Chain Drug Review, June 4, 2018

ANNUAL REPORT OF DRUG WHOLESALERS SPECIAL SECTION Innovative solutions are growth driver at McKesson IRVING Texas For nearly two centuries McKesson Corp has been supporting drug stores and today the company is continuing that work by supplying pharmaceuticals and a broad array of critical business services and scientific expertise to pharmacies at every level McKesson recently announced a multiyear strategic growth initiative focused on creating innovative solutions that improve patient care delivery and drive incremental profit growth The initiative comprises multiple growth pillars and includes a comprehensive review of the companys operations and cost structure which is designed to increase efficiency accelerate execution and improve long term performance McKessons growth priorities include expanded supply chain and commercialization services for pharmaceutical and medical supply manufacturers enhanced solutions for the rapidly growing specialty pharmaceutical market and new offerings that will strengthen and expand the role of retail pharmacy in patient care delivery McKesson expects investments in these areas will accelerate the companys growth trajectory over the long term McKesson has constantly innovated in response to changing customer and patient needs said John Hammergren the companys chairman and chief executive officer This initiative continues that tradition building on our prior successes while focusing on new areas where we can have the greatest impact on patient care while driving profit growth By embracing better ways of working and becoming more efficient and agile we can support innovation while creating more value for customers patients and shareholders Investment to support these growth initiatives will be partially Changing patient customer needs spur new ideas funded by savings from the optimization of McKessons operating model and cost structure This work will take place in multiple phases the company says and will encompass key functional areas such as information technology finance and human resources As a preliminary phase of implementing the strategic growth initiative McKesson will incur restructuring and other charges in fiscal 2019 which will impact the companys results The restructuring plan includes after tax GAAP charges that are estimated to be 150 million to 210 million Meanwhile McKessons distribution solutions in the U S Canada and Europe remain the root of its business with the company delivering vital medicines medical supplies and information technology solutions These goods and services affect the lives of more than 100 million patients in retail pharmacies hospitals longterm care facilities and home care agencies As the industry continues to shift toward a more valuebased care model more and more emphasis is being placed on improving patient care for better patient outcomes and achieving that requires pharmacies performing at the top of their license In this new environment however pharmacies must continually seek opportunities to generate new revenue streams offering clinical services such as medication therapy management adherence counseling and vaccinations along with an attractive convenient front end As McKesson points out pharmacies have proven to be essential in improving patient outcomes through advancing such clinical practices as medication adherence and other services they offer to their patients To bolster these efforts McKesson provides pharmacists with the tools resources and technology to aid in the transition from a model based on filling prescriptions to one more patient focused and based on outcomes Med Sync which is a synchronized prescription refill service that enables retail pharmacies to maintain customer loyalty and build strong relationships with other health care providers while improving patient adherence is a perfect illustration of how McKesson supports pharmacies in this transition and furthers their mission of improving patient care Another example of how McKesson supports pharmacists McKesson Top Executives John Hammergren Chairman President CEO Headquarters One Post St San Francisco Calif 94104 Phone 415 983 8300 Website mckesson com Financial results 3 31 18 Total revenue 2083 billion 5 Net income 264 billion 6 Net margin 127 Operating results Operating profit 386 billion 4 Operating margin 185 Other businesses Medical and surgical supplies specialty health and oncology services technology solutions for pharmacies and other health care providers and stakeholders retail pharmacy franchising business consulting and outsourcing services For 2018 fiscal year is its focus on improving the Medicare Part D Star Ratings performance of its pharmacy franchisees which the company accomplishes by investing in education and providing such tools as Med Sync Providing these tools and support is especially crucial today as pharmacists face increasingly difficult challenges such as gaining access to preferred networks attracting new patients and streamlining their businesses McKesson understands this challenging and shifting landscape so it continues to bolster its independent pharmacy customers through its franchise chain Health Mart which is the largest and most rapidly expanding independent pharmacy network in the country with an estimated 4800 locally owned pharmacies in all 50 states and the District of Columbia As many Health Mart pharmacists embrace new practices to this changing business model and forge partnerships with providers the results are paying dividends in terms of improved patient outcomes Roughly 40 of Health Mart pharmacies are performing in the top 20 in at least one of the Star Ratings measures according to McKesson This is due in part to McKessons focus on improving the Star Ratings performance of its pharmacy member customers by investing in education and providing those tools such as Med Sync and monitoring performance Foundation formed to fight scourge of addiction IRVING Texas As the opioid epidemic continues to worsen in the U S McKesson has outlined a series of initiatives aimed at combating the scourge In March McKesson announced the formation of a foundation dedicated to fighting opioid abuse to which the company has committed 100 million According to the latest Vital Signs report by the Centers for Disease Control and Prevention visits to emergency departments for suspected opioid abuse based on reports from 52 jurisdictions in 45 states increased 30 from July 2016 through September 2017 And based on data from the National Institute on Drug Abuse every day in the U S more than 115 people die after overdosing on opioids and an estimated 54 million Americans over the age of 12 have used prescription drugs for nonmedical reasons For its part McKessons new nonprofit organization is expected to focus on education for patients caregivers and providers addressing key policy issues and increasing access to life saving treatments such as opioid overdose reversal medications McKesson says it will invest in the development of a national safety alert system that uses prescription information to provide real time alerts to pharmacists and ultimately prescribers indicating when additional patient information may be needed before dispensing opioids The system design according to McKesson will address shortcomings of existing state and federal clinical decision support systems and save time for pharmacists and prescribers Implementation of the system is contingent on the Food and Drug Administrations exercise of its Risk Evaluation and Mitigation Strategies REMS or other authorities McKesson says it will also facilitate e prescribing in order to reduce fraudulent or counterfeit prescriptions During 2019 McKesson says it will stop selling opioids to customers who cannot accept e prescribing of controlled substances and will engage with those customers who may need to make this transition To make it easier for doctors to prescribe and pharmacists to dispense in smaller doses and to reduce potential for unused product McKesson will proactively engage with all opioid manufacturing partners to develop plans for limited dose packaging McKesson also says it will work with its manufacturing partners to facilitate immediate availability on a national basis of non opioid pain medication once it is approved by the FDA McKesson will also provide complimentary pharmacist training on opioid overdose reversal medications such as naloxone by independent medical experts McKesson also continues to make significant investments in its its anti diversion Controlled Substance Monitoring Program This program monitors customer orders blocks shipments when necessary and reports suspicious orders to the Drug Enforcement Administration Chain Drug Review June 4 2018 79