Elements magazine Vol.9 Iss.4 December 2020

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ELEMENTS CORONAVIRUS, TAXES, AND YOU How will Covid-19 relief affect this year’s taxes for pharmacies?

PURCHASING POWER How one pharmacy saves thousands on its cost of goods

Vaccines in the Time of Coronavirus Preparing for a Covid-19 vaccine and offering pediatric vaccinations while the virus rages on

VOL. 9 ISS. 4 | DECEMBER 2020 | PBAHEALTH.COM/ELEMENTS

Pharmacy

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CONTENTS ON THE COVER

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FEATURE | Vaccines in the Time of Coronavirus Preparing for a Covid-19 vaccine and offering pediatric vaccinations while the virus rages on

DEPARTMENTS

FEATURE | Vaccines in the Time of Coronavirus

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06

NEWS | Covid Cons

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TRENDS | Coronavirus, Taxes, and You

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RETAIL | Bearing Gifts

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SOLUTIONS | Prior Auths

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SPOTLIGHT | Purchasing Power

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MONEY | Pharmacy Debt 101

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OUTLOOK | Error and Trial

Fraudsters are targeting small businesses using coronavirus relief efforts

How will Covid-19 relief affect this year's taxes for pharmacies?

A robust gift section brings new revenue opportunities

Tips from independent pharmacists on resolving prior authorizations

How one pharmacy saves thousands on its cost of goods

Why debt can be a valuable financial tool for independent pharmacies

How to prevent the most common and most expensive lawsuits against pharmacies

ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

MONEY | Pharmacy Debt

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ON THE WEB

ELEMENTS

The business magazine for indpendent pharmacy

VOLUME 9, ISSUE 4

Find more strategies, tips, and expert advice to improve your business.

DECEMBER 2020 PUBLISHER & EDITORIAL DIRECTOR Matthew Shamet EDITOR Greyson Honaker SR. ART DIRECTOR Brenda Reagan CONTRIBUTING WRITER

How to Reduce Pharmacy DIR Fees DIR fees are inevitable, but that doesn't mean you can't take control to lessen their impact.

Here are a few ways you can reduce DIR fees, stay profitable, and improve outcomes for patients all at the same time.

Erin E. Rand

INTERESTED IN ADVERTISING? elements@pbahealth.com

5 Common Pharmacy Workflow Disruptions (And How to Fix Them) A recent study found that pharmacists experience between three to seven interruptions per hour. Here's how to minimize the damage from disruptions.

Current Legislation That Could Change Independent Pharmacy From tackling the Covid-19 pandemic to fighting back against PBM overreach, pharmacy groups are advocating for changes that make independent pharmacy more profitable, and lawmakers are listening.

Follow Elements magazine on Facebook, Twitter and Elements magazine is published quarterly by PBA Health.

CopyrightŠ 2020 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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ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

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NEWS

COVID CONS

TIPS TO PROTECT YOUR PHARMACY

Fraudsters are targeting small businesses using coronavirus relief efforts

• Don't ever give passwords or personally

T

• Always verify the email address of the sender.

he economic stimulus programs during the pandemic buoyed small businesses as the economy faltered, but the

relief packages also introduced new opportunities for criminals looking to game the system. Acknowledging that we are "facing unprecedented times," the US Small Business Administration

(SBA) sent out a warning to small businesses alerting them to

identifiable information in response to an unsolicited call, letter, or email.

Many false emails will have a single misspelling, like an extra letter or an extra ".com." (All SBA inquiries will end with @sba.gov)

• Never click on links or download attachments from senders you do not know.

fraud schemes related to the coronavirus relief loans: "Fraudsters

• If you are taken to a website, verify the URL.

have already begun targeting small business owners during these

• Avoid untraceable payment methods, such as

economically difficult times. Be on the lookout for grant fraud, loan fraud, and phishing."

The targeted online scams using coronavirus relief efforts typically

manifest as phishing emails. Phishing emails appear to come from a trusted source, and they will seek to get payments, personally identifiable information, banking access, or sometimes contain ransomware in links or attachment downloads. For example, the email might use an SBA logo requesting your personal information for your loan application. Some may promise to get approval for an SBA loan but require payment upfront or offer a high-interest bridge loan. Sometimes, even clicking on a link in the email is enough to grant criminals access to sensitive information or allow them control over data and devices. They will use victims' information for identity theft and financial theft, or they can sell the information to others for a high price. With the coronavirus, the stolen information has been frequently used to apply for PPP loans and Economic Injury Disaster Loans, as well as unemployment benefits.

One con took victims to a fake SBA website requiring them

cash, prepaid debt cards, or cryptocurrency.

• Use cybersecurity software.

• Include warning banners for all emails external to the organization.

• Limit employee access to data and information.

• Train employees. All it takes is one click from one employee to jeopardize your whole pharmacy.

• Don't respond to emails about 7a or Disaster

loans—the SBA does not initiate contact for these.

• Do the math on the fees for loan processing.

Here is what the SBA charges: 3% for loans $50,000 or less and 2% for loans $50,000 to $1,000,000 with an additional ¼% on amounts over $1,000,000. If the fees are higher, suspect fraud.

• Sign up for CISA's free vulnerability scanning and testing services.

to use credentials to log in, which the fraudsters then stole. The email was from disastercustomerservice@sba[.]gov with a subject line that read "SBA Application – Review and Proceed" and a

RED FLAGS

message that urged recipients to click on the link. The website

• Offers sounding too good to be true

mimicked the SBA's almost exactly, so business owners were

• Promises to speed up loan acceptance

none the wiser. Astute users would have spotted the brackets

• Offers of bridge loans

in the email address and a shady URL on the website, but other than those subtle red flags, nothing else indicated foul play.

These scams have become sophisticated enough to imitate

very specific businesses you have relationships with, like vendors.

Many of them will use some coronavirus spin, such as offering or helping with loans or grants, warning that you've been compromised by another scam, or even asking for donations.

Pharmacies should be alert and become familiar with signs of fraud and should have protocols in place to protect the business. We've put together a couple of lists to help.

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• Demands for upfront payment • A ny message with urgent or time-sensitive requests or threats • Emails or texts from official government organizations • Requests to click on links or download attachments • Messages with poor spelling and grammar • R equests or demands to confirm or update personal information • M essages claiming there is a problem with your account • E mails with invoices you don't have record of or weren't expecting

TRENDS

CORONAVIRUS, TAXES, AND YOU How will Covid-19 relief affect this year's taxes for pharmacies?

T

ax season isn't something pharmacy owners look forward to

Right now, there are still many questions surrounding the details

during a normal year, but because of the many coronavirus

of the Paycheck Protection Program funds and business taxes.

relief provisions, 2020's tax season promises to be one for the

Congress is expected to clarify questions like how loan forgiveness

books. Between the CARES Act, the Paycheck Protection Program

will work and whether expenses will ultimately be deductible,

Flexibility Act, and all the rules being passed down from Congress

but as of publication, there have been few answers. "The PPP is

and other regulatory bodies, independent pharmacies are looking

constantly evolving," Scotty said. "We're telling our clients to hold

at some brand new (and often confusing) issues when it comes to

tight until we learn more."

filing taxes.

money they have received and another 10 months after those 24

To get the story on how pharmacy finances need to be

As the law is written, pharmacies have 24 weeks to use the PPP

managed as a result of all the coronavirus relief programs, Elements

weeks have been completed to apply for forgiveness. "We're not

spoke with Ollin Sykes, CPA.CITP, CMA, president of Sykes &

rushing to do that now because of all the indecision and changing

Company, P. A., and Scotty Sykes, CPA at Sykes & Company, to get

laws," Ollin said. "We want clients to be first to the trough to get

an accountant's perspective.

the money and last to get forgiveness." If pharmacies wait longer to apply for forgiveness, they may have more clarity about what

PAYCHECK PROTECTION PROGRAM

the process entails, which will help them with their own financial

The Paycheck Protection Program is likely to be at the forefront of

planning.

pharmacy owners' minds as tax season approaches. According to

an NCPA survey, 96 percent of independent pharmacies applied for

deductible, that's going to be a big change as far as tax planning goes."

Scotty added, "Clearly if Congress makes those PPP expenses

PPP loans, and of those that applied 99 percent received them.

