WEATHERING THE STORM & PREPARING FOR THE FUTURE OF COMMUNITY PHARMACY PRACTICE

BY AUSTIN P. BROWN, Pharm.D., MBA; TONINO MICHIENZI, BS, RPh; MIKE NABOLSI, Pharm.D.; and BRITTANY STEWART, RD, Pharm.D.

Community pharmacy practitioners are no strangers to the increasing challenges facing the profession in 2025. Since 2010, one-third of America’s pharmacies have closed their doors.1 Most of us would agree – the community practice model needs a significant overhaul if pharmacists want to keep them open.

However, that’s the exciting part. This is our renaissance. Community pharmacists are commonly entrepreneurs who are very innovative – not afraid of trying new things and willing to push back against the norms, because that’s how practice models move forward. We will detail a high-level overview of the challenges facing community pharmacy and what practitioners need to be doing to prepare their practices for the future.

Understand the Challenges

The PBM Fiasco

Over the past decade, pharmacy benefit managers (PBMs) have been primarily responsible for the significant challenges facing the operations and profitability of community pharmacies.

Declining reimbursement rates — Poor contract offerings have made being reimbursed below acquisition cost (especially with expensive brand name products) a common occurrence. This happens even more so at independent pharmacies, where average reimbursements from third-party payers can be 90% lower than a chain.2

Increased audit rates and direct and indirect remuneration (DIR) fees – These PBM practices have hindered pharmacies’ ability to cover daily operations and drive the attention of the pharmacy team away from patient care responsibilities. DIR fees increased by 91,500% between 2010 and 2019.3

Vertical integration within the marketplace – Patient steering (pushing a patient toward using a preferred PBM pharmacy rather than choosing their own), mail order mandates, price inflation and exclusive contracts have caused a lot of discussion about fair and appropriate drug product reimbursement. With three PBMs controlling 80% of all prescriptions filled in the United States, it is no wonder the Federal Trade Commission has started to take notice.4

Increased Operational Costs

The cost of doing business continues to rise. When combined with the challenges brought on by PBMs, pharmacies are finding it difficult to remain profitable.

Labor – The cost of hiring and retaining licensed pharmacists and technicians has increased. Many pharmacies are also losing their ability to offer employees health benefits and retirement plans.

Inventory – Inventory expenses account for at least 20-30% of a pharmacy’s operating budget.5 Having a sound inventory management strategy is crucial for success in today’s market.

Third party fees – Contract enrollments, claims processing, phone systems and pharmacy management systems have all become a large line item in the pharmacy’s operational spend.

Pharmacy Closures & Effect on Patient Access

More than 45 million Americans live in a pharmacy desert, defined as being more than 15 minutes away from the nearest pharmacy. Rural areas in the United States have been impacted by this the most, as many independent chain pharmacies have closed. Pharmacists are now working towards solutions to bridge the gap in these underserved populations.

Preparing for the Future

Communicate the Vision for Your Pharmacy

Whether you practice in an independent pharmacy or a chain, as a pharmacist it is important to know how you want your pharmacy to run. Take time to prioritize goals for your teams that are actionable and measurable. Spend time with your teams discussing the metrics, what they mean and why they are important. It is important that all members of the team can communicate what your pharmacy offers to patients when they walk in the door.

Invest in Your Teams

People are the most important asset in pharmacy. Community practices are often busy work environments and take a lot of effort and focus to run effectively. We all know good pharmacy clerks and technicians are worth their weight in gold and play a large role in this process. Check in with your teams, make sure they feel both professionally and emotionally supported. Ask for their feedback on projects and give them real buy-in on the decision-making processes. When everyone feels like they are invested in the goals, the chances of success are much higher. Teams that demonstrate effective collaboration reduce turnover, provide better decisionmaking and can increase profitability by over 20%.6

Emphasize Operational Efficiency

To weather the reimbursement storm, community pharmacies in 2025 need to be incredibly lean. It is important to take a deep dive into your financials, identify your primary cost centers, and then develop a strategy to ensure they run as effectively as possible. Maximizing use of pharmacy claims data is also becoming increasingly important. Understand what your numbers mean in your pharmacy and how you can effectively act on them.

Control Inventory & Cost of Goods

The pharmacy inventory is a primary cost center and must be managed effectively to maintain profitability. Look for any opportunity to increase your inventory turn number. As an example, if your pharmacy’s annual cost of goods sold is $3.6 million and your average inventory value is $300,000, dividing these two numbers gives 12 inventory turns per year. The national average inventory turn rate for a community pharmacy is 11 turns a year.7 Monitor ordering habits and limit the quantity of high-cost medications. Regularly check your reorder points. Leverage technologies to automate your dispensing process and reduce errors. Together, these habits will help create a healthy cash flow and limit money tied up in your drugs.

Pharmacies are also becoming increasingly involved with group-purchasing organizations to help further negotiate the cost of drug products. Many of them also offer discounted rates on other vendor products and offer expertise on current best practice models. It is important to research these distinct groups to find which one best fits your business.

Leverage Your Technicians

Allowing pharmacy technicians to practice at the top of their license will ensure that your pharmacy is prepared for the next level of service. Offer them training in advanced skills like immunizations, point-of-care testing and medication reconciliation. Utilizing the entire pharmacy team in these practices is the foundation of creating appointmentbased models within your practice, thereby maximizing the pharmacist’s time for other clinical interventions and billable services.

