot of rules with regards to credit cards and public benefits programs and payments that cashiers have to follow. We want to make sure this information is being appropriately handled and that grocery store workers are well trained.”

Strikes themselves are costly for companies. The four-month grocery store worker strike that occurred in 2003 led to a total loss of revenue of $1.5 billion, for instance. Employees suffered during and after the work stoppage too. Some workers and consumers crossed picket lines, and wages fell afterward, which Jayaraman attributes more to marketplace changes than to the strike itself.

If workers decide to strike this year, she hopes consumers will support them in the same way they did other striking workers, such as California’s teachers.

“Sometimes, as consumers, we see some workers as deserving and professional and other workers as an inconvenience. But everybody’s trying to earn enough to feed their family,” Jayaraman said.

Finn said that consumers can start by letting store managers at the affected chains know that they are regular shoppers who will no longer patronize the store should a strike occur. Customers have more influence than workers do, she added.

For that reason, workers also want consumers to understand how difficult their jobs are. Müeller-Reiche said that because she spends eight hours on her feet each day, she often wakes up aching from the previous day’s shift.

“Every morning, it takes a while to get my feet used to walking again because they’re just so sore,” she said. “There are back injuries all the time. Our arms are sore. There’s a lot of heavy, repetitive lifting, especially cashiering.”

Hechler added that most grocery store employees must be available to work year-round, including weekends and major holidays. Sometimes, she begins her shift at 5 a.m. and other times she works until midnight.

“It is very, very difficult to work in this business,” she said. “We sacrifice a lot. All we want to do is to make a fair wage, a living wage, to support ourselves.”

Source: CivilEats.com

Grocery union prepares for ‘final offer’ vote in early September

The union representing 60,000 supermarket workers in Southern California is looking for a final offer from the stores that it can take to its members in early September.

The seven locals of the United Food and Commercial Workers and executives from Ralphs, Albertsons, Vons and Pavilions concluded four days of negotiations Sunday, Aug. 25. The union then posted a message on its websites saying membership meetings beginning on Sept. 9 will ask workers “to vote to accept or reject employers’ final offer.”

Five days of talks are scheduled to begin Wednesday, Sept. 4, moderated by a federal mediator.

Greg Conger, president of Local 324 in Orange County, said there was very little progress during the most recent sessions. After criticizing the stores’ previous offer of an additional five cents in wage increases, he said this time they “moved the nickel around,” shifting the offer from one year of the proposed three-year contract to another.

“We’re a long way from a deal, but the gap can be bridged quickly. The ball is definitely in their court,” Conger said. “The next round had better move the needle, or there’s going to be a couple of very unhappy companies.”

In June, the union’s members voted overwhelmingly to authorize its leaders to call a strike. A vote next month to reject the employers’ final offer could lead to the first grocery strike in Southern California in 15 years.

Last week John Votava, Ralphs’ director of corporate affairs, said his chain’s proposals would amount to a $108 million investment in wages, health care and pension contributions over a three-year period. He added that an additional nickel paid hourly to Ralphs 17,000 employees adds up $3.6 million during the run of the contract.

Votava said Ralphs and the other chains are under mounting pressure from non-union competitors. He cited a March report from research group Strategic Resource Partners that indicated market share for unionized groceries fell 10% in a six-year period in Los Angeles, Orange, Riverside and San Bernardino counties, and 15% in San Diego County.

The research was part of a confidential internal study and Votava said he could not share additional details.

Representatives of the other chains did not reply to requests for comment. They are all owned by Cerberus Capital Management, a New York hedge fund.

Ralphs, owned by Cincinnati-based Kroger Co., is the only publicly traded firm involved in the labor negotiations and has been the target of much of the union’s criticism and public outreach. In recent months, store workers have held demonstrations, with pickets and leaflets that seek the support of shoppers. Most of them have been at Ralphs stores. Rodney McMullen, Kroger’s CEO, last year got a 19% pay raise, to $12 million per year.

