McKesson : Top 5 Independent Pharmacy Trends for 2019

There's a big reason that your independent pharmacy should be optimistic about 2019: it's the growing recognition that pharmacies just like yours are in a solid position to provide better care to more patients. But it will take creative thinking and forward-looking management on your part to deliver on that promise.

That sentiment connects the top five trends we think will have the biggest impact on how you run your pharmacy this year. In addition to revealing the top independent pharmacy trends for 2019, let me explain why they're important and how you can respond to each one to produce the best outcomes for you and your patients.

1. Independent pharmacies will continue to experience downward reimbursement pressure

In 2019, your pharmacy will feel even more downward pressure on your reimbursement rates. Some of the additional pressure will come from pharmacy benefit managers (PBMs) that continue to form narrow networks to compete and lower costs for payers. And to be part of those narrow networks, your pharmacy will have to accept lower reimbursement rates and try to make up that money on volume and differentiating services to those patients. In addition, PBM contracts are adding complexity with the growing impact of direct and indirect remuneration (DIR)
fees and introducing more effective rate contracts.

If you're not part of these narrow networks, you won't have access to any of those networks' patients-so it stands to reason that you do want to be included. It is then up to you to optimize each patient visit to your store. That could mean anything from providing reimbursable clinical services to making more front-end sales.

2. PBMs will be under pressure to make their business practices more transparent

PBMs will be under pressure in 2019 as the industry seeks to increase price transparency and lower patient costs. In the past, PBMs' operations have been opaque to the industry. However, as concerns over cost and other operational issues continue to grow, other stakeholders are scrutinizing how PBMs operate. They want to know how payers are paying PBMs, and they want to know how PBMs are paying everyone else.

In response, you should expect to see an increase in transparent PBM models, which will ultimately lower drug costs for patients. That's also a good thing for your pharmacy because now you can begin to follow the money and start to see how much is going to your pharmacy. As it becomes clear how little is actually going to independent pharmacies that care for patients, that can drive a different conversation with regulators. Those conversations can lead to laws that level the playing field (e.g. bar gag clauses, make DIR fees transparent or require disclosure of gross-to-net rebates). It also can help with the decision around which PBM networks to join. Long term, it means you should get more involved with your state and national pharmacy associations to seek relief from some of these PBM practices.

3. Value-based care will create more opportunities for independent pharmacies

Your business has traditionally been fee-for-product, but the downward pressure on reimbursement rates is making that model less sustainable. In the last several years, payment models have been evolving and will create new revenue opportunities in 2019.

The first step in that evolution is the increasing number of contracts and claims tied to performance metrics. The evolution began in the Medicare Part D space and has spread to large national commercial health plans. Health plans adjust your payment rates based on how well you meet performance measures. Now we're starting to see a shift to outcome-based reimbursement models. It's not just that you filled a prescription. It's not just that you filled a prescription and your patient is adherent to their drug. It's that you filled a prescription, the patient is taking the drug and the drug improved their health. This is a great opportunity for you to launch new clinical programs that let your pharmacists practice at the top of their licenses and transition from pharmacists to providers.

4. Engaging patients through technology will be critical for independent pharmacies

Disruptive innovation is happening all around your pharmacy, and we believe it will continue to challenge traditional business models in 2019. New and old competitors are finding new ways to engage with their patients. And they're finding new ways to make pharmacy services more convenient, especially when it comes to filling prescriptions. You'll need to look to technology to accomplish this.

Think about mobile apps that let patients fill their prescriptions or remind them to take their drugs. Consider ways to make same- or next-day home delivery a possibility. I don't think brick-and-mortar pharmacies are ever going away. But your pharmacy needs to keep pace with your patients' expectations of engagement and convenience. That will mean investing in technologies and services to meet and exceed those expectations outside of your four walls.

5. The number of partnerships across the pharmaceutical supply chain will grow

Last year, CVS announced its intention to acquire Aetna and Cigna agreed to buy Express Scripts. I think we're going to continue to see mega deals that result in vertical integration, strategic alliances and partnerships across the pharmaceutical supply chain that create new ways of delivering and paying for care. It's all about accessing new patients and getting them to use your services.

As these partnerships and alliances scale, they could increase the competition and drive down payment rates even more for your pharmacy. But on the other hand, as these national healthcare entities get bigger and want to extend their reach even further, they may need your pharmacy in their network. They may need your pharmacy to guarantee access to pharmacy services for their enrollees. This is when you need the right pharmacy services administration organization (PSAO) to help you decide which networks are right for you.

Each of the five trends I discussed above represents a significant change in the business of pharmacy across the U.S. For your independent pharmacy, each change is an opportunity to build upon and use your well-established patient relationship skills to reinvent your business model, better serve your patients and achieve financial success.

Related: Learn more about McKesson's managed care contracting services for independent pharmacies