Elements Magazine - Vol.5 Iss.4 Dec 2016

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ELEMENTS

MAXIMIZING PROFITABILITY How ProfitGuard, a wholesaler contract negotiation service, helps pharmacies buy better

TELEPHARMACY NOW A look at telepharmacy— and why it’s not like FaceTime or Skype

Cybersecurity How to protect your pharmacy from a cyberattack

VOL. 5 ISS. 4 | DEC 2016 | PBAHEALTH.COM/ELEMENTS

Signs of the Flu Cold and flu season is fast approaching.

Do your patients know the signs to look for when their children are sick?

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ELEMENTS

The business magazine for independent pharmacy

STAFF & CONTACTS Matthew Shamet – Publisher and Editorial Director Kirsten Hudson – Editor Kellie Paxton – Art Director Analisa Bregant – Contributing Writer Torrie Wright – Contributing Writer Paige Fisher – Graphic Designer INTERESTED IN ADVERTISING? elements@pbahealth.com

Contents Departments 20 SPOTLIGHT:

5 NEWS:

Health Screenings Focus on preventative care by offering health screenings in your pharmacy.

Biosimilars on the Rise A look at the new era of biosimilar drugs.

6 TRENDS:

In Your Pocket The benefits of a branded smartphone app for independent community pharmacies.

24 MONEY:

Pay Off See how a lending partner can help diversify your pharmacy business.

8 RETAIL:

Retail Pricing Tips and best practices for more effective front-end pricing.

11 SOLUTIONS:

Telepharmacy Now A look at telepharmacy—and why it’s not like FaceTime or Skype.

ON THE WEB //

29 OUTLOOK:

Maximizing Profitability How ProfitGuard, a wholesaler contract negotiation service, helps pharmacies buy better.

34 NOTES:

Challenges Ahead The obstacles independent pharmacies can expect in 2017.

Feature: Cybersecurity

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How to protect your pharmacy from a cyberattack.

Find more strategies, tips and expert advice to improve your business at pbahealth.com/elements.

How Independent Pharmacies Can Promote Mental Health Awareness (And Make a Difference)

Approximately one in five U.S. adults experience mental illness in a given year. Is your pharmacy doing everything it can to raise awareness for mental health? Read more at http://bit.ly/2dxvCeg.

Elements magazine is published quarterly by PBA Health. Copyright© 2016 PBA Health. All rights reserved.

Neither this publication nor any part of it may be reproduced without written permission by PBA Health.

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NEWS

Biosimilars on the Rise A look at the new era of biosimilar drugs Biosimilars are becoming increasingly important as patents for biologics expire and manufacturers work to develop similar products to compete with approved branded drugs.

But, there’s still a lot of uncertainty surrounding biosimilars, and what independent community pharmacists need to know about them.

A biosimilar is a biological product, or biologic, that’s highly similar to an already approved biologic. The original biologic is known as the biosimilar’s reference product.

They’re used to treat conditions such as rheumatoid arthritis, psoriasis and certain forms of cancer.

Currently, the U.S. Food and Drug Administration (FDA) has approved four biosimilar products: Zarxio®, biosimilar to Neupogen®; Inflectra®, biosimilar to Remicade®; Erelzi®, biosimilar to Enbrel®; and Amjevita, biosimilar to Humira®. Michael Reilly, executive director of the Alliance for Safe Biologic Medicines, said a lot more are coming, and it’s important for pharmacists to know the role they play, particularly regarding substitution.

BIOSIMILARS VS. GENERICS Reilly said there’s a lot of confusion about biosimilars through the paradigm of generics, but they’re very different.

A generic drug is an exact copy of its brand-name counterpart, and the two are considered bioequivalent.

Biosimilars, however, are highly similar to their reference products, but have allowable differences because they’re made from living organisms.

Additionally, the pricing markdown on biologics won’t be as significant as on generics, due to the cost and complexity of manufacturing biologics.

“It’s important to realize that the cost-savings that will result from biosimilars are going to be significantly different than what you see with generics,” Reilly said.

“With generics, you may see an 80 percent mark down right away, but with biosimilars, you generally see around the 15 percent mark.”

THE QUESTION OF INTERCHANGEABILITY State legislation regarding biosimilars require that only interchangeable biosimilars be substituted at the pharmacy level.

But, Reilly said an interchangeable biosimilar is different than the type of biosimilar that has already been approved at this point in the U.S. “It’s important to note that the FDA has yet to put out guidance as to what will determine if something is approved as an interchangeable, therefore no one has submitted an application for an interchangeable,” he said.

Currently, health care providers can prescribe a biosimilar product in place of the FDA-approved reference product.

Dr. Leah Christl, associate director for therapeutic biologics in the Office of New Drugs (OND) in the FDA’s Center for Drug Evaluation and Research, said that a health care professional can prescribe a biosimilar product by using its proprietary name, or its nonproprietary name, just like any other prescription product. “A health care professional should write the specific name of the product intended to be prescribed,” she said.

This will require pharmacists and physicians to work together when it comes to the substitution of biosimilars.

“The message that we really drive home with pharmacists and physicians is the need for collaboration,” Reilly said. “Working with the physician community on biosimilars is going to be really important to gather a good understanding of how they’re working.”

Follow Elements magazine on Facebook and Twitter for pharmacy business tips and advice, news announcements, industry information and exclusive offers.

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TRENDS

In Your Pocket The benefits of a branded smartphone app for independent community pharmacies

By Analisa Bregant

Your patients likely have a smartphone in their pocket. Is your pharmacy on their device?

Sixty-eight percent of U.S. adults have a smartphone, according to an October 2015 study by the Pew Research Center. And, 62 percent of independent community pharmacies have a mobile app, according to the 2016 edition of the NCPA Digest, an annual publication from the National Community Pharmacists Association (NCPA) that profiles the independent community pharmacy market.

“Consumers today are different,” said Robert Terrell, product manager at PocketRx, a branded smartphone refill and pharmacy app. “They aren’t looking through the phone book to find the information for their local pharmacy. They are searching online, in the app store, or posting questions on social media about who their friends are using and what kind of experience they had.”

Whether you’re looking to implement a smartphone app for your pharmacy or want to evaluate the one you have, PocketRx provides a solution for independent community pharmacies to have an app—and their autonomy.

PocketRx allows pharmacies to customize its app to their own unique branding. “The great thing about the PocketRx platform is that it can provide a complete turnkey solution or any level of customization required to meet the needs of the pharmacy,” Terrell said.

WHY YOU NEED AN APP Today’s consumers are mobile app-savvy.

An app can provide convenience for patients when it comes to refilling their prescriptions, as there’s no wait time or busy phone line.

Increased medication adherence is another perk of app use. “Patients benefit from the app by having an easy way to better manage their prescriptions,” Terrell said. “They also get a

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TRENDS

App Features Create your own mobile pharmacy with PocketRx, a branded smartphone refill and pharmacy app. Features of the smartphone app include: • Easy refills • User profiles • Delivery options • Refill reminders • Alerts to take medication • Prescription transfers • Links to the pharmacy’s Facebook and Twitter pages • Integration with pharmacy management systems • Medication information • New patient forms • Send announcements • Promote your specials • Ask the pharmacist

great tool that is with them at all times to help improve adherence and compliance.”

