Friday, December 07, 2018

Delivering Care Beyond Prescriptions: A Marketplace Opportunity for Independent Pharmacies

Today’s guest post comes from Brian Nightengale, President, Good Neighbor Pharmacy at AmerisourceBergen.

Brian discusses the challenges facing independent pharmacies. He outlines an intriguing growth vision for pharmacies that provide medication therapy management and other patient care services.

For more on how pharmacies can enhance care and lower medical expenses, see Delivering Care Beyond Prescriptions: A Marketplace Opportunity for Independent Pharmacies.

Read on for Brian’s insights.

Delivering Care Beyond Prescriptions: A Marketplace Opportunity for Independent Pharmacies
By Brian Nightengale, President, Good Neighbor Pharmacy at AmerisourceBergen

As chain pharmacies continue expanding their footprint, independent pharmacies are leaning into what they do best—providing high-touch, high-quality, personalized service. More than a differentiator, the fundamental differences in how independent pharmacies operate should be increasingly valued within the healthcare ecosystem since more chronically ill patients need readily available access to high-touch care, and payers are placing greater focus on improved patient outcomes, higher quality and lower overall healthcare costs.

Consider that, according to the 2018 NCPA Digest, 79 percent of independent pharmacies offered medication therapy management to their patients in 2017, and 60 percent provided customized compounding services. Another 71 percent of independents offer delivery services that are increasingly more than handing off medication; these visits provide the opportunity to check on a patient’s well-being. Additionally, 70 percent of independents offered immunizations; 57 percent offered blood pressure monitoring; 35 percent, diabetes training; 24 percent, smoking cessation; and 16 percent, asthma management.

Pair these patient care services with pharmacy accessibility. According to Medicaid claims data released by Community Care of North Carolina, high-risk patients see their pharmacist 35 times a year on average while visiting their primary care physician only four times. This positions independent pharmacies as the most valuable resource to deliver cost-effective care for the highest-risk patients in the local community.

The gap? It is rare—and inconsistent—that pharmacies are paid for providing patient care services beyond activity associated directly with filling and dispensing medications. With declining reimbursement rates for those medications, the financial viability for pharmacies providing these services is diminishing. It is becoming more and more difficult for independent community pharmacies to provide individualized patient services while solely funded by gross margin from diminishing prescription drug reimbursement. A look at today’s environment will demonstrate why correcting this disconnect is so important.


Given the challenges facing our healthcare system, the marketplace reality is that downward pressure on prescription reimbursement will likely continue. With more than 90 percent of their revenue and gross profit coming from the prescription side of the business, independents rely heavily on patient loyalty as a key part of their business model, rather than the large “front of store” sales that drive substantial profitability for larger chain, grocery and big box pharmacies.

As chain pharmacies have found alternative sources of revenue, independent pharmacies also need to diversify their revenue. The vision of Good Neighbor Pharmacy is to see new reimbursement models for the services pharmacies are providing—in other words, a future where reimbursement is tied to services provided and value delivered as a whole to a healthier patient. We believe that the market is in the early stages of connecting the dots between the impact enhanced pharmacy care has on patients and the subsequent reduction in medical expenses.

The value patients place on this service and quality of care is validated by the recognition Good Neighbor Pharmacy has received for the highest in customer satisfaction with chain drug store pharmacies and “Best in Customer Service” in a recent survey from Newsweek.

Individuals have very different reasons for choosing an independent pharmacy versus a chain pharmacy. More complex patients tend to seek out the personalized care and close relationships provided by independents. This creates an opportunity for plan sponsors to engage these high-cost patients with independent pharmacies as the avenue to improve outcomes and lower overall costs.

Data from AmerisourceBergen’s PSAO, Elevate Provider Network, reinforces our belief—that these more complex patients pick their pharmacy first and their health plan second—much like many do with their primary care physicians. Across 4,500+ Elevate member pharmacies, average prescription volume grew by 2.2 percent year-over-year, compared to a -0.4 percent decline for the overall pharmacy market according to a rolling 12-month Rx count (September 2018) conducted by data-analysis firm IQVIA.

While drug costs continue to rise, effective drug therapy and management remains one of the most cost-effective treatment modalities available to physicians today, saving substantial costs related to ER visits, hospitalizations and diminished quality of life. Fortunately, most, if not all health plan sponsors are taking a more holistic purview as they design and offer benefit plans focused on overall quality, health outcomes, and value-based contracts. According to a recent report from the Health Care Payment Learning and Action Network, one-third of all U.S. healthcare payments were associated with alternative payment models. The high-touch, personalized and efficient care provided by independent community pharmacies is uniquely positioned to excel within these new value-based contracts.

Evidence shows that independents are already improving outcomes and embracing performance-based incentives through CMS’s Five-Star Quality Rating System. More than 1,000 Elevate member pharmacies have achieved 5-Star performance, exceeding 85 percent scores across cholesterol and diabetes adherence measures. As of June 2018, 75 percent of Elevate pharmacies reached or surpassed 3-Star performance across those measures.

Pharmacies, particularly independents, are best suited to fill the significant, growing gap in primary care, especially in underserved areas. One glimmer of hope for seeing this vision of a new financial model with fair compensation for enhanced clinical services come to fruition is with the recent alignments of medical insurers owning PBMs. The result is that medical benefits and pharmacy benefits are now connected and there is financial incentive to take advantage of this: better pharmacy care reduces medical expenses.

This begs the question: How will we get there? And what actions are needed from independent pharmacies and industry stakeholders? Learn more here.

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