The State of Independent Pharmacy
The National Community Pharmacists Association (NCPA) held its 2016 Annual Convention in New Orleans last month. Drug Topics Executive Editor Anthony Vecchione sat down with NCPA CEO Douglas Hoey to discuss the current state of independent community pharmacy and some of the pressing issues facing the profession.
DT: What is the current state of independent pharmacy?
DH: We continue to provide the highest quality care in the retail pharmacy industry. Some of the surveys from Consumer Reports support that idea. Innovation in community pharmacy is as high as it’s ever been. The desire by new pharmacists to practice and to own their own pharmacy is as high as I’ve ever seen it. New graduates want to be able to practice pharmacy and have that patient interaction. Technology has enabled independent pharmacy. It’s been an equalizer with the big boys. It’s been a positive.
On the negative side, margins are thinner than they’ve ever been before. Profit margins, top and bottom line are very thin. Some pharmacies are really struggling. They’re looking at every expense possible to try and gain even more efficiencies. Close on the heels of this biggest negative is the feeling of a loss of control. Independent pharmacy owners are entrepreneurs who want to help their patients. They also want to be able to make a decent living. Many feel like being able to control their own destiny has been taken away from them by PBMs. The PBMs mandate how they practice pharmacy and how they are paid.
DT: NCPA has given a lot of attention to retroactive direct and indirect remuneration (DIR) fees imposed by PBMs in Medicare Part D. Why is this such an important issue for community pharmacists?
DH: There are two reasons why DIR fees are so important. One is the negative financial impact on pharmacies. Equally important is the unpredictability of these DIR fees. Pharmacy owners want to manage their business but they don’t know what they are eventually going to net on a payment until months later. This uncertainty makes it almost impossible to do business. If a pharmacist wants to make a major expenditure—like hire a new employee or add more services or remodel a facility—he or she can’t be certain whether or not their money is going to be clawed back by a DIR.
DT: How has the Affordable Care Act (ACA) affected the relationship between community pharmacists and their patients?
DH: Because so many of the ACA plans run through PBMs, that’s the front-facing part for the pharmacy. When that patient walks in and they are being represented by a PBM, they don’t necessarily know if the pharmacy benefit is a commercial plan or a plan generated through the exchanges. There has also been an emphasis on the Medicaid programs and some of the expansion of Medicaid programs through the ACA. I think that’s probably one of the major areas for pharmacies. A byproduct of the ACA has been some emphasis on managed Medicaid plans. In some states there seems to be a good working relationship between the managed Medicaid plans the pharmacies and the state.