This is money that does not have to be paid back if pharmacies

ECONOMIC INJURY DISASTER LOANS

meet all the requirements for forgiveness, "but the expenses they

Economic Injury Disaster Loans (EIDL) have been offered by the

are using that money on aren't deductible, either, so it's essentially

Small Business Administration for years to businesses harmed by

a wash," Scotty explained.

natural disasters, and many independent pharmacies have secured

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additional funding through the program. These loans aren't

allows businesses to "carry back" NOLs for five years, which applies

forgivable like PPP loans, but even though pharmacies still have to

to NOLs generated after December 31, 2017, through January

pay the money back, they come with a low, fixed interest rate and

1, 2021. By filing an amended return or Form 1045, pharmacies

repayment terms as long as 30 years.

can get refunds that include interest for taxes they've already

paid. "We've had several pharmacies that have received six-figure

As a response to the pandemic, businesses that applied for

an EIDL were also eligible for an EIDL advance grant of $1,000

refunds doing this," Ollin said.

per employee, up to a maximum of $10,000. There's currently no

guidance from the IRS on whether the EIDL grant will be considered

tax returns because of changes the CARES Act made regarding

taxable income. Any money received through the EIDL program

Qualified Improvement Property. When businesses make interior

beyond the grant is treated just like a regular loan, and therefore

improvements to their space in order to provide better service —

Pharmacies also have an opportunity to amend previous

isn't taxable.

like installation or replacement of drywall, ceilings, interior doors,

mechanical or electrical improvements, it counts as a qualified

Pharmacies who applied for both a PPP loan and an EIDL are

in for some tricky logistical challenges. "The grant may reduce your

improvement. Be sure to understand what is excluded from this

PPP forgiveness, which is where it gets a little more complicated,"

definition such as any internal structural framework improvements

Ollin pointed out. Businesses also can't use PPP funds and EIDL

or enlargements to a building. Under the previous tax code, Scotty

funds for the same purpose, so you can't use the EIDL for payroll

explained, "The expense for those improvements was generally

if you took out a PPP loan. Pharmacy owners should make sure

considered a 39-year asset, meaning you depreciated it over 39 years."

they know the terms of each aid program and keep careful track

of where their aid money is being spent in order to avoid mistakes

Improvement Property to a 15-year depreciation. "That 15-year

that could affect their eligibility for PPP forgiveness.

recovery period is eligible for bonus depreciation and Section 179

PROVIDER RELIEF

asset is being put to use," Scotty said. For pharmacies who have

The CARES Act and the PPP Health Care Enhancement Act allocated

made changes to their space in order to comply with USP 800

$175 billion in relief payments for eligible healthcare providers—

regulations, these new provisions can have a big impact if they go

including pharmacies—to help them cover for lost revenue or

back and submit amended returns.

The CARES Act changed that 39-year depreciation for Qualified

depreciation, so you can essentially write it all off in the year that

unexpected expenses caused by the pandemic.

"The first round was automatically deposited into pharmacy

bank accounts," Scotty explained. Pharmacies also had the ability to

CHANGE IN THE AIR As the coronavirus pandemic continues, changes and additions

apply for additional funding through the HHS Provider Relief Fund if

to relief bills will keep coming. The forever fluctuating standards

they met the eligibility requirements, which have been unclear and

are the biggest challenge that pharmacy owners will face when it

misguided for the pharmacy industry. New guidance has stated that

comes to tackling their taxes.

prescription revenues do not count as "patient care" and therefore

pharmacies should take that into consideration when applying.

recommended three things. "First and foremost, stay on top of your

numbers. Pharmacy owners need to know exactly where they are

Although these funds do not have to be repaid, the IRS clarified

In order to be prepared when it comes time to file, Ollin

that these relief payments don't count as disaster relief payments,

with their finances year-to-date for 2020," he said. "Second, they

so they need to be accounted for as taxable income.

need to be constantly talking to the advisers that are going to help

them with PPP forgiveness and make sure they understand where

Scotty pointed out that these relief payments come with strict

terms and conditions attached to them, as well as some reporting

they are with respect to that and what their options are. Third,

requirements from the HHS, but the details are not yet clear, so

they need to be involved with their advisers now in planning for

pharmacies should keep careful track of how the relief payments

year-end tax issues. Especially because many of these CARES Act

are spent.

changes are merging into regular tax change relating to the Tax Cuts and Jobs Act of 2017, which was the most major tax legislation

AMENDING PAST RETURNS

in the past 30 years."

Relief provisions also introduced new opportunities for pharmacies

to amend past tax returns and get a bigger refund. One of these

Congress, there is potential for change coming from several

changes had to do with net operating losses, or NOLs.

different directions. Scotty advised, "Stay in touch with your

advisers and be prepared to adjust whenever you need to with all

An NOL happens when tax deductions are more than a

pharmacy's taxable income, and that "loss" can be carried forward

Between the FDA, the Treasury Department, and even

the updates that are constantly coming out."

or carried back to offset taxable income in the future. The CARES Act removes a provision from 2017's Tax Cuts and Jobs Act that limited NOLs to 80 percent of a business's taxable income. It also ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

9

RETAIL

BEARING GIFTS A robust gift section brings new revenue opportunities

A

s a locally owned business, independent pharmacies can tailor their front-end selection to their patients. With a well-stocked

gift section, they can take advantage of patients' tendency to

browse as they wait and open up a new revenue stream. "People like to shop while they're waiting for their prescriptions," said

MERCHANDISE MANIA

Mandi Kyles, merchandise manager at Hobbs Pharmacy and Gifts

If you're thinking of expanding your pharmacy's front end to add more gift items, these in-demand products can help get you started.

in Sulphur, Oklahoma. Hobbs has 1,200 square feet devoted to gifts, with contents ranging from jewelry to clothing to housewares.

Kyles said a gift section not only expands your clientele, but

also gets more out of your existing patients. "It can bring in more

• • • • • • • • • •

traffic, but you'll also have the grandma who comes in for her medicine who might not go to a boutique but will buy something from the gift section. The two go hand in hand," she said.

At Dedrick's Pharmacy and Gift Shop in New Paltz, New York,

about half the pharmacy is devoted to gifts. "It's almost like a second store, or a business within a business," said Jared Nekos, owner of Dedrick's, which established its gift shop 15 years ago.

"It's wonderful to go into a family-owned shop where you know

Greeting and holiday cards Seasonal decor Jewelry Lotions and perfumes Candles Work by local artisans Attire for children and adults Toys and games Collectibles Kitchen accessories and other housewares

there are unique offerings and the gifts are going to be affordable. I think part of why the relationship works is that there's always time.

You drop off your prescription and you have a few minutes to wait and browse for gifts and cards."

The gift section and the pharmacy can thrive off each other

if you do it right. Some people may be attracted to the gifts, then

of out of town folks who hear about us on social media and come

decide to transfer their prescriptions over, while others might

visit," said Kyles. "There have definitely been people who have

decide to splurge on something from the gift shop while they

transferred over to our pharmacy because of the gift shop."

are waiting for their prescription to be filled. "If you advertise properly and get the message out to the community that this is

SHELF SELECTIONS

a place where you can get cards and unique gifts for a loved one,

To decide what to purchase for his gift section, Nekos does his

there's no reason why bringing people in to buy gifts shouldn't

homework, and he pointed out that there is no dearth of resources

also translate into sales in the pharmacy," said Nekos. "Having a

for those who want to do their own research, with annual gift

revenue stream from gifts and cards is a great way to boost your

shows like NY NOW in New York City and magazines like Gift Shop

front end. We do especially well for the holiday season where we

Magazine that can help buyers identify trends.

really see great numbers."

knowledgeable rep from a gift company. The good ones will take

At Hobbs, about half of the people who walk into the building

"I think probably the best resource you can find is a

are there for the pharmacy, while the other half are there for the

extra time in your store to help you with everything from the

gift shop. "Our locals stop in here to get gifts, and we also have a lot

product line, to popular products, even product placement and

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merchandising," Nekos said. Last winter, reps pointed out that

have to spend a lot of time and resources to market and promote."

items with cardinals on them were really popular. "It doesn't

He recommends having at least one person on staff who is excited

necessarily mean that they are going to be hot in our area, but at

to be a champion for your gift section. Other pharmacies with gift

least we have some sort of direction on what we want to buy."

sections can also be a great resource, so it's crucial to reach out to

your network. You can avoid pitfalls that other pharmacies have

Because Dedrick's is located in an artistic community,

representing those artists in the gift store is important to Nekos.

fallen into by asking about their successes and failures.

"We're constantly in touch with local artisans for everything from

handmade soaps to handmade jewelry. We've even had some

something, you'll probably be able to sell it. So start with things that

furniture here by a local craftsman," Nekos said. With a combination

you like and grow from there."

Kyles advice? "Just go for it!" she said. "If you personally like

of offerings from local and national sources, the pharmacy is able to curate and tailor their selection to their shoppers' interests.

Hobbs Pharmacy is located near a booth mall for local

artisans, so they see less demand for local products, but they still strive to bring in unique merchandise that can't be found everywhere. "We have a lot of soaperie items like bath bombs, bath salts, and bath sugars, because there isn't a place here in Sulphur that sells that kind of stuff," said Kyles.

When deciding what to put on their gift shop shelves, the

staff lets their own tastes guide them. "We started stocking

SEASON'S GREETING CARDS When it comes time to buy a holiday card or a birthday greeting, many people automatically plan to visit their local pharmacy. "Even before I owned a

our gift shop with items that we were drawn to," Kyles

pharmacy, the first thing that came to mind when I

explained. "We'd visit other boutiques and say, 'I like those,'

needed to grab a card was the local pharmacy," said

and then decide to put them in the gift shop." After they bring in new products, they refine the selection based on sales, and if an item doesn't sell well, they won't reorder.

