Community pharmacies used to be price-setters. Today, they’re price-takers.
That evolution has affected every aspect of pharmacy practice, from patient care to profitability. So it’s crucial to understand where it came from and what it could mean for the future of pharmacy practice and patient care.
Tracing Evolution in Pharmacy Practice
Years ago, I was a community pharmacist and pharmacy owner. In my pharmacy, when a patient presented with a new prescription, I would consult with them about that drug, fill the prescription, collect their co-pay, then bill their insurance an agreed-upon rate—usually average wholesale price (AWP) plus a nominal dispensing fee.
This arrangement ensured reasonable profitability, because pharmacies would acquire medications from distributors at prices slightly below AWP. The dispensing fee also helped compensate pharmacists for time spent filling scripts and counseling patients. If appropriate, I’d also discuss their overall health, medication list, and adherence. If I identified a safety issue or could optimize care, I’d simply call their prescriber.
Now, when a patient presents with a new prescription, the pharmacist must first assess payment factors, and determine whether the drug purchase cost will exceed reimbursement. When filling that prescription would be detrimental to the business—“dispensing at a loss”—the community pharmacy staff’s only viable option is to deny the patient and advise them to go elsewhere.
This current state of affairs is damaging to patient/pharmacist and pharmacist/physician relationships, is devastating to pharmacist morale and passion, and has significant implications for the future of pharmacy practice and patient care.
Challenges Pharmacists Face
Many conditions challenge pharmacy practice today, including:
- The increase in prescribing by physician specialists over primary care physicians
- The surge in direct-to-consumer advertising, beginning in 1985, and the resultant demand for medications
- The aging of baby boomers with numerous co-morbidities.
These factors and others contribute to rampant polypharmacy, as well as to a structural reformation of healthcare, including pharmacy practice.
These tailwinds attracted the interest of investors aiming to incrementally transform healthcare into a profit-maximizing endeavor.
Pharmacy Benefit Managers (PBMs), working on behalf of health plans, thrived in the early-mid 1990s and were exceptionally damaging for community pharmacies. PBMs negotiated on behalf of insurance companies with drug manufacturers to reduce costs, but the savings were delivered only in the form of rebates—not in the form of discounts to patients or pharmacies. PBMs also increased health plan profitability by reducing pharmacy dispensing fees.
Pharmacist care efforts and prescription processing enhancements ground to a halt, as dispensing fees were slashed and drug costs escalated. PBMs not only seized control of prescription pricing, but they also instituted additional methods to extract more funds from pharmacies (e.g., direct and indirect remuneration schemes) under the veil of pharmacy quality.
Today, most pharmacies barely break even on brand-name medication prescriptions, including for specialty drugs (e.g., for patients with rare diseases). “Pharmacy deserts” are becoming more common, and in the first four months of 2024, more than 500 pharmacies closed due to economic factors.
The American Pharmacists Association’s peaceful protest on the steps of the ExpressScripts corporate office in St. Louis effectively tells this story, as reported in USA Today. Profitable dispensing is the priority; patient care is suffering as a result.
Where Do We Go From Here?
So, now what? I don’t see a clear path forward to reverse the scant margin yielded from traditional dispensing.
What I do see starting to bloom is recognition that there is, indeed, a problem.
Patients who take concomitant medications from numerous prescribers, at whatever time of day is convenient, are experiencing predictable and preventable falls, hospitalizations, re-hospitalizations, and worse. Evidence shows that pharmacists’ interventions can prevent and reverse these adverse drug events.
Innovative packaging of pharmacist-led services that improve patient health and safety can appeal to entities who are subject to value-based payment models. I am confident that we can re-empower pharmacists to once again provide valuable patient-centric services and be fairly compensated for them.
So, let’s embrace novel application of the medication sciences which make our pharmacy profession unique, and leverage those to survive these in-between times and regain our patient-focused professional mission.
Find More
GalenusRx has developed a concrete, complete, and scalable tool for optimizing medication safety and efficacy, allowing us to assess how multi-drug regimens interact with each other and with a patient’s genetic makeup and health conditions.
It’s a novel approach with far-reaching possibilities. Learn more about the science behind our APPRAISE™ platform at GalenusRx.com.
