E
ELEMENTS WEIGHING ALL THE OPTIONS This independent pharmacy’s weight loss program adds on profits
BARE SHELVES How understocking products creates a stale and unappealing front end
Essential Credentials How to protect your pharmacy by verifying the credibility of your suppliers and distributors
VOL. 7 ISS. 2 | JUNE 2018 | PBAHEALTH.COM/ELEMENTS
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CONTENTS ON THE COVER
18
FEATURE | Essential Credentials Don’t let good deals and flash sales on pharmaceuticals put your independent community pharmacy at risk. Learn how to protect your pharmacy by verifying the credibility of your suppliers and distributors.
DEPARTMENTS
07
NEWS | FDA Goes Mobile Information on every human drug is only a few finger taps away, thanks to a new mobile app from the U.S. Food and Drug Administration (FDA).
08
TRENDS | Scheduling Appointments Pharmacy’s appointment-based model (ABM) is getting an update. See how adding clinical services to a model that already works can dramatically improve patient care.
10
FEATURE | Essential Credentials
RETAIL | Bare Shelves Independent pharmacies commonly fail to stock enough product in their front ends, leaving gaps and bare spaces on the shelves. Discover why this practice can harm sales.
14
14
SOLUTIONS | Hassle-Free Buying A new secondary pharmaceutical ordering service offers quality, convenience, and ease for independent pharmacies.
24
SPOTLIGHT | Weighing All the Options Discover how one independent community pharmacist empowers patients—and powers her business—with a unique weight loss program.
26
MONEY | Competing for Closings When competitors close, an opportunity opens for your independent pharmacy to get more scripts and new patients. But be quick. You have a short timeframe to work with.
30
OUTLOOK | Dealing With DIR Direct and indirect remuneration (DIR) fees create extra costs for pharmacies, patients, and the healthcare system. See how momentum is building to eliminate them.
34
NOTES | Preventing Abuse Learn how independent pharmacies can help their communities and patients through better education about prescription opioids.
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
MONEY | Hassle-Free Buying
3
E
ELEMENTS
The business magazine for independent pharmacy
ON THE WEB Find more strategies, tips, and expert advice to improve your business at pbahealth.com/elements
VOLUME 7, ISSUE 2 JUNE 2018 PUBLISHER & EDITORIAL DIRECTOR Matthew Shamet EDITOR Kirsten Hudson ART DIRECTOR Lauren Ruiz CONTRIBUTING WRITER Greyson Honaker COPY EDITOR Torrie Wright
Here Are the Pharmacy Inventory Control Methods Every Pharmacy Needs to Know Inventory is your pharmacy’s biggest investment. A healthy business requires minimizing inventory on hand and maximizing inventory turnover. Discover the best pharmacy inventory control methods to make the most of your inventory. Read more at pbahealth.com/pharmacy-inventory-controlmethods.
9 Things Your Independent Pharmacy Website Has to Have Many patients will get their first impression of your business from your website. Is it a good
INTERESTED IN ADVERTISING? elements@pbahealth.com
one? Learn the most essential elements your website needs to make a great impression on patients. Read more at pbahealth.com/ independent-pharmacy-website.
Here’s the Most Important Difference Between Cash and Profit Your Pharmacy Can’t Afford to Miss Every business decision you make affects your cash and profit. But the two aren’t one and the same. Learn how to find the sweet spot where you can maximize profits while maintaining a positive cash flow. Read more at pbahealth. com/difference-between-cash-and-profit.
Follow Elements magazine on Facebook and Twitter for pharmacy business tips and advice, news announcements, industry Elements magazine is published quarterly by PBA Health. Copyright© 2018 PBA Health. All rights reserved. Neither this publication nor any part of it may be reproduced without written permission by PBA Health.
information, and exclusive offers.
Introducing
Personalized Coloring BookS! The Wonderf ul World of Animals & A Visit to My Pharmacy These entertaining and educational, 20-page coloring books feature exciting stories, filled with interesting facts and activities about the world around. Learn how the stories unfold in these interactive, beautifully illustrated coloring books. Personalized coloring books are the perfect add-on to your annual marketing plan—and it’s aimed to inspire creativity in all age groups!
Features: • Story • Maze • Connect the Dots • Word scramble • Original illustrations by Teldon’s own Ljiljana Majkic • And much more... Size: 8.375” x 10.75” | Imprint: 7” x 2” in black on the cover *Minimum order size is 250 and in increments of 250 thereafter. These products can only be ordered in conjunction with your calendar order and cannot be purchased on its own.
How and When to Use
Coloring Books Parents love it when you engage their kids It warms their hearts and shows you care, while helping you stand out from the competition.
Are you a compounding pharmacy? Give them out with each purchase of flavored cough syrup or cold medicine.
Halloween/Holidays Hand out a personalized coloring book to the kids in your neighborhood, in addition to candy or gifts.
A Usef ul Tool to Drive Clients or Prospects to Your Online Presence Run a coloring book contest. Parents will have to continually engage you through emailing the finished colored page and then will have to visit your website to see the results. Offer a small prize ($25 gift card to a family restaurant) and see how quickly they engage you throughout the year.
Call to order: 1 . 8 77. 5 4 4 . 45 75
Don’t forget to order your 2019 Wall Calendars!
NEWS
The included drugs go as far back as 1939, but most of the drugs were approved after 1998. Some information, like labeling supplements and approval letters, are only found on the website, not the app. HOW PHARMACISTS CAN USE THE APP Pharmacists can use the app to educate themselves about drugs, learn about recently approved drugs, or access pertinent information to help patients. Search the app by product name, active ingredient, or application number. You’ll see the drug’s name, type, marketing status, TE code, RLD, and reference standard. You’ll also find the drug’s approval history with accompanying labels. Pharmacists can use the app to help answer patients’ questions, but you can also show them how to use the app themselves. The
FDA GOES MOBILE
drug information on the app can come in handy if patients lose or ruin the drug’s label. They can access directions and warnings through the app. “With the launch of the Drugs@FDA Express mobile app, we’re bringing the public important information about drugs in an easyto-use, mobile format,” Kahn said. Download the free app through your mobile device’s app store.
A new smartphone app from the FDA makes finding drug information easy
ON THE APP Information on every human drug is only a few finger taps away, thanks to a new mobile app from the U.S. Food and Drug
The Drugs@FDA Express mobile app houses information
Administration (FDA).
on every FDA-approved human drug. Here’s what you can
The FDA has turned one of its most popular web pages,
find on the app to educate yourself or your patients.
Drugs@FDA, into a mobile app that pharmacists and patients can access from their mobile devices. “The FDA is continuously
• Approved labels for approved drug products
seeking ways to bring information to consumers in more accessible
• Generic drug products for an innovator drug product
formats,” said Jeremy Kahn, a spokesperson for the FDA. “We hope
• Therapeutically equivalent drug products for an
that by making this important health information more easily
innovator or generic drug product
accessible, we can help empower patients and providers in making
• Patient information for drugs approved since 1998
their treatment decisions.”
• All drugs with a specific active ingredient
The Drugs@FDA Express mobile app contains information on FDA-approved brand and generic prescription and over-the-counter
• Approval history, including approval letters and review packages of a drug
(OTC) human drugs, as well as biological therapeutic products. Information includes labels, reviews, and patient information. The app features the most recent product approvals, within seven days.
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
7
TRENDS
SCHEDULING APPOINTMENTS Your pharmacy can’t afford to miss out on offering this service Pharmacy’s appointment-based model (ABM) is getting an
FILLING A NEED
update. Adding clinical services to a model that already works
A new study published in the Journal of the American
can dramatically improve patient care.
