A bitter pill
|New Rockford pharmacist Shane Wendel says the personal service approach is key to the success of his small-town pharmacy service. Photo by John Kary|
As prescriptions are filled, few customers realize the pharmacist has little control of medication pricing.
It’s a complicated case of vertical integration. Pharmacies must contract with a Pharmacy Benefit Manager (PBM). PBMs are companies that handle the distribution of drugs for large employers, insurance companies and government programs like Medicare. Some of those PBMs are now owned by large drugstores, which steer members to their affiliated pharmacies, such as requiring patients to use mail order prescriptions rather than local pharmacies. Basically, the local pharmacy is locked out of certain contracts or from competing for a patient’s business in a number of cases. The PBM gives some pharmacies one contract, but the PBM gives the pharmacies it owns a different contract where patients are forced or incentivized to use the PBM-owned mail order pharmacies and not the independent pharmacies, according to Schwab.
“That is our biggest challenge is us not truly having a fair chance to earn all of our patients’ business because insurance and huge multibillion dollar pharmacy corporations push patients to themselves and I don’t think that’s best for patient care and neither do our patients,” Wendel says.
Ninety percent of his local pharmacy’s medications go through insurance processors. These companies dictate pricing and even how much of a prescription a local pharmacy can fill. For instance, some require 10 out of 12 months of medications to be filled by mail order, rather than by the local pharmacy.
“In small towns, we don’t have a lot of volume like big cities do. Volume erodes away by rules made by these insurance processors and drives patients out of our stores into mail order facilities 1,000 miles away,” Wendel explains.
“They want us to be available to fill an antibiotic here and there and get a patient started on a med, answer all their questions, take care of them after hours. Mail order wants 10 out of 12 months filled and want nothing to do to take care of patients,” Wendel explains. “That’s the most frustrating part.”
“The pharmacy business from a profitability standpoint has gotten much more difficult in the last few years, just because the pressure from insurance companies to push down our reimbursement has gotten much more challenging,” Churchill adds.
“That is the number one focal point of our survival. We don’t struggle in taking care of patients in our small towns. As far as competing with service, that has never been an issue. We know our patients personally and if they need something, we respond to it,” Wendel shares.