Envisioning an ideal model for retail pharmacy
Retail pharmacies have been expanding the role they play in the healthcare ecosystem, offering screenings, immunizations, chronic disease management and more. But while this pathway toward a more ideal operating model is filled with opportunities, it is also rife with regulatory and operational hurdles.
Even before the COVID-19 pandemic shone a spotlight on the value that drug stores can provide, pharmacy retailers and the industry groups that represent them had begun considering a future in which they were more seamlessly integrated with the greater healthcare infrastructure and rewarded for an expanded scope of responsibility.
“We were already beginning to say, what’s next for the industry and what would the future look like?” said Steve Anderson, president and CEO, the National Association of Chain Drug Stores.
That future involves not only pharmacists operating at the top of their licensure, but it also includes a focus on the total store’s overall contribution to health and wellness, as exemplified by efforts such as NACDS’ support for “food is medicine” initiatives.
“I think what we’re focusing on is really creating the ideal one-stop-shop for all Americans in terms of their health,” said Anderson.
Key to the success of any retail pharmacy operating model that emerges will be a payment framework that supports it, he said, which is why NACDS continues to push for reforms in the way pharmacies are reimbursed for their services and in the way pharmacy benefit management companies operate. “If we don’t get PBM reform and pharmacies continue to close, we can’t provide those services,” said Anderson.
Likewise, the National Community Pharmacists Association also has been “laser-focused” on changing the pharmacy payment model and increasing pharmacy reimbursements for Medicare- and Medicaid-covered prescriptions, said Ronna Hauser, senior VP, policy and pharmacy affairs, NCPA. These two programs combine to account for about half of a typical pharmacy’s business, she said. “It’s very important to get the best reforms in place to allow our members to continue to care for these patients, and allow our members to remain viable in their communities.”
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Among the reforms NCPA is seeking are a reimbursement floor in Medicaid-managed care and a reform in Medicare part D pharmacy payments, both of which are currently included in legislation that is currently active in Congress. “Those are our top two payment reforms that we’re trying to get passed by Congress and signed by the President,” said Hauser.
The result of such legislation would be more stable and predictable payment for the prescriptions that pharmacies dispense, Hauser explained, which would assist retailers in their business planning and management. Anderson noted that there has been considerable, bipartisan momentum behind the legislative efforts for pharmacy reimbursement and PBM reform, both at the federal and state levels. NACDS has helped push through dozens of favorable reforms around pharmacy payments at the state level, he noted.
Beyond Vaccines and Testing
In an ideal world, retail pharmacies would have Medicare provider status granted at the federal level, which would allow pharmacies to be compensated for more services—a key element of expanding pharmacists’ scope of practice. The “test-and-treat” legislation introduced last year in the form of the Equitable Community Access to Pharmacist Services Act would expand Medicare coverage to include some services and supplies provided by a pharmacist related to testing, vaccines and treatment for COVID-19, influenza and certain other illnesses. This expanded scope would include the ability for pharmacists to prescribe treatments for specific illnesses.
Related to this are efforts to extend the Public Readiness and Emergency Preparedness Act, which has allowed pharmacists to test and vaccinate for COVID-19 for the past three years but is scheduled to expire in April 2024.
NACDS and NCPA are working at both the federal and state levels to ensure that retail pharmacies can continue to perform these additional services, and, more importantly, can be compensated for them. “It is basically building on some of the work that was done during the pandemic and making sure that pharmacists are still able to be access points for services,” said Hauser. “It’s ensuring that pharmacists can be paid appropriately through the medical benefits for the care they’re providing in addition to the prescriptions they dispense.”
Rick Gates, senior VP and chief pharmacy officer at Walgreens, said retail pharmacists are ideally positioned to assume a more active role in the treatment of patients, given the fact that they are already highly trained and trusted healthcare professionals.
New Pharmacy Operating Models
The store-level operating model will need to be tailored to suit the evolving scope of retail pharmacy, said Kate Maheu, associate partner, healthcare and life sciences practice, Kearney. A model that offers acute care solutions, for example, might require extended operating hours and multiple types of clinical rooms and waiting areas. It would also likely have some connectivity with medical providers in the community to ensure that more specialized or emergency on-call services are available.
She cited the challenges that adding services such as vaccines and testing during the pandemic posed for retailers, which are lingering today in the form of overwhelmed pharmacy departments. “I think a lot of retail pharmacies squeezed vaccinations into their operational capacity in a time of need,” Maheu said. “In order to make that sustainable, I think they would need to ensure that the experience was as convenient for customers as possible.”
The ubiquitous presence of retail pharmacies in communities across the United States indicates that these stores will always be inclined to merchandise a broad assortment of convenience items and products related to their health and personal care needs, said Maheu. “The value proposition will continue to include more than just pharmacy or pills in a bottle,” she said.
As pharmacy retailers add more services, their product assortments might also evolve to complement those changes, and the complexity of their operations could also evolve to accommodate connections with other healthcare providers in the community.
“That might require changes in skills and capabilities,” said Maheu. “You can envision that the role of a retail store manager might shift as you think about the mix of services, products and prescriptions across the location.” Rick Gates, senior VP and chief pharmacy officer, Walgreens, said the evolution of the retail pharmacy operating model is empowering pharmacists to redefine their roles and improve patient outcomes.