Pharmacists Association (JAPhA) in March reveals a gap the ABM
With the ABM, pharmacists synchronize patients’ chronic medication refills to a single appointment date, typically every 30, 60, or 90 days. That approach has worked well. “Numerous studies show that
can fill: immunizations. Researchers studied 24 Kroger pharmacies with a total of 840 patients enrolled in an ABM program. It included 30-minute, in-person appointments. During the appointments, pharmacists
the ABM increases medication adherence, which translates into
assessed patients’ need for vaccinations, using their vaccination
more prescription fills per year for the pharmacy—a key driver
records if available, and offered appropriate vaccinations
of revenue in the current system,” said Lindsay Kunkle, Pharm.D.,
on the spot.
R.Ph., Senior Director, Practice Advancement & Pharmacist Engagement at the American Pharmacists Association (APhA). But those traditional benefits are only the beginning.
Vaccination rates in those pharmacies were nearly 25 percent higher than the control pharmacies that didn’t offer ABMs. “With access to statewide immunization information systems,
Appointments not only improve convenience and adherence,
pharmacists can access a patient’s vaccine history, screen for and
Kunkle said, but can also help identify and address gaps
close gaps in immunization care, and contribute immunization
in patients’ care.
information to empower the rest of the healthcare team,” Kunkle said.
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“Numerous studies show that the ABM increases medication adherence, which translates into more prescription fills per year for the pharmacy—a key driver of revenue in the
AN APPOINTMENT TO MODEL When pharmacies offer immunization services as part of a scheduled appointment with patients, they can: • Assess immunization status • Recommend needed vaccines • Administer immunizations as allowed by state law or the patient’s healthcare coverage • Refer patients to a provider who can administer the vaccine, if needed • Schedule appointments to receive the remaining doses of a multi-dose vaccine series
current system.” These results not only introduce a new, lucrative, and effective service in the appointment-based model; they also point to the possibility of offering other services through an ABM. “This study shows that adding patient care services, such as
the calls to patients beforehand to identify changes, confirm refills, and answer questions. “In the ABM, pharmacists and technicians take a proactive approach, resulting in fewer phone calls, more meaningful
immunization screening and delivery, to the ABM can improve
interactions with patients, prescribers, and insurers, and more
people’s health and increase patient and pharmacy staff
focused time for pharmacists to provide patient care services,”
satisfaction,” Kunkle said. “The ABM can be the platform upon
Kunkle said. “With the shift to proactivity, many pharmacists and
which patient care services are delivered by optimizing workflow
pharmacy staff members report being more satisfied employees.”
and freeing up the pharmacist to spend more time with patients.”
Some pharmacies also schedule appointment times for patients to pick up their medications. During these appointment
IMPROVING PATIENT SATISFACTION
times, pharmacists meet with patients to answer questions, offer
Patients even prefer the model. In the JAPhA study, more than
consultations, perform comprehensive medication reviews, and
90 percent of patients said they would recommend the ABM
provide other needed services.
program. And more than half said getting vaccinated at their appointment was convenient. Besides the clear health benefits, patients also make fewer trips to the pharmacy and get one-on-one time with their pharmacist. “It often does not take much convincing to get patients into
IMPLEMENTING ABM IN YOUR PHARMACY Any pharmacy can put an ABM in place. “Every pharmacy will need to evaluate their workflow and systems, their physical space, and patients’ preferences and needs
the ABM because it can simplify their life, improve their care, and
as they implement the ABM,” Kunkle said. “The ABM does not
result in better health,” Kunkle said. “When you explain the ABM to
require any fancy technology or other expensive modifications to
patients who are on multiple chronic medications, they are often
be effective. But there are definitely components that can be added
elated about the prospect of spending less time visiting and on the
to create value and efficiency for patients and the pharmacy staff.”
phone with the pharmacy.” The ABM also reduces stress for pharmacy staff. Normally,
For a detailed walkthrough on starting an ABM, check out the APhA Foundation’s implementation guide at aphafoundation.org/
pharmacists and pharmacy technicians react to calls and walk-ins
appointment-based-model. It discusses how to phase in an ABM
throughout the day, which disrupts their workflow.
on top of current workflow, the materials needed, and other
The ABM differs from simple medication synchronization with
mechanics of the model.
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
9
RETAIL
BARE SHELVES How understocking products creates a stale and unappealing front end
Independent pharmacies commonly fail to stock enough product
The museum effect makes patients feel like they’re attending
in their front ends, leaving gaps and bare spaces on the shelves.
a closeout sale from a dying business. And it gives the impression
A sparse row here. Some blank spots there. Sometimes an entire
that your pharmacy isn’t invested in anything front-of-the-counter.
section left empty.
“It’s telling your customers, ‘Come here for your prescriptions.
A few bare spots may seem harmless. But empty shelves make your pharmacy feel like a stale history museum. Not a modern,
But we’re not really paying attention to the front end or OTCs.’ So, they’ll probably shop for those items elsewhere,” Lentz said.
active retail pharmacy. “When the department is sparse, it looks more like a display
FOCUSING ON RETAIL
than a well-stocked fixture,” said Kyle Lentz, Category Analyst at
More practically, when you don’t fully stock the shelves, you risk
Hamacher Resource Group (HRG), a firm that improves results
running out of products patients need. By the time you notice an
across the retail supply chain by addressing dynamic needs such
item is out of stock, it could take days to get a new shipment. And
as assortment planning and placement, retail execution strategy,
that could damage your pharmacy’s reputation if it happens with
fixture coordination, item database management, brand marketing,
items patients expect.
and analytics. “It doesn’t look shoppable.” Dave Wendland, Vice President, Strategic Relations and a member of the owners group at HRG, coined the term “museum effect” to describe this sparsity in the front end.
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“It may be a high-demand product you should always have inventory of,” Lentz said, “because if you don’t, you’re going to lose sales.” The museum effect occurs at every retail outlet, big or small,
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Lentz said. But the effect occurs more often at independent
ADJUSTING TO YOUR BUSINESS’S NEEDS
pharmacies because they place emphasis on patient prescription
But if pharmacies have too much space, Lentz recommends filling
needs more than the retail aspects of their business.
wide rather than filling back. “If you have two products, it’s better to
Independent pharmacies would do well to shift their focus
double face the product rather than putting one in front and one in
and adapt to the changing industry. “As margins shrink behind-
back,” he said. “But if you have extra shelves in your front end, you
the-counter, they can gain some of that margin back by selling
really need to reevaluate your assortment. What products can you
over-the-counter products,” Lentz said. “Pay attention to your front
add that will benefit your customers?”
end like it’s a crucial part of your business rather than something additional that you have to offer besides prescriptions.”
He suggests creating a customized end cap that you change monthly. Like an allergy end cap in March, a summer end cap with first aid supplies and sun care products, and a back-to-school end
HOW TO AVOID THE MUSEUM EFFECT
cap in August. “Otherwise, you can take that fixture down and add
Talking about stocking enough product is one thing. It’s another to
a counseling area or expand your waiting area,” he said.
do it. You don’t want to overstock either because when items sit on the shelf, money sits on the shelf.
Beyond those top categories, pharmacies will have their own specializations that influence their stocking strategies.
“There’s a difference between stocking too much inventory and stocking the right amount of inventory,” Lentz said.
Most importantly, pharmacies need to know what their particular patients buy. The catch-all categories only go so far. To
Each pharmacy will have different demands and needs. But
get a good grip on your sales, Lentz suggests mining point-of-sale
Lentz said all pharmacies should keep certain general categories well stocked. The top five categories for independent pharmacies are cough and cold, digestive, vitamins, pain relief, and first aid.
