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Are Pharmacy Benefit Managers (PBMs) Destroying Your Independent Pharmacy?


I want to start off by stating that I know a few things are certain in life and in business;

1. Things are definitely easier said than done


2.  Anything worth doing isn’t easy, but usually comes with great returns
We are all in the same boat together.  If you go down, we go down, so understand that anything I say, anything I write, is from the heart.  We don’t just want you to succeed, we need you to!

As I see it, these are the biggest problems we face, as an industry, and here are some suggestions/ideas:

PROBLEM 1:  Independent pharmacies are too segregated.

There are too many different organizations out there fighting in different areas, with different visions, and NOT together.  We stand near 22,000 independent pharmacies nationwide.  Yet, how many of them are fighting together for the same cause?  We have great organizations out there such as PUTT, NCPA, now we have FIXRX in NY State, and the list goes on.  But how many are members are in each organization?

Picture this:  20-22k pharmacy owners / independent pharmacists across the United States, committing just $100 a month to help save the industry.  $20-24 million dollars a year at a minimum –not counting others in the industry that could, and should donate.  Money that should be allocated to 2 places:

A)  The best damn litigators that specialize in the pharmacy / pbm / insurance industry to fight and represent all of us.  To fight the injustices out there — Caremark paying you .51 cents on the same script it pays itself at CVS $1.09.  “Specialty pharmacy” lists that keep growing and growing, and your inability to get into that network, but damn certain the chains are in.

All this talk about manufacturer rebates is ridiculous.  If you take them away, tell the drug manufacturers you have to give them directly to consumers and know PBMs are already formulating their next move to plan for this?


B)  At least $15 million annually to strategic marketing split up between a great website that is promoted properly, billboards strategically placed where our elected officials get off exits to head to work (like FIXRX did in NY), and television ad’s played during local nightly news broadcasts around the country.  We need to educate every person in this country.  People need to know WHY drug prices are so high.  They need to know that while PBM’s and chain pharmacies are getting rich, the rest of the industry is getting bullied into making less and less – to the point where these companies are doing their best to run all competition out of business.  They want a monopoly.  These greedy bastards are no better than Bernie Madoff.  They don’t care about your health.  They don’t care about patients getting affordable medications so they can stay adherent and healthy.  They care about MONEY.  PROFITS.  GREED.

PROBLEM 2:  Too many independent pharmacies are still focused on RX Profits:

We see the differences in our clients that are struggling, vs those that are flourishing.  For the time being, prescription profits are dismal at best, and instead of giving up, we need to reinvent ourselves.  Pharmacies need to work on other profit centers within the industry, and software vendors need to build a lot of automation in to alleviate the need for more employees, as well we need to continue revolutionizing our systems so we can all prepare for what should be the future of pharmacy – a collaboration of care between you and doctors.  More clinical work and documentation, and hopefully, being paid for these services.

Additional profit centers, and ideas to consider for your future in pharmacy:

