Independent pharmacy closures have been top of the news lately — the National Association of Community Pharmacists estimated that one independent pharmacy closed every day in 2023. These closures are increasingly creating medication deserts, especially in rural areas. But, despite the massive financial challenges, the critical role of community pharmacy is more important than ever. Research shows that, “on average, high-risk patients see their pharmacists 35 times per year, while visiting their primary care physician only 4 times.” This, coupled with the impending shortage of physicians, positions neighborhood pharmacies as an ideal solution for things like vaccination point-of-care testing, and chronic disease management.
The National Association of Community Pharmacists has long documented the breadth of community pharmacy’s role. In 2019, NCPA reported that 76% of independent pharmacies provide flu immunizations, and 57% of independent pharmacies monitor blood pressure. Pharmacists are vital, front-line healthcare providers and are often the closest to patients' homes. Community pharmacists are vital, front-line healthcare providers and are often the closest to patients' homes.
Despite their clear importance, a barrage of challenges are threatening the future of independent pharmacy. We have spent months conducting research and engaging in conversations with independent pharmacy owners. Here are 5 challenges that are top of mind:
1. DIR/PBM Fee-asco
DIR (Direct and Indirect Remuneration) and PBM (Pharmacy Benefit Manager) fees are top of every discussion around independent pharmacies and are, undoubtedly, the single largest threat to community pharmacies. The unpredictable nature of these fees means that pharmacies are often left in the dark, grappling with fluctuating costs and scant transparency. Month to month, the fees levied on the same drug can vary wildly. But overall, the fees are dramatically escalating — . This wildcard cash crunch makes accurate cash flow prediction nearly impossible. Congress has been punting on PBM reform efforts. In an effort to create some transparency, the switch to fee at point-of-sale in January of 2024 created a “double-whammy” that meant independents were hit with the immediate fee for drugs at the same time as the retroactive 2023 drug fees came due. The dust is still settling on the aftermath and it’s too early to tell how many pharmacies will have to close because of the situation. The NCPA survey found that “With lower prescription reimbursements in one corner and higher back-end fees in the other, many community pharmacists are thinking about throwing in the towel. According to the new NCPA survey, 32 percent of all respondents say they are considering closing their doors in 2024 because of the cash crunch.”
2. “Blizzard Season” New Year Insurance Plan Changes
At the stroke of midnight on January first each year, every American makes a wish, gives a kiss, and gets a new insurance plan. Despite the regularity of this tradition, patients almost always neglect to inform their pharmacies about these new policies. As prescriptions start to roll in, independent pharmacies are overwhelmed with admin work to verify coverage, reconcile scripts sent under outdated plan information, and manually update patient records. Many independents staff up just for this phenomenon and it’s so infamous that some call it “blizzard season.”
3. Prior Authorization Predicament
If independent pharmacies had a tagline, it might be “on the hook but out of the loop.”
Imagine that a physician sends a prescription to the pharmacy. The pharmacy software indicates that the patient’s insurance plan requires Prior Authorization (PA) for that prescription before the plan will cover the medication. So, the pharmacy submits a PA request which goes back to the prescribing physician’s office. That physician’s office either grants or does not grant PA to the insurance plan. But, there is no automatic indiciation back to the pharmacy that the PA has been granted. Sometimes the physician’s office will be kind enough to call the pharmacy and let them know but many (most) times the pharmacy only finds out that the PA has been granted by attempting the submission workflow again and seeing whether or not it goes through successfully. Patients have zero awareness of this process and become frustrated with medication delays that they perceive as pharmacy failures, though, in actuality, the pharmacy has no control over PA.
4. Copay and Manufacturer Assistance Program Awareness
Many pharmaceutical manufacturers offer financial assistance programs for privately-insured patients to offset (or completely cover) the cost of their medications. These copay programs are a great tool that independent pharmacists can use to help improve affordability and increase access to medications for their patients. However, there is no single place for pharmacies to discover these programs. Sometimes programs are automatically loaded into the Pharmacy Management Software or come through from the switch. But during our research we discovered that most often, pharmacy staff either have prior domain knowledge about a program or will do an ad-hoc Google when they have time or think of it.
5. Copay and Manufacturer Assistance Reimbursement Delays
To add to the well-documented cash flow challenges, pharmacists we surveyed said that it typically takes 30+ days to receive reimbursement for manufacturer copay assistance programs. Meaning that the pharmacy is on the hook for floating the value of the copay card on the patient’s behalf until the copay administrator sends them the reimbursement. This, combined with the aforementioned fees, makes cash flow opaque and unpredictable.