Mike Shimpock, spokesman for Local 770, which covers Los Angeles County and the Central Coast, said members have held these gatherings at all 83 Ralphs stores in its jurisdiction, and Conger said the same strategy is being pursued in Orange County.

Burt Flickinger, an analyst for Strategic Resource Partners, said it was still too early to write off the negotiations because both sides recognize that a strike would be damaging.

“It’s still the proverbial jump ball,” Flickinger said. “But the fact that negotiations are still going on means there is some constructive bargaining.”

Source: The Press-Enterprise

UFCW members take action against grocery companies

Members of UFCW Local 1167 gathered in front of Ralph’s on University Parkway in San Bernardino on Aug. 15, calling on their employers to offer fair pay and benefits.

Even though United Food and Commercial Workers (UFCW) contract negotiators have made progress with Albertson’s and Kroger on some issues in regard to getting workers a new contract, such as preventing cashiers from being demoted and losing pay, UFCW Local 1167 says the two companies’ wage and benefits offers amount to “another nickel a year” to their members vis their website.

As the two sides of the bargaining table remain unable to ratify a contract, grocery workers are taking to the sidewalk to rally the support of their customers and communities.

“Our members are reaching out to the people who matter the most: the customers we serve every day,” says UFCW spokesperson Ellen Anreder. “Their support is crucial as we negotiate for a fair contract.”

At an action event outside Ralph’s on University Parkway in San Bernardino on Thursday, Aug. 15, secretary Matt Bruno said to the community, “We really appreciate your support,: In the event we have to take it to the next level, then we really would appreciate them honoring what we’re doing out here and sending that message back to (the grocers).”

All the while, members made chants such as, “No contract, no peace,” and demanded their employers offer fair terms “now.”

While both sides of the negotiation table say they don’t want a strike, Bruno says “If that’s what it takes, that’s what we’ll have to do.”

Ralph’s is owned by Kroger. Albertson’s also owns the Von’s and Pavilion’s chains.

In a press release, Ralph’s said their offers include top-rate increases that exceed those of the 2016 agreement, renewing their ‘Minimum Wage Letter’ benefitting employees working at minimum wage, maintaining current health care coverage without raising worker premiums and stabilizing pensions.

“We are all on the same team and we want the same thing: a thriving company that can employ people with fair pay and great benefits.”

Melissa Hill, Director of Public Affairs for Albertson’s says that balancing fair compensation and financial discipline remain equally important.

“Albertson’s, Von’s, and Pavilion’s remain committed to reaching an agreement that will provide our employees with a competitive compensation package that includes good wages, maintains their affordable health care and provides for their retirement while, at the same time, continuing to keep our Company competitive in the Southern California market.”

Anreder reminds the public this doesn’t mean a strike is guaranteed, but the situation remains sensitive.

“The situation could change at any moment if management keeps making unreasonable demands that undercut our ability to support ourselves and our families. Should a labor action become necessary, we believe the community will support our cause and respect our picket lines.”

UFCW has further action events planned in Apple Valley, La Quinta and Riverside. Negotiations resume on Aug. 22, running through Aug. 25.

Until a contract is ratified, Anreder reminds the public of the UFCW’s bottom line: “One job should be enough.”

Updates can be found at ufcw1167.org, by clicking on ‘negotiation updates.’

Source: HighlandNews.net

Health Plan’s ‘Cadillac Tax’ May Finally Be Running Out Of Gas

The politics of health care are changing. And one of the most controversial parts of the Affordable Care Act — the so-called Cadillac tax — may be about to change with it.

The Cadillac tax is a 40% tax on the most generous employer-provided health insurance plans — those that cost more than $11,200 for an individual policy or $30,150 for family coverage. It was supposed to take effect in 2018, but Congress has delayed it twice. And the House recently voted overwhelmingly — 419-6 — to repeal it entirely. A Senate companion bill has 61 co-sponsors — more than enough to ensure passage.

