Even more pharmacy consolidation: UPMC in Pennsylvania
When I was doing research on public markets a few years ago, I came across a book called Civic Agriculture, about the development of local food systems centered upon small business.
One of the interesting discussions within the book was how the prominent sociologist C. Wright Mills did a study for a Congressional Committee just after World War II, about the difference in economic effect of small businesses versus chain businesses and the impact on local communities.
-- Small Business and Civic Welfare, United States. Congress. Senate. Special Committee to Study and Survey Problems of Small Business Enterprises, 1946
Well, in terms of government support for small business versus large business, we know the road that was taken.
At the beginning of the covid vaccination program, West Virginia was touted for its program which focused on utilizing independently owned pharmacies to deliver vaccines, leveraging the trust in locally based professionals within the community ("A West Virginia pharmacist on how the state became a vaccine success story," Vox).
I also remember stories about independent pharmacists taking their own initiative to go to local nursing homes, senior centers, etc., to do vaccinations "in place" rather than expect often infirm people to come to them ("This Pharmacist Had Vaccine Doses to Spare. So He Hit the Road," New York Times).
Just like there is a term food desert, the same goes for pharmacies, "pharmacy deserts," as the industry has pretty much chained up on two primary firms--CVS and Walgreen's--and one also ran, Rite Aid. Plus Walrmart. A few years ago Target sold its pharmacies to CVS, which now runs them within Target stores.
-- "Mapping pharmacy deserts and determining accessibility to community pharmacy services for elderly enrolled in a State Pharmaceutical Assistance Program," PLoS One, 2018
While supermarkets have been quite active in having pharmacies, increasingly stores are getting out of the business, especially because prescription benefit companies keep lowering the reimbursement levels, making it unprofitable to fill a prescription.
Health care organizations are doing the same thing. UPMC, the major hospital and health care group based in Pittsburgh, has just reduced the number of pharmacies able to participate in its health care program, and this has targeted small pharmacies in small towns ("As UPMC takes drugstore network trend to Obamacare plans, small-town Pa. pharmacists worry," Pittsburgh Post-Gazette). From the article:
UPMC Health Plan is reducing by 60% statewide the number of drugstores where people with Obamacare coverage can fill prescriptions, a move that follows an industry cost-cutting trend and one the insurer said is needed to better align pharmacist services with overall patient care.
The smaller networks will affect both individuals and small employers who are insured through Pennsylvania’s online marketplace, called Pennie. Enrollment in Pennie plans for 2023 continues through Jan. 15 and will determine the number of people affected by the change.
But some independent pharmacy owners predict the downsizing — and similar efforts to drive down drug costs by limiting the number of participating pharmacies available to plan participants — endangers Pennsylvania’s 829 independently owned pharmacies, including many serving rural areas.
Healthcare deserts, nationally. While the switch will reduce costs up to 2%, it comes at the cost of abetting the medical desert problem, and makes getting medical care that much more difficult in small towns and rural areas more generally.
-- "Mapping Healthcare Deserts: 80% of the Country Lacks Adequate Access to Healthcare," GoodRx
Government policy should differentiate between place conditions--inner city urban versus suburban versus rural in particular, and these kinds of program changes should be disallowed because of the negative impact on local communities and businesses.
The immediate savings for the health plan are dwarfed by the negative costs imposed on communities in other ways, costs which can exacerbate health conditions rather than improve them.
