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Ultimately, a Healthy Decision At Giant and CVS Pharmacy

First Giant Food Inc. and then CVS Corp. last week terminated agreements with a Massachusetts marketing firm, Elensys Inc., to mail reminders to customers to refill their prescriptions.

The decision to end the agreements is a small but important victory for consumers in the struggle to balance an individual's right to privacy with advances in technology and the quest for higher corporate earnings.

Giant and CVS say they provided prescription drug records to Elensys, much as other drug chains have, as a way to help the companies remind customers to take their medicine. The agreement also called for Elensys to mail information about "certain medications to selected patients." But both companies maintain their agreements with Elensys contained adequate safeguards for ensuring confidentiality about patients' medical conditions.

The rationale for entering into the agreements is at best a patently flimsy excuse for Elensys, pharmaceutical companies and drug chains to boost their incomes. Why would customers need a middleman to send them information from pharmaceutical companies that hope to sell "certain medications to selected patients"?

And what about doctors? Certainly they're in a better position to prescribe or even recommend the proper medication for patients whose prescription records are the keys to this marketing scheme.

Canceling the agreements with Elensys averted what might have been a public relations disaster for Giant and CVS. Even so, telltale traces of egg remain on the corporate faces of the two companies.

Both exercised poor judgment in signing agreements with Elensys without explaining how the program works and before getting customers' permission to transfer their prescription records to a third party.

It was only after angry customers read about the program last week in The Post and voiced their concerns about confidentiality that Giant and CVS canceled agreements with Elensys. Only then did the two retailers seek to assure customers in paid newspaper advertisements that safeguards had been put in place to protect their privacy.

Let's assume, for the sake of argument, that there really is a need for this kind of service. Why would Giant, of all companies, want to farm out the job of mailing prescription refill reminders to its pharmacy customers?

Granted, Giant does a big volume of prescription drug business. Of its 176 supermarkets, 138 are food/pharmacy combinations. Giant also operates three free-standing drugstores and plans to expand in that category. At the same time, a typical Giant pharmacy fills 1,000 to 2,000 prescriptions a week, according to company officials.

But Giant hardly needed a middleman to help it remind customers to refill prescriptions, even if the intent was to provide a public service. Giant not only has its own database on prescription drugs it dispenses; it has the technology and other resources to accomplish what it contracted Elensys to do.

Indeed, Giant has been at the forefront of the supermarket industry for more than 20 years in applying computer technology to its grocery and pharmacy operations. It was the first supermarket chain in the country to equip all of its stores with computerized checkout scanners, for example.

Computer technology enables the company to track products from suppliers to its stores. The manager of a Giant supermarket can ascertain within seconds the total sales rung up at each checkout stand or how many cans of green peas there are on the shelves. It's all in the store's computer.

Much of Giant's success can be attributed, in fact, to technology, innovation and the vertical integration of store operations and support systems. Giant operates its own bakery, dairy and soft drink plant. It builds its own stores and produces its commercials and advertising in-house. It even makes its own signs.

That keep-it-in-the-family strategy has been evident in the food-pharmacy combination that Giant helped to pioneer. "The pharmacy is a customer retention center," the former head of pharmacy operations said in an interview several years ago. "With prescriptions come refills."

The fact that each Giant pharmacy fills 1,000 to 2,000 prescriptions a week strongly suggests that refills account for a big share of the company's business or that it has a lot of satisfied customers, or both.  So why would Giant turn to a third party for help in reminding customers to refill their prescriptions?

The explanation, provided in a recent interview by Russell Fair, Giant's vice president of pharmacy operations, is a gem. Giant will make more money and its customers will be healthier under the program, Fair told a reporter. "It's a real win-win situation," he said.

That was before Giant's customers began protesting the use of their prescription records in conjunction with the marketing program.

Giant spokesman Barry Scher later explained that the agreement with Elensys began as "an effort to develop a positive program to benefit consumers," many of whom don't take their medication properly, he added. But Giant already provides detailed instructions on how and when to take prescription drugs.

"In retrospect, the decision to involve the company with [Elensys] should have been placed in the hands of [Giant's] management committee," Scher acknowledged last week.

He didn't have to explain. It was obvious from Giant's abrupt withdrawal from the program that it had not been subjected to the same rigorous scrutiny by the company's top management that most new products and test programs undergo before being introduced to the public.