The tax was always an unpopular and controversial part of the 2010 health law because the expectation was that employers would cut benefits to avoid paying the tax. But ACA backers said it was necessary to help pay for the law’s nearly $1 trillion cost and help stem the use of what was seen as potentially unnecessary care. In the ensuing years, however, public opinion has shifted decisively, as premiums and out-of-pocket costs have soared. Now the biggest health issue is not how much the nation is spending on health care, but how much individuals are.

“Voters deeply care about health care still,” said Heather Meade, a spokeswoman for the Alliance to Fight the 40, a coalition of business, labor and patient advocacy groups urging repeal of the Cadillac tax. “But it is about their own personal cost and their ability to afford health care.”

Stan Dorn, a senior fellow at Families USA, recently wrote in the journal Health Affairs that the backers of the ACA thought the tax was necessary to sell the law to people concerned about its price tag and to cut back on overly generous benefits that could drive up health costs. But transitions in health care, such as the increasing use of high-deductible plans, make that argument less compelling, he said.

“Nowadays, few observers would argue that [employer-sponsored insurance] gives most workers and their families excessive coverage,” he wrote.

The possibility of the tax has been “casting a statutory shadow over 180 million Americans’ health plans, which we know, from HR administrators and employee reps in real life, has added pressure to shift coverage into higher-deductible plans, which falls on the backs of working Americans,” said Rep. Joe Courtney (D-Conn.).

Support or opposition to the Cadillac tax has never broken down cleanly along party lines. For example, economists from across the ideological spectrum supported its inclusion in the ACA, and many continue to endorse it.

“If people have insurance that pays for too much, they don’t have enough skin in the game. They may be too quick to seek professional medical care. They may too easily accede when physicians recommend superfluous tests and treatments,” wrote N. Gregory Mankiw, an economics adviser in the George W. Bush administration, and Lawrence Summers, an economic aide to President Barack Obama, in a 2015 column. “Such behavior can drive national health spending beyond what is necessary and desirable.”

At the same time, however, the tax has been bitterly opposed by organized labor, a key constituency for Democrats. “Many unions have been unable to bargain for higher wages, but they have been taking more generous health benefits instead for years,” said Robert Blendon, a professor at the Harvard T.H. Chan School of Public Health who studies health and public opinion.

Now, unions say, those benefits are disappearing, with premiums, deductibles and other cost sharing rising as employers scramble to stay under the threshold for the impending tax. “Employers are using the tax as justification to shift more costs to employees, raising costs for workers and their families,” said a letter to members of Congress from the Service Employees International Union.

Deductibles have been rising for a number of reasons, the possibility of the tax among them. According to a 2018 survey by the federal government’s National Center for Health Statistics, nearly half of Americans under age 65 (47%) had high-deductible health plans. Those are plans that have deductibles of at least $1,350 for individual coverage or $2,700 for family coverage.

It’s not yet clear if the Senate will take up the House-passed bill, or one like it.

The senators leading the charge in that chamber — Mike Rounds (R-S.D.) and Martin Heinrich (D-N.M.) — have already written to Senate Majority Leader Mitch McConnell to urge him to bring the bill to the floor following the House’s overwhelming vote.

“At a time when health care expenses continue to go up, and Congress remains divided on many issues, the repeal of the Cadillac Tax is something that has true bipartisan support,” the letter said.

Still, there is opposition. A letter to the Senate on July 29 from economists and other health experts argued that the tax “will help curtail the growth of private health insurance premiums by encouraging employers to limit the costs of plans to the tax-free amount.” The letter also pointed out that repealing the tax “would add directly to the federal budget deficit, an estimated $197 billion over the next decade, according to the Joint Committee on Taxation.”

Still, if McConnell does bring the bill up, there is little doubt it would pass, despite support for the tax from economists and budget watchdogs.

“When employers and employees agree in lockstep that they hate it, there are not enough economists out there to outvote them,” said former Senate GOP aide Rodney Whitlock, now a health care consultant.

Harvard professor Blendon agrees. “Voters are saying, ‘We want you to lower our health costs,’” he said. The Cadillac tax, at least for those affected by it, would do the opposite.