PocketRx wanted to increase the focus of its app from just prescription management to adherence and wellness initiatives. “Patients of the pharmacy can now receive reminders letting them know when to take their medication or when a refill is due, and messages from the pharmacy, such as that it’s time to get their flu shot,” Terrell said.

Mobile apps also help strengthen relationships between patients and pharmacists by providing an additional resource for patients to connect and seek information.

“They can receive text messages with status updates about their refill, and they can reference health information from their local pharmacist to better manage their care,” Terrell said. “All of these things help to deepen the relationship between the patient and their pharmacist. By providing pharmacy

patients with these multiple touchpoints, the local independent pharmacy can now be more connected to their customers than ever before.”

CREATING YOUR OWN APP Going mobile doesn’t require you to hire an on-staff developer. You can create your own branded mobile app with the help of a software development platform such as PocketRx. PocketRx provides the technology pharmacies need in an app, while enabling them to stay true to their pharmacy’s unique brand. “PocketRx differentiates itself by branding the entire service through the name and logo of the pharmacy that we are working with,” Terrell said.

The company can customize its app for all types of pharmacies. For example, PocketRx has designed more specialized software for compounding pharmacies and even created an in-app menu for a pharmacy with an in-shop deli.

Creating an app with PocketRx can also prove to be a beneficial marketing tool for your pharmacy. “PocketRx is the most cost-effective marketing tool in the industry that also helps drive patient engagement,” Terrell said. “We also work with more pharmacy management systems than any other provider, so that the entire experience fits directly within the existing workflow of the pharmacist.”

With the help of a platform like PocketRx, your independent pharmacy can compete with mobile apps offered by national chain pharmacies. “Our full list of features helps to close the gap between the technology offered by independents and the large chain stores,” Terrell said.

And you can set up your business for the future.

“As the market continues to move forward toward outcome-based payment and reimbursement models, we are always striving to develop new features within our platform to help pharmacies offer services to their patients to help improve outcomes,” he said.

Contact myapp@pocket-rx.com to create your own mobile app for your pharmacy or visit pocket-rx.com.

ELEMENTS | pbahealth.com/elements

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RETAIL

Retail Pricing Tips and best practices for more effective front-end pricing Keeping up with the competition is likely a top priority for your independent community pharmacy. And, while it may seem impossible to beat competitors’ retail prices, it’s not always about having the lowest price.

“Sometimes stores get wrapped up thinking they need to match Wal-Mart, or that they need to have the best prices in town,” said Tom Boyer, director of national accounts at Hamacher Resource Group (HRG), a leading partner in category management, business strategy and marketing services focused on consumer health care at retail. “You’re never going to win that game. You need to think from the standpoint of your image and branding.”

For example, if a pharmacy prices a private label product dramatically lower than a national brand, that price disparity can actually diminish the product’s appeal. The patient might think the store brand is inferior because of the large pricing gap.

The lowest price isn’t what gives your pharmacy a competitive edge; it’s the value you provide. Providing value can be as simple as ensuring that your frontend space is well stocked, and that products are always on the shelf. “You want to focus on building relationships and the shopping experience with customers and avoid competing with Wal-Mart on price,” said Sean Grudzinski, product research and analysis manager at HRG. PRICING KNOW-HOW But before you can set your retail pricing effectively, you need to know your market.

Look into your patient demographics and who’s shopping your front end. Grudzinski recommends pharmacies consider their competition, determine how they want to be positioned and perceived, and then

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establish their retail price strategy. “You really need to understand your market and customers. That’s a common mistake retailers on all levels make,” he said.

“They don’t really understand who’s shopping their store or the surrounding area.”

Examining patients’ retail purchasing habits can also help determine whether your pharmacy is a convenience or a destination business. Grudzinski said most independents are convenience businesses. “If a patient is already in the store getting a prescription, maybe they’ll get something because they’ve been meaning to pick that up. They purchase it as a convenience,” he said.

Boyer suggests pharmacies amp up their over-thecounter (OTC) offerings so their front end becomes a destination for patients.

REGULAR UPDATES It’s also important to routinely evaluate and update your pricing—monthly at a minimum. “You want to change your prices frequently to keep your customers receptive to change,” Grudzinski said.

“Pharmacies need to focus on changes in market conditions and whether their wholesalers or manufacturers change costs,” he said. “Obviously the goal for them is to not lose margins, so they need to adjust their retails accordingly.”

And if you want to get rid of slow-moving merchandise, overstock, discontinued products or seasonal items, a sale is a good idea. “People are always looking for a good deal,” Boyer said. “Don’t send things back to your wholesaler. Find ways to offer discounts to your customers to help build loyalty.”

Grudzinski recommends promoting your sale with price cues like signage, banners and bag stuffers.

“Putting something on sale isn’t the most important thing. Communicating it is,” he said.

FINDING THE RIGHT FORMULA Ultimately, pricing requires a well-thought out strategy.

RETAIL

“It all depends on how the store wants to be positioned, how competitive they want to be in the market, and what other services and products they offer,” Grudzinski said. “Sometimes there’s a misconception that the lowest price is the best price.

That’s not necessarily true. I know a lot of retailers in which the market area, and the general positioning of the store, is more geared towards a specialty, so they can get a higher retail.”

When pharmacies don’t adhere to a pricing strategy, they’re ultimately affecting their bottom line. “Pricing is definitely one of the biggest factors in contributing to a pharmacy’s bottom line, when you consider profitability,” Grudzinski said. “Even a small improvement in your retail price can have a large impact to your bottom line and overall profit.”

A managed pricing program, whether through your wholesaler or HRG, can help you set a consistent pricing strategy, create a professional image and help minimize pricing issues.

“The benefit of a value-price program is that someone is taking over the management of it for you,” Boyer said. “It’s kind of that silent coach for that store.”

Want more proven tactics for retail success?

Download the 5Ps of Retail Success by Hamacher Resource Group: http://bit.ly/5psofretailsuccess.

By the Numbers From the very price conscious to the impulse buyers, consumers shop in different ways. percent of consumers are very price conscious. The primary driver for their buying decisions is price. They’re more likely to shop around and the shopping experience is less important. percent of consumers are not price conscious. “These individuals are the consumers who just go and buy that product. They don’t look at or care about the prices,” said Tom Boyer, director of national accounts at Hamacher Resource Group. percent of consumers are image shoppers. “These are the impulse buyers,” Boyer said. “They like the pharmacy’s environment, or they like the staff.” For these shoppers, the benefits outweigh the costs related to the product.

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Benefits ’s A P C N h wit

Maximize the Value of Your NCPA Membership…or Join Today!

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Exclusive Regulatory and Legislative Updates

This free turnkey adherence program provides NCPA members with tools, training, and marketing support to implement a medication synchronization program.

NCPA fights for the nation’s 22,000 independent pharmacies and their patients because pharmacists play a vital role in health care.

