Study: Competitive bidding hurts independent Rx

Diabetes has always been a core competency for independent pharmacy operators. To that end, the National Community Pharmacists Association in October released results from a survey of more than 800 independent community pharmacists about the negative consequences for their patients and their businesses if diabetes testing supplies under Medicare Part B are subjected to competitive bidding prices.

“The message from our survey is clear: Applying competitive bidding prices for diabetes testing supplies to independent community pharmacies is financially unsustainable for these pharmacies,” stated NCPA EVP and CEO Douglas Hoey.

“Community pharmacists are indispensable to helping combat diabetes, whether it is the counseling they offer, the medications they dispense, the lifestyle modification classes they provide or the testing supplies they carry,” Hoey added. “But that dynamic will be harmed if these small-business pharmacies are forced to walk away from a pricing structure that only a large warehouse can make work. Such a mass exodus of community pharmacies from Medicare Part B would diminish seniors’ access, and the health complications that could ensue will only increase overall health costs.”

Diabetes is typically the first disease state addressed by wholesalers looking to expand the patient services offerings of their member independents. For example, Cardinal Health last year introduced its Specialized Care Centers concept with diabetes as the focus. “Every wholesaler has a diabetes ‘something,’” said Steve Lawrence, SVP retail independent sales for Cardinal. “Ours focuses on training the pharmacist [on] how to teach people to live with diabetes itself, knowing that the patients will then buy the products. But instead of focusing on products, it’s more about becoming a healthcare adviser for them on their diabetes, and what we’re seeing is pharmacists actually charging for that and gaining extra revenue while [at the same time] gaining new patients and picking up new product sales.”

McKesson’s Health Mart pharmacy franchise group earlier this month debuted a new Health Mart-branded private-label line with diabetes products to coincide with American Diabetes Month.

Other results from the NCPA survey included:

  • 81% of independents reported that their average Medicare diabetes patient visits his or her independent community pharmacy two or more times per month for counseling and/or diabetes testing supplies;

  • 84% of community pharmacists surveyed said they would likely drop out of the program if forced to take reduced payments or competitively bid;

  • If their patients were forced to obtain diabetes supplies by other means, 84% of pharmacists said their patients would suffer a significant impact; and

  • The majority (81%) of independent community pharmacies regularly deliver diabetes testing supplies to patients — often free of charge — with 28% making 30 or more deliveries per month. Without that home delivery and counseling from a community pharmacist, 65% of pharmacists predicted a significant impact on these patients, many of whom are unable to leave their homes.

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