Source: Kaiser Health News

A Supermarket Revolution Is Coming: Are You Prepared?

The Financial Post in Canada writes that food visionary and restaurateur David Chang “wants the ethnic food aisle to die.” Chang “urged supermarkets to mix it all up instead, putting sauces and spices with spices, regardless of where they came from.” He argues that the current ethnic food aisle is “out of date and doomed … because it puts all the places in the world that are not White America in one aisle.”

Morten Toft Bech, the founder of The Meatless Farm Company that makes meat-free plant-based burgers, says its time for supermarkets to rename their meat departments to be called “protein departments.” Beyond Meat, the plant-based burger maker, already successfully sells its product in the fresh meat case in supermarkets across the U.S., attracting shoppers who might otherwise buy beef, pork, and chicken or turkey products.

The design of today’s supermarkets does not align with the way people eat or how they want to shop.

The study Buying Time Promotes Happiness published in the Proceedings of the National Academy of Sciences found that “Around the world, increases in wealth have produced an unintended consequence: a rising sense of scarcity.” The study’s researchers proved in four countries, including the United States, that individuals who spend money on timesaving services reported greater life satisfaction and happiness.

Instacart, Shipt, Door Dash, Uber Eats as well as countless other food delivery companies have built their enormous customer bases on the promise of saving people time; even though most in the grocery space would argue that none are profitable, they feel they must offer these services in order to satisfy their customers’ desire. The American shopper places a lot of value on time – and they don’t want it to be wasted. In our work lives, we live by calendar programs on our devices usually in 15-minute sections.

It is time to redesign the supermarket. Why should a shopper who has 25 items on their shopping list have to walk past 40,000 items to fill their basket? And what about the poor shopper who forgot their list and have to try to remember what they need as they walk down each aisle slowly? While many grocers will be outraged that I write this and have concerns that they will lose impulse sales, the reality is a new design might be one of the most important tools to convince shoppers to stay in the store and not buy groceries online (the thought of which is keeping many supermarket CEOs up at night).

Chang and Bech both make great points and should be a wake up call for grocery retailers. Many retailers are remodeling stores to create a better shopping experience, adding grocerants, more prepared foods, more service counters and more amenities and the store might indeed be more attractive, but the format remains the same. Aisle after aisle after aisle. Let’s put the shopper first. Why not build a store around dayparts? Departments for breakfast, lunch, dinner and snacks. Yes, there will be some duplication – say for example milk, which may appear in all four areas. By grouping all the foods together a shopper would clearly be saving time and frankly be able to focus more on products that they’ve passed by a hundred times, but never actually “seen.” I would argue that this type of format would actually increase impulse sales and discovery. This format would also be a huge time saver for those shoppers who never eat breakfast, or have lunch out or have it supplied at their offices.

If we want people to keep shopping in grocery stores it is time for us to revolutionize the shopping experience with substantive changes, not just a coat of paint.

Source: Supermarket Guru

Why America’s biggest charities are owned by pharmaceutical companies

When patients in need of medicines in America go to fill their prescription the price they have to pay can vary wildly. For generic off-patent drugs prices are usually low for the uninsured and free for those with insurance. But for newer patent-protected therapies prices can be as high as several thousand dollars per month. Those without insurance might end up facing these lofty list prices. Even those with coverage will often have to fork out some of the cost, called a co-payment, while their insurance covers the rest.

These co-payments, which for the most expensive drugs can themselves be prohibitively high, can act as a deterrent to filling a prescription. Into this gap a new type of charity has emerged: one that offers to pay co-payments for patients. There are two main types of such charities. There are independent ones, like the Bill and Melinda Gates foundation, America’s largest charity, which spent $3.4bn on co-payments in 2014.