Jared Nekos, owner of Dedrick's Pharmacy and Gift Shop. "That was always my go-to."

Because of this longstanding association

between pharmacies and cards, Dedrick's has a large card selection in the store's gift section. They

GIFT REGISTRY

bring in a good margin for the store—around

Hobbs has made their gift section into even more of a destination

50 percent—and they are perennially popular.

by hosting registries for weddings, bridal showers, and baby

One reason pharmacies are a particularly good

showers. It's a more personal experience than going to a big box store. Instead of getting a pricing gun or browsing through an online catalog, the people registering come into the store and walk through with an employee. "We have them shop in the store, pick up everything that they want. We walk through the store with them

destination for cards, according to Dawn Garvey, the chief financial officer of the card vendor Designer Greetings, is the foot traffic. "This type of traffic is exactly the incentive for a customer to pause and use that destination as the 'one-stop shop' where they can pick up a prescription and

and set things aside," Kyles explained.

grab a card," she explained.

When the engaged couple or expectant parents have picked

out everything that interests them, employees will display all the items on a table with a big sign that singles it out as a gift registry.

"People can come in and buy off of it, and then we'll wrap it," Kyles said. "We also offer to deliver gifts to the wedding or the shower."

There are many different vendors and lines of

greeting cards, and Nekos recommends doing your research before committing to a line. "Different pharmacy resources and publications will offer different card vendors and arrangements," he said.

"Use your network and find out what other people have had success with."

MAKING THE MOST To really get the most out of a gift section, Nekos advises that

Continued on next page

pharmacy owners and staff be ready to put the work in. "It's not something you can do on a whim," he said. "Selling cards can be a good revenue generator, but if you're looking to go bigger, you

ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

11

SEASON'S GREETING CARDS CONTINUED

Some vendors will provide perks like bringing in all-new

fixtures to display your card selection, though perks are often

analyzes current trends taking place in the retail industry," said Garvey. "Designer Greetings takes pride in working with

associated with a contract and an upfront investment. Make

the customer to develop a planogram based on demographic

sure you read the terms carefully before signing. "We wanted

and other data information for the location so that the cards

to bring in a new line, and one of our former buyers didn't

in the store meet the customer's needs. We consistently

realize when they signed the contract with the old vendor that

upate our cards based on the retail industry inputs, so that

they'd signed a three-year agreement," Nekos recalled. "So we

our line is always reflecting current trends. An example of

had to put a major change on hold for a couple of years."

our flexibility is our publication of cards that respond to the

need to give a 'virtual hug' during these challenging times of

When bringing in cards, it's important to think about

the space you have available. If you have a large area that

the worldwide pandemic."

you can devote to cards, you can bring in multiple lines at

different price points, and it could help generate more foot

holidays. Most seasonal cards that don't sell, you can return

traffic in your gift area as a whole.

for a full reimbursement," said Nekos. This means the store

If your space is limited, you'll have to be more selective

"Cards are in the highest demand around major

can stock up on plenty of Mother's Day or Christmas cards

about what you offer. "Go to your competition," Nekos advised.

without worrying about eating the cost for the items that are

"If you walk into a box store, most of their cards are four to five

still on the shelf after the holiday passes, although terms like

dollars apiece, but in the next town over, there might be a lot

this can vary based on your vendor and contract terms.

more competition from dollar stores." If your main competition

is a big box store, you may want to offer patients cards at a

opportunity to cross-merchandise. For Nekos, taking

lower price point, but if there's a dollar store down the road, a

advantage of that opportunity comes down to training

higher-end line might be more successful.

employees. He explained, "We train employees so that if

Designer Greetings tailors card selections for their

If you have a significant gift area, cards also offer an

they see someone buy something that looks like a gift, to

clients based on their location and customer base. "We have

ask, 'Do you need a card for that?' You can also put signage

collections that are developed based on market data which

around the store. Near our collectibles, we might have a sign reminding patients to buy a card."

If you advertise properly and get the message out to the community that this is a place where you can get cards and unique gifts for a loved one, there's no reason why bringing people in to buy gifts shouldn't also translate into sales in the pharmacy.

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SOLUTIONS

PRIOR AUTHS Tips from independent pharmacists on resolving prior authorizations

B

urdensome administrative tasks are part and parcel of running

a small business. But most tasks can be smoothly incorporated

into the pharmacy's schedule without disrupting patient care or

pharmacy operations. You can carve out time for say accounting and billing, but prior authorizations can arrive at any moment and interrupt filling, counseling, or any other number of important activities, which makes them particularly exasperating.

"Just the mention of the words "prior authorization" seems to put my staff into a stress coma!" exclaimed Tom Bragdon, owner of Pioneer Drug in Newman, California. Bragdon estimates that 10 percent of total new prescriptions require a prior authorization, and there's usually a jump at the new year and when patients switch insurance. And the process varies considerably among prescribers and insurance, with resolution coming in as little as one hour to as much as several weeks, he said.

Prior authorizations are not a new burden for pharmacies, but according to pharmacists, the number of these administrative annoyances keeps growing. As more specialty medications enter the market, as formularies narrow, and as insurance companies vertically integrate, prior authorizations only become more common.

For many pharmacies, prior authorizations pop up as much as five times a day. And that takes a toll on pharmacy staff and operations.

"Prior authorizations are extremely burdensome on the pharmacy staff taking time to process, receive an electronic reject, write up a request, send to the physician's office, and follow up," Bragdon said.

At Palace Drug in Mammoth Spring, Arkansas, the time spent on prior authorizations accumulates to up to an hour each day. "It causes problems in workflow and leads to unhappy customers," said M.J. Clark, pharmacy director of Palace Drug.

Besides the disruption to workflow, prior authorizations can cause real problems for patients if they have to go several days or weeks without their medication. And at some point during the process, the pharmacy might lose a patient due to frustration.

Between insurance, the patient, and the prescriber, controlling prior authorizations is only partly in the hands of the pharmacy, but there are a few ways you can help streamline the process and keep patients happy.

COMMUNICATING WITH PATIENTS Imagine coming into your preferred community pharmacy to pick up your medication only to be told it not only isn't ready, but it may take a couple of days before the pharmacy is allowed to dispense it. And actually, insurance may require you to get a different

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medication altogether. You hear the terms "authorization" and "rejection," even though your doctor has already authorized it. For patients, who expected to grab their medication and be on their way, this conversation understandably causes frustration, and confusion.

"Patients don't understand a lot of times when you tell them they need an authorization," Clark said. "They're like, "Well my doctor prescribed it, why isn't that authorization enough?" They don't understand formularies or contracts or anything like that.

The frustration and confusion can result in a patient abandoning a therapy altogether, and potentially abandoning the pharmacy. That's why it is so important for the pharmacy to have a consistent, effective way of explaining prior authorizations to patients to help them understand and to put them at ease.

"Communication at the end of the day is key," Clark said. "That way everyone at least knows the goal is trying to be accomplished."

Hannah Bors, pharmacy manager of Oswald's Pharmacy in Naperville, Illinois, makes sure the patient is the first person she takes care of in the case of an authorization, spending as much time as needed to explain the situation to them. Bors used to work for a national chain pharmacy, and pharmacists there did not have

the kind of time to spend with patients as she now has working at an independent. She's found giving them one-on-one time makes all the difference. "One of the big differences between us and the chains is

are probably faster, the prior authorizations get done."

However, not all physicians prioritize prior authorizations even if they have the software. Whenever Clark submits an electronic

that we really value customer service and taking more time to contact

request, he also faxes one. Some physicians seem to check their

patients and keep them in the loop and actually have the time to

faxes more often than their electronic requests, he said. He will often

spend with them on the phone," she said.

just call the physician directly and simply ask what the most helpful

However, offering a clear explanation doesn't guarantee

approach would be for them. After making the request, he will

the patient will understand or accept the roadblock with a good

always follow up within 24 hours. He emphasized the importance of

attitude. Sometimes, they simply don't get it. "Oftentimes patients

following up with the nurses, who usually do most of the heavy lifting

don't understand even after we've explained it to them,"

for the prescribers on getting prior authorizations done.

When prescribers don't do their part, Bragdon has seen the

she said. In those cases, they

process take up to several weeks. Or sometimes circumstances

may give up on the process

extend the waiting period for the patient, such as getting the

altogether. "We don't want

authorization on a Friday and having to wait the whole weekend

patients abandoning therapies.

before anyone gets around to addressing it. One of Bragdon's

We obviously want them to

solutions is to process a three-day supply of the medication

come to our store, too. We

while the prescriber addresses the request, if insurance allows.

know it's frustrating and

Sometimes this works, sometimes it doesn't, but it is one strategy

people don't always realize it's

to try to bridge the gap.

not really in the pharmacy's control. But we do try to help

FINDING ALTERNATIVES

them out with it."

