THE NATIONAL COMMUNITY PHARMACISTS ASSOCIATION (NCPA) released its digest at its recent annual meeting showing financial, practice, and service trends among the nation’s independent pharmacists. I was happy to see many ComputerTalk readers, staff, and ASAP (American Society for Automation in Pharmacy) members at the NCPA Orlando meeting. Trends reported in this year’s digest reflect many issues occurring within the profession: reimbursement pressure from government payers and PBMs (pharmacy benefit managers), staffing challenges, increased nonprescription patient care services, and community involvement. Let’s look at some key highlights reported at the meeting.
Pharmacy Financial Trends
First, the number of independent pharmacies declined slightly from 19,479 in June 2022 to 19,432 in June 2023. In spite of the decline, independent community pharmacy continues to represent a significant portion of pharmacies (35%) in the United States. The digest reports the following pharmacy number comparators: traditional chains 20,210, supermarkets 9,367, and mass merchants 7,280.
Independent pharmacy represented a $94 billion marketplace in 2022, with the average annual sales per pharmacy growing about 20%, reaching $4.847 million compared to the prior year’s $4.031 million. Gross profit, however, fell to 21%, its lowest point in the digest’s 10-year look-back window. Contributing factors include low or below-cost third-party reimbursements, inflation (which showed up in drug prices), and a higher cost of dispensing.
Prescription volume per pharmacy rose nearly 5% to 66,218 in 2022, up from the 63,228 prescriptions dispensed in 2021. Eighty-six percent of prescriptions at independent pharmacies are filled with a generic drug, and 51% of total prescriptions are covered by the Medicare Part D (35%) and Medicaid programs (16%). Other third-party programs covered 39% of prescriptions, while fully 10% were cash payments. The large portion of third-party payment means the reimbursement strategies of government programs and PBMs significantly affect the financial viability of independent community pharmacies.
Staffing shortages meant wage increases across the board to attract staff. Hourly wages reported were: pharmacists $59.78; pharmacy technicians, $18.84 for certified technicians and $16.49 for noncertified technicians; and $13.50 for nontechnician staff members. The average pharmacy employed 12 staff, with 7.4 full-time and 4.5 part-time positions. The wage increases contributed to a higher cost of dispensing prescriptions, which rose 15% to $12.90 per prescription.
Pharmacy Service And Practice Trends
Independent pharmacies offered a wide variety of services to patients in 2022, including:
- Wound care 81%
- Medication therapy management 80%
- Compression socks and hosiery 70%
- Smoking cessation aids 42%
- Compounding 62%
- Ostomy supplies 26%
- Diabetic shoes 27%
- Hearing aids 9%
Many of these services are unavailable at other types of pharmacies, making independent pharmacies indispensable to their communities. As an example, several pharmacy chains in my geographic area have completely stopped any compounding or antibiotic liquid flavoring because of forthcoming implementation of revised United States Pharmacopeia Chapter 795 on nonsterile compounding. The burdens are too great even for the simplest compounding or flavoring services.
Immunizations and other wellness/patient care services continue to increase in spite of the reimbursement and staffing challenges, with pharmacies offering the following:
- Immunizations (flu) 87%
- Immunizations (non-flu) 88%
- Blood pressure monitoring 59%
- Diabetes training 32%
- Smoking cessation consultation 29%
- Asthma management 17%
- Weight management 15%
- Lipid monitoring 4%
Technology supports the provision of both dispensing and patient care services, with independent pharmacies using a variety of tools to help with expanded service offerings:
- Point of sale systems 94%
- Automated dispensing counters 58%
- Telephone IVR (interactive voice response) 58%
- Mobile commerce/signature capture 38%
- Automated dispensing systems 38%
- Online patient appointment scheduling 29%
- Medication compliance packaging (robot) 24%
- e-Commerce site 15%
- Exchanging clinical data via a health information network 15%
- Videoconferencing for pharmacist-patient telehealth visits 7%
The use of current and emerging technology solutions is core to the pharmacies that are participating in CPESN USA, America’s first clinically integrated network of pharmacies. There are now 8,395 dedicated providers in 3,498 local, community-based pharmacies within CPESN, and they have submitted 7.6 million pharmacist eCare Plans. The network is the fourth-largest single-contract organization of pharmacy providers in the United States, with pharmacies located across 47 states and Washington, D.C. There are now 249 value-based contracts with payers, partners, or purchasers, with revenue opportunities of more than $20.1 million. See the September/October 2022 Catalyst Corner ComputerTalk column for more on CPESN.
These new service models are critical to the health of community pharmacies while advocacy work on prescription drug reimbursement continues — a primary focus of the NCPA, along with other pharmacy organizations. PBM reform was front and center at the meeting, with the NCPA applauding two new efforts in the fight against unfair PBM practices and DIR (direct and indirect remuneration) fees.
First, a lawsuit has been filed by the law firms Berger Montague PC and Cohen & Gresser LLP, against Caremark, the largest pharmacy benefit manager in the country. The suit claims the company has been assessing pharmacy DIR fees in violation of federal antitrust laws and state laws governing contracts. The lawsuit also challenges Caremark’s agreements to arbitrate claims as being unfair and unenforceable. There have been a couple of arbitrations that are public (unlike most) that support the lawsuit.
In one, an arbitrator awarded a judgment of $23 million to the AIDS Healthcare Foundation, finding that Caremark breached the covenant of good faith and fairness in implementing its DIR practices. A district court in Arizona confirmed the award in 2022. In another case, an arbitrator awarded a judgment of $2.1 million in wrongfully collected fees, plus an additional $1.5 million in attorneys and interest, because Caremark’s contract was unconscionable. A district court confirmed that award in 2023.
The second effort is the creation of a limited liability company, called TRUST LLC, by the NCPA. The LLC will investigate, litigate, or arbitrate (when appropriate) on behalf of community pharmacies to recover coerced price concessions (DIR fees) that were assessed by the PBMs and insurance plans in violation of federal antitrust law and state contract laws.
NCPA CEO Doug Hoey said in a related press release announcing the initiative, “These companies have nearly unlimited resources and it’s almost impossible for a single pharmacy to fight them alone. The way the contracts are set up, arbitration for claims like these can top $1,000,000 for a single pharmacy. The NCPA’s efforts allow independent pharmacies to assign their claims to TRUST LLC to fight the PBMs together. It’s still not an even playing field, but we have a much better chance of getting justice if we join forces.”
Both efforts were widely applauded by those participating at the NCPA’s annual meeting, and they are a welcome addition to the continued efforts by the profession to create fairer practices so that pharmacy services may continue to be offered by pharmacies and their staff around the country. Difficulties in providing services is a topic that has been increasingly reported on in the mainstream press, most recently by USA TODAY.
In my July/August 2023 column, I talked about the perfect storm that has come this fall, with flu, RSV (respiratory syncytial virus), and the COVID-19 vaccines. The demand for these vaccines and how workflow is being managed has led to severe disruptions to patient’s pharmacy needs, including walkouts. More to come on the issues raised in these investigative reports in my next column. Stay tuned. You can access the complete 2023 NCPA Digest here. CT
Marsha K. Millonig, M.B.A., B.Pharm., is president and CEO of Catalyst Enterprises, LLC, and an Associate Fellow at the University of Minnesota College of Pharmacy’s Center for Leading Healthcare Change. The author can be reached at mmillonig@catalystenterprises.net.