What goes around, comes around

Drug Store News, Dec 11, 1989 by Harold Cohen

What goes around, comes around

As another year comes to a close and I begin my seventh year at Drug Store News and fourth year at the helm of Inside Pharmacy, I can't help but reflect on the state of pharmacy, and maybe even gaze a bit into the future.

While recently chatting with some members of our pharmaceutical community, I was asked what I thought would be some of the more troublesome areas facing the profession in the coming year. It took me all of five seconds to come up with a reply.

No. 1 on my hit list of problems, not only over the next year, but over the next several years, is the staggering and frightening rise of third-party prescriptions. Third-party prescriptions are predicted to comprise about 70 percent of all prescriptions filled by the end of the century. If reimbursement schedules that continue to spiral downward aren't brought under control soon, it will be the ruin of pharmacy as a profession. Maybe pharmacy as a business will barely survive, but pharmacy as a profession will have seen better days. Fighting for that almighty third-party contract will certainly have its effect on key expenses, like pharmacists' salaries. Store owners will have to cut back. The pressure on each pharmacist to fill a greater number of prescriptions will obviously increase. There will be no time for an average pharmacist to practice the profession of pharmacy. And, if you think we have a pharmacy manpower problem today, wait.

The multi-tier curse

Another problem I see looming large in the year ahead is multi-tier and discriminatory pricing. It doesn't take a genius to figure out that the pharmacy getting the best prices from manufacturers is in a better position to deal in low third-party reimbursement contracts. Is it fair that one segment of our market gets treated to substantially lower prices than another? Absolutely not. Pharmaceutical manufacturers who continue to practice multi-tier pricing are simply choking the profession. It should be stopped, and stopped now.

To a lesser extent, I think physician dispensing will continue to plague retail pharmacy in some geographical areas. Although I don't see it wreaking the same kind of havoc nationwide as I envision third-party doing, it will continue to be bothersome and financially upsetting in some communities. Last year prescriptions dispensed by physicians accounted for 1 percent of retail prescription sales. My position is simple: physicians should not dispense medications for profit. But if they must, they should be licensed and subjected to the same legislation and regulation as pharmacists, including pharmacy continuing education separate and apart from their medical continuing education.

Unfortunately for many retailers, especially the independents, mail order will continue to grow. Let's face it. As long as retail walk-in pharmacies continue not giving the kinds of services and prices to keep consumers shopping in their stores, prescription mail order houses will unfortunately continue to grab a piece of the pharmacy marketplace. Last year prescription mail order companies took 5 percent of the nation's prescription sales for themselves.

Well, Cohen, thanks for depressing me, you say. Is there any good news? I think so. I don't think the future of retail pharmacy looks as bleak as I may have painted it.

Marketing the key

Although it looks like third-party programs' hands will dig deeper into pharmacists' pockets, I think some good might come out of all of this nonsense. First, I think that once good, old-fashioned service hits an all-time low at retail pharmacies, consumers will revolt. They will finally wake up and realize they can't have their prescriptions and service too. I also think that pharmacists will have to find alternate ways of keeping customers from running to exclusive third-party providers. We'll see more creative, professional marketing programs by pharmacists. A greater use of technicians will allow pharmacists to consult with patients and become more visible to the public. Along those lines, some states are already considering mandatory consultation laws. While the process is certain to be evolutionary, I think eventually, as more sophisticated drugs flood the market, the pharmacist will be able to charge for his or her services.

I think we will see less physician dispensing as many states put into action laws that will force physicians to follow the same regulations as pharmacists. At that point, I think most physicians will become disgusted and give up their practice of dispensing prescriptions.

Once retail pharmacy begins to show that it has some clout again, pharmaceutical manufacturers will come around and discontinue multi-tier pricing.

On the generic scene, as third-party prescriptions become a mainstay and after the dust settles from the current generic scandal, generics will become stronger than ever, with fewer companies competing for the business. I also think that the scandal will strengthen the FDA, and it will once again become a regulatory agency of note.