There are also co-pay charities owned by drugmakers themselves. According to public tax filings for 2016, the last year for which data are available, total spending across 13 of the largest pharmaceutical companies operating in America was $7.4bn. The co-pay charity run by AbbVie, a drugmaker that manufactures humira, a widely taken immunosuppressant, is the third largest charity in America. Its competitors are not far behind. Bristol-Myers Squibb, which makes cancer drugs, runs the fourth largest. Johnson and Johnson, an American health conglomerate, runs the fifth largest. Half of America’s top 20 largest charities are co-pay charities owned by pharmaceutical companies.

Not everyone qualifies for their help. Unsurprisingly, pharma-owned co-pay charities only fund co-payments on prescriptions for drugs that they manufacture. There is an income threshold, too, which excludes the richest Americans—though it is usually set quite high, at around five times the household poverty line in America. In fact they are prohibited from funding co-payments for those on Medicaid (which helps the poor) and Medicare (which helps the elderly) by the anti-kickback statute, which prevents private companies from inducing people to use government services. Those patients can accept co-pay support from independent charities, such as the Gates Foundation.

The impact of these charities is large and growing. Most of them are less than 20 years old. In 2001 just five drugmakers operated co-pay charities, spending a total of $370m. That had risen 20-fold to $7.4bn by 2016. According to Ronny Gal, an analyst at Bernstein, a research firm, the co-payment on the price of a drug is usually just 10% of the cost the pharmaceutical company ultimately charges to the insurance provider. This would mean that $7.4bn spent on copayments could earn drugmakers $74bn in revenues, which would account for nearly a quarter of total drug spending in America. Add in spending by the Gates Foundation and this share rises to a third.

Pharmaceutical companies will often claim that helping patients with their co-payments is one way of making expensive drugs more accessible. But it has the fortunate consequence of making their customers price insensitive, because insurance companies will often use high co-payments to nudge their customers into opting for generics over costlier branded drugs: no co-pay, no incentive to save money.

Say a patient is prescribed a statin, a type of drug to lower cholesterol which has proved useful in reducing heart disease. They could take Lipitor, a branded drug manufactured by Pfizer, with a list price of around $165 per month. But a generic drug, Atorvastatin, has also become available for just $10 per month. In the absence of help from a charity, a patient with private insurance would probably be able to get Atorvastatin free of charge, but would have to pay some of the cost for Lipitor. With help from Pfizer’s co-pay charity, both are free. “It is entirely to their advantage because consumers only care about what it costs them,” says Adriane Fugh-Berman of Georgetown University. “It’s not charity, it’s cheating.”

There is also evidence that pharmaceutical companies bump up the scope of their co-payment programs shortly after they hike drug prices. When Martin Shkreli, the former boss of Turing Pharmaceuticals (who has since been imprisoned for securities fraud), increased the price of Daraprim 50-fold in 2015 he also donated money to a fund to cover co-pays for patients with toxoplasmosis, a disease treated using Daraprim.

American authorities are trying to curb the effects these charities might be having on prices. In California in 2017 a bill was passed banning companies from providing co-pay assistance in some situations, eg, if a patient’s insurance company offered a drug on a lower co-pay cost tier that the Food and Drug Administration had deemed therapeutically identical, or when the active ingredient is available over-the-counter at a lower cost.

A patented formula for itchy backs

The Securities and Exchange Commission (SEC) is also looking more closely at independent charities that are sometimes sponsored by pharmaceutical firms. One independent charity only offered co-pay support for a specific type of “breakthrough pain” for cancer patients, a condition its sponsor had 40% market share in treating. An SEC probe has already settled claims with some pharmaceutical firms, though none have admitted wrongdoing. United Therapeutics has settled the biggest claim, worth $210m, with the Department of Justice. Lundbeck, a Danish drugmaker, and Pfizer have settled smaller claims. “Pfizer knew that the third-party foundation was using Pfizer’s money to cover the co-pays of patients taking Pfizer drugs,” according to US Attorney Andrew Lelling, “masking the effect of Pfizer’s price increases.” Johnson & Johnson, Astellas, Gilead Sciences, Celgene, Biogen and others face investigations.

