Who’s Killing Independent Pharmacy?

This is a great question.

  1. Has it been the big mail order pharmacies?
  2. Has it been the PBM’s and their negotiating leverage?
  3. Was the final straw Medicare Part D and the loss of the cash patient?
  4. Is it other retail chains and their operating efficiencies?
  5. Was it just a natural evolution?
  6. Is it the fact that money isn’t made on the Rx anymore but on the candy bars and soda?
  7. Is it technology and the capital investments required?

Here is a quote from Jennifer Luddy, spokeswoman for Medco Health Solutions, (from AIS Drug Benefit News):

“The facts show that it is not mail-order [pharmacy], but rather chain pharmacies that are presenting a threat to independent pharmacies. According to national data from the pharmacy industry itself, for every independent pharmacy that closes, 25 chain and big-box retail pharmacies open.”

9 Responses to “Who’s Killing Independent Pharmacy?”

  1. Ms. Luddy does indeed speak for Medco and as such certainly would not offer information as to their highly advantageous buying opportunities ( 7-8 times cheaper than the independent are some estimates I’ve encountered) or the fact that they own both the PBM and the mail order pharmacy which my patients are effectively forced into using through financial coercion. We simply want a level playing field. Give me the option of the mail order ‘s buying power (or even half of it) and give my patients the fair option of keeping their healthcare close to home. We would (if a patient preferred) be glad to counsel over the phone but the law doesn’t allow that option to us. This is another area of unfair regulation that the mail order pharmacy escapes. Most of our patients prefer face to face counseling in a PRIVATE setting, George, but the phone option is taken from you by the health care laws of our government requiring a face to face unless the patient is home bound. I would be glad to mail patients a 90 day supply to their homes but it would seem that is not an option to those of us who have served our community and been a highly available health care provider for over 65 years. We aren’t afraid of change. We welcome it when it means better provision of health care to our patients who are also our friends and neighbors. Most of the people I speak to on a daily basis HATE the thought of mail order but feel they have absolutely no option. Please note that Medco is not the only PBM who has their own mail order house. Humana and others are in the same market. Can anyone say anti-trust or conflict of interest? I agree that business savvy is absolutely necessary and we are building new and innovative ways to “out-service” the chain. But 3 chains I compete with are not my problem. Mail order is still the 800 pound gorilla currently.

  2. Its fair to say that what independent pharmacy is suffering is the ills of commoditization. Now, we can either allow it to happen, not differentiate ourselves and no matter how good we are…let the only reason a customer would shop with us be on price…the end result, wither and die.
    Or utilize the antidote to commoditization (in any market or business)-POSITIONING- own the market that we are in…and if we cannot be number 1 in the market we see ourselves in-manipulate the perception or create a new category that we can claim that top spot.
    This all done through yes…effective marketing and communication strategies that deliver MEASURABLE results fast!
    Its’ possible, believe me, I stepped into it with the disillusion of “if I build it they will come”…and after a rude awakening I made it work.
    Last thought- we are not filling prescriptions-we are filling wants, needs and desires.

    • Boycotting Target AND Walmart AND CVS!

      Where do I buy my stuff? Independent pharmacies. I’ve just learned that Target is spending $150,000 to support the Republican governor candidate. I am boycotting Target. EVERYONE FIND YOUR INDEPENDENT!

  3. You’re exactly right. A new plan of action is needed for us to survive, or we might not be in the game very much longer. In a world of $4 generic discount plans, we’ve got to find avenues to compete on a different playing field. At our pharmacy, we focus on attracting chronic care patients, which allows us to ‘flex our clinical muscles’ and improve patient outcomes, but it also improves our pharmacy’s bottom line at the same time. Chronic-care patients (diabetes, cardiovascular, asthma/COPD) have more prescriptions than any other type of patient, and we simply try to be their one source for all their healthcare needs. If anyone’s interested, we’ve created a website that explains these topics and helps independent pharmacies compete on a different playing field than the chains. It’s http://www.creativepharmacist.com. I’d love to see feedback on what you guys think about the program.
    David D. Pope, Pharm.D, CDE
    Editor-in-Chief, Creativepharmacist.com
    Director, Barney’s Pharmacy Diabetes and Wellness Center
    Barney’s Pharmacy, Augusta, GA

  4. Easier said than done, I have tried many different aspects, I am still barely scraping by, I am ready to sell. Independent pharmacy cant survive on rx alone, and a successfull pharmacy like you implied doesn’t need a good pharmacist, but a good buisness man, which is sad because in the medical field it should have been the actual pharmacist the deciding factor.

  5. “According to national data from the pharmacy industry itself, for every independent pharmacy that closes, 25 chain and big-box retail pharmacies open.”

    Wow , so it seems like what Wal-mart is doing to mom and pop grocery stores is happening on a very significant scale with retail pharmacies gobbling up the business of independent pharmacies.

  6. Michael L Keller Reply May 29, 2009 at 1:01 pm

    Ms Luddy speaks for Medco. Medco is both a PBM middleman as well as a mail-order pharmacy.

    There is little if any data to support the notion that PBMs have lowered prescription drug expenditures. While it is true that they negotiate lower reimbursements for pharmacies and rebates from manufacturers, it appears that these are not passed on the the payor of services. The “negotiating leverage” is used by PBM middlemen to line their own pockets by extracting a large share of prescription drug dollars spent.

    It is quite natural that the spokesperson for Medco would want to divert attention away from themselves.

  7. The comments by Ms. Luddy are not credible. Mail order pharmacies cut into the business of independent ones. Maybe not as much as the bigger retails, but they do.

  8. George – this is a great question. It’s a combination. Let’s look at the demographic of today’s independent pharmacy owner. 24,000 some out there – and the median age of ownership is 49. 20 years ago – IF you were an average pharmacist – and a lousy businessman – you’d still make money. How many business development or marketing courses were taught in pharmacy school 5, 10, 20 years ago? Today’s thriving independent pharmacies are lead by individuals with vision, tenacity, marketing creativity, and good business “know-how.” The chain across the street may be “eating your lunch” and taking business away – but if you can’t “out-think” the fast food lunch box pharmacies then maybe you need to re-evaluate your “business-plan”. HONESTLY – when’s the last time one of these suffering owners – took time to reinvent their business. Filling scripts just doesn’t cut it today – and the creative business savvy pharmacy owners are thriving!! I am not saying it’s easy – we all know it’s NOT. 2 years ago – pharmacy software (for example) was a much easier “sell” especially when the technology was so much more advanced then the character based systems of the 1980’s. Today it’s harder to be profitable. I support the independents 100% and they are going to need to develop a NEW PLAN of attack or sell your pharmacy to someone who will and CAN. Technology in the right hands coupled with a good marketing plan will cause your pharmacy operations to prosper. It’s not that hard to OUT service the Walgreens across the street and out market – them with creativity.
    Todd S. Eury
    Pharmacy Technology Resource, LLC.
    (412) 735-4427

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