Labels: building a local economy, federal policy, health and wellness planning, pharmacy/drug store, small business policy
posted by Richard Layman @ 12:27 PM&Permanent Link
11 Comments:
https://www.seattletimes.com/seattle-news/health/how-wsu-plans-to-ease-shortage-of-rural-pharmacists/
2/4/2023
https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2753258
October 21, 2019
Assessment of Pharmacy Closures in the United States From 2009 Through 2015
Despite the growing number of pharmacies in the United States, findings from this study indicate that 1 in 8 pharmacies had closed between 2009 and 2015, which disproportionately affected independent pharmacies and low-income neighborhoods. Although efforts to promote pharmacy access have focused on addressing pharmacy closures in rural areas,6 we found that pharmacies located in low-income, urban areas are at greater risk of closing. These findings suggest that policies aimed at reducing pharmacy closures should consider payment reforms, including increases in pharmacy reimbursement rates for Medicaid and Medicare prescriptions. The findings also suggest the importance of understanding the influence of preferred pharmacy networks in order to protect independent pharmacies most at risk for closure, especially in urban areas. Such efforts are important because pharmacy closures are associated with nonadherence to prescription medications, and declines in adherence are worse in patients using independent pharmacies that subsequently closed.1
The U.S. pharmacy industry is crumbling. Here’s how to fix it.
https://www.washingtonpost.com/opinions/2023/11/27/pharmacies-closures-drugs-medicaid-medicare/
His drugstore, one of a few in his county of more than 9,000 people, exemplifies the struggle many independent pharmacies face. The store is a lifeline for customers, most of whom are on either Medicaid or the state’s health-insurance program. Yet profitability is now near-impossible because of the preposterous way the United States distributes pharmaceutical drugs.
... U.S. drug distribution has also greatly consolidated, granting enormous power to a few big players that have mangled the industry in the pursuit of profit. A small number of pharmacy benefit managers (PBMs) — Express Scripts, CVS Caremark and Optum Rx — act as intermediaries between pharmacies and the insurance companies that pay for prescription drugs. But each PBM also runs a network of pharmacies and goes to great lengths to direct customers to its preferred retail stores.
That’s right — the same corporations that are deciding where Americans should buy their drugs are often running those drugstores.
This market dominance has driven business away from independent stores. Worse, PBMs are notorious for setting low reimbursement fees, making it difficult for pharmacies to break even. Many PBMs also impose contracts on independent pharmacies with unrealistic demands on how they dispense drugs and how their customers follow the regimens. When pharmacies fall short, they are hit with enormous fees.
,,, An elegant solution to these problems is to make it more profitable for pharmacies to serve low-income patients. This would require a heavy hand from the government.
One way to do it: raise reimbursement rates for drugs covered by Medicaid or Medicare. Government programs typically pay less than private insurers do. This saves taxpayers money, but it means poor communities — which already suffer from higher rates of health issues — are less profitable for drugstores. This makes low-income areas less attractive places to open pharmacies, regardless of demand.
States could change the incentive structure and pay more for drug purchases through their assistance programs. This would cost governments more, but it would help stabilize independent pharmacies and give chains reason to remain where they’re most needed.
States should also confront PBMs. These middlemen have concocted a devious way to profit from the byzantine drug system at the expense of pharmacies. PBMs negotiate discounts with drug manufacturers on behalf of payers — either insurance companies or state Medicaid programs. But the amounts they charge payers are often much higher than what they reimburse pharmacies. PBMs then pocket the difference, or at least a portion of it.
In center cities, pharmacies are more like convenience stores.
According to this article about the closure of a downtown Bartell's in Seattle, the typical "front store" sales of a pharmacy is 20% while the Bartell's was 40%. That's probably typical of stores in DC, CVS especially, NYC is probably even higher.
https://www.seattletimes.com/business/what-the-loss-of-downtown-seattles-last-bartell-drugs-says-about-the-chains-decline
What the loss of downtown Seattle’s last Bartell Drugs says about the chain’s decline
12/15/2023
Bartell stores were famous for their unusually wide selections, from household products and toys to food and especially candy, much of it upscale.
Bartell also put special emphasis on locally made products, such as Almond Roca from Tacoma-based Brown & Haley; Aplets & Cotlets from Liberty Orchards in Cashmere; and Theo Chocolate from Seattle.
It was a merchandising strategy suited to a booming metropolitan area where “the average income levels are pretty high, the average educational level is pretty high” as George D. Bartell, grandson of the company’s founder, explained when the Rite Aid sale was announced.