Clark estimates that about half of the time his team ends up

After explaining the prior authorization, Bors lets the

recommending an alternative therapy. But one of the biggest hassles in his experience is trying to figure out what exactly

patient know the cash price in

insurance wants. Sometimes insurance will clearly give the

case they want to purchase it

alternatives; other times, they won't. Looking up the state Medicare

without having to go through

Part D formulary can be cumbersome. Calling the insurance

insurance. Likewise, Bragdon

company is a last ditch option, because you end up waiting on hold

has sometimes found the

for thirty minutes to an hour. This is where Clark's software system,

difference between an

PioneerRx, comes in handy. It has a function that lists alternatives

insurance copay and a cash

that insurance prefers, and it allows you to send the change right

price to be negligible, making it

there in the system.

an easy solution for the patient

Even though finding alternative medications may take some

to completely circumvent the prior authorization process, though

work, recommending alternatives can often be the most efficient

this does not happen very often. If the patient does want to go

approach—by going with a drug that has already been approved,

through insurance, Bors will ask if they want to contact their doctor

it avoids the prior authorization process altogether. Getting there

and ask them to send over the prior authorization approval request,

requires buy-in from the patient and the prescriber, however, so

which she says usually expedites the process.

the success rate will vary depending on who is involved.

COMMUNICATING WITH PRESCRIBERS A large part of the responsibility in resolving prior authorizations lands on the shoulders of prescribers. Prescriber responses vary widely: some are quick to respond, but others will completely neglect the process. "Sometimes doctors aren't great at following through with it. Sometimes they just won't do it," Bors said.

Clark and Bors have found some success using an electronic software solution called CoverMyMeds. CoverMyMeds helps by serving as a consistent, electronic platform between pharmacy and prescriber. It can streamline part of the work by pre-populating most of the information fields to cut down on input data. It also alerts the prescriber when a prior authorization has been requested or rejected, and a team member from CoverMyMeds will even follow up with a phone call if it has been a couple of days. "I do feel like it helps," Clark said. "I think the doctor's offices that use CoverMyMeds ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

15

FEATURE

VACCINES IN THE TIME OF CORONAVIRUS Preparing for a Covid-19 vaccine and offering pediatric vaccinations while the virus rages on

'

T

is the season. Not the usual season of gifts under the tree, or

choral congregations, or festive feasts. Whatever joyful holiday

at least two could be approved before the end of this year. On

About five US coronavirus vaccines are in phase 3 trials, and

anticipation typically fills the air this time of year is being bagged up

November 18, Pfizer announced its vaccine is 95 percent effective

by the meanest grinch in the history of Christmas: the coronavirus.

in preventing Covid-19 in the final results of its trial and is seeking

As the dangerous virus threatens to prevent celebrations and

FDA authorization. If the vaccine is not approved as of this

continues to infect millions of Americans, the greatest gift

publication, it should be by the end of the year. As of November 18,

pharmacists can give their patients this year is immunity. 'Tis the

it appears that Moderna will be next in line, with results on efficacy

season of vaccines.

reaching 95 percent based on an early analysis.

"This is an excellent opportunity for pharmacists to

At the same time, with experts warning of a "twindemic," the

demonstrate their value by stepping up in the face of an

demand for the influenza vaccine is at an all-time high. According

unprecedented health crisis. It's kind of what we do," said John

to Bloomberg, CVS has already given more flu vaccines this year

Beckner, senior director of strategic initiatives at the National

than they did all of last year, and they expect to double the number

Community Pharmacists Association (NCPA). "Our members are

by the end of the flu season.

able to help the communities that they serve by offering a variety

of pharmacy services—and immunizations are one of the most

they delayed during this pandemic that the Department of Health

prominent ones. I think it’s a good opportunity to be part of the

and Human Services (HHS) issued emergency authorization

solution and show others through our actions that we are a valued

allowing all pharmacists, student interns, and qualified technicians

and essential part of the solution."

to administer vaccines to children aged 3 to 18. "During Covid

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On top of that, enough people need to make up vaccinations

we were seeing people less willing to go into their physicians’

offices and other locations, and physicians’ office hours were

recognized the importance of pharmacies in the distribution and

Now, for the coronavirus pandemic of 2020, HHS has already

being modified, so access was harder," said Mitch Rothholz, chief

administration of the vaccine. And in its distribution plan for the

of governance and state affiliates for the American Pharmacists

Covid-19 vaccine, the CDC explicitly references the H1N1 pandemic

Association (APhA). "With the order, they declared the reduced

as an influence on this plan:

childhood vaccination rate as a public health emergency."

different ways of engaging with the healthcare system, and

So, 'tis the season. Are pharmacists ready to deliver?

"The Covid-19 pandemic has likely accelerated a trend towards

successful delivery of this vaccine will need to incorporate new COVID-19 VACCINE DISTRIBUTION PLAN

types of sites and approaches for vaccine delivery. For example,

The government plans a multi-phased and multi-faceted vaccine

during H1N1, once vaccines became widely available pharmacies

distribution process based on supply, storage and handling, and

played an important role in the vaccine distribution; pharmacies'

documentation requirements. Although the distribution will be

role is even more critical to vaccinations today and will be fully

coordinated federally, it will rely heavily on individual states to

integrated into the distribution plan."

determine distribution to administration sites in their jurisdiction.

Populations most at risk will be prioritized, along with frontline

to distribute vaccines to long-term care facilities, a key part of

workers, but many details of the distribution depend on which

reaching the most vulnerable populations first. The CDC also

vaccine is approved. The HHS wrote, "Some variables that will

announced partnerships with the national chain pharmacies and

Already, the government has partnered with CVS and Walgreens

impact the planning of this vaccination program are unknown

independent pharmacy networks—including CPESN, Health Mart,

until a vaccine is authorized or approved by the Food and Drug

and Medicine Shoppe—to achieve nationwide vaccine distribution.

Administration (FDA), such as populations for whom a given vaccine

The distribution timeline for independent community

is most appropriate, distribution and storage requirements, dosage

pharmacies will likely depend primarily on the demographics it

requirements, and other variables." For example, Pfizer, whose

serves as well as the number of surrounding healthcare facilities

vaccine requires storage at negative 94 degrees Fahrenheit, plans

and other administration sites. For example, pharmacies in rural

to skip the wholesaler and ship directly to sites themselves.

areas without other vaccine providers should expect higher

prioritization than pharmacies in an urban area next to a health

Distribution will occur in three phases, according to the

Operation Warp Speed distribution strategy. The first will be the

clinic and national chain pharmacy. At some point, every pharmacy

distribution of limited doses with highly targeted administration

will have its turn and should be preparing now.

to achieve coverage in priority populations. The second will be the distribution of large quantities of vaccine to widespread populations—essentially, enough for everyone who wants one. The third will integrate the vaccine into routine vaccination programs, if a vaccine is still needed. It is expected that most independent community pharmacies will get involved in phase two, which could happen within months after the vaccine receives initial approval.

Already manufacturers have produced tens of millions to hundreds of millions of their vaccines to be ready to ship as soon as the FDA and CDC give them the go-ahead.

One thing this distribution plan reveals is the stark change in

perception toward pharmacies over the last decade. Back in 2009 when H1N1 vaccines were being distributed, pharmacies were almost an afterthought. "If you look closely, the pharmacy community was not involved at the start of that. It was halfway or toward the end of the process," Beckner said. "I think the impact that pharmacists had on getting people access to that vaccine was the springboard for gaining authority in the remaining states and for pharmacyadministered vaccinations being more readily accepted by public health and the medical community."

Almost a quarter of the H1N1 vaccines were administered by

pharmacies, and a study from the CDC concluded that pharmacies helped reach 80 percent of the population seven weeks faster than they would have without them during the pandemic.

ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

17

COVID-19 VACCINES IN THE WORKS Researchers are testing more than 50 vaccines in clinical

vaccines of this kind approved for human use. But two of the

trials on humans, and at least 91 preclinical vaccines

vaccine frontrunners are using this approach.

are under active investigation in animals, according to the New York Times. However, there are only a handful of

Viral Vector

vaccines in the US with a promising timeline—some perhaps

Like genetic vaccines, viral vectors attach a gene (DNA) for

as early as December of this year. To receive FDA approval,

the spike protein to a mostly harmless virus (adenovirus),

a vaccine must demonstrate effectiveness on at least 50

which is injected into the body and carries the gene to its

percent of people who get vaccinated.

destination and produces the spike protein. The adenovirus

is inactive, so it won't cause any harm.

There are several different types of vaccines being

developed. Most of the vaccines work by producing the coronaviruses's spike protein, which is what enables it to

Protein-Based

attach to and invade human cells. When the spike protein

The spike protein is synthesized in a lab using insects, then

is produced in the body, the immune system produces

injected. This is a typical method for creating vaccines, but

antibodies against it, ensuring it will be killed when the real

they take longer than the other options. They also require

coronavirus enters the system. How they produce that spike

an adjuvant booster for the immune system.

protein is what differentiates the various vaccines. Here are Inactivated or Attenuated

the types you need to know.