Digital Pharmacist Solution powered by RxWiki

Member Forums

Exclusive social media support and enhancements for your website—all free for NCPA members.

The forums are monthly live colleague-to-colleague discussions on topics of interest to you as an independent pharmacy owners and staff.

Front–End Overhaul Members have access to a library of resources and unique products to help them maximize profits in their front end and stand out from the competition.

Dispose My Meds™ The program offers a discount on the purchase of a takeaway box, as well as information and resources for pharmacies to create a disposal program.

NCPA Digest sponsored by Cardinal Health A summary of selected financial and demographic information that helps members evaluate their business and illustrates the value independent pharmacists provide to their patients.

Member Communications NCPA keeps an eye on the news, trends, and regulatory, legislative, and legal issues affecting pharmacy.

Discounts on Meetings, Education and Networking Opportunities, and more…

NCPA Conferences Members enjoy significant discounts on registration to all of our meetings.

Continuing Education Members receive access to continuing education programs and training on a variety of subjects.

Member Discounts on Publications Staff training publications and niche service training manuals are available through the NCPA Bookstore.

NCPA Professional Services Call NCPA toll-free to get personalized answers for your business and operations questions.

Learn more at www.ncpanet.org or 1-800-544-7447.

SOLUTIONS

Telepharmacy Now A look at telepharmacy—and why it’s not like FaceTime or Skype As operational challenges grow for independent community pharmacies today, many have had to sell their businesses—or close their doors altogether.

The number of independent pharmacies has decreased steadily over the past five years from 23,106 in 2011 to 22,160 in 2015, according to the 2016 edition of the NCPA Digest, an annual publication from the National Community Pharmacists Association (NCPA) that profiles the independent community pharmacy market.

With the number of independent pharmacies dwindling, those operating must consider how to compete to stay in business.

A possible solution is telepharmacy. Telepharmacy serves as an extension of a pharmacy’s current business, and allows for remote dispensing of prescriptions.

“For a long time, independent pharmacists have been used to things getting more difficult for them,” said Greg Janes, director of marketing at TelePharm, a Cardinal Health company that offers telepharmacy software. “Now, it’s really exciting for them to be able to turn that around and have the opportunity to expand.”

Telepharmacy can provide health care access for patients in medically underserved areas, improve patient care and increase the odds that independents will keep their doors open and their lights on.

“The addition of telepharmacy service is really reversing the trend of independent pharmacies closing, enabling independent pharmacies to reach more patients and allowing them to stay open more hours,” said Adam Chesler, director of regulatory

affairs at Cardinal Health, a global, integrated healthcare services and products company.

DEFINING TELEPHARMACY The National Association of Boards of Pharmacy (NABP) defines the practice of telepharmacy as “the provision of pharmacist care by registered pharmacies and pharmacists located within U.S. jurisdictions through the use of telecommunications or other technologies to patients or their agents at distances that are located within U.S. jurisdictions.”

At a telepharmacy, a certified pharmacy technician dispenses prescriptions at the remote site and a pharmacist verifies the scripts at a host store. The pharmacist communicates with patients via live video conferencing technology.

“The pharmacists doing the video counseling can assess whether the patient understands the program and will be able to follow it,” said Mike Coughlin, president and CEO of ScriptPro, a company that provides robotics-based pharmacy management, workflow and telepharmacy systems. “If this assessment turns out to be negative, corrective action can be taken by recruiting a caregiver or planning more intensive follow-up tasks.”

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SOLUTIONS

Misconceptions of Telepharmacy—Debunked Are you unsure about telepharmacy? The experts answer common misconceptions about telepharmacy.

Telepharmacy eliminates pharmacists’ jobs. “Rural pharmacies are closing at an alarming rate, and when a rural pharmacy closes, that’s the loss of a job,” said Adam Chesler, director of regulatory affairs at Cardinal Health. “When you add a telepharmacy, you’re not only helping the overall economy of that town, but you’re actually increasing the amount of pharmacists’ jobs there; you’re increasing access to the pharmacists. Every time you open a telepharmacy you’re creating jobs.”

Telepharmacy will take prescription business away from your other pharmacy.

“Telepharmacy is actually improving adherence, which increases the overall number of filled prescriptions,” Chesler said.

pharmacy, whether a pharmacist is on site or not,” Chesler said. “Telepharmacies have cameras covering every square foot of their facility and panic buttons are also put in place. Regarding diversion, you want your top technicians in these pharmacies; the ones who look at their profession as a career, and are ready to take that next step in advancing their role.”

Telepharmacy is less accurate.

“Telepharmacy, when performed correctly, can be more accurate than a traditional pharmacy due to all the additional checks and balances that are built into the system,” Chesler said.

Telepharmacy is similar to FaceTime and Skype. “Telepharmacy is not FaceTime or Skype, but a secure point-to-point video feed that is electronically documented and barcode scanned of a prescription to the patient from point-of-entry through remote dispense,” said Brian Glaves, director of sales at ScriptPro.

Telepharmacy increases the risk of diversion or robbery. “If someone wants to rob a pharmacy, they’re going to rob a

AN OPPORTUNITY TO EXPAND Telepharmacy allows pharmacies to expand with smallfootprint locations and increase business to areas they weren’t previously operating in.

Independent pharmacy owners are continually looking for ways to grow their businesses. “Once they feel that they have tapped the customers within their trade area, they start looking outside that area for other

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areas of growth,” said Brian Glaves, director of sales at ScriptPro. “This strategic growth typically follows doctors from their area who have part-time practices in surrounding communities or satellite clinics that are served by the local hospital. They might be offering delivery to these towns currently as well.”

Glaves said another opportunity for telepharmacy is when a pharmacy owner is looking to retire, and

SOLUTIONS

the prospects for selling the pharmacy are limited. “A pharmacy in a small town is considered an essential service,” he said. “An independent from a neighboring town could turn this site into a telepharmacy location and nearly maintain business as normal.”

Independent pharmacies don’t have to sacrifice the personal patient care and quality customer service they provide with a telepharmacy. “The objective is to have the same level and quality of experience for the patients that they would have in a live, fully-staffed pharmacy setting,” Coughlin said.

CREATING A BETTER PATIENT EXPERIENCE Telepharmacy provides greater convenience and increases pharmacist access for patients located in rural communities and medically underserved areas.

“Normally these customers would go into the grocery store and buy over-the-counter (OTC) medications without a consultation,” Chesler said. “A telepharmacy in these towns means customers can now walk into the pharmacy at any time and speak to a pharmacist.”

And patients benefit from it. “There’s no better way to ensure that patients get their medications and take them properly than to make the medications and counseling available as quickly as possible after prescribing occurs, and at a location that’s convenient for the patient,” Coughlin said. “When this is done through telepharmacy, patients are given medications along with the knowledge and motivation to use them properly.”

When patients located in rural areas participate in routine pharmacist interactions, it can help increase medication adherence and improve outcomes.

“By implementing telepharmacy, you’re helping improve patient outcomes; you’re increasing patient adherence because patients are receiving and being educated on taking their medications,” Chesler said.