(POS) data for at least a few hours a month. “If pharmacists know what’s selling, they’ll be in a much better position to manage their stock,” Lentz said. “Better self-awareness
Within those categories are best-selling items that HRG calls
of your front end is going to equal better outcomes and better
Never Outs®. “Never Outs generate the majority of sales for that
sales. You’ll stock the right product, stock the right amount of that
category. They should never be out of stock because customers are
product, and build your categories based on the importance to
looking for those products,” Lentz said.
your pharmacy customers.”
THE TOP 5 CATEGORIES TO NEVER RUN OUT OF Keep these general categories in your pharmacy’s front end well stocked.
1. COUGH AND COLD
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pbahealth.com/elements
2. DIGESTIVE
3. VITAMINS
4. PAIN RELIEF
5. FIRST AID
13
SOLUTIONS
HASSLE-FREE BUYING A new pharmaceutical ordering service offers quality, convenience, and ease for independent pharmacies After working a 12-hour shift, you’re ready to wind down for the
service from PBA Health, makes placing product orders easy. With
day. The last thing you want to do is pull together a product order.
features like order replication, a frequent purchases listing, and
“Pharmacy staff is overworked these days,” said Clark Balcom, Senior Vice President and COO of PBA Health, an independently owned pharmacy services organization that provides group purchasing services, expert contract negotiations, and distribution
multiple search options, BuyLine streamlines secondary ordering, so you spend less time restocking inventory. “BuyLine is the fastest, easiest, and most convenient order management solution of its kind,” Balcom said.
services. “When they get to the end of the day, it’s important that they have a fast and hassle-free inventory replenishment solution
STREAMLINED BUYING
that takes care of the bottom line and also gets them out the door
Besides making ordering fast, BuyLine also offers what pharmacies
toward home.”
need: low prices on a full line of products. That means more than
BuyLine™, a new online secondary pharmaceutical ordering
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pbahealth.com/elements
just generics.
You can shop brands, generics, over-the-counter (OTC) products, refrigerated products, and controlled medications (certain qualifications apply) on BuyLine. “BuyLine is an independent pharmacy-owned and controlled
FEATURES TO KNOW
secondary pharmaceutical supplier solution that offers the
BuyLine™, a new online secondary pharmaceutical ordering
industry’s lowest pricing on the broadest line of brand and generic
service from PBA Health, has the convenient features you’ve
pharmaceuticals,” Balcom said.
been looking for.
EARNING LOYALTY REWARDS
Easy online shopping
Similar to earning airline miles or accumulating rewards points
Shop any time on the intuitive, easy-to-use website.
on credit cards, BuyLine offers loyalty rewards points on generic pharmaceutical purchases. “BuyLine seeks to deliver the full benefits of pricing as upfront,
Everyday low prices BuyLine offers competitive prices on a full line of products
off-invoice, discounts,” Balcom said. “However, it also rewards
and regularly updates pricing to reflect market changes
pharmacies with variable rewards points on each qualified
and trends.
purchase. These rewards points are additional savings that accumulate similar to dollars and can be applied at checkout
Full line of products
on future purchases.”
BuyLine offers brands, generics, over-the-counter (OTC)
Every time you log in, you’ll see your accumulated loyalty rewards points right away. You can easily apply them during
products, refrigerated products, and controlled medications (certain qualifications apply.)
checkout whenever you choose. Loyalty rewards points EASY ONLINE SHOPPING
Includes a loyalty rewards program to earn points
You don’t have to wait for phone calls or use clunky faxes to order
on generics purchases. Redeem the points on any
product. BuyLine features a modern, up-to-date website where you
future orders.
can easily order pharmaceuticals like you would order products on a personal shopping website. After creating an account, the website is available 24 hours a day, seven days a week for you to place product orders. Orders
Live chat Have a question? Use BuyLine’s live chat feature when shopping to get your questions answered—fast.
are fulfilled during business hours. A FOCUS ON QUALITY Not all secondary distributors are created equal. Especially when it comes to quality. “There are ‘fly by night’ secondary suppliers popping up every day,” Balcom said. “Many of them are operated by people with an equity interest beyond that of the pharmacies. With the acceleration of wholesaler consolidation, we believe it will
manufacturers and supplied to pharmacies through PBA Health’s
be increasingly important for independent pharmacies to have
VAWD-certified facilities.
complementary solutions that are controlled by independent pharmacies for the sole benefit of independent pharmacies.” Pharmacies today often feel pressured to compromise quality
FINDING THE BALANCE With years of contract negotiation experience with primary
and safety to address depressed margins and overworked staff,
wholesalers on behalf of independent pharmacies, Balcom
Balcom said. “But pharmacies can never forget that we are in
recognizes that pharmacies must manage a careful balance
the business of health care. Therefore, quality and safety
between buying from their primary wholesaler and
remain paramount.”
secondary sources.
BuyLine has the credentials pharmacies can trust. All BuyLine products are sourced solely and exclusively from original
“By offering industry-leading generic pricing, BuyLine provides pharmacies the opportunity to directly improve savings,” he said.
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
15
WE SPEAK PHARMACY AND KNOW FINANCING. Contact Our Pharmacy Loan Advisors Today: Amer Khamis - Loan Officer Phone: 425 971 6889 Email: akhamis@ffb1.com West Region: WA, OR, CA, NV, ID, MT, WY, UT, AZ, ND, SD, AK, HI
Bo Garmon - Loan Officer
First Financial Bank is one of the nation’s leading small business lenders - originating almost $200M in pharmacy loans over the last few years. Our lending team has over 75 years of pharmacy experience and includes current and past pharmacy owners. We have the industryspecific expertise and knowledge to help you finance your pharmacy. We are a preferred Small Business Administration (SBA) lender offering financing solutions to help practicing pharmacists meet a wide range of business needs: • Acquisition • Equipment financing • Expansion & remodeling • Business refinancing • Start-up loans
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Drew Hegi - Loan Officer Phone: 601-594-6237 Email: dhegi@ffb1.com East Region: LA, MS, TN, AL, GA, FL, SC, NC, VA, WV, MD
Larry Alexander
Managing Director Phone: 832-244-9656 Email: lalexander@ffb1.com
We offer a wide range of flexible terms tailored to your unique situation. Whether you are buying, selling or refinancing, we’ll work with you, one-on-one, every step of the way. Our customer service, financial strength, and expertise in working with independent pharmacies nationwide make choosing First Financial Bank a sound business decision!
First Financial Bank - Professional Services Division
Bob Graul R.Ph, MBA Business Development Phone: 870-866-6686 Email: bgraul@ffb1.com
“BuyLine is an independent pharmacy-owned and controlled secondary pharmaceutical supplier solution that offers the industry’s lowest pricing on the broadest line of brand and generic pharmaceuticals.”
“And by offering brand pharmaceuticals, BuyLine also provides pharmacies with an opportunity to improve overall profit margin
pharmacies it serves.” “BuyLine brings independent pharmacies the balance
by achieving higher levels of generic compliance. And, therefore,
of a broad line of products, industry leading prices, quality and
higher levels of financial incentives with their primary
safety, and the added assurance of no external equity holders.
wholesaler contracts.”