Instead of using just the spike protein of the coronavirus, Genetic

these vaccines inject the entire virus into the body—one

New to the vaccine scene, genetic vaccines inject messenger

that has been inactivated through chemicals or weakened

RNA from the coronavirus genome that instructs the body to

enough to be harmless. The immune system then produces

create its spike protein. These genetic vaccines also induce

antibodies. This is how the majority of vaccines are made,

production of killer T cells, which stop the coronavirus from

including the annual influenza vaccine. However, none of the

replicating. This technique relatively new—there are no

leading US candidates use this technique for the coronavirus.

Among the top US vaccines, there are viral, protein-based, and genetic types.

Here's a breakdown of the vaccine frontrunners in the US, all of which are in phase 3 trials, as of November 16.

Type

Genetic

Genetic

Viral vector

Viral vector

Protein-based

Earliest availability

December 2020

December 2020

2021

2021

2021

Doses required

Two shots three weeks apart

Two shots, 28 days apart

One shot

Two, four weeks apart

Two

-94ºF

-4ºF

Refrigeration

Refrigeration

Refrigeration

Storage requirements

HOW SHOULD PHARMACIES PREPARE? All vaccinators must meet basic requirements for storage and

about ancillary supplies either. According to the distribution

handling, the details of which we won't fully know until the vaccine

strategy, administration sites will be provided with ancillary

is approved. Some of the frontrunners require refrigeration and

supply "kits," which include "needles, syringes, alcohol pads,

will likely require nothing different than routine vaccination storage

vaccination cards, and limited PPE."

while others require storage at negative 94 and negative 4 degrees

Fahrenheit. Pharmacies do not have to worry about securing or

reporting capabilities. All vaccination information will need

One essential requirement is data storage and

purchasing the vaccines because they will be paid for and supplied

to be uploaded to the state immunization information

by the government. Pharmacies also likely won't have to worry

system (IIS) at the very least, and the government may

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IS THE COVID-19 VACCINE SAFE?

have additional requirements. Among other purposes, the data will serve as a way to know when patients need their second dose and ensure that dose is the same vaccine as their first. According to the HHS, "The vaccination program requires extensive data monitoring infrastructure, including appropriate IT architecture, to incorporate claims and payment processes, to identify when a person needs a potential second dose, to monitor outcomes and adverse events, and to account for products the U.S. government is spending billions of dollars to research, develop, and produce. Data will need to be available both federally and at the state, local, and tribal level to ensure efficient management of the vaccination program."

Pharmacies hoping to offer the vaccine should get in touch

with their state pharmacy association or state health department.

Every pharmacy will have to fill out a provider intent form with information about capabilities, such as storage and documentation, and about the demographics of its patients. Rothholz and Beckner said they are trying to coordinate primarily through the state pharmacy associations to reduce the burden on state health departments in having to deal with individual practices.

All pharmacies should be enrolled in VaccineFinder, a service

through the CDC that lists you as a vaccine provider and "gives you the opportunity to list all the vaccines you provide," Beckner said.

"That's another proactive step you can take to get ready for this. They should be doing that anyway if they are an immunization provider."

VaccineFinder will also be used for tracking vaccine supply at practice sites.

Beckner recommends pharmacies get a staffing plan in place

to account for the surge in traffic. "I think the demand is going to be unprecedented," he said. "Pharmacies need to ensure, if they can, to have the appropriate amount of staffing." Decide on the workflow and format—will you require appointments to control the number of patients in the pharmacy? Will vaccines be administered curbside or at an outdoor station? What personal protective equipment will your staff use? These kinds of decisions should be made long before any vaccine arrives.

The other thing pharmacists need to prepare for, Beckner said,

is addressing vaccine hesitancy. "There's some general mistrust about the vaccine. Is it a political rush to market? Is it safe? I think pharmacists are in a really good position to dispel some of those myths and they need to be prepared to really encourage people to get the vaccine." Doing that requires an understanding of the vaccine and why it's safe, which means pharmacists need to do their research. "Education here is going to be huge."

One major barrier to broad vaccine uptake is hesitancy from patients who aren't sure of its safety. Several polls have shown a consistent resistance across the US. In one poll, only 50 percent said they would get a vaccine, 31 percent were unsure, and 20 percent planned not to get it. Side effects were noted as the main reason for the resistance.

Other polls revealed a preference to wait for a while after a vaccine is approved to see if any side effects or adverse events occur.

Pharmacists will have to address vaccine hesitancy, armed with the facts and the ability to demonstrate its safety. In a November media telebriefing Secretary of Health and Human Services Alex Azar outlined the process for vaccine approval, describing five independent checks that work to ensure safety.

1. Clinical trials "First a vaccine clinical trial has pre-specified end points; they're statistical and actually these drug companies have been transparent for the first time in history, laying out exactly what those statistical endpoints are. There is a totally independent data and safety monitoring board that will look at the data as it comes in [to] determine if those endpoints have been met. If and only if those endpoints are met that data gets revealed to the company and the FDA." 2. Manufacturer approval "The company will have its own second independent process. It will have to meet their ethical standards for submission of an application for either an emergency use authorization or a biologic license."

3. Review by the Food and Drug Administration "It'll come to the FDA, where the FDA will evaluate that vaccine according to two sets of guidances it put out— its general vaccine guidance for Covid and its second EUA guidance for what it would require and expect in terms of approval."

4. Independent advisory committee "The advisory committee at the FDA. An external advisory committee that will be webcast. A public external advisory process will advise the FDA." 5. Approval or authorization by FDA scientists "All of those elements of the process should reassure the American people that when a vaccine or therapeutic comes out with the authorization or approval of FDA it represents FDA's career scientists' best judgment, that it meets their scientific evidence legal and regulatory standards."

CHILDHOOD VACCINATIONS In addition to the Covid-19 vaccine, pharmacists are being

meet this requirement, APhA, in partnership with Washington

urged to push annual recommended vaccinations, particularly

State University College of Pharmacy and Pharmaceutical Sciences,

because many Americans missed their doses due to lockdowns

has created a new program covering the specifics of vaccinating

and precaution. To increase vaccination access and uptake, the

children aged 3 to 18, which Rothholz referred to as a "refresher

HHS in September authorized pharmacists and student interns

course" for pharmacists who have already been through APhA’s

to administer vaccines to children aged 3 to 18, later including

immunizing pharmacist certificate training program. This program

pharmacy technicians as well. In a press release, the agency

is an additional offering within APhA’s extensive portfolio of

wrote, "A May 2020 Centers for Disease Control and Prevention

immunization-related educational programs that help pharmacists

(CDC) report found a troubling drop in routine childhood

meet the education requirements of the HHS authorization,

immunizations as a result of families staying at home. While

Rothholz said.

families followed public health warnings about going out, an

unfortunate result was many missed routine vaccinations. This

to educate the patient or their adult caregiver regarding the

The expanded authority also requires immunizing pharmacists

decrease in childhood-vaccination rates is a public health threat

importance of well-child visits, given that there is a percentage

and a collateral harm caused by the Covid-19 pandemic."

of the population that does not have an existing medical home,

This guidance supersedes current state and local laws.

About 22 states allow pharmacists to administer pediatric vaccines,

Rothholz explained.

The next thing to do is view the pediatric vaccine schedule,

which means more than half of the country can't. Although this is

which you can find on the CDC's website, and decide on which

a temporary allowance through emergency authorization, Beckner

vaccines to offer and understand the ages and recommended

and Rothholz are hopeful it will open the door for permanent

dosing schedule for each vaccine. Rothholz said, "The authority is

change in those states that currently restrict it. "The HHS

from ages three to eighteen. It doesn't say you have to do three

provides a window of opportunity to show that we can have an

if you aren't comfortable. We don't want any practitioner doing

impact. Clearly, from the public health perspective, it will provide

anything they aren't comfortable doing."

additional access and will allow for more people to be protected."

Beckner said. "I think it's going to be easier for the states to adopt

for Children program, a federally funded program that provides

regulations that make this permanent, and some states have

vaccines at no cost to children who might not otherwise be

already started working on it."

vaccinated because of inability to pay. "Not a lot of pharmacies are

The amendment could also facilitate increased dialogue with

Beckner also recommends becoming involved in the Vaccines

involved in that program because of the administrative burden and

pediatric providers on this and other issues. "One thing that it

reimbursement not being great, but that may be an opportunity in

does is hopefully allow for more collaboration and acceptance by

a rural area to really help the community they serve."

the pediatric community who have historically been resistant to pharmacists immunizing children," Beckner said. "If pharmacists

ESSENTIAL PROVIDERS

can play a role in children and adolescents getting caught up

At the end of the day, the pandemic serves as a magnifying glass on

on their regular immunizations, I think the pediatric medical

the essential role of community pharmacies in caring for the health

community will be more accepting." Beckner advises pharmacies

of our nation, and the Covid-19 vaccine administration is a natural

to get in touch with the local pediatric providers before they start

outflow of that reality.

administering the immunizations, as that could lessen the risk of it

becoming a turf issue.

