Ten companies w/ CVS, Wal-mart & Kmart will sell information about drug trends.

[NRSKarenRN, BSN, RN]

7.31.2001 00:15

CVS doling out data on prescriptions

* Ten companies will sell information about drug trends.

BY LISA BIANK FASIG

Providence Journal Staff Writer

http://www.projo.com/cgi-bin/story.pl/business/05909721.htm

In an effort to further capitalize from its vast database of prescription information, CVS has aligned with nine competitors, including heavyweights Wal-Mart and Kmart, to launch a drug data company that sells information on pharmaceutical trends.

The company, ArcLight, will sell its product -- for hundreds of thousands of dollars -- to drug makers and marketers who can access the data on the Internet. Such clients can then track the performance of their own products or those of competitors.

This data does not involve personal customer information, the company said. Only drug sales and general demographics, such as geographic location, age group and race, are available.

CVS teamed with drug distributor Cardinal Health, of Dublin, Ohio, to provide capital, technology and employees for the venture. Grocery store chain Albertson's, Kmart and Wal-Mart are the three other managing companies.

The remaining founding partners of the firm, which will be based in Dublin and Paradise Valley, Nev., include four smaller drug store chains.

Why is CVS sleeping with the enemy? Because the venture -- like many other business deals possible through Internet technology -- creates a new way to make money from existing resources, while not compromising the chain's competitive position.

"The market in the U.S. for retail pharmaceutical data we estimate to be $300 million," said Fritz Krieger, chief operating officer of ArcLight and former general manager of Cardinal Health Information Cos., a unit of Cardinal Health. "We also believe that that marketplace has been under-served and characterized by a lack of innovative growth."

Krieger said the 100-employee ArcLight expects it can ultimately grow its database to the size of the industry's largest operators, which manage data for two-thirds of all U.S. prescriptions.

ArcLight's viability rests on the shoulders of a product called R(x)ealTime, created by Krieger, which tracks prescription sales and activities. ArcLight customers can research trends, follow product introductions and gauge marketing effectiveness. The data is updated on the Internet every 10 minutes.

"There's certainly demand for it," said Eric Bosshard, an analyst covering CVS for Midwest Research in Cleveland. "Drug manufacturers are always looking for ways to target revenue-enhancing opportunities."

Krieger approached CVS because the companies worked together for years and knew each other. The other managing partners were brought in to represent data on the West Coast, where CVS does not operate.

"Being able to take our data and using it in a way that benefits both parties has been a challenge," said Chris Bodine, senior vice president of merchandising at CVS and a board member of ArcLight. "I think it has significant potential. In terms of how big it will be in the next few years is a question mark."

Krieger declined to share sales projections for the company, other than to say that ArcLight expects to grow the $300-million industry.

But he did say that ArcLight's first R(x)ealTime version is billed at $300,000 a year, and that contracts typically run one to three years. So far, R(x)ealTime is installed with 13 major pharmaceutical companies.

Bosshard said other drug companies will likely pay that fee, if the system can help build prescription sales.

Lisa Fasig covers retail and banking for the Journal and can be contacted at [email protected] .

Find more on Arclight Systems, and the pharmaceutical prescription trend information it's providing, at:

http://www.arclightsystems.com/

[Mijourney]

Hi NRSKaren. I don't know much about this area, but I did read recently that biotechnology continues to increase at a rapid pace. This includes the more rapid approval of drugs by the FDA here in the states. I don't understand the need to increase the sale of drugs. Why down in my neck of the woods, one of the states adjoining mine I believe ranks one or two in the nation for prescription drug use. We've already gone and are still going through a big hulabalu about the medication errors. And I don't care how much you update the pharmaceutical dispensing technology, if you don't have enough people, ie nurses, who can properly administer, monitor, supervise, and instruct, you're going to still have a massive and growing problem with med errors.

What is needed is to implement ways to rein in pharmaceutical costs and to find ways to aid quality drug research and development without giving the pharmaceuticals and their supporters the kitchen sink. Also, there is a need, I feel, to help people find alternative ways of managing their health and medical problems, which for the boomers and older are mostly lifestyle related. Physicians, nurses, and allied health professionals knowledgeable in alternative health and medicine are vitally needed to support this effort. Although many of us may feel indebted to pharmaceuticals in some way, I don't believe that giving sanction to wholesale legalized drug pushing is any more ethical than illegal drug pushing.

[fiestynurse]

The consumer ultimately pays for all this crap! Where do our prescription dollars go? --Profits 4%--Taxes 9%--Marketing 22%-- Administration 13%--Manufacturing and Distribution 26%--Research and Development 16%.

I completely agree with Mijourney, when she speaks of "legalized drug pushing" by these pharmaceutical companies. the drug companies spend $10 billion a year in drug promotion. the average MD meets with one of the 56,000 drug reps once a week. Drug reps often make false claims in regards to their drugs and MDs do not always recognize these falsehoods. Many MDs attend drug sponsored CME courses, which leads to more and worse prescribing. I think that many people take prescribed drugs that they just don't need. As Mijourney has stated, there are usually alternative ways of managing your health--but it is easier to just pop a pill!