It is the only solution that offers independent pharmacies all
Balcom said pharmacies should carefully evaluate how to use secondary suppliers as part of their overall buying strategy if they
the above today.” Learn more about BuyLine at pbahealth.com/buyline.
want to significantly increase margins. They need to consider purchases made through the secondary supplier and purchases made through the pharmacy’s primary wholesaler relationship. “To do this, a pharmacy truly needs to consider the breadth
SHOPPING SECONDARIES
and type of product lines available and how an appropriate use of those lines results in an overall increase in financial
Independent pharmacies need to do their research
performance,” he said.
before shopping a secondary distributor. “The quality,
Balcom said PBA Health is available to provide guidance
safety, and integrity of the supplier should always come
to pharmacies on how to handle that balance. “With a little
first,” said Clark Balcom, Senior Vice President and COO
guidance on how to properly use BuyLine within the pharmacy’s
of PBA Health. He recommends pharmacies ask these
primary wholesaler relationship, pharmacies end up saving
questions as they consider a secondary supplier.
time and money.” • How many years has the supplier operated? INDEPENDENTS FOR INDEPENDENTS Independent pharmacies today want to support other independent businesses. But independent supplier options have seriously diminished in recent years. BuyLine is one of the few secondary supply options out there that’s still independently owned. “Pharmacies should consider the equity and control structure of the secondary supplier solution,” Balcom said. “BuyLine is
• Does the supplier guarantee that it sources products directly from original manufacturers? • Does the supplier hold necessary industry certifications for safety and quality? • Does the supplier have a strong and consistent track record with respect to licensure with federal and state regulatory agencies?
an independent pharmacy solution and has no external equity holders. It is designed solely for the benefit of the independent
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
17
FEATURE
ESSENTIAL CREDENTIALS How to protect your pharmacy by verifying the credibility of your suppliers and distributors
Profit margins matter to independent community pharmacies
pharmacies. “The pharmacy would also incur significant liabilities
more than ever today. So, independent pharmacy owners often
in regard to the licensure of the facility and individual pharmacists
shop secondary distributors to try to save money where they can.
and civil responsibility for patient harm or death,” Catizone said.
The options and potential savings can seem endless. The
Liabilities could also include criminal charges, even if you aren’t
market is made up of large wholesalers, regional and specialty
aware that you bought or dispensed illegitimate pharmaceuticals.
wholesalers, and thousands of small companies licensed by
The FDA includes a statement to healthcare practitioners on its
U.S. states as merchant wholesalers.
website that states, “If you purchase drugs from illegal, unlicensed
But buyer beware: Those savings could come at a high cost.
sources (foreign or domestic) you are putting your patients at
“There is a network of rogue wholesale drug distributors that target
risk of consuming drugs that may be unapproved, counterfeit,
healthcare practitioners using aggressive marketing tactics and
contaminated, ineffective, or dangerous. If you purchase drugs
offering medications at deeply discounted rates,” said Jeremy Kahn,
from illegal sources, you may be subject to criminal investigation.”
a spokesperson for the U.S. Food and Drug Administration (FDA). Illegitimate distributors introduce substandard and counterfeit
Since 2012, the Department of Justice has prosecuted more than 95 corporations and individuals for criminal charges related to
products into the drug channel, and they often come with an
selling unapproved drug products, or receiving and administering
attractive price tag. Substandard and counterfeit pharmaceuticals
unapproved drug products to patients.
can include the wrong dose, contain no active ingredient, contain
And liability isn’t the only threat to your pharmacy. Harm
the wrong active ingredient, include harmful ingredients,
to patients’ health inevitably leads to harm to your pharmacy
be ineffective, or be contaminated. If you don’t know who’s
practice. “We’re in the quality health care business. If you’re
credible, you could expose your pharmacy and your patients
going to provide quality health care to patients, you have to have
to dangerous products.
a quality product,” said Nicholas Smock, Pharm.D., MBA, President
“The risks are significant,” said Carmen Catizone, M.S., R.Ph.,
and CEO of PBA Health, an independently owned, VAWD-accredited
D.Ph., Executive Director of the National Association of Boards
distributor and pharmacy services organization based in
of Pharmacy (NABP). “First and foremost, the patients of that
Kansas City, Mo.
pharmacy can be injured or killed by counterfeit products or adulterated and misbranded products.” In one far-reaching incident in 2003, investigators discovered that more than 100,000 bottles of Epogen® were counterfeit
“If you don’t have integrity in your pharmaceutical product, how could you have integrity in your health care? You need to provide 100 percent in the quality of your product and 100 percent in your services,” he said.
after a liver-transplant patient experienced crippling spasms and debilitating health problems for months while taking the medicine.
GETTING TO YOUR PHARMACY
The drug’s labels had been forged to indicate a dosage strength
The drug distribution channel is a complicated web of interchange.
20 times the actual dose.
Nearly 40 percent of finished drugs are imported, according to
That’s one of the many recorded stories of patients who have
the FDA. And, nearly 80 percent of active ingredients come from
suffered from counterfeit or substandard drugs. The worst cases
overseas sources. Ingredients can be sourced from one country,
involve life-saving drugs for conditions like cancer and autoimmune
packaged in another, and then repacked in another.
disease. But even the smaller cases can still harm patients. These risks make it paramount for independent pharmacies
Often, you can draw a straight line from manufacturer to distributor to pharmacy within the U.S. But sometimes, drugs may
to ensure the credibility of their distributors, said Rebecca Snead,
bounce from one manufacturer to several different wholesalers,
R.Ph., FAPhA, CEO and Executive Vice President of the National
and even pharmacies, before finally ending up at your pharmacy.
Alliance of State Pharmacy Associations (NASPA). “It is the right
“A pharmacy buyer should always ask the seller where the
thing to do for our patients. The pharmacy profession was founded
product is sourced from and about the storage conditions used to
on the platform of assuring patients have access to a safe and
handle it,” Smock said.
effective drug supply. One adverse effect due to selling an illegal,
Although the U.S. distribution channel is heavily regulated and
contaminated, or unapproved drug—or even worse, death—is
is one of the safest in the world, loopholes exist that opportunistic
too many.”
distributors exploit. For example, they seek licensure in states with the fewest requirements and the least stringent enforcement.
LIABILITY FOR PHARMACIES
They buy pharmacies to function as distributors, so they can sell
Besides the concerns of harming patients, buying from illegitimate
drugs to other wholesale distributors under the guise of a medical
distributors can also result in financial consequences for
emergency transfer. And, some pharmacies that supply nursing
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
19
homes and hospices order huge quantities of drugs at discounted prices and sell the excess to secondary distributors for profit.
SNEAKY STRATEGIES
through improper storage and handling. For example, refrigerated
Many illegitimate distributors gain licensure in states with
products that change hands can easily lose potency and
less stringent requirements or lax enforcement. These
effectiveness without the right storage conditions.
distributors seek licensure in states where:
But even without fraud, medicine can become adulterated
And here’s the biggest takeaway for your pharmacy today: The most common culprits are secondary distributors. And, these
• The state doesn’t require pedigrees • Licensure of out-of-state wholesale distributors is either optional or not required at all • Wholesale distributors can register for one wholesale distribution license and use the same license across the country for several entities • Inspection requirements for wholesale distributors are lacking • A wholesale license is issued to a wholesaler with the same name and address as a pharmacy Source: National Association of Boards of Pharmacy (NABP)
fraudulent distributors often appear to have legitimate standing. In a 2013 report on the rising problem of the integrity of the prescription drug supply, the NABP said the incidents “point to the roles of licensed wholesalers in distributing counterfeit drugs and unapproved foreign-sourced oncology drugs.” In many of the fraud cases, independent pharmacies were unknowing accomplices. They purchased pharmaceuticals from licensed secondary distributors they thought were legitimate. Which leads to the question, then how can pharmacies avoid counterfeit and substandard drugs? HOW PHARMACIES KNOW WHO TO TRUST The best way for pharmacies to avoid dispensing substandard and counterfeit drugs is to take proactive steps to verify the credibility of every wholesaler they buy from. “Where you see the counterfeit and fraudulent drug channel is when people take risks with how they’re doing their purchasing,” said Perry Fri, Executive Vice President of Industry Relations, Membership and Education for the Healthcare Distribution Alliance (HDA) and COO of the HDA Research Foundation. “Are you buying from a company that you don’t know anything about?”