“They’re getting better because a pharmacist is now accessible to those patients.”

Glaves agrees. “The average patient will interact with their local pharmacist almost monthly compared with one to two times per year with their primary care provider,” he said. “These routine interactions

help patients to stay compliant with their meds. Take that option completely away and now they depend on their mailman to get them their meds on time and an overburdened health system to handle increased doctor’s appointments.”

WHERE TO START Before you delve into the business of telepharmacy, you need to consider your state’s regulations. “Telepharmacy is regulated by the state and it does vary depending on your location,” Glaves said. “Some states have had rules allowing telepharmacy for more than 20 years while others require a variance to be applied for. There are still quite a few states that either haven’t addressed it or do not allow it.”

If you’re unsure of the legality of telepharmacy in your state, visit NABP at nabp.pharmacy.

Although implementing a telepharmacy may seem like a giant undertaking, telepharmacies aren’t so different from your brick-and-mortar pharmacy.

“The requirements are very similar to what is needed for a normal retail pharmacy,” Glaves said.

“You’ll need space, drug stock, a pharmacy software system with point-of-sale and a certified pharmacy technician for the site. There are also added licensing requirements that vary by state. High speed Internet access or a point-to-point T1 line aid in the connectivity of the stores.”

It’s also important to have a healthy host store before considering opening a telepharmacy site. “I’ve met with numerous owners of underperforming stores that think they can open up five to 10 telepharmacy sites to support their current single store,” Glaves said.

Ultimately, telepharmacy should be an extension of what independent pharmacies already do—care for their patients.

“Telepharmacy provides easy access to getting scripts filled by a live person in the community with a consultation by a pharmacist,” Glaves said. “Contrast this with driving to the next county or waiting on the mailman to deliver much-needed meds; this can really decrease the quality of life in these areas.”

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Cybersecurity How to protect your pharmacy from a cyberattack

By Torrie Wright

Is your pharmacy prepared for a cyberattack?

Even though you can’t see them, cyberattacks, or cybersecurity breaches, are very real threats. And, your independent community pharmacy may be a likely target.

Forty-three percent of cyberattacks targeted small businesses in 2015, a number that has been steadily increasing over the last five years, according to the 2016 Symantec Internet Security Threat Report, an annual report that analyzes trends in cyberthreats and attacks, by Symantec, a global leader in security and information management solutions.

“We communicate and operate on the Internet as though this is a secure system, while in reality it’s far from secure,” said Tim Campen, a mentor with the Washington, D.C., SCORE chapter, a nonprofit association dedicated to educating entrepreneurs and helping small businesses through mentoring in partnership with the U.S. Small Business Administration (SBA).

Seventy-eight percent of small business owners don’t have a cyberattack response plan in place, according to the second annual Small Business Indicator, an online survey conducted by Nationwide Mutual Insurance Company in June 2016.

Kristin Judge, spokesperson for the National Cyber Security Alliance (NCSA), said businesses need to protect themselves. “We live in a connected world, and just as we have learned how to protect our physical security, we need to protect this new aspect of our lives with just as much vigilance,” she said.

Protection starts with prevention, which means implementing better cybersecurity practices. And, if your pharmacy does fall victim to a cybersecurity breach, you need to be prepared to mitigate cyber liability in order to help your business survive.

“The internet has become the communication backbone of major parts of our economy and our social and business community communications,” Campen said. “The impact of cyber breaches can spread very quickly and can have industry-wide cascading results.”

The NCSA prefers to describe cybersecurity in a positive way. “Cybersecurity allows you to use the Internet with more confidence, because you’re putting safe practices in place,” Judge said. “Cybersecurity can empower you to use more Internet resources with trust and confidence.”

Judge said cyberattacks are a growing threat, and independent pharmacies need to build cybersecurity into the culture of their businesses. “You’re responsible for peoples’ very sensitive data, so it’s something you need to be paying attention to,” she said.

Mike Warren, risk manager at Pharmacists Mutual Insurance Company, a provider of life, disability, financial planning, investment and professional liability products to the pharmacy community, said that about 25 billion devices in the world can theoretically talk to one another, a number that’s expected to double over the next 20 years. “You’re seeing more press about cyberattacks and how they’re impacting companies,” he said. “We’ve gotten a lot of feedback from pharmacists that are waking up to the potential threat.”

One problem with cybersecurity in small businesses is the lack of time and resources to devote to the issue. “Small business owners unfortunately are busy running their businesses and they don’t have a lot of spare time to focus on this topic—it can seem overwhelming,” Judge said. “Criminals know that these smaller businesses can be vulnerable, so they take advantage of them.”

Additionally, Campen said one of the most problematic elements of cybersecurity is the quickly and constantly evolving nature of security risks. If your pharmacy doesn’t have the right practices in place, it can be devastating.

And, Judge said pharmacies are starting to take note. “We are always looking to improve the adoption of cybersecurity best practices for consumers and businesses,” Judge said. “We do see pharmacies putting some cybersecurity practices in place in order to follow Payment Card Industry (PCI) and Health Insurance Portability and Accountability Act (HIPAA) laws, but more can be done.”

DEFINING CYBERSECURITY Cybersecurity is defined as the measures taken to protect a computer or computer system against unauthorized access or attack.

A LOOK AT CYBERTHREATS Mike Egan Jr., pharmacy program director at The Selzer Company, an insurance broker and consulting company in the Mid-Atlantic region that offers its Pharmacy

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Terms to Know Cybersecurity is more important now than ever. Small businesses, including your independent community pharmacy, need to be aware of the threats out there. Here are some key cybercrime terms you should know.

Bot-infected computers A remote attacker controls a large number of compromised computers over a single reliable channel in a botnet, which can then be used to launch coordinated attacks.

Denial of service An attack on a computer or network in which bandwidth is flooded or resources are overloaded to the point where the computer or network’s services are unavailable to clients.

Keylogger Software that can track every keystroke typed on a computer.

Ransomware A type of malware that encrypts computer data and holds it hostage until a fee is paid.

Social engineering The act of taking advantage of other people’s instincts to be trusting and helpful.

Spam zombie Remotely controlled, compromised systems specifically designed to send out large volumes of junk or unsolicited email messages.

Spear phishing An email that appears to be from an individual or business you know, but that is actually from a criminal hoping to trick you into divulging your passwords.

Source: Symantec Corporation

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Insurance Network, said cyberthreats are unlike any other threat. “You can see a storm coming from far away, but you can’t easily see cyberthreats,” he said.

The majority of cyberattacks on businesses are done through phishing, which Symantec defines as “an attempt to illegally gather personal and financial information by sending a message that appears to be from a well-known and trusted company.”

Judge said that for independent pharmacies in particular, phishing scams are a big concern. “Medical data is worth money on the black market,” she said.

“Pharmacies have access to valuable data without having staff whose expressed responsibility is securing that data.”

Egan agrees. “Pharmacies tend to have more exposure than that of other businesses because pharmacies combine risks to both retail payment data and health care exposures, two big areas experiencing lots of attacks and losses,” he said.