“Incorporating technological advancements like telepharmacy, micro-fulfillment and mobile scheduling tools enables pharmacists to extend their expertise beyond medication dispensing,” he said. “This shift allows them to focus on building connections through patient counseling, analyzing comprehensive health profi les and collaborating with other healthcare professionals. This evolution in the operating model creates an environment where pharmacists receive the support and flexibility needed to provide essential services to patients. The result is heightened job satisfaction as pharmacists find renewed motivation and fulfillment in their careers.”
“When deeply embedded within local communities, they possess a wealth of expertise that can be strategically used to enhance patient care,” he said. “By granting pharmacists the authority to prescribe for low-acuity health issues such as respiratory illnesses, we can better leverage their expertise to deliver essential healthcare services quickly.”
This would not only make healthcare more accessible, particularly in underserved communities, but would also align with the broader goal of improving patient outcomes and reducing healthcare costs, Gates said. Retail pharmacies, Gates continued, can also deliver care quickly, another advantage they have compared to traditional models in which patients rely on their primary care providers (PCPs) and emergency-room visits for diagnosing and treating routine conditions, for example. “Empowering pharmacists with enhanced prescription capabilities would serve as a crucial bridge in addressing this challenge,” he said.
Allowing pharmacists to operate at the full scope of their licenses and take a more proactive role in overseeing minor conditions creates a dynamic support system for both healthcare providers and patients, he said.
“This approach not only promotes greater medication adherence but also identifies potential barriers to effective care management before patients see a PCP or in between appointments,” said Gates. In its recent Rx Report, CVS also highlighted the potential for retail pharmacies to add value in the total healthcare landscape.
“Community pharmacists are increasingly seen as true partners in patient care, helping to ll gaps between regular provider visits, addressing health inequities and offering trustworthy, accessible and affordable services when patients need them most,” the report concluded.
Expansion of Services at Walgreens
Gates said Walgreens is working to broaden the scope of its platform in each of the communities in which it operates, using a fee-for-service approach. This is a payment structure in which healthcare providers are compensated for each service performed. “The COVID-19 pandemic highlighted pharmacists as crucial healthcare access points and cemented pharmacies as the front door to healthcare in America,” he said. Walgreens remains “open and fully prepared” to evolve to alternative reimbursement models that fairly reimburse pharmacies for the value they provide, said Gates. That includes taking on risk-sharing arrangements, he said.
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“Looking ahead, we believe the future of pharmacy is grounded in a value-based, patient-centered approach that prioritizes the quality of care rather than the traditional fee for service,” said Gates. “This aligns with industry trends that prioritize holistic health services. Pharmacy services can be folded into a value-based care model, leveraging existing
infrastructure for diagnostic testing and data exchange, and allowing seamless integration.”
He also noted that pharmacies have been long recognized for their role in preventive care but are increasingly “transcending their traditional functions,” and becoming “holistic healthcare hubs.” Pharmacies are now offering a broad array of services, including vaccine administration and immunizations, health screenings, chronic disease management and lifestyle counseling– areas in which Walgreens is actively expanding its offerings, he said.
Community-based care models
Kate Maheu, associate partner in the healthcare and life sciences practice of consulting firm Kearney, said an “ideal” retail pharmacy model would offer a roster of services based on the specific needs of the communities it serves.
For some locations, this could include more acute care, such as providing walk-in clinical services, such as diagnosing illnesses and prescribing medications to treat them. For others, a community-based model might focus on what she described as a more “longitudinal” care that focuses on the treatment of chronic conditions over time.
“Those could all have different levels of impact depending on what’s most needed in different communities,” said Maheu. “What does that care model look like for each community that they are a part of? There are a lot of different variations and different value drivers depending on where you’re located.”
Increasingly, technology will help retailers customize their offerings for each location, she said. “I think we need to be pushing the boundaries and thinking through what kinds of offerings are best positioned for a high-touch, high-trust retail environment and, importantly, the impact that creates across the broader healthcare ecosystem,” said Maheu.
One of the ways the industry is seeking to move in that direction is through the support of nutritional services provided in connection with the pharmacy, said Anderson. NACDS last year launched a campaign called Nourish My Health in partnership with other health associations, focusing on the protective health benefits of a nutritious diet.
NACDS is also currently partnering with the Milken Institute, a healthcare think tank, on additional initiatives, including an effort to expand the abilities of retail pharmacies to provide “food prescriptions” for patients.
Technology Creates Diverse Opportunities
In its recent Rx Report, CVS cited the increasingly important role that technology will play in retail pharmacies going forward, both behind the counter to ease labor pressures and in digital connectivity with customers.
“While most Americans want enhanced technology and expanded digital services, they still want to engage with their pharmacist in multiple ways, including both in-person and by phone,” the report concluded. “The future of pharmacy integrates a digital-first, but not digital-only, approach to improving the overall patient and pharmacist experience.” NACDS, meanwhile, has co-founded a group called the AI Council that is focusing on the impact artificial intelligence could have on the industry. “Every company will take a different path on this, but we’re providing the platform and the environment to have these discussions moving forward,” said Anderson.
AI could play an important role in the discovery of new treatments, and in medication therapy, for example. “It dovetails with pharmacogenomics and we don’t know what else yet, but we’re having those discussions,” said Anderson. “We’ll have a seat at the table as these issues develop, both in terms of what our members are doing, and how government responds to them as well. It’s an exciting, exciting time for retail health.”
