Tuesday, April 27, 2010

USPS: Bad News for Mail Pharmacies

The U.S. Postal Service (USPS) wants five day delivery, promising an estimated $3 billion savings annually. Check out this USPS web page explaining why “Five-day delivery is part of the solution to declining revenue, volumes.”

Pharmacy Benefit Managers (PBMs) with mail-order pharmacies are not too pleased about this proposed change and are lobbying against the move. I suspect PBMs may be in for a tough battle. How many of us still write and mail actual, physical letters?

Five-day delivery could end up being another inhibitor to mail-order prospects. Independent pharmacies are supporting the five-day schedule, hoping to make mail order pharmacy less attractive. Both mail order and independent pharmacies lost share of prescriptions to retail chains in 2009, so the benefit to independents may be minimal. (See Chains Win Big in 2009.)

The Pharmaceutical Care Management Association (PCMA), which represents the PBM industry, sent letters opposing the move to five-day delivery to U.S. House Committee on Oversight and Government Reform Chairman Edolphus Towns (D-NY) and U.S. Senate Committee on Homeland Security and Government Affairs Chairman Joseph Lieberman (I-CT).

PCMA wrote:
“Intentionally delaying mail, even by one day, would cause a potential gap in care when a refill has not arrived in time. For a patient needing a drug on Saturday, a wait until Monday’s mail, regardless of the reason, is not acceptable.”
Alas, this plays right into the hands of anti-mail independent pharmacies, who claim (wrongly, IMHO) that mail-order is unsafe and dangerous. The National Community Pharmacists Association (NCPA) gleefully forecasts much higher costs for PBMs and payers in Wait a Minute, Mr. Postman:
“One has to think that USPS would at least consider asking its largest business customers (mail order, et al) to help make up that loss through higher rates. Or PBMs could move toward private carriers like UPS or FedEx, which charge premiums for Saturday or Sunday delivery. Either scenario leads to higher costs. PBMs would likely pass that cost on to patients and health plan sponsors. This would further reduce mail order’s ‘cost appeal.’”
Since the time NCPA made this statement, the NCPA's current President announced a move to PBM with a mail pharmacy. I'll be curious to see NCPA’s public response to the USPS situation.

"Well you see, Norm, it's like this... A herd of buffalo can only move as fast as the slowest buffalo and when the herd is hunted, it is the slowest and weakest ones at the back that are killed first. This natural selection is good for the herd as a whole, because the general speed and health of the whole group keeps improving by the regular killing of the weakest members. In much the same way, the human brain can only operate as fast as the slowest brain cells. Now, as we know, excessive drinking of alcohol kills brain cells. But naturally, it attacks the slowest and weakest brain cells first. In this way, regular consumption of beer eliminates the weaker brain cells, making the brain a faster and more efficient machine. And that, Norm, is why you always feel smarter after a few beers."


  1. Another excellent post! I'm convinced that all we want to do is sponge more off the tax payers and not pay for what we get. PBM's should discuss options with UPS. Thanks for sharing the thoughts of one of the great thinkers of our time, Cliff. I'll ruminate on his sage wisdom.


  2. No doubt the USPS, must do something to control cost! I'm like Adam, who sends letters via the US mail anymore? As an independent pharmacy owner, I'm for anything that might increase my sales...I wonder what % of the larger mail-houses use USPS for delivery? I would think most us UPS or FedEx?

  3. Love the Buffalo Story!!

    It's scientifically accurate, or at least I thought so in the bar last night!

  4. My use of mail order is for refills of regular meds - I tend to get those filled before I'm actually completely out. An extra day or two delivery time won't impact my mail order refills. It's called planning ahead! Maybe Mail Order should beef up their proactive notifications and refill reminders.

  5. Never thought of that (ie, impact on mail order pharmacy). Makes sense. But, on the other hand, PBMs have shown remarkable resilience at figuring out how to meet emerging challenges over the years…..Like Mark Twain, reports of their demise have been exaggerated for decades now….

  6. Agree with Anonymous #3: do people really time their mail prescriptions to arrive the day they run out? I always assume mail is going to take longer than expected anyway, and plan accordingly.