The most common type of phishing used by attackers today is spear phishing, where an email targets a specific business or individual. A spear phishing email appears to be from someone who you know, and when clicked on, gives criminals access to your data.

Judge said when businesses fall victim to spear phishing, the number one concern becomes ransomware, a type of malicious software designed to block access to a computer system until a sum of money is paid. “Similar to kidnapping in the movies where a person is held for ransom, criminals hold data for ransom hoping to extract money out of the victim who needs access to the data in order to run a business,” she said. “Ransomware is a fancy name for a corrupt program put on your computer because you clicked on a link or downloaded an attachment that was infected.”

Egan said generally these threat vectors, tools cybercriminals use to attack a target, reveal internal risks and external risks, both accidental and malicious.

“The exposures range from theft of data, to extortion to regulatory fines and penalties, not to mention exposures like cyber extortion,” he said. “The risks and threats are simply too vast to ignore.”

PROTECTING YOUR PHARMACY Independent pharmacies need to take measures to increase cybersecurity and protect their businesses.

Judge said that education and adding authentication to accounts are the first steps to protect your pharmacy from a cybersecurity breach. “It’s important

to train your staff to build cybersecurity into your business,” she said.

For example, she suggests having a lunch-and-learn once a month or holding staff meetings to discuss the importance of your pharmacy’s data, and the roles each employee plays in keeping it safe.

Campen said insider threat is usually the greatest risk for small businesses. “Get training for your employees, and have a written security policy in place so they can learn what to avoid and how to respond to ‘strange’ things on their computers,” he said.

STOP.THINK.CONNECT.™ is a global cybersecurity education and awareness campaign that works to reinforce safe online habits, such as taking caution before clicking on emails and downloading attachments. The idea is to stop, think about what you’re doing and then connect. The campaign was created by a coalition of private companies, nonprofits and government organizations with leadership provided by the NCSA and the Anti-Phishing Working Group (APWG). The U.S. Department of Homeland Security (DHS) leads the federal engagement in the campaign.

“It’s really become very easy for the bad guys, because we’re not educating people enough about how to secure their accounts and refrain from clicking on things,” Judge said.

It’s equally important to protect your data by increasing cybersecurity on your computers. Warren said to minimize the risks of cyberthreats, you should encrypt your data, secure your hardware and use—and

update—antivirus and malware protection software. He said although people tend to ignore notices to update their software, it’s really important to make updates to keep your computers safe.

Additionally, Judge said pharmacies need to have a cybersecurity specialist who checks on their business regularly. “We encourage all businesses to have relationships with these specialists before there’s a problem,” she said.

Independent pharmacies have many helpful resources available to them to learn about cybersecurity and how to protect their businesses from an attack. The NCSA (staysafeonline.org), SBA (sba.gov), Federal Trade Commission (FTC) (ftc.gov), and DHS (dhs.gov) all offer helpful tools and information on their websites.

LIABILITY FOR A DATA BREACH But it’s not just about prevention; it’s about preparation. Because with a cybersecurity breach, comes cyber liability.

“Cyber liability is a fairly new category of business liability risks associated with electronic information and computer systems not covered by traditional insurance,” Egan said.

And pharmacies face cyber liability. “The liability part of it is that the pharmacy can be held responsible for damage or even perceived damage to the parties whose data has been compromised,” Warren said.

Warren said cyber liability generally falls under two categories: first party liability and third party liability.

Quick Tips to Protect Your Pharmacy Use these cybersecurity tips to help protect your pharmacy from a cyberattack.

Train employees in security principles Protect information, computers and networks from cyberattacks Provide firewall security for your Internet connection Make backup copies of important business data and information Control physical access to your computers and create user accounts for each employee

Secure your Wi-Fi networks Employ best practices on payment cards Limit employee access to data and information, and limit authority to install software Require passwords and authentication Create a mobile device action plan Source: Federal Communications Commission (FCC)

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“First party liability is damage to your own information, while third party liability is where you lose somebody else’s data—and that can be really expensive,” he said.

If your pharmacy experiences a data breach, you can be fined by multiple agencies. “When they impose these penalties, they look at what the company did before the event to prevent it, and what actions they took in response,” Warren said.

A cyberattack is likely inevitable. “You have motivated and dedicated adversaries intent on stealing from or extorting businesses and creating thousands of new malware each day, going up against folks that run a business and everything it entails,” Egan said. “Experts say it is not a matter if an incident will happen, but when.”

Warren said that handling cyber liability is like handling any other risk. “You have to educate yourself about the potential threats when you hear about them,” he said. “Consider transferring the risk to insurance, and have measures in place to mitigate the risks.”

Similarly, Egan said everyone needs to take the threats seriously and practice risk management, get proper insurance and have access to experts if an incident occurs. “The cyber risk and threat landscape is really quite scary; it’s not a fair fight going on right now,” he said.

THE DETAILS ON CYBER LIABILITY INSURANCE Cyber liability insurance is becoming standard for businesses today, and some vendors and states are requiring businesses to have cyber coverage.

“Pharmacists are more aware of cyber liability because of the regulatory environment and the presence of huge data breaches at health care-related entities,” Egan said. “Losses are in the news every day.”

According to Egan, reliance on computers combined with the value of information and the evolving risk environment, makes cyber the main exposure businesses face. “Because this exposure is so vast and the uncertainties so great, cyber insurance is now being mandated in many circles,” he said. “Every business should cover the gaps that exist in traditional insurance policies by obtaining comprehensive cyber insurance.”

But, while Egan thinks pharmacists are generally aware of cyber liability, he also said there’s room for more education about evolving exposures and coverages, such as cyber liability insurance, that can cost-effectively address them.

Warren said the size of a cyber loss can be so huge that it can cripple a pharmacy, or even put it out of

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business. And, most small companies don’t have the financial resources to protect themselves.

“With cyber liability, some of the costs people think about is notifying the affected parties and doing credit monitoring, but there’s also legal defense costs, regulatory fines and penalties, data loss and business interruption,” Warren said.

“If your company has a data breach and you send out a notification or it hits the press, imagine hundreds of your customers calling your business all at once,” he said. “How will they feel when they don’t get an answer or can’t get a hold of somebody?”

Cyber liability insurance is a way to offload some of the costs, should your pharmacy fall victim to a cyberattack.

Egan said each legal entity should have cyber insurance coverage. “It is simply becoming part of best practices as each of the stakeholders, including customers, owners and vendors, have an interest in making sure these assets are protected and that remedies exist if they are lost or stolen,” he said.

And, it’s important to look for a policy with proper terms and conditions that provides broad coverage, few exclusions and a price point that makes sense.

“You definitely want broad coverage that essentially provides coverage for “any” type of breach, whether accidental or malicious and no matter where your data is, because at the end of the day, the pharmacy is responsible,” Egan said.

Warren said pharmacies need to look for certain features in a cyber liablity insurance policy, including an aggregate limit (to apply resources where you need to apply them); recovery and restoration of data; lost income due to inoperable systems; data breach response services such as forensics, legal, public relations and customer notification expenses; and fines and penalties for violations.