WARNING SIGNS
due diligence under national law. “Today, there’s pretty specific
Look out for these indicators of counterfeit drugs.
requirements that are put onto pharmacies in terms of who they
At the basic level, your pharmacy is required to perform certain
should be doing business with and what they should expect from • Product packaging and label aren’t in English • Words are misspelled on the bottle
that business relationship,” Fri said. In 2013, Congress passed the Drug Supply Chain Security Act
• “Rx Only” designation is absent
(DSCSA, or Title II of the Drug Quality and Security Act), which created
• Expiration date is missing or has passed
measures to enhance pharmaceutical traceability.
• Lot number is omitted • Generic name or active ingredient isn’t printed with brand name • Product appearance, packaging, prescribing information, labeling, or indications for use are unfamiliar • Patient labeling or product information are missing
“The DSCSA creates a tighter, closed prescription drug distribution system to prevent harmful drugs from entering the supply chain, detect harmful drugs if they do enter the supply chain, and enable rapid response when such drugs are found,” Kahn said. The DSCSA creates a national, interoperable, electronic system to track and trace pharmaceuticals all the way through the drug channel. The law is being implemented gradually through 2023 and
Source: U.S. Food and Drug Administration (FDA)
it requires pharmacies to be more stringent with recordkeeping and verifying licensure, among other requirements. If you need help complying with the provisions of the
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“There is a network of rogue wholesale drug distributors that target healthcare practitioners using aggressive marketing tactics and offering medications at deeply discounted rates.”
DSCSA, Snead said state pharmacy associations have resources
illegitimate distributors can create false paper trails with sparkling
in partnership with the American Pharmacists Association (APhA),
records. In 2012, fraudulent distributors falsified their pedigree
the National Community Pharmacists Association (NCPA), and the
while distributing more than $1 billion in diverted drugs to
Partnership of Safe Medicines.
unwitting pharmacies.
But pharmacies need to go beyond the track and trace requirements, especially as the law phases in gradually, because
THE RIGHT CREDENTIALS
vulnerabilities still exist.
To ensure your distributor’s credibility, look for additional
Smock said verifying the credibility of distributors requires two things: evaluating their pedigree and making sure they have the right credentials. “The number one thing is, ‘Does the distributor buy directly
credentials. “You’ve got to look at the credentialing body,” Smock said. State licensure is the basic requirement for a credible distributor. You can verify wholesale drug distributor licenses on
from the manufacturer?’” Smock said. “Ask them for their
the FDA’s website at fda.gov. But licensure on its own can’t give your
pedigree and see where they’re actually buying it from. With
pharmacy complete assurance of a distributor’s credibility. Every
pharmaceuticals, there should be a valid paper trail. And raise
state has its own standards of practice required for distributors
concerns about the price if it seems too good to be true.”
to obtain licenses. Some states have stricter requirements than
The FDA also advises healthcare professionals to know the
others, which makes it easier for distributors to obtain licenses in
source of the prescription drugs they purchase. The distributor’s
some states and makes it harder for pharmacies to know which
pedigree should verify that it sources all of its product directly
distributors they can trust.
from the manufacturer. Pedigree is a good start to ensuring credibility, but it’s not
Catizone said that some states don’t have the resources to regularly review and verify distributors to ensure they maintain
enough on its own. For one thing, each state’s requirements
licensure standards. “In some cases that NABP encountered,
vary. And, some states don’t require pedigrees at all. For another,
unscrupulous wholesale distributors deliberately misrepresented
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
21
licensure, falsified information to indicate licensure when the facility was not licensed, did not report that a license was revoked or suspended, and withheld licensure status in order to avoid
QUESTIONABLE ACTIONS
disclosing disciplinary actions against a license,” she said. In 2004, the NABP set a higher and more unified standard by creating an accreditation program for drug distributors called
How do rogue distributors get away with their actions?
Verified-Accredited Wholesale Distributors® (VAWD®). To become
Sometimes they use loopholes like these.
accredited, distributors must pass the NABP’s compliance review process, which includes a rigorous review of operating policies and
Seeking out states with less stringent laws
procedures, licensure verification, a survey of a facility’s operations,
Because some states have stricter laws than others,
and screening through the NABP Clearinghouse.
illegitimate distributors will often apply for licensure in states with the fewest requirements.
“VAWD accreditation plays a pivotal role in preventing counterfeit drugs from entering the United States’ drug supply,” Catizone said. “VAWD accreditation helps ensure that the wholesale
Taking advantage of the “5 percent rule”
distribution facility operates legitimately, is licensed in good
Some states allow pharmacies to sell drugs to other
standing, and is employing security and best practices for safely
pharmacies and wholesalers as long as the sale of those
distributing prescription drugs from manufacturers to pharmacies
drugs doesn’t exceed 5 percent of the pharmacy’s annual
and other institutions.”
prescription drug sales. Illegitimate pharmacies will abuse this allowance and sell more than 5 percent.
Unlike licensure, VAWD standards apply equally to every distributor no matter the state they reside in. When you work with VAWD-certified distributors, you know they’ve met the strictest
Manipulating the emergency transfer exemption Pharmacies can sell drugs to distributors during medical
standards that currently exist. Several states including Indiana, North Dakota, and Wyoming
emergencies without being deemed a distributor. So,
require VAWD accreditation for licensure. Optum Rx, a pharmacy
illegitimate pharmacies will use the pretense of a medical
benefits manager (PBM) that processes nearly 20 percent of the
emergency to sell drugs to distributors.
nation’s prescriptions, announced in 2016 that pharmacies that contract with the company must only buy from VAWD-accredited
Exploiting drug shortages
wholesalers. Optum Rx will no longer pay for any claims that don’t
Fake pharmacies will find out which drugs are
come from VAWD-accredited wholesalers, and it could charge
in short supply at hospitals, buy up far more than
additional clawbacks and may even revoke contracts.
they need, and then sell them to the gray market. During the shortages, companies will charge hospitals
ANOTHER FEATURE TO LOOK FOR
1,000 times the cost of the drug.
Another element pharmacies can look for when choosing distributors is membership in the Healthcare Distribution Alliance
Using an intracompany transfer
(HDA). HDA, formerly the Healthcare Distribution Management
Transferring drugs between companies under
Association (HDMA), represents primary pharmaceutical
common ownership isn’t considered distribution.
distributors. Its members include 36 pharmaceutical distributors
Illegitimate companies use several strategies to
throughout the U.S. And it serves as a link between the nation’s
disguise transactions between pharmacies and
pharmaceutical manufacturers and more than 200,000 pharmacies,
distributors as intracompany transfers.
hospitals, long-term care facilities, clinics, and other facilities. Although HDA isn’t a credentialing body, it gives pharmacies
Source: National Association of Boards of Pharmacy (NABP)
assurance because of its sourcing verification. “Our members are companies that typically are part of what we’d call the direct supply chain,” Fri said. “So, they buy directly from manufacturers and sell directly to the pharmacy.” Additionally, the HDA constantly works to improve supply chain security in a variety of ways among distributors. “The safest and most secure supply chain is at the core of our mission
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FOLLOWING THE LAW Under the Drug Supply Chain Security Act (DSCSA), enacted in 2013 and which is being phased in through 2023, independent pharmacies have certain requirements to help keep the drug supply chain safe. Here’s what the law requires pharmacies do: • Confirm the entities from which they purchase prescription drugs are licensed • Receive, store, and provide product tracing documentation • Investigate and properly handle suspect and illegitimate drugs, including quarantining the drugs • Notify the FDA and trading partners if they find an illegitimate drug Source: U.S. Food and Drug Administration (FDA)
statement, so everything we do aligns with that,” Fri said. Among
counterfeit bottles were identified by missing degree symbols in
other initiatives, it offers educational opportunities, industry
the temperature instructions.
forums, and guidelines. “We do a lot of work on the supply chain
Also, aggressive offers are a telltale sign of fraud. “If you
side. How can we advance business process, technologies, logistics,
receive a call that is too good to be true, it probably is,” Snead
operations to make the supply chain safer and more efficient?”
of NASPA said. “Make sure you verify before you buy.”
