The future of the independent pharmacy is at a critical point in its development. Increasing competition with national brands, a drop in prescribing physicians, and the trend towards e-pharmacies and doorstep delivery of medications has given many independent pharmacists reason to ask: what will the future look like for the local pharmacy?
Utilizing Technology to Integrate Independent Pharmacy Care
There is no way around technology, especially in rural areas. In 2019, it will be imperative to consider new ways to allow patients to interact with physicians and customer service representatives including, live chat, video chat, and phone helplines. In addition, dedicated mobile apps are enticing to new customers, especially if they integrate with other tech applications that they are already using (such as a smart watch, heart monitor, or oxygen duration calculator).
The University of Utah has also recently released research showing that their recently installed dedicated 24/7 speciality drug helpline can decrease overall costs. The helpline, which offers assistance with authorization, ordering, and medication management therapy, is projected to increase the speed and accuracy of patient care. And while this may be a large leap for an independent pharmacy, the trend is clear: getting fast, effective healthcare support (whether by phone or online) is how small pharmacies can remain relevant.
An Increase of Large-Scale Pharmacy Partnerships
With recent acquisitions, the growth of “mega pharmacies” is clearly a trend that will not drop off in 2019.
Although these mergers may continue to drive down payment rates and force unstable independents out of business, it may mean additional opportunities for your business. As large-scale pharmacies gobble up bigger and bigger pieces of the healthcare patient pie, they may find that they are unable to fully consume a strong independent without making it a partner first.
What this means is that now, more than ever, you need to have a good pharmacy services administrator to help you negotiate the best deal and identify your strongest bargaining chips in order to protect your own business as well as the welfare of your patients.
The fee-for-product model is on the way out, and that means good things for independent pharmacies. As pharmacy benefit managers (PBMs) continue to whittle down networks and stack up fees (direct and indirect remuneration), profit margins may narrow to become razor-thin.
On the upside, there are alternatives to scraping for these patients as evidenced by the trend towards performance-based metrics for repayment. For example:
Old system: Patient pays for Drug D, payer covers 80% of the retail cost of Drug D, pharmacy makes 5% profit.
New system: Patient pays for Drug D, pharmacy provides documentation that patient takes full schedule, pharmacy provides documentation of health improvement, payer covers 90% of retail cost of Drug D, pharmacy makes 10% profit.
A number of these new claims and contracts will allow pharmacists to maximize their education and expertise and be a full stakeholder in the healthcare of their patients. It can also give independents a unique edge on large-scale chains, as independents are small enough and flexible enough to track and monitor outcomes to be award full payments.
Transparency, Transparency, Transparency.
With the addition of the Know the Lowest Price Act and Patient Right to Know Drug Prices Act, it has become clear that the current political climate is focused on making sure that transparency is at the forefront of the physician-pharmacist-payer-patient relationship. The people most affected by these changes are the payment benefit managers (PBMs) themselves. Still, there are potential impacts for the independent pharmacy.
As PBMs are forced to become more transparent about how they are paid and how they pay out, it may become equally transparent that independents are being paid far less than they need to be. The trend for 2019 is that small pharmacies should be looking out for their own interests when it comes to reviewing the more transparent PBM models and finding ways to push legislation and change so that there are fairer contracts and more opportunities for success in competing with chain pharmacies.
More Specialty Medications
In 2018, The Drug Channel Institute released a report that stated the specialty drug market is booming. Last year, there was a 16% increase, and by 2022, specialty drugs are expected to make up nearly half of the entire industry’s revenue (46%).
While it is clear that pharmaceutical juggernauts like CVS, Walgreens, and Walmart are not going away—they make up more than 40% of the wholesale market revenues—there is a hidden benefit for independent pharmacies. These large markets negotiate much lower prices from wholesalers, driving wholesalers towards pharmacy services administration organizations (PSAOs) to develop more lucrative contracts with independent pharmacies.
This might mean that wholesalers are getting a slightly better deal, but it also means that independents are getting more access to these high-demand specialty medications. It could also mean a slight shift of power in the buying space, with intelligent PSAOs negotiating better long-term deals that could make independents more competitive at the local level.