Using co-pay charities to support high prices is good for business, but charitable contributions foster healthy profits in another way too: they are tax deductible. The corporate tax codes of most countries allow companies to deduct the cost of any charitable giving from pre-tax profits. But in America the system is more generous, says Jason Factor, a tax lawyer at Cleary Gottlieb Steen and Hamilton. Companies that give products for the benefit of the “needy or ill” can deduct up to twice the cost of gifted goods. How convenient!

Source: The Economist

Rite Aid names Heyward Donigan as new CEO

In line with a leadership shakeup earlier this year, Rite Aid Corp. has hired health care executive Heyward Donigan as CEO, replacing John Standley, who is leaving the company.

Rite Aid said Monday that Donigan takes the helm as CEO effective immediately. She also joins the board of directors. The company had announced in March that Standley was stepping down as chief executive, a role he held since June 2010, and would continue to serve in the post until a successor was named.


Donigan (left) comes to Rite Aid from Sapphire Digital, where she has been president and CEO since March 2015. Formerly called Vitals, Sapphire designs and develops omnichannel platforms that help consumers choose health care providers. Before that, she was president and CEO of behavioral health firm ValueOptions and chief marketing officer at health insurer Premera Blue Cross.

“Today’s announcement is an important step in positioning Rite Aid for the future, and we are confident that Heyward is the right person to lead the company in capitalizing on the opportunities in the evolving healthcare environment,” Rite Aid Chairman Bruce Bodaken said in a statement.

Bodaken had taken over the chairman’s title from Standley last October. “Over the past several months, the Rite Aid board conducted a thorough search, and Heyward’s strong senior executive experience, proven leadership capabilities and consistent track record of driving profitable growth, as well as her broad health care knowledge and digital shopping technology expertise, set her apart,” Bodaken commented. “Her skillset will be invaluable as we work to deliver on the full potential of our business and create additional long-term value for our shareholders, associates, customers and patients.”

Standley’s exit follows a major management restructuring earlier this year that saw Rite Aid name a new chief operating officer, chief financial officer and retail operations chief, among other appointments. Leadership changes had been expected among retail industry observers after shareholders pressed the company and merger partner Albertsons to kill their $24 billion deal last August.

That decision came after the Federal Trade Commission in June 2017 derailed a $17 billion agreement by Walgreens Boots Alliance to acquire Rite Aid. To gain FTC approval, the companies downsized their deal to the sale of 1,932 Rite Aid stores to Walgreens. The transaction cut Rite Aid’s drugstore base by more than 40% and further hampered its ability to compete with much bigger rivals CVS Health and Walgreens. Rite Aid has since seen its sales fall from around $32 billion to $21.6 billion.

“On behalf of the board, I want to thank John for his numerous achievements in helping to reshape Rite Aid in the face of an evolving environment during his tenure,” said Bodaken. “In particular, I want to thank him for his leadership in guiding the company through some incredibly challenging times. His commitment to facilitating a smooth transition for Rite Aid is greatly appreciated, and we wish him the best in his future endeavors.”


Prior to the unsuccessful merger deals, Standley (left) and his executive team had led a resurgence at Rite Aid that refreshed its store base, bolstered its pharmacy and front-end sales, and expanded its health care business, restoring a previously struggling company to profitability. He had rejoined Rite Aid as president and COO in 2008 after an earlier stint at the company, coming over from Pathmark Stores, where he was CEO before the grocer’s acquisition by A&P. Standley was promoted to Rite Aid CEO in June 2010 and became chairman in June 2012. His career also includes executive roles at Yucaipa Cos., Fleming Cos., Fred Meyer Inc., Ralphs Grocery Co. and Smith’s Food & Drug.

“I’d like to thank our talented Rite Aid team for their dedication and support in taking great care of our customers and patients throughout my tenure,” Standley said in a statement. “I have tremendous confidence in this team, and I’m excited about the future prospects of this company.”

