Pharmacy Trends 2018: Midyear Update
As we approach the midyear point, it’s a great opportunity to benchmark several key trends that are challenging both the pharmacy business and profession and compare them to the trends we anticipated seeing at the start of the year. For many in pharmacy, opportunity lies in finding that right balance between growing our transaction-based business while continuing to expand our patient-care role.
The retail channel has gotten to be even more competitive, challenging the bottom line for many pharmacies. Among the issues facing the industry, five emerge as the most striking challenges:
Recognition of the Value of Pharmacy
The pressures of restricted participation in networks, expanded performance-based role, and squeeze on overall reimbursement continue to grow. This is continues to be a “work in progress” for pharmacy, educating and advocating to state and federal regulators to pass laws and regulations recognizing the value of pharmacy and fair reimbursement for products and services.
Direct and Indirect Reimbursement (DIR) Fees
DIR continues to adversely impact pharmacy financials. It is still among the biggest issues facing pharmacy today and has promulgated federal legislation for change
Healthcare Supply Chain
Potential vertical integration from mega-mergers – including the merger of CVS/Aetna, Amazon’s entry into the pharmacy channel with the purchase of Pillpack, and other announced major partnerships between PBMs, insurance companies, and pharmacy chains – have led to many speculations and potential threats to the pharmacy business.
Today, nearly 1 in 3 American pharmacies participate in 340B drug pricing programs, and it now represents 6% of total prescription spend. It was created to provide covered entities with important financial support to assist with the extension of care to the most vulnerable populations. The pharmacy industry saw it as an endeavor to grow incremental financials.
340B programs now face significant scrutiny. The U.S. government has documented that pharmacies are realizing tremendous profits from the program. The government has promulgated regulations and increased compliance audits to address the alleged enrichment of pharmacies at the expense of needy patients.
Growth of Specialty Drugs
Revenue from specialty drugs now represents over 30% of total prescription spend and will exceed 40% in the next five years. Retail pharmacy needs to take the steps necessary to break into this market. While specialty pharmacy has unique clinical requirements, retail pharmacy doesn't want to lose its loyal patient base by not offering the products and services they need.
Evolving Business Model
Traditional pharmacy is now evolving with its portfolio of services offered expanding to include:
- Medication usage and management
- Health and wellness screenings
- Chronic care management
Pharmacy’s overall capability to deliver sustainable value in these areas has increased the percentage of financial investment in enabling technologies aimed at improving pharmacy workflow efficiency and patient engagement.
Pharmacist-driven Platforms: The Value of Data
The pharmacy channel is increasing its reliance on data analytics, predictive modeling applications, and potential use of artificial intelligence leveraging large databases and “non-standard” datasets to target and personalize relationships with key patients for proper use and compliance with their healthcare needs and medication management.
In summary, the healthcare supply chain in the U.S. continues to explore cost-effective ways to accommodate a growing demand for products and services. With the squeeze on its bottom line, pharmacy is continuing to transform its business model by expanding its role beyond just filling prescriptions. The challenge is being able to scale and deliver consistent and sustainable successful value, while be compensated fairly for this growing patient-care role.
David J. Fong, PharmD, is president of Dave Fong Rx Consulting, Inc. A former senior retail pharmacy executive for Fortune 100 and Fortune 500 companies, he is recognized as one of the U.S. and Canada’s business and professional healthcare leaders, leveraging his knowledge and experience working with pharmaceutical manufacturers, distributors, retailers, payers, and healthcare technology companies to bring value to the industry and the consumer.
You may also like:
More than 40% of Americans said in a recent survey that they struggle to pay for their medications, with 33.3% reporting they’ve skipped filling a prescription at least once in the past year due to cost. ...
A recent study using Medicaid enrollee data showed that medical marijuana laws and adult-use marijuana laws were associated with lower opioid prescribing rates. A second study using data from the Medicare Part D population foun...
It may not be exciting or cutting-edge, but the pharmaceutical supply chain and pharmacy profession’s operations are tied to an infrastructure that depends on a 10- or 11-digit number: the
Stay in the Know
Sign up to start receiving notifications via email of our upcoming webinars!