Medication Synchronization & Appointment Based Models

Establishing a med sync program is crucial to maximizing revenues and optimizing the pharmacy’s dispensing workflows. When done optimally, med sync programs improve patient adherence and outcomes and increased prescription volumes.8 It is the lynchpin to turning your pharmacy operating model from reactive to proactive and creates the capacity for your teams to implement other patient care initiatives. This also prepares a patient to have the mindset of a “pharmacy appointment” when they walk through the door. As the pharmacist, if you know when to expect a patient interaction, you can better prepare for it and compound other sales and services into the interaction.

Diversify Revenue Streams

Clinical Services – Community practitioners have been successful in finding niche markets and promoting their services beyond the drug product. Immunization programs, diabetes self-management education accreditation, medication therapy management and point-of-care testing are some popular choices. Medication adherence packaging and prescription delivery services also give pharmacies an opportunity to make interventions and build clinical programs in their community. Recently, pharmacists have begun identifying regular patients who qualify for long-term care at home programs within certain payer groups, which qualify for different reimbursements compared to a retail pharmacy designation.

Specialty Products and Services – Stocking higher-margin front end items like high grade supplements and home health care products can give pharmacies an edge. Pharmacy teams must also be aware of opportunities to bundle the sale of these products with prescription fills. For example, nutrient depletion programs can help patients supplement any vitamins or minerals that may be lowered from chronic use of prescription drugs medications (vitamin B12 and metformin) and generate additional over-thecounter sales.9 Additionally, these types of personalized services build patient loyalty and increase repeat business in the pharmacy.

Direct Pricing Models – Although more than 90% of prescriptions are still filled through insurance, this business model is becoming more popular with increasing reimbursement challenges.10 Cash-only pharmacies can offer a transparent pricing model that allows patients to shop for cheaper generic drugs while bypassing the entire insurance process more easily. Operational costs can also be lowered by eliminating third-party contract obligations. This model can also be applied to pharmacists charging cash for clinical services such as point of care testing, hormone replacement therapy consultations and travel immunization services.

Advocate, Market and Collaborate

To best maximize your efforts, it is important to understand what your community needs. Are there certain care disparities the pharmacy can help with? Which providers send you a lot of prescriptions? Have you spoken to them recently? What do they struggle with? All providers are looking for ways to maximize their time, be more efficient and take care of more people. If you can help someone do that, there is a good chance they will listen.

It is also important to not waste a lot of time for no reason when starting a new clinical service or project. There are many resources available from groups like the National Community Pharmacists Association, CPESN and the National Association of Chain Drug Stores. Get involved with an organization that aligns with your pharmacy’s goals and can help you be successful. You do not have to do it alone!

Be mindful of the legislative initiatives happening at a state and federal level and get involved when you can. Now more than ever, people in multiple layers of government are paying attention to the business of pharmacy. There has never been a better time to continue highlighting the value that community practitioners bring to the healthcare team. Despite the numerous challenges faced by community pharmacies, there are many promising opportunities on the horizon. By embracing innovative strategies, diversifying revenue streams, enhancing operational efficiency and building strong collaborations, community pharmacies can not only survive but thrive in this evolving landscape.

The resilience and adaptability of community pharmacies are their greatest strengths. By focusing on personalized care, leveraging technology and engaging in advocacy efforts, these pharmacies can continue to play a vital role in their communities. The future holds exciting possibilities for those willing to innovate and adapt, ensuring that community pharmacies remain a cornerstone of accessible and quality health care.

This is the time for community practitioners to redefine their role and create a sustainable, profitable future. With determination and a commitment to excellence, they can overcome challenges and seize the opportunities that lie ahead, making a lasting impact on the health and well-being of their communities.

REFERENCE:

1. UPI. One third of America’s pharmacies have closed their doors. Published December 4, 2024. Accessed March 9, 2025. https://www.upi.com/ Health_News/2024/12/04/one-third-us-pharmaciesclosed-2010/1661733331728/

2. MedBen. PBM independent pharmacies. Accessed March 9, 2025. https://www.medben.com/pbmindependent-pharmacies/

3. National Community Pharmacists Association. It’s not a typo: 91,500% increase in fees heaped on pharmacies. Published June 3, 2021. Accessed March 9, 2025. https://ncpa.org/newsroom/newsreleases/2021/06/03/its-not-typo-91500-increasefees-heaped-pharmacies

4. Federal Trade Commission. FTC sues prescription drug middlemen for artificially inflating insulin drug prices. Published September 2024. Accessed March 9, 2025. https://www.ftc.gov/news-events/news/ press-releases/2024/09/ftc-sues-prescription-drugmiddlemen-artificially-inflating-insulin-drug-prices

5. Business Plan Templates. Running costs of a pharmacy. Accessed March 9, 2025. https:// businessplan-templates.com/blogs/running-costs/ pharmacy

6. Gallup. Employee engagement reverts back to pre-COVID levels. Published October 13, 2020. Accessed March 9, 2025. https://www.gallup.com/ workplace/321965/employee-engagement-revertsback-pre-covid-levels.aspx

7. PBA Health. Measuring pharmacy inventory. Accessed March 8, 2025. https://www.pbahealth.com/elements/ measuring-pharmacy-inventory/

8. EnlivenHealth. Med sync for outpatient pharmacies. Accessed March 9, 2025. https://enlivenhealth.co/ blog/med-sync-for-outpatient-pharmacies/

9. Cheng YJ, Chien HC, Lin CH. Metformin and vitamin B12 deficiency: A systematic review and meta-analysis. J Clin Med. 2018;7(8):207. https://pmc.ncbi.nlm.nih.gov/ articles/PMC6054240/

10. Advisory Board. Cash-only pharmacies. Published August 24, 2022. Accessed March 9, 2025. https:// www.advisory.com/daily-briefing/2022/08/24/cashpharmacies