“It‘s imperative to have adequate coverage and limits that address these cyber, privacy and computer security risks,” Egan said. “Having dedicated and tailored cyber coverage for pharmacists will help fill gaps in traditional coverages and help ensure the business survives a malicious attack or ordinary accident.”

FALLING VICTIM TO AN ATTACK If your pharmacy’s system is compromised, it’s important to report the attack to the Federal Bureau of Investigation (FBI) via its online Internet Crime Complaint Center at IC3.gov.

Judge said the FBI is the number one resource for

small businesses in the case of an attack. “They want to know what’s going on, as they may see trends,” she said. “They’re not going to fix it for you, but they want you to report it so they can continue helping to stop this problem.”

The SBA also recommends informing local law enforcement or your state attorney general, as appropriate.

Additionally, you should contact your insurance company and consult legal counsel to initiate a response plan and determine what next-steps you need to take.

The FTC offers valuable resources at ftc.gov to guide businesses through the steps they should take in response to a data breach, including how to secure your operations, fix vulnerabilities and notify the

Cybersecurity: A 5-Step Process The National Institute of Standards and Technology (NIST) created a five-step process that has become an internationallyrecognized standard. NIST uses these steps as the five ‘functions’ of its Cybersecurity Framework Core, which aids businesses in managing cybersecurity risks.

Follow this process when addressing cybersecurity in your pharmacy to help protect your business and recover from an attack if necessary.

1. Identify. Know what data and technology assets you have.

2. Protect. Once you’ve identified what you have, take steps to protect it.

3. Detect. Have a means to detect when a problem occurs.

4. Respond. Have a response plan that focuses on fixing the problem and business continuity while you’re resolving the issue.

5. Recover. Work with your staff to determine what recovery looks like and have relationships with professionals who can help.

appropriate parties. You can also download a model letter for notifying people.

TAKING ACTION FOR YOUR BUSINESS Now’s the time to secure your pharmacy from cyberthreats.

“Cybersecurity has always been important and pharmacists have always recognized the threats of the personal health information, but the world has changed and it matters now more than ever,” Warren said.

And independent pharmacies can’t ignore it.

“Don’t look the other way,” Judge said. “Make sure this becomes a part of what you do. You need to build cybersecurity into the culture of your business because it is a growing threat.”

SPOTLIGHT

Health Screenings Focus on preventative care by offering health screenings in your pharmacy Preventative care can begin at the pharmacy.

“Good health starts with healthy lifestyle choices and health screenings,” said Jennifer Helmke, Pharm.D., pharmacy manager at Bremo Pharmacy, an independent community pharmacy with two retail locations and one long term care pharmacy in the Richmond, Va., area.

Bremo Pharmacy offers free and discounted health screenings for patients, including cardiovascular risk assessments, blood glucose testing for diabetes, bone mineral density testing for osteoporosis, annual wellness checks and more.

If you’re considering offering health screenings to patients, like Bremo Pharmacy does, now is a prime time to do so.

National attention for preventative care is increasing.

In 2011, the National Prevention Strategy was released, which aims to guide our nation in the most effective and achievable means for improving health and well-being.

Currently Americans are using preventative services at about half the recommended rate, according to the Centers for Disease Control and Prevention (CDC).

Each year, potentially preventable chronic diseases are responsible for millions of premature deaths.

HEALTHY FOR PATIENTS Health screenings provide the opportunity to monitor existing problems and screen for any potential health concerns. And, these screenings also enable pharmacists to get a better knowledge of their patients’ health status.

“We may see patients more often than their doctors, so we can catch issues earlier,” Helmke said. “When the pharmacy has more information about a patient’s health, we can help guide them in the right direction.

Often, screenings get to the root of the problem when a patient is not at their optimal health goals.”

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SPOTLIGHT

be causing the medication not to work correctly, Helmke said. “It could also be an issue of noncompliance or patients not understanding where their blood pressure should be,” she said.

PHARMACISTS ARE PROVIDERS Pharmacists are well prepared to perform health screenings.

“Most pharmacists are Doctors of Pharmacy,” Helmke said. “They have been trained to perform these health screenings during pharmacy school and rotations. Continuing education is recommended to provide the latest information about new testing equipment or keeping up-to-date with information about each screening.”

And it’s really about looking at the overall health of the patient. “Each screening is more than just the number,” Helmke said. A pharmacist reviews the patient’s medical history, prescriptions and risk factors before performing the test. After the test, the pharmacist explains the results and offers suggestions on ways to improve the results.

Helmke recommends pharmacies perform their screenings in a private space. Bremo Pharmacy conducts its screenings in a clinical office with a closed door. And, like most providers, Bremo Pharmacy schedules its screenings by appointment.

Making appointments ensures that a pharmacist is available to perform the screening.

PROMOTING TO PATIENTS Bremo Pharmacy’s most popular health screening is for osteoporosis. The pharmacy gets the word out about all of its screenings by promoting these services on its website, in monthly newsletters, by doing T.V. interviews on local morning shows, posting on its Facebook page and advertising in local newspapers. The pharmacy also has a marketing representative who visits physicians’ offices and community centers.

Every quarter, Bremo Pharmacy offers one type of screening at a discounted rate—or completely free.

“We see a lot of turnout for the free or discounted

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Screenings to Offer Want to start providing health screenings at your pharmacy? Here’s a list of the health screenings Bremo Pharmacy, an independent community pharmacy in the Richmond, Va., area, offers to give you an idea of where to start.

• Cardiovascular risk assessment (blood pressure testing) • Diabetes (blood glucose testing) • Cholesterol (full cholesterol panel testing for high cholesterol) • Osteoporosis (bone mineral density testing) • Annual wellness exams (height, weight, blood pressure, cholesterol, blood glucose, body fat percentage) • Comprehensive medication reviews

screenings we offer,” Helmke said. “As we have increased our promotions of these, the turnout is better. We remind patients that we always have these screenings all year round, but we tend to see more attendance during the promo months.”

Patients likely already know that your independent community pharmacy offers certain services, like flu shots. But they’re probably not aware pharmacies can offer health screenings.

“Knowing is the key,” Helmke said. “Many people aren’t aware that pharmacies can do screenings, or they think that’s what their doctor does. But, as we all know, doctors’ appointments are very quick. Most people don’t have all their questions answered during their visit, or they come up with questions once they go home. Depending on the screening, the pharmacist is one of the best providers for this service.”

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MONEY

Pay Off How a lending partner can help diversify your pharmacy business

It’s no secret that independent community pharmacies are facing a tough market today.

“Community pharmacies aren’t getting notices in the mail that third parties are going to increase their reimbursements,” said Jimmy Neil, general manager at Live Oak Bank in Wilmington, N.C., a bank specializing in small business loans, including independent community pharmacy lending. “They’re not getting notifications that more drugs are covered under formularies than aren’t covered. Preferred networks and select networks aren’t going away. It’s more difficult.”

As pharmacies strive to make innovative changes to stay competitive, they’re going to need funding. But where does the money come from?