  • Compounding:  Not cheap, not easy, but the benefits are there, and the chains don’t offer it! We continue to expand our compounding capabilities and have many compound-specific pharmacies using our software to run their businesses.  Working together with our clients helps us improve our compounding functionality and we continue to improve it constantly.   
  • Revamping Front End:  94% of patients leave a chain pharmacy with OTC/front end items while only 44% do the same in an independent.  WHY?  To begin with, they assume it’s more expensive—the ‘big box mentality’.  Educate your patients on savings with promotions and signage in the store, email, and use your mobile app to educate through sales on the edge you have.  Furthermore, don’t JUST sell Tylenol and the standard OTC items you would expect in a pharmacy.  A few of our clients built a boutique.  Some sell unique cosmetics or perfumes.  Some of them cater to a higher demographic, and some to a lower one.  Some are educating and selling essential oils, CBD oils, or nutritional supplements along with medications. No matter what, you are paying for that retail space – and putting the same old boring over the counter medicines on the shelf is not going to open anyone’s eyes or make a big impact on your bottom line.  BE DIFFERENT!  Are you using POS reports to see what items are not selling?  Are you building and promoting custom sales and tracking them?  Are you using couponing targeted specifically towards items your patients have bought before?  Just some of the capabilities built into our POS to help grow the front end. 
  • Specialty:  Not easy to do—we know there is a lot of work involved!  But we have many clients getting accredited, jumping through the hoops, and fighting to become accepted as specialty pharmacies –and Datascan is about to build in some great functionality to further help document patient interactions on these drugs.
  • Assisted Living / LTC:  Design a brochure.  Market yourself, your pharmacy, the technology you have.  Create a delivery plan and speak to homes in your area and within a reasonable distance.  How can you better serve them?  Did you know that we have a remote nursing portal that will allow the nurses in homes to see patient profiles, update notes, queue up RX’s to be filled or stop a prescription from being filled? 
  • Delivery and Med Sync:  If you’re not offering it, why not?  Try it out –see if it builds your refill business.  We plan to expand our mobile application to allow patients to shop and order OTC items across your store to be added to their RX deliveries. 
  • Events and online promoting instead of print advertising:  Print advertising is getting old and these days shoppers rely on digital marketing and practically live on social media.  If your spending money on that, how about events around the holidays to draw local patrons in.  Facebook and other social media— are you marketing and active within your targeted area – you can be very specific on here for marketing.  More importantly, join local groups in your town and area, and market promotions with great graphical advertising – give folks a reason to come in and support their local business.  
  • DME sales and rentals:  Our POS can fully support rentals of DME equipment now.  Promote it locally, with home health care organizations, doctors, etc. 
  • Technology and Doctor Relationships:  It is still our largest struggle and biggest frustration that the majority of our clients have no idea about a fraction of the capabilities of the software they have from Datascan.  I was just sitting with a client last week that had no idea about a lot of our automation and was so impressed.  He’s a pretty tech-savvy guy, and we repeated that software optimization training could really open some doors for his business.  If you get a handle on some of the great capabilities we have, and some that we are developing, you can market your pharmacy to local doctors on why you can help to provide better outcomes for their patients.  See if you can “sponsor” a lunch or bring a gift basket with a brochure highlighting some of your unique capabilities and why they may want to consider mentioning your store to their patients.  Every little bit helps! 

PROBLEM 3:  You don’t take the time to read, educate, and implement technology –and its costing you money!

Time and time again we have proven that so many of our clients either read what we send and move on without digging further, they never see it, or they say they don’t have time.   Meanwhile, there are so many old habits within the store that is costing them time, keeping extra employees on staff, and in many cases not taking advantage of features that could literally help make them MORE money.  Watch our videos on new features.  Read our newsletters.  Read the emails and tips we send out.  It’s all for your benefit.  AND – find time to do optimization training—as an owner or manager –someone that has a vested interest in bringing change to your business.

Giving up, throwing the towel in, and looking for the next best thing – I have seen it done, and know a lot of ex pharmacy owners that will tell you the grass is NOT greener.  If your use to working for yourself, do you think you could be happy working for someone else?  Working for a chain?  How about starting a new business with an entirely new element of risk — every single business has it.  Starting over from scratch, instead of reinventing what you have is definitely more costly, takes time to build, and has as much if not more risk involved.  Over the years I have watched so many people I know tell me about these great opportunities out there that they are going to get involved in, and the majority of them never seem to pan out – because nothing worth doing is easy, or most of us would be doing it!

Let us help you with technology to require fewer hours manned in the store.  Let us automate more processes, build your refills, build patient adherence which in turn build refills, and help build out other areas outside of your prescription filling business.  We are poised to help our clients participate in E Care plans and CPESN, we are getting ready to help arm specialty pharmacy and compounding pharmacy with better features and capabilities – in other words, we are working hard here to make sure we can provide you all with technology to take your businesses into the next decade.  We hope you’re in this fight with us, and are open to change, re-inventing your business, and creating a revolution.  We are stronger together!