Covid crisis began in early March. They want and really should be part

of the solution to the crisis," Beckner said. "They have been the safety

The HHS authorization comes with several requirements, most

"Community pharmacists have been on the front lines since the

of which are already met by pharmacists who administer vaccines

net for the communities they serve. They have remained open, for

to adults. One of the requirements is a two-hour ACPE-approved

the most part, throughout the crisis while other providers have been

continuing education course on immunizations during each license

forced to close their doors, at least temporarily. They are ready and

renewal cycle during the declared emergency. To help pharmacists

willing to administer the vaccine once it becomes available to them."

The HHS provides a window of opportunity to show that we can have an impact. Clearly, from the public health perspective, it will provide additional access and will allow for more people to be protected.

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CHILDHOOD VACCINATION RECOMMENDATIONS For those looking to offer childhood vaccines, here's a

of age. For some of those vaccines, you can provide "catch-

breakdown of what you can provide. The authorization is

up" doses for children who missed their recommended

for children starting at age 3, which means a large numbers

timing. This list includes only those vaccinations routinely

of childhood vaccinations are off the table for pharmacists

given according to the recommended schedule.

because they are recommended between birth and 3 years

Vaccine

Brand Name

Age

Hepatitis A vaccine (HepA)

Havrix®, Vaqta®

Minimum age of 12 months

Human papillomavirus vaccine (HPV)

Gardasil 9®

11 – 12 years

Influenza vaccine (inactivated) (IIV)

Multiple

Minimum 6 months

Influenza vaccine (live, attenuated) (LAIV)

FluMist® Quadrivalent

Minimum 2 years

Measles, mumps, and rubella vaccine (MMR)

M-M-R® II

12 months to 12 years

Meningococcal serogroups A, C, W, Y vaccine (MenACWY-D) (MenACWY-CRM)

Menactra®, Menveo®

11 – 12 years, 16 years

Meningococcal serogroup B vaccine (MenB-4C) (MenB-FHbp)

Bexsero®, Trumenba®

16 – 18 years

Tetanus, diphtheria, and acellular pertussis vaccine (Tdap)

Adacel®, Boostrix®

11 – 12 years

Diphtheria, tetanus, and acellular pertussis vaccine (DTaP)

Daptacel®, Infanrix®

4 – 6 (fifth dose in five-dose series)

CDC GUIDANCE HIGHLIGHTS Although life has resumed in many ways, including the

immunization services "to assist healthcare personnel in

reopening of pharmacy front ends, the coronavirus is still in

a variety of clinical and alternative settings for the safe

full swing. The Centers for Disease Control and Prevention

administration of vaccines during the Covid-19 pandemic."

has issued interim guidance for routine and influenza

Visit the CDC website for the full guidance.

• Require appointments for vaccinations.

• Create a separate vaccination area or separate hours for patients at increased risk for severe illness from Covid-19, such as older adults and those with underlying medical conditions.

• Limit the number of people in the building at any given time.

• Screen for symptoms of Covid-19 before arrival and upon arrival.

• Require face masks for staff and patients over the age of two years (if tolerated).

• Reduce crowding in waiting areas by asking patients to remain outside until they are texted or called in for their appointment.

• Ensure that physical distancing measures are maintained during the entire visit.

• Use electronic communications as much as possible to minimize time in the pharmacy and the reuse of materials (e.g., clipboards, pens).

• Administer all needed vaccines on a single visit, unless a specific contraindication exists, to reduce the number of visits.

SPOTLIGHT

PURCHASING POWER How one pharmacy saves thousands on its cost of goods

W

hen Huy Duong, RPh, owner of Dale's Pharmacy in Fort

UNPRECEDENTED NEGOTIATING POWER

Lupton, Colorado, discovered ProfitGuard, he couldn't

With experience negotiating more than $5.6 billion in contracts

believe how long his business had gone without it. "What have we been doing all these years?" he asked. "It's like it opened our eyes."

ProfitGuard catapulted Huy's pharmacy business by securing

for independent pharmacies, the experts at PBA Health guarantee contracts with better terms, rebates, and pricing. Besides bringing more than 30 years of pharmacy contract experience to the table,

him a lower cost of inventory and optimizing his purchasing on the

they also bid the pharmacies' business across multiple national

back end. "It really boosted our profit margins substantially, right

wholesalers to get a true market-competitive contract.

out of the gate," he said. "It was much more than I ever thought possible when enrolling in the program."

Whether representing individual independent pharmacies or forming groups to leverage buying power, ProfitGuard manages

Huy said that for his group, ProfitGuard negotiators worked intensively with several wholesalers and through several revisions to secure a vastly improved contract for his pharmacy. "They went back and forth multiple times with competing wholesalers and

primary wholesaler negotiations to get pharmacies the best overall

listened to the wants and the needs of the ProfitGuard members

cost of goods. It also includes a proprietary purchasing optimization

in the group along the way," he said. "They made sure we received

tool that maximizes rebates and profitability every day to ensure

the best deal possible, leaving nothing on the table."

pharmacies are getting the full benefits from their contract.

In a market plagued by decreasing reimbursements and

Without ProfitGuard's group purchasing power, Huy said he wouldn't have the leverage with wholesalers to get the cost of

growing consolidations, Huy said ProfitGuard is the best solution

inventory he requires to remain competitive. "There's no way I can

for sustainability and success. "It's the industry game changer for

stand alone, or for any member of our group to stand alone and

the independent pharmacy owner or operator," he said. "There's

get the deal we have collectively, together," he said.

nothing out there like it on the market."

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pbahealth.com/elements

TOOLS TO OPTIMIZE INVENTORY PURCHASING With ProfitGuard, securing a better contract is only the beginning.

And it keeps his wholesalers accountable and competitive, he said.

Its purchasing optimization solution ensures pharmacies get the

"It keeps both sides honest, makes both vendors compete each

most out of their contract every single day. The pharmacy receives

and every day for my business. I don't know anybody else who

a daily purchasing report to guide inventory decisions based on

has that capability."

all of its contract terms and incentives, as well as numerous other

And with the Navigation report, owners don't have to figure out

factors that can only be measured by ProfitGuard's proprietary

which supplier to purchase from because it calculates that for them

technology. The report identifies when a product should be

automatically, ensuring they always get the lowest price.

purchased through the primary or secondary wholesaler or through a different manufacturer in order to get the lowest net cost

GIVING YOU COMPLETE CONTROL

of goods by the end of the month.

From negotiations to purchasing, ProfitGuard gives owners

After using ProfitGuard for almost a year, Duong said he saw

complete control during every step of the process. Whether they

a substantial increase in cash flow. "Before ProfitGuard, I spent

want to be involved in every detail or don't want to lift a finger,

a lot of my time trying to keep an eye on changing drug prices,

ProfitGuard allows them to choose their level of participation.

especially the ones where I was reimbursed below my cost," he

"I love the freedom that PBA Health gives pharmacy owners. They

said. "ProfitGuard has given me a substantial pay raise for a

can be as highly involved as they want to be," Huy said. "It's up to every

minimal effort."

business owner to decide what business model is best for them."

With the daily Navigation report, Huy rests easy knowing he's getting the best net cost of goods possible. "It gives me peace of

CONTINUAL INNOVATION

mind and lets me know how well my staff is performing on the buy

ProfitGuard provides innovative solutions that pave the future

side," he said.

to profitability, starting with its singular approach to competitive

If the pharmacy prefers to have the entire process automated, PBA Health can do that as well. Instead of receiving a report and

bidding and its unique in-house purchasing software. Huy believes that no matter what changes come to the industry, he'll always

manually inputting the recommended changes, PBA Health will make

remain ahead of the game with ProfitGuard.

the switches and the pharmacy will simply receive the benefits.

"I like that my buying group continues to innovate and bring

new products to market that benefit pharmacy owners," he said.

FULL-SERVICE WAREHOUSE

"If they can think of something they can do to better serve their

When members join ProfitGuard, they receive access to its NABP-

members and pharmacy owners, they're going to go for it. It's a

accredited warehouse with a full line of pharmaceuticals. This

drive to never stop innovating and to keep moving forward."

additional option at Huy's fingertips enables him to ensure he is

Even as it continues to develop solutions to tomorrow's

getting the lowest prices and always has access to the products he

problems, Huy believes ProfitGuard has already set the standard in

needs during shortages. "I think between the two warehouses I can

the market for independent pharmacies.

probably supply 99.9 percent of my inventory," he said.

"This is a product that clearly gives me a distinct competitive advantage," he said. "I don't know anybody who offers what PBA Health is doing right now. Eventually people will see this and think, 'Wow, why didn't I use this before?'"

It's the industry game changer for the independent pharmacy owner or operator. There's nothing out there like it on the market.

ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

23

MONEY

PHARMACY DEBT 101 Why debt can be a valuable financial tool for independent pharmacies

W

hen it comes to household financial management, most people avoid debt like the plague. But when it comes to

running your independent pharmacy, an aversion to debt can

actually hold you back.

EXAMPLE: FINANCIAL LEVERAGE

"In a business environment, debt can be a really important tool," said Joe Knight, co-owner of the Business Literacy Institute, and author of the book Financial Intelligence with Karen Berman.

