Ann Johnson, Pharm.D.
Ann Johnson, Pharm.D.
Tim Kosty, R.Ph., M.B.A.

As we approach the end of the year, we look forward to a post-pandemic 2022 and the return to a normal life. There are many entities and market sectors that benefit from prolonging the pandemic. However, our take is that most of the public is ready to move on, and the continued reopening of stores and businesses is expected. We expect most 2021 trends to continue in 2022, with a few twists and turns based on political decisions made in Washington.

Pharmacist Clinical Services

Pharmacist administration of COVID-19 vaccinations has been a tremendous success. We believe this performance has improved public perception of pharmacy, allowing the public to see pharmacists not only as product dispensers, but also as service providers. The key for pharmacy will be to find ways to leverage this change to gain access to new clinical opportunities and get paid for the services. CMS (Centers for Medicare & Medicaid Services) established vaccine administration fees that were adopted by private insurers. This provided the funding for pharmacies to offer vaccination clinics to the public.

Sustainable funding for pharmacist-provided clinical services is a major barrier for expansion of these services. For example, under many state standing orders, pharmacists have been able to dispense naloxone to patients who are receiving an opioid prescription. While pharmacists may be paid for dispensing the product, most are still unable to bill for the counseling that should accompany these prescription fills. The uptake of this service has been less than expected. Patients may not be willing to pay the copay required by their pharmacy benefit, and pharmacies may be losing money on naloxone prescriptions due to low third-party reimbursements. Absent funding for pharmacist counseling, the financials associated with dispensing these prescriptions are not especially attractive for pharmacies. These issues limit the uptake of the naloxone distribution through the pharmacy channel. Without the alignment of financial incentives, naloxone programs will continue to struggle in 2022.

Pharmacy Labor Markets

The pandemic changed everyone’s perception of where we work. Many companies found that employees’ work was not impacted by working outside of the office. The lack of a commute added additional productive hours to the day, while reducing out-of-pocket expenses. Office work will never be the same. Rite Aid recently announced a new corporate headquarters in Philadelphia that is more of a temporary meeting place for associates than a traditional office. Employers are now more likely to be concerned with productivity and to be indifferent about where their employees reside, as long as the work is accomplished on time. These changes will have a long-term impact on office rental rates and the construction of new office buildings, which may not be needed.

It seems like every restaurant or retail location that we go into these days has a help-wanted sign on the door. Where have all the workers gone? The financial publication Barron’s reports that the Federal Reserve Bank of St. Louis conducted a study indicating that 3 million people retired during the pandemic. The lack of entry-level workers will have an impact on all of us, as stores and restaurants reduce hours or limit services, e.g., carry-out only for restaurants. The shortage of workers and the need to increase wages puts retail at a competitive disadvantage compared to online competition. Retailers have relatively high fixed costs, with limited opportunity to leverage fixed costs. Comparatively, online retailers rent warehouse space — a fixed cost — and can become more profitable as their sales volume increases. We expect retail wages to increase dramatically in 2022, which will cause some pharmacies to close or consolidate with existing locations that are nearby.

Intense Market Competition for Everyone!

All sectors of the pharmaceutical market are facing new competition. The pandemic accelerated the introduction of nontraditional competition, including telemedicine providers. Telemedicine refers to remote clinical services. New telemedicine companies, such as Truepill, offer physician consultation services combined with pharmacy fulfillment. These organizations are identifying market niches and providing services to meet those needs.

Retail Pharmacy Market

There is intense competition for cash-paying customers. TV advertisements for SingleCare and GoodRx seem to be everywhere. These companies focus on prescription pricing and imply that consumers are being taken advantage of by using pharmacies without their services. Pharmacies that support the discount card programs contribute to the perception that their cash pricing is not competitive. There are many valid reasons for higher cash pricing, and it’s beyond the scope of this column to discuss those. The commercials for discount cards do not mention the value of professional services provided by pharmacists. In 2021, Amazon pharmacy offered new services to its Prime members. Prime members are able to compare a cash price for a prescription versus an estimated copay amount before deciding how and where to have their prescription filled.

The Affordable Care Act (ACA) accelerated the introduction of high-deductible health plans. For example, ACA plans may have a $5,000 pharmacy deductible that the majority of consumers know they will not meet. Therefore, these consumers act like cash-paying customers, seeking the lowest cost for their prescriptions and accessing discount card programs. These changes apply downward pressure on retail cash prescription prices and pharmacy margins. We expect these trends to continue in 2022.

PBM Market

The top three PBMs (pharmacy benefit managers) process over 75% of the third-party prescriptions in the country. This market concentration has not deterred new PBMs from entering the market. For example, Mark Cuban is launching a new transparent PBM called Cost Plus Drug Company PBC. Transparency means the PBM will typically pass along 100% of the rebates and pharmacy pricing that has been negotiated without taking a markup. Transparent PBMs charge their customers a flat fee for service. While purchasers of a PBM’s service desire a better understanding of their costs, it has been our experience that minimizing the total dollars spent on the pharmacy benefit is more important in decision-making than whether the PBM uses a traditional or transparent business model. We expect to see PBM market consolidation in 2022, especially in the mid-tier PBMs. These organizations lack the scale to compete with the top three PBMs and need to identify a niche market where they can be successful.

Pharmaceutical Manufacturers

Pharmaceutical manufacturers are experiencing increased competition in a number of areas. For example, the continued introduction of biosimilars has provided new competition for brand products. The biosimilar manufacturers are still exploring marketing approaches and tactics to gain market share. We believe this will be a payer-driven decision in the short term, depending upon the financial arrangements made with the biosimilar manufacturers. This will require pharmacies to carry multiple biosimilars of the same molecule.

The just-in-time delivery of products has reduced supply chain costs over the last 20 years. In part, this reduction eliminated safety stock. The pandemic has exposed cracks in the global supply chain of pharmaceuticals and has led politicians to call for the manufacturing of active pharmaceutical ingredients (APIs) in the United States. Currently, approximately 80% of APIs are manufactured in China and India. New organizations, such as Bright Path Labs, provide the technology to manufacturer APIs in the United States at competitive prices.

In the coming year, we expect competition to intensify in all segments of the pharmaceutical market, which will lead to consolidation of existing companies. We expect to see the introduction of new competition as entrepreneurs identify and seek to fill market needs that may have been overlooked or not identified as meaningful.


We look forward to each new year with positive expectations. To move forward in our careers and personal lives, the ability to embrace and not resist change is paramount. In every industry and walk of life, there will always be the need to do things faster, better, and more cheaply. Be an early adopter and try new things, or at the very least, educate yourself about them. The pace of change has accelerated with technology, and there is no end in sight.

The willingness to continue learning and enhancing your skills and abilities is a strategy for handling industry and life changes. Continually updating your knowledge provides insight into the changes coming and provides time to reflect on how they may impact your company, job, and happiness. Be resilient — life happens, and oftentimes it’s a challenge. To quote Woody Allen, “80% of success is showing up.” Be willing to alter your approach if you are not getting the results you want. CT

Ann Johnson, Pharm.D., is president, and Tim Kosty, R.Ph., M.B.A., is co-founder at Pharmacy Healthcare Solutions. The authors can be reached at and