Going to CVS or Walgreens is a part of many Americans’ routine. After all, these stores have established themselves as the primary leaders in the market of corporate pharmaceuticals. What many individuals fail to realize, however, is the fact that the United States is home to thousands of independent pharmacies, many of which offer competitive prices and more personalized services.
These small-to-mid-size companies aim to provide patients with the necessary medications while having to overcome many challenges in the industry. Just consider, for instance, how difficult it is for a smaller pharmacy to battle a nationwide chain like CVS.
Fortunately; however, thousands of these stores are currently operating all over the United States. In fact, many rural areas would be left stranded and have no access to medication if it was not for their local suppliers.
Well, even though they may not be as big as their counterparts, independent pharmacies are still affected by everything that takes place in the market. Therefore, what would be the three new trends that will impact the way in which these organizations operate?
One of the main concerns of all buyers of medication is the fact that the industry often lacks the necessary transparency. This is an unsurprising fact given how the insurance deductibles and copays often blur out the actual price of some drug. Additionally, the fact that patients seldom pursue these types of questions does not help the matter much.
Well, one of the trends that will address this deficiency is the increased transparency of reimbursements from Pharmacy Benefit Managers (PBMs). Why? Because lawmakers made some monumental changes through their Know the Lowest Price Act and Patient Right to Know Drug Prices Act of 2018. Now, the chances that the patients and buyers will be misguided are minimized while the companies have to be completely straight-forward about their practices.
Increased price transparency has also been seen through direct and indirect remuneration (DIR) fees and pharmacy benefit manager (PBM) plans. DIR fees are an umbrella term that encapsulates all the monies that a Medicare Part D plan/ PBM may collect to address the member costs. Assured RX shares that in recent years there has been a shift towards PBMs expanding DIR fees for commercial plans as well.
Technological Improvements Increase Accessibility
Assured RX, an independent retail pharmacy, reminds that people used to be unable to obtain medicine absent in-person visits to the local drug store. Nowadays; however, they can order refills of their prescriptions by simply logging into the right apps on their mobile devices. This is a byproduct of innovation that has given computers a lot more use in the pharmaceutical field.
For instance, doctors can write prescriptions and send them over to the patient’s local store without the patient ever getting involved. One obvious perk of this modernization is the increase in accessibility. In other words, people who may be unable to do a lot of moving around to get their medicine can oversee the process via the internet from the convenience of their own home.
Another technological improvement that is shaking the norms of medical efficiency is telehealth-video consultations for disease-state counseling. This innovative technology is used by tech-savvy doctors and pharmacies to teleconference patients to deliver up-to-date diagnosis and information regarding treatment. Telehealth has expanded to the mainstream to deliver medical services to rural areas, small communities, immobile patients, and to connect patients with out-of-town specialists.
Thanks to the advancements of medical records being recorded electronically, new services are being introduced to ensure the adherence of medication and medication synchronization. Assured RX shares that a leader in the field of adherence medication packaging is the Amazon-based PillPack, which uses technology to improve patient adherence to therapy. PillPack simplifies your medication, so that patients are no longer sorting medications, waiting in line, or searching for refills. Assured Rx is currently working with third party companies to begin offering these types of services to all patients!
Finally, according to Assured RX, the final technology trend that should be mentioned is the ever-improving methods to track inventory. And if there was ever an industry where smooth and accurate inventory tracking was needed, it would have to be the field of pharmacology. Just think about the thousands of different drugs that these businesses come into contact with. Well, if they failed to maintain their records appropriately, they could sell the wrong medication or fail to replace their stock in a timely manner. Even worse, they may miss if medications begin to go missing.
Doing so could have some terrifying consequences as patients’ lives would hang in the balance. Fortunately, the aforementioned growth in technology is helping the employer side of things as well. Thus, inventory tracking methods like just-in-time, open-to-buy, min/max, and many other alternatives will only continue to improve!
More Competition and Tougher Barriers to Entry
In 2017, the cumulative number of independent pharmacies dropped from 22,041 to 21,909. Although this may not seem like a significant change, it is. After all, seeing 132 pharmacies shut down in a single year is a clear sign of increased competition that is most likely originating from the large corporate providers.
In translation, entities like CVS and Walgreens are slowly pushing small providers out of business when they open up their own stores in new locations. This trend is also reflected in the fact that there are increased barriers to entry in the market. For those unfamiliar with the terminology, it simply indicates that people cannot open their own pharmacies and capitalize on demand as easily.
Assured RX states that the medical and healthcare industry has entered into an era of consolidation, where consumers are experiencing a trend of major corporations joining forces to eliminate any of the smaller businesses in pharmaceuticals. This era of consolidation can be seen through such mergers as CVS/Caremark and Aetna (valued at roughly $70 billion USD), Cigna acquiring Express Scripts (valued at approximately $54 billion USD), and Humana and Walmart (valued at $37 billion USD) .
In November of 2018, healthcare and pharmaceutical giant CVS Health acquired Aetna to lower pharmaceutical costs to consumers. Assured RX explains that this merger combines CVS’ vast pharmacy network with Aetna’s insurance business, which is a nonconventional approach to try and limit the cost consumers’ experience. According to the CEO of CVS, Larry Merlo, the merged companies will begin testing CVS locations with added health services in order to determine the feasibility to expand them across all locations. These new locations are going to focus on the following:
- Managing five major and common chronic conditions including, behavioural health, diabetes, cardiovascular disease, hypertension, and asthma
- The addition of more primary health services at CVS’ MinuteClinics
- Guiding discharged hospital patients through at home plans
- The management of complex medical conditions such as kidney failure
According to Assured RX this trend of mergers and acquisitions amongst complimentary services in the healthcare industry will continue to unfold and disrupt the industry. Consumers will feel the vast majority of the benefits from mergers and acquisitions and will continue to drive down the price of pharmaceuticals.