Drug Store News: Homing in on Rx needs at the worksite

Looking ahead, Familymeds, a wholly owned subsidiary of DrugMax, is not interested in securing the prime corner lot of a busy intersection or going head-to-head with the major national drug chain. Instead, Familymeds is setting its sights on an area where it believes it can become a leader: worksite pharmacies.

While most of Familymeds' 80-plus pharmacies, which average 1,800 square feet, are located at or near medical buildings, hospitals or clinics to serve its patients conveniently, the focus is shifting away, albeit not completely, from such facilities and zeroing in on the workplace.

"The worksite pharmacy is a topic that has come of age as large employers are looking to control drug costs," said Ed Mercadante, co-chairman and chief executive officer of DrugMax, who noted that an employer can save 5 percent to 10 percent on its drug costs by implementing a worksite pharmacy.

Mercadante said the company currently is discussing worksite pharmacy opportunities with a number of Fortune 500 companies, but added that it was too early to mention names.

In 2005, the company expects to open two or three locations per quarter, most of which will be worksite pharmacies for companies that employ at least 2,000 associates at a single site.

Familymeds opened its first worksite pharmacy at the Mohegan Sun Casino, which is owned by the Mohegan tribe. It serves the casino's 10,000 associates and their families.

The doors to the roughly 2,000-square-foot Eagleview Pharmacy opened Dec. 13, offering casino employees convenient access to a full-service pharmacy that sells prescription drugs and tailored front-end merchandise, such as compression hosiery (as associates spend many hours on their feet), eye and skin care products (to help alleviate discomforts associated with the smoky environment), cosmetics and convenience grocery items.

To date, the casino's worksite pharmacy has impacted generic substitution favorably, moving utilization from what was about 55 percent brand/45 percent generic to more than 60 percent generic.

That is not to say that Familymeds doesn't face competition in this arena. Its chief competitor is CHD Meridian Healthcare, a developer and manager of worksite corporate health programs. According to its most recent annual report, CHD operates more than 170 on-site facilities in 30 states for such clients as Toyota and other automotive and consumer products manufacturers.

"We see ourselves as larger than them and more aggressive in our ability to meet the marketplace demands, but yet they have more established worksite pharmacies because they have been in this a little bit longer," noted Mercadante.

Another key growth initiative for the company is revamping the former DrugMax distribution platforms so it can sell--through an inside sales force and direct marketing campaigns--specialty pharmaceuticals directly to doctors' offices, pain management centers and acute ambulatory clinics.

Familymeds

Headquarters: Farmington, Conn.

2004 sales: $270.5 million *

% change vs. 2003: 8.2%

No. of stores: 85 ([dagger])

Avg. store size: 1,650 sq. ft.

Rx sales: $239.4 million

% of sales from Rx: 88.5%

Sales per store: $3.2 million

* Drug Store News estimate

([dagger]) 77 corporate stores and 8 franchise stores