Independents weathering tough economy, NCPA reports, with new revenue streams
PHILADELPHIA Independent pharmacies in 2009 generally were able to withstand the pummeling of a major recession, the growing influence of government healthcare programs, declining prescription drug reimbursements and an ongoing battle with pharmacy benefit managers, the National Community Pharmacists Association reported Monday.
The NCPA unveiled its 2010 NCPA Digest, sponsored by Cardinal Health, during its 112th Annual Convention and Trade Exposition here. The annual report on the owner-operated pharmacy industry found independent operators were “able to generally stabilize their business,” despite a daunting slew of challenges.
“The NCPA Digest findings demonstrate that an independent community pharmacy business model that is adaptable, yet rooted in sterling customer service and competitive pricing, has a viable place in today’s marketplace,” said Doug Hoey, NCPA acting EVP and CEO. Pharmacy owners, he added, succeeded last year “by diversifying their revenue streams through providing convenient patient services, such as immunizations, and helping patients manage their prescription costs and medication regimen in a down economy. As a result, after a sharp drop in the number of pharmacies in 2006, when Medicare Part D went into effect, the number of independents has generally stabilized and grew modestly.”
Among the significant findings produced by the annual survey, now in its 78th year:
- The number of total independent community pharmacies rose from 22,728 in the previous year to 23,117;
- Independents remain the bedrock of smaller-town America: 51% of them operate in areas of 20,000 people or less, according to the Digest, with another 21% found in areas with 20,000 to 50,000 people, and 28% in areas greater than 50,000 people;
- Owner-operated pharmacies dispensed 4% more prescription drugs in 2009 than they did the previous year;
- Generic drugs accounted for 69% of all prescriptions dispensed by independents, marking a 4% increase over the previous year and exceeding the average generic dispensing rate of the largest, PBM-owned mail-order pharmacies, according to NCPA;
- 30% of dispensed prescriptions were from the Medicare Part D program and 14% were from Medicaid;
- 76% of independent pharmacies offer immunizations –– up from 46% the previous year –– and 76% offer personalized home delivery, often at no cost. Medication therapy management in some form is now offered by 68% of independents;
- Immunizations are able to generate an average of $10,000 in additional revenue; and
- Increasingly, independent operators are utilizing technology to make their staff more productive, with 43% using at least one kind of an automated dispensing technology.
Despite those promising developments, independent drug store operators still grapple with anemic profit margins. “The average independent community pharmacy’s pretax profit margin remains at 3.2% for the second year in a row,” NCPA noted. “That, combined with a dependence on prescription drug reimbursements for more than 90% of revenue, leaves independents vulnerable to any changing dynamic in the marketplace and limits business expansion opportunities. By contrast, publicly traded chain pharmacies sell much more front-end merchandise that often yields higher profit margins, while major PBMs saw their profits increase five-fold during this decade,” the group asserted.
In a press conference Monday, NCPA’s top leaders laid out the challenges and opportunities faced by independents as healthcare reform begins to take shape, congressional elections loom and the nation continues to struggle with a halting, weak economic recovery. Among those who met with the press: newly named EVP and CEO Kathleen Jaeger; Hoey, who will return to his previous position as NCPA SVP and COO; Bob Greenwood, NCPA president-elect and pharmacy owner in Waterloo, Iowa; John Coster, SVP government affairs; and Stuart Soberman, SVP and chief legal officer.
Jaeger, who assumes her post as the group’s top executive on Nov. 1, briefly laid out her vision for the NCPA. “Our first and foremost objective must be to ensure that our patients have excellent access to quality care and pharmacy services in their community,” Jaeger said. “Second, we must continue to demonstrate the tremendous value independent pharmacists deliver to patients and the overall healthcare system. Third, we must drive economic growth at independent pharmacies. And lastly, [independent pharmacies] must be viewed as part of the reform solution.”
“My vision is quite simple: To build upon the true strengths of our industry, and not be shy about letting the world know of our true value to patients and the communities we serve,” Jaeger concluded.
Greenwood, NCPA’s newly named president, said he will focus first on being “a liaison and an advocate for our members. I’m going to help the NCPA staff bring their message to Main Street about the great work they do in Washington, and spread that message to the stakeholders, state associations, buying groups and schools of pharmacy,” he told reporters. Another goal, Greenwood added, is to “elevate the understanding, utilization and practice of medication therapy management. MTM should be a core competency of pharmacy practice,” he asserted.
The NCPA, Hoey added, will support efforts to make all independent pharmacists experts in both MTM and patient adherence by 2015.
Diabetes prevalence among Americans may increase to 33%, CDC study finds
ATLANTA The rate of diabetes among Americans is on an upswing and likely will reach epic proportions by 2050, costing the government millions.
Anew study by the Centers for Disease Control and Prevention and published in Population Health Metrics found that annual diagnosed diabetes incidence (new cases) will increase from about eight cases per 1,000 people in 2008 to about 15 in 2050. The authors also projected that — assuming low incidence and relatively high diabetes mortality — total diabetes prevalence (diagnosed and undiagnosed cases) is projected to increase from 14% in 2010 to 21% of the U.S. adult population by 2050, but noted that if recent increases in diabetes incidence continue and diabetes mortality is relatively low, prevalence will increase to 33% by 2050.
In 2007, diabetes cost the United States in excess of $174 billion. With the increased prevalence of diabetes in the country, the CDC suggested that the projected loss in quality of life and the projected costs of providing health care could be significant, as the healthcare costs of a person with diagnosed diabetes are approximately 2.3 times higher than nondiabetics, the authors noted.
"These are alarming numbers that show how critical it is to change the course of Type 2 diabetes," said Ann Albright, director of CDC’s division of diabetes translation. "Successful programs to improve lifestyle choices on healthy eating and physical activity must be made more widely available, because the stakes are too high and the personal toll too devastating to fail."
The authors also noted that intervention can reduce, but not eliminate, increases in diabetes prevalence.
AP poll finds Americans evenly divided on impact, benefits of health-reform law
WASHINGTON Seven months after President Obama signed the massive health-reform bill into law, Americans remain deeply divided over the controversial overhaul and its potential benefits, a new poll from the Associated Press and the GfK Group revealed.
In a mid-October survey of 1,501 adults, AP-Gfk found the nation evenly split over whether the law should be overturned or made even stronger. But also significant is the fact that only 15% of Americans would leave the health-reform law — thus far the key legislative accomplishment of the Obama administration — as it currently stands.
Among the 846 poll respondents who said they likely would vote in the November congressional elections, 37% said the law should be completely repealed, according to AP. Not surprisingly, opposition among Tea Party supporters was strongest, with more than 70% of respondents who describe themselves as Tea Party enthusiasts saying they would scrap health reform.
Despite the opposition, 36% of those polled had a very different view, telling surveyors “they want to revise the law so it does more to change the healthcare system,” the news service reported Friday. That means “Tea Party enthusiasm for repeal has failed to catch on with other groups,” according to AP, “which may be a problem for Republicans vowing to strike down Obama’s signature accomplishment if they gain control of Congress in the Nov. 2 elections.”
Among the top concerns about the new law expressed by survey respondents: a requirement that most Americans carry some type of public or private health insurance, beginning in 2014. Some told researchers the law does little to address rising health spending.
Older Americans also expressed concern over the plan to help fund the health overhaul in part by cutting spending for Medicare. Some poll respondents also asserted the need for a public-health plan option to compete with private insurers and to help hold down costs, a plan that was eliminated from the original bill before its passage in Congress.
Support for health reform is strongest among women and younger voters, according to AP.