HOW TO SPOT FRAUD
the Supply Chain Security Toolkit for Medical Products. It can
If your pharmacy’s distributors carry the right credentials, you’re
help you develop processes, procedures, and tools for product
in good shape. But there’s always a risk of falsified credentials and
quality and supply chain security. “These materials provide
other factors. So, look out for the warning signs of substandard
overviews of clinical and retail pharmacy practices across APEC
and counterfeit pharmaceuticals.
economies, identifying best practices and resources to support
The FDA has also created a toolkit pharmacies can use called
The main sign of a counterfeit drug is lack of effectiveness. If multiple patients report a lack of efficacy or if a normally effective
implementation toward ensuring the quality of drugs that reach patients,” Kahn said.
drug stops working, make sure to inspect the product. Kahn suggested pharmacists check the Orange Book, which is also called Approved Drug Products with Therapeutic Equivalence Evaluations. It identifies drug products approved by the FDA and related patent and exclusivity information. In addition, pharmacists can visually inspect the drugs before handing them to the patient, Kahn said. Look for misspelled words, foreign language, missing lot number, an outdated expiration date, missing “Rx Only,” or unfamiliar labeling. In the Epogen case, the
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23
SPOTLIGHT If one word could sum up Medicap Pharmacy in Owasso, Okla., it’s empowerment. Even though Dr. Kathy Campbell, Owner of Medicap Pharmacy, is a Pharm.D. with 26 years of experience, she focuses her pharmacy less on prescriptions and more on prevention. “I want my pharmacy to be a place where people come to not need medication,” Campbell said. “I use my talents and skillsets and resources to support people having the health they want to live the life they want.” Campbell’s desire for her patients to not rely on medication
WEIGHING ALL THE OPTIONS This independent pharmacy’s weight loss program adds on profits
guides every patient encounter and every business decision. When wellness requires medication, she’ll maximize outcomes with her pharmacology expertise. But ultimately, she helps her patients live healthy lives through a whole health approach. “I’ve never been the kind of pharmacist where I felt the pill was the only way,” she said. “To me, pharmaceuticals are a tool in the toolbox. I started using other tools to empower people to take charge of their health and well-being.” She started offering consultation appointments years ago, where she consults with patients on their health and their medications. “I think that’s very unique in that people hire me to talk about their health and well-being and their medications.” She charges for this service and she thinks other pharmacists should too. “We’ve relied too much on that single product entity called the prescription for our revenue, for our identity,” she said. She also earns revenue by selling nutraceuticals and offering educational seminars on health topics, including her most popular seminar on hormone balance. STARTING A WEIGHT LOSS PROGRAM But her major tool of empowerment—and profit—is her unique weight loss program. The program spans 12 weeks and includes an initial detox, full body analysis, nutrient support, lifestyle analysis, and a Mediterranean diet, low glycemic nutrition plan. Through the process, Campbell provides health coaching tailored to each patient. “I actually utilize my unique skillset as a pharmacist to impact the biochemistry. I tell my patients that it isn’t about me figuring it out, it’s about us figuring out your machine,” she said. “My intention is basically empowering people on the basis of lifestyle approach that will support their health and well-being forever.”
Medicap Pharmacy in Owasso, Okla., looks beyond medication to help patients. The pharmacy offers personal health consultations, health seminars, a weight loss program, and more to empower patients to take charge of their health. Owner Kathy Campbell, Pharm.D., said acknowledging and caring for patients makes a difference.
WHEN PATIENTS LOSE, THE PHARMACY WINS The idea sprang from what she was already trying to do in diabetes prevention and reversal, which also focused on a whole health approach. Patients weren’t responding to that, so she created a new program with the same concepts and branded
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“I’ve never been the kind of pharmacist where I felt the pill was the only way. To me, pharmaceuticals are a tool in the toolbox. I started using other tools to empower people to take charge of their health
Kathy Campbell, Pharm.D., Owner of Medicap Pharmacy in Owasso, Okla., created a branded weight loss program that’s tailored to each patient’s unique biochemistry. “One size fits all doesn’t work,” she said.
and well-being”
it as a weight loss program. In the two and a half years she’s offered the program, Campbell
whatever we can do to brand ‘pharmacists make a difference in your health,’ I think is key for our profession going forward.”
has enrolled nearly 200 patients. And from a health perspective, it’s been a success. Many patients have seen dramatic reductions
ADVICE FOR INDEPENDENT PHARMACIES
in A1C levels, LDL cholesterol, and weight loss of up to 90 pounds.
For independent pharmacies looking to get into the $65 billion
“I have a lady who’s been losing weight, about 12 pounds in
weight loss industry, Campbell said the key is marketing. “The
a month,” Campbell said. “She came in with full body neuropathy,
weight loss program is not that different from what I would have
and that’s gone.”
done for anybody, any time,” she said. “But it was packaged and
Campbell has also seen a healthy boost in her business. Patients pay for the program out-of-pocket, so she doesn’t have
marketed differently.” Even if you have to outsource your marketing, as she does, it’s
to worry about third party reimbursements. “From a financial
worth the investment. “As independents, we wear way too many
standpoint, it’s been a product that’s really helped with cash flow
hats and we’re not good at half of them,” she said. “We don’t have
at a time when cash flow has been basically turned off at the spigot
a lot of resources, so we tend to do a moderately mediocre job at
by the PBMs,” she said. “This is a way for me to generate a different
something that really needs to be done well.”
product to sell.” The program costs patients $499 down and $99 per month. More importantly to Campbell, the program has enabled her
Finally, if you decide to start a weight loss program, expect challenges. “It’s going to be very uncomfortable when you start something new,” she said. “Stay committed, stay engaged with the
to brand her pharmacy as a partner in health rather than a remedy
patient. I think it’s that therapeutic relationship that is ultimately
for disease, which she says is a major problem for pharmacy.
going to keep us valid.”
“If you think about it, where do you go to get healthy? Nobody thinks of a pharmacy,” she said. “I want to change that. Getting out
Learn more about Campbell’s weight loss program at drkathyweightloss.com.
from behind that counter, talking to patients, sitting down with patients, having seminars, educating people, getting it on Facebook,
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
25
MONEY
COMPETING FOR CLOSINGS How to make the most of a competing pharmacy closing down When a competitor closes its doors, yours should open even wider. A mass of current patients in your area actively looking for a new pharmacy doesn’t happen every day. Snagging even
prescriptions. “There’s going to be an exodus,” Beckner said. “That’s the period of uncertainty that you can take advantage of.” It’s a golden opportunity. “You’re marketing to customers
a small percentage of those patients could dramatically improve
who’ve been forced to go somewhere else,” said Gabe Trahan,
your business.