David Worrell, partner and CFO at Fuse Financial Partners and author of The Entrepreneur's Guide to Financial Statements, argues that most small businesses should take on debt. "You can certainly have too much, but you can also have too little," Worrell said. "That means you are not growing as fast as you could."

From taking out an installment loan for new robotics to maintaining a line of credit to help with cash flow, well-managed debt can keep your independent pharmacy running smoothly and efficiently.

OPPORTUNITY TO GROW

"Let's say you want to start a business, and you have to come up with $1,000. In the first year, that business does $100 of revenue and costs are $80.

So you make $20 of profit.

Now let's say you have an opportunity to invest in two companies at $1,000 each and they both make $20 return. You only have $1,000. So at this level, if you take $500 and put it in one business and $500 to put in another similar business, and you borrow the other $500 for each investment from a bank at 10% interest, the new income statement that has $500 invested and $500 in debt, and your income statement is $80 of costs, and then you had to pay the $5 interest on the debt at 10%, you've still made $15. So you've made $30 with the same $1,000 as in the first scenario. That $1,000 returns $20 with no debt and $30 with debt." – Joe Knight

If you want to grow a business, you're going to have to spend some money. "The more you grow, the more employees you take on, the more space you need. All of that is limited by the amount of cash you have to support the business," Worrell said.

In business, there are only two kinds of money: debt and equity. Equity is money that you can pull out of your pocket, while

For most pharmacy owners, borrowing money from a bank is a

debt is money that you borrow from someone else. "There's a

much cheaper option to finance growth. Worrell explained, "If you

principle developed by Hewlett Packard in the 1950s that says you

come to me and say, 'I want a million dollars, and I don't want to

can only grow as fast as you can finance your growth. But you have

take on debt,' I would say 'Great, I'll give you a million dollars, but

to finance that growth by injecting more equity or borrowing more

I want 50 percent of your business forever.' " On the other hand,

money," Worrell said.

Many small businesses don't have the equity to invest in growth opportunities while also meeting expenses. For those

if you ask a bank for a $1 million loan, instead of taking half your business, you only have to pay them a small amount of interest on the loan.

businesses, borrowing is their next option. But even if they do have the equity to fund it themselves, debt could still be a better choice

TYPES OF DEBT

than dipping into their cash. You could spend $30,000 all at once

Though Worrell points out that "there are as many flavors of loans

to buy a new delivery vehicle upfront, or you could take out a loan

as there are for ice cream," business debt breaks down into two

and spread the cash around to other investments that would keep

essential kinds: secured and unsecured.

your pharmacy growing. Knight explained, "One of the benefits of debt is that if you're making a higher margin of return than the

A secured loan is used to pay for a concrete piece of property, and that piece of property serves as collateral for the

interest rate on your debt, borrowing can increase your rate of

loan. Use this type of loan to purchase capital equipment for your

return. That's financial leverage."

pharmacy, like a delivery vehicle, a building, furnishings, or robotics

Another alternative to funding growth is seeking an investment,

but with that approach you end up giving up more than you gain.

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technology that helps you automate. "You're borrowing against your equipment and using debt to pay for it, which leverages your

business. Especially now, when interest rates are relatively low, financing equipment is well worth it in order to keep cash in your business," Knight said.

Unsecured loans don't have a tangible piece of collateral associated with them, and they're backed only by the faith your financial institution has in you to pay them back. Your credit card or a line of credit are examples of unsecured loans.

Both have a place in running your pharmacy. Knight explains that a revolving credit line can be an invaluable tool for managing the day-to-day cash flow of a small business. "The products you sell, you can't collect on immediately," he said. While you're waiting for reimbursements, you can dip into your credit line for when you need working capital. "Banks will offer credit lines as long as you have the assets to back it up."

Banks will let pharmacies borrow a line of credit based on their inventory as long as they can verify the inventory actually exists.

Knight explained, "Then as you sell that inventory off, you collect the money and you have cash to pay down that debt."

Having a line of credit can keep pharmacies afloat during temporary lean times, but it's crucial that they not wait for cash flow troubles to pop up before applying for revolving credit. "When you're out of cash it's the wrong time to negotiate for a credit line.

The bank will tell you to go home," Knight said. "What you need to do is plan for a credit line early on. Get projections and work with someone who can do an analysis and tell you that if you grow to this level, you're going to need this kind of line of credit."

While unsecured debt can provide important working capital

HOW MUCH DEBT IS TOO MUCH? The biggest risk of debt is that you acquire so much that you can no longer pay it. Even if you don't default, if you take on too much debt, it won't ease your cash flow, it will restrict it. "Once you can't pay your rent or payroll because of loan payments, that's when you get in trouble," Worrell said. Even if your entire business isn't forced into bankruptcy, "If you default, someone is going to come knocking on your door looking to take your collateral. If your collateral is the building you occupy, it's no fun when someone takes that back from you."

Here are a few rules of thumb used by banks and financial institutions to determine how much debt a business can take on.

COVERAGE RATIO The coverage ratio is a formula that banks and financial institutions use to measure a business's ability to pay the interest they would owe on a loan. A higher ratio is better, as it indicates a business has enough money to satisfy the interest on its debts. It's calculated using this formula: Coverage Ratio = Earnings Before Interest and Taxes / Interest Expense

for your pharmacy, Worrell warned, "That's the dangerous kind of loan, because you aren't investing in something specific. A lot of people run up unsecured debt and end up upside-down."

MISTAKES TO AVOID In Knight's eyes, one of the biggest mistakes independent pharmacies can make is refusing to take on any debt at all. "You limit your growth when you don't finance your business," he said. "If there was some piece of capital equipment that could be used to make the pharmacy more efficient, and the owner is reticent to take on debt even though they have good cash flow, that business won't grow."

While there are a lot of people and organizations willing to offer financing to small businesses, that doesn't mean they are offering a good deal. One pitfall some business owners fall into is taking on higher-interest debt with unfavorable terms. "Companies can get put in a situation where they have a debt burden that can actually put them out of business," Knight said. Especially if business is cyclical

QUICK RATIO The quick ratio is a measure of liquidity, sometimes known as an acid test. It shows whether you have enough assets to cover your liabilities, like debt. A quick ratio less than 1 signals that a business doesn't have enough liquid assets to cover its liabilities, while a quick ratio greater than 1 means they are equipped to handle their commitments. Here's how to calculate it: Quick Ratio = Total Assets / Total Liabilities TOTAL CASH FLOW Some financial institutions use your cash flow to determine how much they are willing to loan you. "If you go into a bank and say you want a million dollar loan, they might tell you they want to see that you have operating profits of at least 1.25 times the debt payments," Worrell explained. "So if that million dollar loan costs $10,000 a month to repay, they want to know that you have $12,500 in cash profits coming out of the business to pay it."

with periods of high and low cash flow, an extended period of lower cash flow can end up being a death sentence.

"During the COVID crisis, there have been a lot of businesses whose loans have gone bad because they overextended their debt, and when business dropped, they couldn't service that debt," Knight said.

Worrell recommends that owners comparison shop for terms to make sure they are getting the best deal. "Some people put longterm big purchases on a credit card, and then they have $50,000 on

ELEMENTS | The business magazine for independent pharmacy | DECEMBER 2020

25

a card that charges 24 percent interest when they could have gone down the street to the bank and gotten $50,000 on a five-year note at 4 percent interest," he said. "It pays to shop around for the right kind of loan."

Owners should also match the term of the debt to the lifetime of the asset. "You don't use a 30-year mortgage for next week's payroll," Worrell said. "You want to match the length of the loan with the usefulness of what you're doing with that money."

And when it comes to buying technology that is going to become obsolete, Worrell recommended not taking out a loan at all and renting the tech instead so you can upgrade to the newest version when it comes out instead of being stuck with an older version.

PAYING IT DOWN Once owners have acquired business debt, they may be tempted to pay it all down as fast as possible, but that's not usually the wisest decision. "You might want to pay down your mortgage or pay down your personal debt on the car, but in the business world, as long as your debt is reasonable, has good coverage, and you're able to pay it, debt is an engine to fuel growth," said Knight.

When you have excess cash, it usually makes more sense for

you to reinvest it rather than making extra loan payments. "Focusing on dropping debt might limit your potential opportunities," Knight said. Instead, you can focus on things that will open up new revenue streams like investing in a new location, expanding your marketing efforts, or hiring someone to help you develop the business.

Worrell says to concentrate on getting your current bills paid

and building a few months of emergency funds before deciding to pay off your debt more quickly than you need to. "Allow the cash to build up in your business so you have a cushion. But not so much that your money isn't working for you," he said. Once you have a reasonable cushion, whether you decide to pay off debt depends on your long-term goals. If your goal is to grow, then investing in growth areas is a better decision than paying down debt. If you simply want to maintain your current business, paying down extra debt isn't a bad idea.

In a business environment, debt can be a really important tool.