Donigan’s 30 years of health care industry experience also includes roles as senior vice president of operations at Cigna Healthcare and executive roles at General Electric, Empire BCBS and U.S. Healthcare.

“I am deeply honored to have been selected to lead a company with such a strong brand, deep culture and dedicated team of associates,” she said. “I see tremendous opportunity to revitalize the company’s position as a leader in meeting the health and wellness needs of customers and patients through our store and pharmacy benefit management platforms.”

Rite Aid currently operates 2,466 drug stores in 18 states as well as PBM provider EnvisionRxOptions.

Source: Supermarket News

Walgreens to close 200 US stores

Walgreens plans to shutter 200 stores in the U.S. as the company pares back its locations in the U.K., the company said Tuesday.

Parent company Walgreens Boots Alliance earlier this year announced plans to shutter 200 stores in the U.K. and review its U.S. footprint.

The new store closures represent less than 3% of its 10,000 locations in the U.S., Walgreens said in a statement, adding that it anticipates “minimal disruption to customers and patients.” It said it anticipates retaining “the majority” of employees in other nearby locations.

Walgreens said it hopes to save $1.5 billion in annual expenses by fiscal 2022 in what it’s calling the “transformational cost management program.” Walgreens expects to record a $1.9 billion to $2.4 billion earnings hit related to real estate, severance and other costs, it said in a regulatory filing.

“As previously announced, we are undertaking a transformational cost management program to accelerate the ongoing transformation of our business, enable investments in key areas and to become a more efficient enterprise,” the company said in a statement.

A Walgreens spokesman said the company does not plan to release the complete list of store closures and declined to share any more details about which locations will close.

Analysts have long worried about the number of pharmacies in the U.S. In some cities, it seems Walgreens and CVS stores line nearly every block. Worsening the situation is the fact that consumers are shopping more online and less in stores.

Retailers have already shuttered thousands of stores as foot traffic dwindles. Drugstores have so far been largely spared. That could change as the companies’ sales of convenience items shrink and people start buying prescription drugs online.

The announcement marks Walgreens’ largest round of closures since 2015, when it also closed 200 stores. Its parent company, which bought 1,932 Rite Aid locations in 2018, has since closed 631 of those stores and plans to shutter another 119.

In May, CVS said it would close 46 underperforming stores. In June, CVS’ head of retail warned it will close unprofitable stores as it evaluates its 500 leases that come up for renewal every year.

Source: CNBC

This Grocery Store Is Beating Costco as America’s Third Biggest Retailer

Walmart and Amazon are major presences in the world of American retail. Both are places where you seem to be able to get pretty much anything, so it came as no surprise to learn that they were first and second, respectively, in Kantar Consulting’s ranking of the top 50 U.S. retailers of 2018. What was surprising, though, was the identity of the third-place winner. America’s third-biggest retailer is a grocery store—and not even the grocery store with the best reputation in America.

The third biggest retailer in the United States is Kroger! If you don’t have the pleasure of having one of these stores near you, Kroger, whose headquarters are in Cincinnati, is a low-priced grocery store that’s most popular in midwestern, mid-Atlantic, and southeastern states. You’ll also find lots of Krogers in some western states, like California, Washington, and Colorado. Altogether in the United States, you’ll find 4,064 Kroger locations in 42 states. It’s a top destination for organic food, meat and seafood, and these other things you should always buy at Kroger.

The data, which was released in late 2018, assessed the retailers’ sales throughout the beginning of the year, the sales estimates for the rest of the year, and projected sales through 2023. Kroger’s estimated total sales for all of 2018 was a whopping $123 million dollars. Not only does this top Costco, whose estimated 2018 sales were $101.5 million, but it’s only just trailing the second-place winner, Amazon, which had $125.5 million. In fact, Kroger was in second place in last year’s ranking; Amazon only passing it for the first time in 2018. So if you don’t shop at Kroger, it may be time to find out why Americans love it more than Costco! Or, if there’s not a Kroger near you, you can try checking out the best supermarket in every state.

Source: Yahoo! Lifestyle