Senior Director of Store Operations and Marketing at NCPA.
“Increasing script count is your primary benefit,” said John
“They’ve been forced. So, the advantage is yours.”
Beckner, Senior Director of Strategic Initiatives at the National Community Pharmacists Association (NCPA). “But there’s also an
UNIQUE OPPORTUNITIES
opportunity to sell a lot of ancillary and front-end products. So,
If an independent pharmacy closes, you have an inherent
you’re hopefully getting a total customer in terms of prescription
advantage over national chain pharmacies. “You may have first
customers and the opportunity to service their over-the-counter
shot at those customers because they’re used to the independent
needs as well.”
environment, they’re used to having a relationship with their
Before a pharmacy closes, it has to serve a notice to its patients 14 to 30 days in advance, depending on the state board of pharmacy’s regulations. When that happens, you have an open window to reach patients as they scramble to transfer their
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pharmacist, and they might be more inclined to transfer their prescriptions to another independent,” Beckner said. Even if a national chain buys the pharmacy and keeps those customers, the opportunity still remains. “A lot of times when a
chain takes over, they’re not ready for the influx of new customers and the wait times get ridiculous,” Trahan said. “So, it makes for a great opportunity.” PREPARING FOR NEW PATIENTS Caring for a sudden influx of patients will test your pharmacy’s capacity. You’ll need the staff, workflow, and infrastructure in place to handle the needs of numerous new patients. “Be prepared to succeed,” Trahan said. “You have one attempt to make that first impression.” Take everything into consideration. Do you have enough parking to accommodate more patients? Do you have enough staff so patients don’t wait in line? Do you have enough inventory to fill all their prescriptions? And, preparation includes providing more than prescriptions. Competing against national chains for those customers means you
“A lot of times when a chain takes over, they’re not ready for the influx of new customers and the wait times get ridiculous. So, it makes for a great opportunity.”
also need a healthy front end. “You don’t have to match them,” Trahan said. “But you can’t have onesies on the shelves; you can’t be out of the best sellers.” You should also prepare a singular message. Trahan suggests writing a script. That way every staff member communicates the same message to new patients. “Everyone has to be on board. When a new customer comes in, what exactly are you going to say to them? Because everybody has to say the same things. From the clerk to the truck driver to the tech to the pharmacist,” Trahan said. “What will you do to make everybody seem excited that a new customer’s coming in?” MARKETING YOUR PHARMACY Get your message out because you only have one shot to attract those new patients. “When you do your marketing, make sure you say three things:
makes your pharmacy different. And they said to be specific
You have a choice. We’re ready for you. And, in just one call, we’ll
in your message. Don’t spout general claims about being family
take it from there,” Trahan said. “Because customers have no idea
owned or having great customer service. “You have to define
how to transfer prescriptions.”
exactly what makes you good,” Trahan said. “That’s how you’re
Also, reach out to doctors. “It’s always good to have an outside entity advocating on your behalf,” Beckner said. “If you could get
going to change customers’ experience.” Patients also look for continuity, Beckner said. “For these
the medical community on board with what you’re doing and the
people who are forced to find a new pharmacy, there’s a little
services you offer, that’s a very important piece.”
bit of trepidation involved. They have to establish a new
NCPA provides a marketing toolkit to help patients capitalize on a competitor closing. It includes a customizable letter to
relationship. They’re worried about their files getting lost or where they’re going.”
prescribers, sample signage designs, templates for print, radio, and
Once you succeed at getting a patient to walk through your
social media ads, and more. Trahan also suggests getting a banner
doors, you still have work to do. Often, patients meet the clerk
printed that you can hang outside your pharmacy right away.
or technician first, and they never speak with the pharmacist.
And, Trahan said to prepare a marketing budget before you
Trahan and Beckner said pharmacies need to give patients an
begin your campaign.
official introduction.
DIFFERENTIATING YOUR BUSINESS
and greet every new customer from the competitor is extremely
Trahan and Beckner also emphasized the need to promote what
important,” Beckner said.
“Making sure the pharmacist has an opportunity to meet
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
29
OUTLOOK
DEALING WITH DIR Strategies for pharmacies to take control of DIR fees and the push to end them Direct and indirect remuneration (DIR) fees create extra costs for
below cost. And their number one tool to quickly adjust to changes
pharmacies, patients, and the healthcare system. And momentum
in profitability—price shopping for drug acquisition—has been
is building to eliminate them.
taken from them because of retroactive DIR.”
More than 115 healthcare organizations are currently pushing legislation to eliminate the fees. The National Community
DEALING WITH THE PROBLEM
Pharmacists Association (NCPA) has heavily lobbied against them.
None of this is news to independent pharmacies. You’ve
And its CEO has written op-eds for various national media outlets exposing the practice. In a February 2018 survey by NCPA, community pharmacists voted DIR fees as their top legislative or regulatory obstacle. And, the PBM tactic has faced greater national scrutiny recently, with major media outlets highlighting the practice and Congress introducing bills to combat it.
4 WAYS TO REDUCE DIR FEE LIABILITY
But despite increased efforts, DIR fees continue to claw back
1. Increase generic dispensing above 94 percent
profit from independent pharmacies after the point-of-sale. And
2. Improve patient adherence in diabetes, blood
that can be detrimental for business. “In most cases, it’s months before pharmacy owners see the impact of DIR fees to profitability. By then it’s too late to take action to impact margin,” said Melanie Maxwell, Senior Vice President, Pharmacy Services at Pharmacy Providers of Oklahoma Inc. (PPOk), an organization that negotiates third party contracts for independent pharmacies. “Pharmacies are being forced to unknowingly fill prescriptions
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pressure, and cholesterol 3. Complete all medication therapy management (MTM) cases through Mirixa and OutcomesMTM 4. Partner with a pharmacy services administration organization (PSAO)
N C PA 2
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6–9 OCTOBER YOU SAY YOU NEED REAL SOLUTIONS? That’s what you’ll find at the 2018 NCPA Annual Convention this October in Boston. As your role in health care is changing, the NCPA convention is where you can discover ways to transform your pharmacy business. Come prepared to learn, grow, and seize the moment. With more than 30 sessions designed to speed your evolution as a trusted
health care provider and a successful entrepreneur, the NCPA Annual Convention is the cutting edge, the place to connect with the innovators in community pharmacy and to discover ideas and solutions you can take home and put to work in your own enterprise. It all comes down to execution. If you’re ready to execute a successful transformation of your pharmacy business, NCPA’s Annual Convention is your instruction manual. From enhanced patient services to business technology
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“Pharmacies are being forced to unknowingly fill prescriptions below cost. And their number one tool to quickly adjust to changes in profitability—price shopping for drug acquisition— has been taken from them because of retroactive DIR.”
experienced the squeeze of DIR fees for years. In a 2016 NCPA
“PBMs have made it virtually impossible for anyone other
survey, 87 percent of community pharmacies said DIR fees
than themselves to estimate or project DIR liability. Contracts that
significantly affect their pharmacy’s ability to provide patient care
contain DIR fees do not have specific enough language to tie a
and to remain in business.
contract rate and DIR fee to an actual claim billed at point-of-sale,”
One pharmacist told NCPA that an initial profit of $53 turned into a net loss of $263 after the DIR fees. Another pharmacist told
she said. “PBMs continue to refuse to provide contract information on the claim transaction to tell pharmacies which contract applies.”
