As 2017 comes to a close, the pace of change in the pharmacy sector continues to accelerate. As we reflect on the past year, several highlights warrant attention and indicate potential retail pharmacy trends to look for as we approach 2018.
Potential disrupters: Threat or opportunity?
Startup technology, supply-chain e-commerce companies (i.e., Amazon) and e-health companies with innovative models are beginning to integrate into areas within our traditional pharmacy business and practice model. That includes medication dispensing, same-day delivery, cost savings, prescribing, storage, compliance, and adherence. It’s still early on, but the potential success, scalability, and sustainability of their respective business model is worth watching.
The retail pharmacy industry has entered a new period of fierce competition that is forcing pharmacies to further reduce their prescription profit margins:
- Entering 2018, preferred cost sharing networks within Medicare Part D account for 99% of prescription drug plans, thus limiting the number of retail pharmacies that are able to participate, accept lower reimbursements, and meet expanded value-based outcome requirements in return for increased store traffic.
- In the commercial space in 2018, payers continue to fight for fair and timely reimbursement models
- More collaboration between the very large chains and major payers are challenging smaller pharmacies’ ability to participate.
- Direct and indirect remuneration (DIR) fee assessments continue to be the most significant profit hit on pharmacy reimbursement. Tools continue to be introduced to community pharmacies to forecast and mitigate these post-transactional assessments.
It’s never too early to start planning ahead! Going into 2018, there are several potential regulatory changes that, if passed by CMS, could benefit pharmacy for the 2019 Medicare Part D plans, including proposed changes in the regulations on “any willing pharmacy” and ability to participate in networks, as well as changes addressing DIR fees and identifying solutions to mitigate the assessments to pharmacy and the patient.
Potential implications of CVS/Aetna deal
The biggest potential disrupter may be CVS’s blockbuster acquisition of Aetna, announced on December 3. If the deal goes through, CVS Health will control a pharmacy, a PBM, and an insurer — effectively all the steps from drug manufacturer to consumer. This deal could potentially impact the current and future state of pharmacy business resulting from the combination of the nation’s largest pharmacy chain, one of largest PBMs owned by CVS, and the third largest health insurer.
Continued growth of the specialty market
Pharmacy industry revenues are shifting from traditional brand-name drugs to specialty drugs. Over the next four years, specialty drugs will account for 42% of the pharmacy industry’s revenues. Since more and more of these products are being dispensed by a small number of large specialty pharmacies, community pharmacies must strategically position themselves to handle an increasing number of these expensive products with unique clinical requirements as they are introduced into the market place.
Over the past year, three patient-administered, pharmacy-dispensed biosimilars have been approved by FDA for launch. While there are potentially significant reduced costs from using these products, payers, PBMs and prescribers will control access and drive product selection.
Expansion of pharmacogenomics
Personalized healthcare using genetic testing offerings is becoming available within retail pharmacy settings. Additional offerings of genome sequencing now cost under $1,000, and the results of that sequencing can be used to link a person’s genes with personalized, specific treatment to improve overall health outcomes.
The foreseeable future holds the opportunity for patients to work with pharmacists to select the best drugs based on their DNA profile.
Targeting compliance and adherence using big data
Medication adherence remains a major obstacle to saving lives, controlling costs, and improving the quality of healthcare. Half of all patients with chronic diseases don’t take their medications as prescribed. Data is an effective tool to boost adherence.
Up to this point, primarily retrospective data is used for business intelligence and predictive modeling to target patients who are not appropriately adherent or compliant with their medications.
Going forward, the availability of real-time data visibility will strive to keep the patient and his or her “circle of support” better informed and improve adherence behavior. Through their accessibility and relationships with their patients, pharmacists already play a vital role in achieving positive health outcomes, such as fewer hospitalizations, less disease progression, and fewer co-morbidities. With more effective real-time data, pharmacists will need to examine how they can use it to improve medication adherence without disrupting their workflow and unnecessarily expending time and resources. Real-time interaction with shared patient data to deliver solutions for a more streamlined, effective delivery of services results in better care and better outcomes.