Neil said pharmacies need a lending partner that understands how growth can positively influence their business.

IT PAYS TO DIVERSIFY Diversifying your business is necessary today because of increasing competition. “The chains continue to build more and more pharmacies, they continue to consolidate and they have advantages as such in the marketplace,” Neil said.

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Successful pharmacies need to try new things.

And, trying new things requires money and working capital. “It takes money to make money, so you need to invest,” Neil said.

Whether you’re investing in compounding, pharmacy management software updates, robotics, packaging automation or other innovative services, it all takes extra funding.

“If your margins are continually challenged, you may not have the excess cash to invest, so you may need to borrow $100,000 to $5 million to invest in your business,” Neil said.

FINANCING OPTIONS There are a lot of ways pharmacies are looking to grow today—and a lending partner can help.

“Recently, we’ve been loaning money to pharmacies in the area of working capital for specialty pharmacy,” Neil said. For example, “A pharmacy owner has secured a relationship with a referral channel, a physician or network to get some specialty scripts, and realized they need several hundred thousand dollars in order to buy inventory and pay for operations until those dollars come in.”

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diversify is through file acquisition, which Neil referred to as taking a play out of the chains’ playbook.

“When a pharmacy is looking to sell, instead of selling prescription files to the chains, the pharmacy sells to another independent, and we finance that,” Neil said.

“Almost all of the customers transition their business to the other independent.”

Neil also said a lot of pharmacy owners would like to own the real estate their pharmacy resides on, so they’re looking for a lending partner to help. “They’ve approached the landlords, who in most cases used to own the pharmacy, and they’re buying the real estate from them,” he said.

Additionally, pharmacies are looking to refinance.

“Interest rates are still relatively low, so we’re able to refinance some lines of credit and unfavorable term debt,” Neil said.

TYPES OF LOANS Live Oak Bank offers U.S. Small Business Administration (SBA)-guaranteed loans for pharmacies.

Neil said that these loans allow the bank to finance small businesses that otherwise wouldn’t be able to obtain a conventional loan.

According to Neil, conventional banks typically want collateral in the form of real estate or a liquid asset.

But, for independent pharmacies, the majority of the acquisition loan is allocated to purchase script files or the “goodwill”.

“Most conventional banks don’t give any collateral valuation to the script files,” Neil said. “As an SBAguaranteed lender, we’re able to give the script files or the ‘goodwill’ collateral value.”

GETTING STARTED Neil’s advice to independent pharmacies that want to expand and diversify their business is to do their homework.

He stressed the importance of deciding what type of diversification you want to do, finding out what your competitive advantage is and understanding the risks associated with expanding your business.

“I would make sure you truly believe in a strategy that you want to take,” he said. “Find something that’s unique and make sure you can execute on it.”

5 Criteria to Qualify for a Loan As a U.S. Small Business Administration (SBA)-guaranteed lender, Live Oak Bank in Wilmington, N.C., primarily looks at five criteria when evaluating whether or not an independent community pharmacy will qualify for a loan.

Credit score. A pharmacy’s FICO score must be in the low 600s to 820.

Cash. If there’s an acquisition, a pharmacy must be able to invest some cash into the business.

Collateral. If it’s a marginal deal, it helps if a pharmacy has some equity in real estate collateral.

Cash flow. A pharmacy must generate at least 25 percent more cash than is required to pay the bank debt each month or year.

Competency. A pharmacy owner needs to be able to demonstrate the competencies that are required to run a successful business.

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OUTLOOK

Maximizing Profitability

How ProfitGuard, a wholesaler contract negotiation service, helps pharmacies buy better Every independent community pharmacy owner is looking for ways to save time, offset reimbursement pressures and maximize profitability.

And that starts with your primary wholesaler contract. The deal you get determines how well you can buy, and ultimately how profitable you can be. But negotiating with primary wholesalers, monitoring your contract and managing purchasing takes time, which is something most owners don’t have enough of. And, when you don’t have the time to ensure you’re getting a good

By the Numbers

You don’t have to just take it or leave it. ProfitGuard by PBA Health ensures independent community pharmacies get a better deal on their primary wholesaler contract. Here are the numbers to back it up. $3.5 million - Average savings over the term of the negotiated agreement 27 percent - Average pharmacy profit margin with ProfitGuard Source: PBA Health

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OUTLOOK

working with the wholesaler directly. “It’s easier for a third party to negotiate with wholesalers than to have the pharmacists directly involved,” he said.

Ron Jung, Pharm.D., CEO of Fox Drug Stores Inc., which has four locations in rural California, also stressed the importance of having an expert on his team. “The wholesaler could tell us it’s a good deal and have us sign, and we wouldn’t know the difference,” he said. “Now, someone is on your side negotiating and verifying versus you just taking what they offer.”

Jason Jung, CFO and COO of Fox Drug Stores, agreed and compared the wholesaler telling you it’s offering a good contract to the fox guarding the henhouse. “I could take your word for it, but now I’ve got somebody who’s objectively telling me it’s a good contract and comparing it with what they’ve seen elsewhere,” he said.

deal, your pharmacy isn’t going to be as profitable.

ProfitGuard by PBA Health manages primary wholesaler contract negotiations to secure independent pharmacies with the best overall cost of inventory possible. The service also includes data analytics tools to help pharmacies regularly monitor and improve their purchasing. ProfitGuard aligns with primary wholesalers to improve pharmacies’ purchasing arrangements and the wholesalers get opportunities to win larger volumes of business.

ProfitGuard leverages buying power by forming regional groups of pharmacies. And, multiple national wholesalers bid on the group’s business, which promotes fair and balanced competition, and earns everyone a better deal.

Take a look at how three independent pharmacy owners use ProfitGuard to buy better.

EXPERT CONTRACT NEGOTIATION ProfitGuard’s experts negotiate contracts for pharmacies to secure them with better pricing, rebates and payment terms on their primary wholesaler contracts.

Victor Law, R.Ph., chief pharmacist and president of Alpha Medical Pharmacy, Inc., which has three locations in Southern California, said it’s beneficial to have an expert who understands how a retail pharmacy functions negotiate on his behalf, as opposed to

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SELECTING THE RIGHT WHOLESALER Once ProfitGuard forms a regional group of pharmacies, contract negotiations begin and multiple national wholesalers bid on the group’s business.

After a thorough review and analysis of all negotiated offers, the group selects a wholesaler.

Law said he likes the negotiation process with ProfitGuard, particularly when the negotiators meet with all the individual owners in the group after receiving bids from the wholesalers. The experts give recommendations, and all of the owners discuss the terms to decide if there are any other grounds for negotiation or areas to improve.

Before signing the contract, each individual owner in the group gets to vote. “I think it’s a fair process, and it saves me the headache of dealing with so many different people myself,” Law said.

“We don’t have the time to handle all of that, and ProfitGuard has done a good job on our behalf.”

Jason said he appreciates that ProfitGuard’s negotiators leverage their experience to get everyone a better deal. For example, they know about features other independent pharmacies have asked for in their wholesaler contracts that may also benefit his pharmacies. “They can bring the idea to us and say, ‘Hey, do you want us to ask for this as well?’ and we can say, ‘Yeah, we’ve never thought about that; that is a good feature!’” he said.