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OUTLOOK

ERROR AND TRIAL How to prevent the most common and most expensive lawsuits against pharmacies

I

n 2019, the average independent pharmacy dispensed over

WHY PHARMACIES AND PHARMACISTS GET SUED

58,000 prescriptions. With that high volume, errors are almost

Claims against pharmacies and pharmacists typically fall into two

inevitable. These errors cause different levels of harm for your

categories: mechanical errors and intellectual errors. Mechanical

patients. If a pharmacist violates HIPAA, the patient’s private

claims happen when an error occurs within the pharmacy workflow,

information will have been compromised, but if a pharmacy

and they make up the largest proportion of claims against

accidentally dispenses the wrong medication, a patient might

pharmacies. "We have been collecting our pharmacy claims since

need serious medical intervention or face deadly consequences.

1989 and we have over 14,000 claims in our database. We’ve found

For errors both large and small, patients may seek legal recourse

over this time period that over 80 percent of claims are due to

against the pharmacy.

wrong drug, wrong dose, and wrong directions," said Jones.

"It’s not uncommon for a lawsuit to be filed when an error is

made," said Kristen Jones, a pharmacy risk management consultant

Wrong drug claims take the top spot as the most common

claim made against pharmacies. Wrong drug errors often occur

at Pharmacists Mutual Insurance Company. And over the years,

because pharmacists or technicians confuse lookalike and

lawsuits have increased, Jones said. "It used to be infrequent, but

soundalike drugs, pull the wrong stock bottle, or have a difficult

more and more pharmacists are being named as defendants."

time reading a prescription.

Knowing which claims are most common can help you prepare a

risk mitigation strategy to protect yourself and your staff from lawsuits.

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Errors with certain drugs can result in more expensive claims.

Jones said, "Typically, our number one offender is warfarin. You can

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| The business magazine for independent pharmacy | DECEMBER 2020

27

imagine that making a mistake with a drug of that nature could be an expensive claim because the outcomes could be very bad."

Compounding claims are also particularly costly, in both sterile and non-sterile settings. "The reason they are so expensive is that you lose a safety net when you’re doing the math and calculating

HIGH ERROR MEDICATIONS

the decimal points yourself," Jones explained. "If you are grinding

A few medications tend to show up in claims more often than others. These drugs tend to have one or more of these traits: they are dispensed at a high volume, they have a narrow therapeutic index, or they come in a variety of different doses and strengths.

Keep an eye out for these worst offenders:

tablets on a thyroid prescription, you know exactly the amount that’s in that tablet. If you turn around and weigh the powder, there are all sorts of things that can go wrong. Your scale could not be set correctly or you do the calculations wrong."

On the other side of the coin, intellectual errors happen when a pharmacist uses their skills and knowledge to make a decision, and the decision has a poor outcome. They may not counsel a patient properly, or not at all, so the patient ends up taking their medication incorrectly, or they don’t warn about the side effects of a drug.

HIPAA claims, where a pharmacist or pharmacy technician discloses medical information in a way that violates the patient’s privacy, also

• Warfarin

• Insulin

• Opioids

• Levothyroxine

• Methotrexate

• Amoxicillin

• Prednisone

• Amitriptyline

fall in this category. "Breaches of privacy are intellectual because they are based on a decision that was made or a lack of policies or training about confidential information," Jones said.

Drug utilization review (DUR) claims, which occur when a pharmacist does something like failing to recognize an allergy or potential drug interaction, are the costliest on average of all the claims categorized by Pharmacists Mutual. In general, intellectual

Source: Pharmacy Professional Liability: Lessons Learned from an Ongoing Study of Over 10,000 Claims, Pharmacists Mutual

claims can end up being more expensive than mechanical claims, because where the mistake happened is not as cut-and-dried as a

FROM ERROR TO TRIAL

wrong drug or wrong strength scenario. This means both parties

The claims process starts for pharmacies as soon as they become

have to spend time and resources investigating what happened.

aware an error has been made. A patient might come in to let them know that they dispensed the wrong drug. In a more dire scenario, a patient might end up at the hospital because they took the wrong drug, and the pharmacy will get a phone call. "Any time a pharmacist knows the patient has ingested the wrong medication or they know of an error, we ask they report it to the insurance company and we’ll set up a file for them," said Jones.

But just because an error has occurred doesn’t mean it will

eventually result in a lawsuit. After the insurance company has been notified, an investigation will begin. Claims adjusters will work TOP 5 CLAIMS AGAINST PHARMACIES Pharmacists Mutual has collected nearly three decades of claims against pharmacists and identified trends in the data. In 2017, these were the most common categories of claims:

with the pharmacy to find out exactly what happened. "Maybe the patient, at that point, just wanted to let you know there was an error," Jones said. If the pharmacy handles the mistake with empathy and a commitment to improve the overall safety of their processes, they may avoid a lawsuit altogether.

Jones recalled a pharmacy that once gave someone the wrong

1. Wrong Drug

medication, and as soon as they realized the mistake, they called

2. Wrong Strength

the patient and instructed her to go to the ER immediately, since

3. Drug Utilization Review

she’d already taken the wrong drug. Jones said, "When our adjuster

4. Wrong Directions

called the woman to see if she wanted to file a claim, she said, 'No,

5. Compounding

I’m not going to sue my pharmacist. They did everything they could to help me when they made a mistake.' " By being proactive and compassionately looking out for their patients’ best interests, many pharmacies will be able to sidestep the worst outcomes.

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29

When errors do result in a claim, adjusters do their best to

After changes have been implemented, the work of risk

work with the claimant to settle things before a lawsuit is filed, like

management is not finished. The last step of the risk management

by offering to pay any medical bills at cost. Even if a lawsuit is filed,

cycle is to monitor how the changes are affecting workflow and

that doesn’t necessarily mean the case is going to go to trial.

check to see if they are actually reducing risks. You may find that

the training you’ve given employees wasn’t thorough enough, or

"If a lawsuit has been filed, we will hire counsel in the relevant

town or state and go through an investigation process," Jones

that the new process could be improved even further.

explained. "It depends on how that process goes if we can reach a

settlement, or if we have to go to mediation to reach a settlement,

progress. If you decide to further tweak the system, analyze the

or if we end up going to trial."

results to ensure the changes are having the intended effects.

Keep documentation of your processes and track your

Going to trial is a worst-case scenario for pharmacies, both

because it is expensive to hire all the relevant experts and because

PROFESSIONAL PROTECTION

it’s a stressful experience for the pharmacist. Luckily, the vast

Before a claim is made against you, one of the best things you

majority of claims are settled before the trial stage is reached.

can do to protect yourself is to make sure that you are fully covered by insurance. It is increasingly common for the pharmacy

RISK MANAGEMENT

where the error took place to get sued, and then the pharmacist

The best way to prevent a lawsuit is to avoid making mistakes

or pharmacy technician who committed the error to be named

in the first place. Claims against pharmacies have actually been

separately in the lawsuit.

declining in recent years because of new technology that reduces

risk. Bar codes, robotics, and physician order entry have all helped

insurance policy that covers your business and an additional

to decrease the number of claims, according to Pharmacist Mutual.

personal professional liability policy. "It’s an excess policy that will

However, while technology has reduced the pain of illegible

cover a pharmacist twenty-four hours a day, seven days a week,"

handwriting, it has introduced new opportunities for error by

Jones said. "If they are volunteering at a clinic, working at a health

accidentally selecting the wrong item on an electronic dropdown

fair, or giving advice to their neighbors, that excess policy would

menu or checking the wrong box.

cover them in those situations."

Pharmacies that have a solid risk management process

This is why it’s crucial to make sure you have both an

Having a personal professional liability policy will keep you

can circumvent mistakes that could turn into costly lawsuits.

covered in case there are any issues with the business’s insurance

Pharmacist Mutual has a four-step risk management cycle that

policy. If there’s a $1.5 million judgment, but the pharmacy’s

helps pharmacies continually analyze and avoid risks.

insurance only covers $1 million, your personal professional

liability insurance will cover the difference. Having a personal

The first step of the process is to identify the risks in your

pharmacy. With over 80 percent of pharmacy errors happening

policy in your back pocket, Jones said, "allows you to control what

because of the wrong drug, wrong dose, or wrong direction,

risks you are taking."

targeting those issues can cut your risk of error dramatically.

Assess your current workflow to find out where errors could potentially occur, how often they occur, and if there are any drugs that frequently show up in your error log.

Once you’re armed with the information of what your risks are,

it’s time to create a plan to prevent errors. "It could be something as simple as barcode scanning, double checks by other pharmacists and techs, or Tallman lettering for lookalike and soundalike drugs," Jones said. The solutions you come up with must be practical because if they take up too much time or effort, pharmacy staff members might end up taking shortcuts that could result in even more errors.

When you’ve come up with a plan, the third step is to

implement it. "Train everybody on the new techniques and what you are doing to prevent the error," Jones said. Education is crucial because if staff members know why the changes were made and how it will protect both patients and the pharmacy, they will be more likely to put in their best effort.

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