NCPA, “[I]t is very hard to plan a budget or allow for the same amount of employees to remain at our store if we are uncertain as
ELIMINATING AT THE POINT-OF-SALE
to how much we will actually make that week. We will be forced to
Although DIR fees remain firmly entrenched, momentum against
cut back or lay off employees due to these fees.”
them is building. At this point, no one is seeking to get rid of the
Over time, DIR fees have only gotten worse. According to a January 2017 fact sheet published by the Centers for Medicare & Medicaid Services (CMS), DIR fees increased by 22 percent
fees entirely, but they’re working to eliminate their application after the point-of-sale. “We are hearing significant noise from community pharmacy
per year between 2010 and 2015. “Part D sponsors and PBMs
about the need to ‘eliminate DIR fees,’” Maxwell said. “In actuality,
are engaging to a greater extent in arrangements that feature
the work to address DIR fees is mostly focused on eliminating
compensation after the point-of-sale, and the value of such
the retroactive element to DIR fees. Changes are being pushed to
compensation is also generally increasing,” the report said.
require PBMs to disclose DIR fees at point-of-sale. This effort just
Even though pharmacies understand the detrimental effects of DIR, Maxwell said many pharmacies may not realize
addresses the transparency issue.” If pharmacies knew the fees upfront, they could adjust their
the extent of the techniques PBMs use to confuse the issue
business strategy to account for the losses to their bottom line.
in pharmacies’ contracts.
And ideally, make up for them.
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“Eliminating DIR fees will restore a pharmacy’s ability to gauge profitability at point-of-sale, drug by drug, allowing more competition between drug wholesalers,” Maxwell said. “Pharmacies will also benefit by eliminating the need for complex accounting procedures to accrue for DIR fees that are virtually impossible to project.” Two bills currently under consideration in Congress address the transparency issue, S. 413 and H.R. 1038, which Maxwell said is the path to DIR elimination. The bills would prohibit Medicare Part D plan sponsors and PBMs from retroactively reducing payment on clean claims submitted by pharmacies under Medicare Part D. The American Pharmacists Association (APhA) and NCPA
A LOOK AT BILLS S. 413 AND H.R. 1038 Legislation currently introduced in the Senate and House is taking aim at DIR fees. Here’s how these bills could improve matters for independent pharmacies. Prohibit retroactive DIR fees on independent pharmacies
back the bills. Both organizations said the bills will not only help
The bills will prohibit Medicare Part D plan sponsors
pharmacies but will also save billions of taxpayer dollars by
and PBMs from retroactively reducing payments
reducing inflated drug costs.
on clean claims submitted by pharmacies under
CMS has also started to push back against DIR. In a proposed
Medicare Part D.
rule published in November 2017, it requested comments on how to address the rising problem of DIR fees. After reviewing 1,400
Increase drug pricing transparency
comments on the issue, CMS said in its April 2018 final rule, “We
Prohibiting retroactive pharmacy fees will make the
believe the statute provides us with discretion to require that Part
Medicare Plan Finder more accurate. It will also allow
D sponsors apply at least a portion of the manufacturer rebates
the Centers for Medicare & Medicaid Services (CMS)
and all pharmacy price concessions they receive to the price of
to have better oversight.
a Part D drug at the point-of-sale.” Create reduced cost-sharing and greater budget PHARMACIES PLAY A PART
predictability for beneficiaries
Even though the fate of DIR hinges heavily on legislation,
DIR fees punish Medicare Part D beneficiaries who
pharmacies don’t have to sit on the bench.
use their drug plan to fill prescriptions. Retroactive
DIR depends in part on factors that pharmacies have influence over.
fees lead to inflated drug costs, which are the basis for beneficiary cost-sharing amounts.
“DIR fees are currently tied to pharmacy performance,” Maxwell said. “Pharmacies can lower their DIR liability by focusing
Preserve access to independent community
on increasing generic dispensing above 94 percent; improving
pharmacies
patient adherence in three key areas: diabetes, blood pressure,
These bills will help independent community
and cholesterol; and completing all of their medication therapy
pharmacies stay in business, which means better
management (MTM) cases through Mirixa and OutcomesMTM.”
care for patients. Often located in rural communities
Pharmacies can also gain leverage against PBMs by partnering
and inner cities, independent community pharmacies
with a third party network to negotiate their contracts. “Pharmacies
provide much-needed health care. The number of
that utilize pharmacy services administration organizations (PSAOs)
independent community pharmacies declines every
for contracting typically benefit from negotiated DIR fees as well
year, putting patients in underserved communities at
as contract rates,” Maxwell said. “Pharmacies that have direct
risk of losing the only pharmacy in their community.
contracts with PBMs and are located in rural or underserved areas also have the ability to negotiate contract terms including DIR fees.”
Source: National Community Pharmacists Association
Every pharmacy can use its voice. NCPA offers independent pharmacies resources to get involved in advocacy, including letter templates to send to representatives and media suggestions for raising awareness. It also has a Legislative Action Center where you can stay up-to-date on current issues and find ways to participate.
ELEMENTS | The business magazine for independent pharmacy | JUNE 2018
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NOTES
BY THE NUMBERS
PREVENTING ABUSE How independent pharmacies can help their communities and patients through better education about prescription opioids Despite opioid abuse trending as a hot topic right now, many patients still don’t know how to prevent misuse in their own homes. And they may not get the education they need from healthcare
62 Percent of adults who said their healthcare provider hasn’t spoken to them about safe prescription opioid storage or disposal
9/10 Number of adults who keep leftover prescription opioids for future use
35 Percent of adults who said they’re not aware of safe disposal methods
providers. In fact, 62 percent of adults said their healthcare provider or pharmacist has never spoken to them about safe
Source: AAOA Prescription Opioid Awareness Survey, March 2018
storage or disposal of prescription opioids. That’s according to a survey commissioned by Allied Against Opioid Abuse (AAOA), a national education and awareness initiative to help prevent the abuse and misuse of prescription opioids. “Unfortunately, there is a significant knowledge gap regarding safe use and disposal of opioid products,” said Mallory Ward, a
their rights, risks, and responsibilities associated with these pain medicines, patients can take an active role in preventing misuse and abuse before it occurs.”
representative for AAOA. “There is an urgent need for outreach to patients, caregivers, and the public around proactive steps to take
PATIENTS’ RIGHTS
to mitigate the likelihood of misuse before it begins.”
More patients need to know their options when it comes to opioids, such as partial fills and alternative treatments.
TALKING TO PATIENTS
“Patients have the right to know the full scope of the pain-relief
As a consistent touchpoint for patients taking opioids, pharmacists
options available to them, including non-opioid treatments, and
have an opportunity to educate patients every time they pick up or
should make informed decisions about the medications they take,”
refill a prescription.
Ward said.
“It is essential that pharmacists have a conversation with
According to the AAOA survey, 47 percent of adults said they
patients every time an opioid is prescribed or refilled to make
don’t know about their right to partially fill a prescription. And, 67
sure they understand the potential risks and side effects of the
percent said their healthcare provider hasn’t talked to them about
medication, which includes dependence, addiction, or overdose,
alternative pain treatments to opioids.
especially with prolonged use,” Ward said. And because it’s a sensitive topic, patients need to know they
If pharmacists focus on education and awareness, they can make a big difference to prevent opioid abuse and misuse. “Patient-
can turn to their pharmacist. That means being the trusted and
pharmacist conversations about tips and actions they can take to
accessible professional they’ve come to expect.
reduce instances of abuse and misuse at home is a significant step
Discussing safe storage and disposal is important because opioid misuse can start in the home. “By reminding patients of
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forward as we develop solutions to address the national opioid epidemic,” Ward said.
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