Bartell Drugs came to rely on front-of-store sales for around 40% of its revenue, or roughly twice the percentage of national drugstore chains, said George Bartell, now 72, in the 2020 interview.
That heavy front-of-store reliance would be even greater downtown, with its throngs of convenience-minded commuters.
At a time when Seattle drugstores are closing, an independent expands
https://www.seattletimes.com/business/at-a-time-when-seattle-drugstores-are-closing-an-independent-expands
1/9/2024
Small store, less cost to operate. In walkable areas. Limited front of the house type convenience goods. Takes all forms of insurance.
Spends time with customers explaining drug issues, which doesn't really happen at CVS and Walgreens because they are so busy and often understaffed (note that the Walmart on Parley's Run in Salt Lake is excellent on providing info on prescriptions).
Washington State has also passed a law authorizing insurance reimbursements to pharmacists for certain procedures including patient monitoring, and referrals.
https://www.nytimes.com/2023/12/24/nyregion/pharmacies-closures-shoplifting.html
https://www.nytimes.com/2023/12/24/nyregion/pharmacies-closures-shoplifting.html
Some small independent pharmacies in the city are benefiting from a decline in chain stores. But theft and low reimbursement rates are still making life hard.
At one of the few chain pharmacies still open in the South Bronx — a Rite Aid on Southern Boulevard — just about everything except for the greeting cards is behind plexiglass barriers and sealed with a lock. The Kit Kats. The Pringles. The soda. The dog toys.
Yet near a subway station on that same bustling shopping street, four mom-and-pop pharmacies are doing brisk business. Their unlocked shelves are filled with merchandise. The pharmacist and technicians are on the phones, answering calls in Spanish and English from patients whose names they often know.
“I’m the kind of person who likes to speak to the patients,” said Dr. Rana Makki, supervising pharmacist at Bronx Specialty Pharmacy, a few doors down from the Rite Aid, explaining why she works there instead of a chain. “We know who you are, delivery is faster here and there you have to deal more with people stealing.”
... But in New York City, where the total number of pharmacies actually grew slightly over the past year, there is a robust mom-and-pop pharmacy industry that could possibly pick up the slack. Of the 2,964 pharmacies registered with the state as of November, only about 15 percent were one of the three major chains.
The large number of local pharmacies in New York City makes it an outlier among the nation’s urban areas. According to a 2021 study, less than 1 percent of residents live in a pharmacy desert in New York City, compared with 13 percent in Los Angeles, 20 percent in Chicago and 29 percent in Houston.
... At the chains, he said, pharmacists have little time to answer their phones or give patients advice. “They come and go as business decisions, not with a purpose to serve the people most vulnerable,” he said.
... A far bigger issue, she said, is low reimbursements for the medications she sells. Across the industry, a significant percentage of the drugs that pharmacies sell do not generate enough revenue to cover costs.
“Let’s say we are buying a $3,300 H.I.V. medication; if you’re giving us $250 less, or $150 less, where are we going to recover that?” Ms. Patel asked.
... The reimbursement shortfalls mean community pharmacies are constantly trying to make ends meet in other ways. More and more, they operate like old-fashioned general stores, offering all kinds of additional products and services: passport photos, tax filing, lottery tickets, bill payment, UPS drop-off, vision testing for driver’s licenses.
At Esco Pharmacy in Hell’s Kitchen, in operation since 1940, owner Danny Dang is opening a cafe in the front of the shop to sell juices. His pharmacy is also one of only a handful in Manhattan that sells pepper spray, which requires special verification.
Why Pharmacy Workers at CVS and Walgreens Are Protesting
https://www.nytimes.com/2023/11/01/business/cvs-walgreens-pharmacy-workers-protest.html
Mr. Jerominski said that workers had organized on Facebook and Reddit, rallying around demands for more staffing as well as better pay and guaranteed hours for pharmacy technicians.
Many were inspired, he said, by about two dozen CVS pharmacists who walked off the job in the Kansas City, Mo., area in September.
The American Pharmacists Association said in a statement supporting the walkouts that pharmacists had contended for years with “workplace issues, leading to frustrations and burnout, affecting your mental health and well-being.”