Customer-centric store experience to generate revenue
Customer-centric personalization/engagement will be the “must have” as pharmacy and the total store work toward targeting consumers’ shopping behavior in 2018. Pharmacy can be the revenue and margin driver for the rest of the store, and that starts by tapping into “de-identified” internal information, as well as known information, to better understand how to offer holistic health and wellness tools, information, products, and solutions.
Self-care market is more than a trend
Self-care and healthcare consumerism are growing, thanks in part to the shortage of and challenging access to primary care physicians, as well as mounting patient costs resulting from higher deductibles and co-payments for prescription drugs. Consumers are much more conscious of efforts to reduce personal spend, exploring opportunities to proactively avoid medical problems, identifying options to look for the least expensive prices on prescription drugs and use OTCs instead. In fact, eight in 10 consumers say they prefer using OTC self-treatments before visiting a healthcare professional.
This bullish self-care market presents a revenue opportunity for pharmacy, but it also creates its own patient-care responsibility, putting us in the position to help guide consumers to most efficacious OTC options and sometimes to gently remind them when self-care may not be enough and it is time to re-engage with a healthcare professional.
Digital future: Growth of the ‘e-Patient’
In a world where technology is driving more and more human behaviors, it is essential that pharmacy is also in the mix. By 2020, experts predict that more than 20 billion everyday objects will be able to capture, receive, and share data via a global network linked together by inexpensive sensors, GPS, and the cloud, explained Dr. Joseph Kvedar, VP of Connected Health at Partners HealthCare. “Real-time biometric data will automatically be captured by these objects and used to learn more about the impact of lifestyle on chronic diseases and wellness, and ultimately change behavior to improve our health including telemedicine consultations and mobile health apps and trackers, allow consumers to become e-patients,” he said.
Research predicts the number of consumers using home health technologies will increase from 14.3 million worldwide in 2014 to 78.5 million consumers by 2020.
Part of that is wearables. Changing lifestyle of young people demands connectivity. The healthcare segment accounts for a major part of the wearable technology market, considering the innovations in several applications in this area in the last two decades. Mobile phones with wearable sensors, implanted medical devices, and home-based telehealth devices can help monitor and manage the health of a patient.
Coordinated healthcare networks
Healthcare providers must be connected and provide coordinated care through smooth information flow. The importance of coordinating the healthcare sector and bridging the gaps in care to provide positive outcomes can’t be underestimated. Inadequate care coordination is estimated to cost as much as $45 billion to the healthcare industry, much of it tied to wasteful spending. With the evolution of information technology, we can safely share every ounce of information.
Coordinated healthcare will hardly be possible without interoperable technology: Teams connecting providers and specialists everywhere with the aim to deliver quality care. Understand the fact that every patient is different. At the end of the day, all the developments, treatments, and medicines have to be administered to an individual patient.
Role of artificial intelligence
The role of AI will be to strengthen the growing personalized relationship between healthcare providers and the individual patient. The advances in computing power and increasing integration of patient data with smart machines will enable better and more timely decision making. “It’s a new world where artificial intelligence is moving beyond a back-end tool for the healthcare enterprise to the forefront of the consumer and clinician experience,” Accenture Consulting noted in a recent report on digital health technology.
Whatever trends, discoveries, and advances the coming year brings, the most important thing the pharmacy sector will do is what it has always done best: Offer timely, knowledgeable, and compassionate care, service, and advice to patients and consumers as their most familiar and accessible point of contact in the healthcare landscape. It’s what we’ve always done, regardless of the shifts in trends, and what we will continue to do in 2018.
Happy New Year!
David J. Fong, PharmD, is president of Dave Fong Rx Consulting, Inc. A former senior retail pharmacy executive for Fortune 100 and Fortune 500 companies, he is recognized as one of the U.S. and Canada’s business and professional healthcare leaders, leveraging his knowledge and experience working with pharmaceutical manufacturers, distributors, retailers, payers, and healthcare technology companies to bring value to the industry and the consumer.