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OUTLOOK

BETTER PRICING Before switching to ProfitGuard, Ron said discounts and rebates were confusing and often hard to track.

“It was the one thing missing in all the wholesalers we talked to,” he said. “Their individual contracts were nothing like what ProfitGuard offered, and that really piqued our interest.”

Jason said with drug prices changing so frequently, it’s difficult to find the time or resources to keep an eye on them. “Unless you sit there and review them every single time, you’re going to miss some potential cost savings,” he said. “That’s one of the problems ProfitGuard has helped solve for us. We can feel more confident now that we’re not going to miss that price change and blindly keep paying a higher price if we don’t need to.”

ProfitGuard also gives pharmacies access to the PBA Health warehouse as a quality secondary source of product, and uses that market knowledge to the pharmacies’ advantage.

“They’ve negotiated with the manufacturers and have gotten the price of the drug, so they can tell the prices being offered from the wholesaler are legitimate prices,” Jason said. “Now, we can validate these prices we’re being offered as fair prices.”

A TIME-SAVING SOLUTION Independent pharmacy owners have a lot on their plates, and they shouldn’t have to sacrifice valuable time that could be spent caring for patients.

Ron recommends other independent pharmacies use ProfitGuard to gain a beneficial contract—and save time. “The owner is always too busy and has his hand in too many other fires,” he said. “It’s the last thing he takes time to look at.”

Law said using ProfitGuard has helped save him the hassle of checking on pricing and product availability, and handing contract negotiations and bidding wars with wholesalers. “They saved me all this time, so I can focus on patient care,” he said.

Law also has experience negotiating contracts, so he understands the benefits of using a service like ProfitGuard. “You have a lot of problems to solve when you have a group of pharmacies buying together,” he said. “ProfitGuard solves these problems for me, so I can be available full time to fill prescriptions and network with doctors.”

MONEY-SAVING TOOLS After the primary wholesaler contract is signed, the group gains access to ProfitGuard’s data analytics tools, which help pharmacies manage their purchasing.

Pharmacies can verify pricing by line item to ensure the wholesaler is paying the correct rebate amounts.

They can also see how much they purchase on- and offcontract with the easy-to-read metrics, and they’ll get money-saving recommendations on the products they purchase regularly.

Ron and Jason said they find the data analytics tools valuable, and they check them on a weekly basis.

“They’re giving us a good history of our data now, showing us our actual purchase patterns and purchase history,” Jason said. “They’re really starting to shine and show value.”

The tools allow pharmacies to optimize their rebates and make sure they’re purchasing correctly.

“Before, it was hard to calculate whether we were getting the right rebates and whether the prices were even correct before the rebate discount was applied,” Ron said.

He said that within the first two months of using ProfitGuard, they saved money by taking advantage of ProfitGuard’s recommendations. ProfitGuard also caught an accounting error, which resulted in a $1,800 additional rebate that the wholesaler had calculated incorrectly. “So, it already paid for itself for us,” he said.

GROUP POWER Law’s favorite aspect of ProfitGuard is being part of a group. “When you have a group, it’s easier to be more compliant, and you can all work towards the same goal together,” he said.

With ProfitGuard, wholesalers bid on the group’s business, which Law said results in a better contract.

“There’s no way you can negotiate a better contract by yourself than with a group,” he said. “The wholesalers are all very eager to sign with us because we stand for a lot of business to them. Before we were nobody, but now we are somebody.”

Law hopes to get the message across to other pharmacy owners that they should consider using ProfitGuard and gain the benefits of joining a group.

“The problem with independent pharmacists today is that we are not united,” he said. “Anytime you’re not united, you’re on your own, and you’re not as strong as with a group of people.”

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NOTES

By the Numbers

Challenges Ahead The obstacles independent pharmacies can expect in 2017 Each year brings new challenges for independent community pharmacies to overcome.

As 2016 draws to an end, it’s time to consider—and prepare for—what the New Year may bring.

Mohamed Jalloh, spokesperson for the American Pharmacists Association (APhA), chatted with us about the challenges your pharmacy can expect to face in 2017.

A LOOK BACK AT 2016 This past year, financial concerns were plaguing independent pharmacies.

Direct and indirect remuneration (DIR) fees were a big problem. Pharmacy benefit managers (PBMs) retroactively impose DIR fees on pharmacies, making it difficult—if not impossible—for pharmacies to know what their true reimbursements will be.

“I suspect that they will still be a problem in 2017, especially since there may be fewer PBMs due to mergers,” Jalloh said.

Along with DIR fees, PBM transparency in general was an issue in 2016.

“Various PBM consolidations have decreased the selection of PBMs that pharmacies can work with,” Jalloh said. “This is troubling since it makes it difficult for pharmacies to have options for receiving payments.

Also, PBMs don’t have the best transparency regarding generic drug payment methodology. Pharmacies may not be getting the most economic deal.”

Jalloh expects this past year’s challenges to continue into 2017. “I see achieving higher PBM reimbursements and working to maintain financial leverage and stability, despite various PBM

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ELEMENTS | pbahealth.com/elements

Prepare your pharmacy for the challenges ahead by expanding your service offerings. Consider these popular services other independent pharmacies are providing.

83 – Percent of pharmacies provide medication therapy management (MTM) services 68 – Percent of pharmacies do immunizations 60 – Percent of pharmacies offer online refills for patients 59 – Percent of pharmacies provide blood pressure monitoring 41 – Percent of pharmacies provide pet medications Source: 2016 NCPA Digest, The National Community Pharmacists Association

consolidations, as one of the biggest challenges independent pharmacies will face in 2017,” he said.

ADVICE FOR THE UPCOMING YEAR With reimbursement struggles continuing into the upcoming year, Jalloh recommends pharmacies combat these concerns by expanding their service offerings.

“Independent pharmacies have unique challenges ahead, however I suspect that if they expand their dispensing services to other sites or locations (e.g. medication packaging for long term care facilities), create disease specific clinics (e.g. HIV medication review clinics) and conduct reimbursable medication therapy management (MTM) services, they can continue to compete with the larger pharmacies,” he said.

Jalloh said pharmacies can prepare for these challenges by meeting with their legislative representatives and advocating for change.

For example, he suggests independent pharmacists ask their legislative representatives to support H.R. 244, the “MAC Transparency Act” to ensure that independent pharmacies are reimbursed appropriately and on a timely basis.

Let them choose the taste of their medicine

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WHEN I TOLD THEM

“We are with PRS,” BOTH AUDITORS SAID,

“Oh, then you’re OK!” I HAD TWO MAJOR INSURANCE AUDITS, and both auditors asked me about my compliance programs.

When I told them “We are with PRS”, both auditors said, “Oh, then you’re OK.” Neither needed to check my P&P’s since they had seen PRS’s programs before at other pharmacies and they knew we were compliant. Very cool!

— Jake Olson, Pharm.D. Skywalk Pharmacy Milwaukee, WI

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