The association blamed, among other factors, quotas on the number of prescriptions filled per hour and vaccines administered per day.
Grocery store pharmacies. Tops adding specialty pharmacy functions.
https://progressivegrocer.com/tops-markets-rolls-out-new-specialty-pharmacy-program
1/26/2024
Grocery store pharmacies. Tops adding specialty pharmacy functions.
https://progressivegrocer.com/tops-markets-rolls-out-new-specialty-pharmacy-program
1/26/2024
Independent pharmacies fight for survival as chain stores close
https://www.inquirer.com/jobs/labor/independent-pharmacies-insurance-costs-staffing-20240204.html
“My prescription numbers aren’t growing as much as I’d like them to” for several reasons, he said.
In some instances, Czerw has to turn away a patient because it costs more to get the medication than he’ll get back from the patient’s insurer. He doesn’t like doing that, he said, but he is restricted from changing the price to cover the difference. Sometimes, an insurer will prohibit a patient from patronizing an independent pharmacy such as Parkway, or their co-pay will be lower at a chain.
“Every prescription that comes in the door you have to evaluate for profitability,” Czerw explained. “Too many of the wrong ones can drive you out of business.”
... Czerw’s pharmacy is located inside a condominium building, and many of his clientele are senior citizens, he said. He tries to make it “as easy and convenient as possible” for his customers to get their medications so they stick with him. He’s currently working on a project that would allow them to sync up prescriptions so they can make one regular trip to the pharmacy for multiple medications.
He’s also training Parkway staff to suggest additional products and services. He shares the store’s profits with his staff to incentivize those patient interactions.
“I can’t have every conversation myself,” he said. “Where we can really stand out [from competitors] is with education and experience.”
Hussar said many independent pharmacies have turned to alternative revenue streams for survival, such as medical equipment or high-end merchandise. He recalled one alumnus whose store became well known for its gift shop. Hussar invited him to speak to his class one day, and the pharmacist brought a scented candle for each student.
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What happens after a Philly neighborhood’s last chain pharmacy shuts its doors
https://www.inquirer.com/business/rite-aid-bankruptcy-south-philadelphia-20240204.htmlAs for their actual pharmacy, Ronald Doughty, 64, used to walk around the corner to Rite Aid a couple times a week to pick up their medications. Then this fall, a pharmacist there told him news that he said felt like “a knife in the heart.”
The 30th and Reed Streets store is among dozens of locations that the Philadelphia-based chain has closed in recent months as Rite Aid filed for Chapter 11 bankruptcy. Nationwide, pharmacies have struggled with decreased reimbursements, staffing shortages, and other issues. CVS recently announced it would close dozens of its pharmacies inside Targets early this year.
In Grays Ferry, a historically working-class neighborhood where about half of residents are Black and many households make less than $44,000 a year, their Rite Aid’s closure has caused logistical struggles and stirred up what some residents describe as feelings of being abandoned and forgotten. Their stories represent a snapshot of the reverberations that are occurring across the region and the country as more pharmacies close.
... Dima Qato, an associate professor at the University of Southern California’s Mann School of Pharmacy and a national expert on pharmacy access, said her research has shown that less access leads to lower adherence to medications, greater likelihood that residents stop taking their medications entirely, and lower vaccination rates. Communities of color and areas that are more reliant on public transportation are disproportionately impacted, she added.
But the pharmacies themselves can only do so much, she said, meaning larger policy solutions are the greatest hope for mitigating some of these issues.
“This is kind of the crux of the problem: Pharmacies have no moral obligation to anyone really,” Qato said. “At the end of the day, they’re businesses, and they’re businesses that stay open if they perform well.”
Still, for customers in communities that are already underserved, a pharmacy’s closure can feel personal.
https://www.beckershospitalreview.com/pharmacy/1-in-3-independent-pharmacies-to-close-this-year-survey.html
1 in 3 independent pharmacies to close this year: Survey
2/29/24
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