Elements Magazine - Vol.7 Iss.2 June 2018

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ELEMENTS WEIGHING ALL THE OPTIONS This independent pharmacy’s weight loss program adds on profits

BARE SHELVES How understocking products creates a stale and unappealing front end

Essential Credentials How to protect your pharmacy by verifying the credibility of your suppliers and distributors

VOL. 7 ISS. 2 | JUNE 2018 | PBAHEALTH.COM/ELEMENTS

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CONTENTS ON THE COVER

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FEATURE | Essential Credentials Don’t let good deals and flash sales on pharmaceuticals put your independent community pharmacy at risk. Learn how to protect your pharmacy by verifying the credibility of your suppliers and distributors.

DEPARTMENTS

07

NEWS | FDA Goes Mobile Information on every human drug is only a few finger taps away, thanks to a new mobile app from the U.S. Food and Drug Administration (FDA).

08

TRENDS | Scheduling Appointments Pharmacy’s appointment-based model (ABM) is getting an update.

See how adding clinical services to a model that already works can dramatically improve patient care.

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FEATURE | Essential Credentials

RETAIL | Bare Shelves Independent pharmacies commonly fail to stock enough product in their front ends, leaving gaps and bare spaces on the shelves. Discover why this practice can harm sales.

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SOLUTIONS | Hassle-Free Buying A new secondary pharmaceutical ordering service offers quality, convenience, and ease for independent pharmacies.

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SPOTLIGHT | Weighing All the Options Discover how one independent community pharmacist empowers patients—and powers her business—with a unique weight loss program.

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MONEY | Competing for Closings When competitors close, an opportunity opens for your independent pharmacy to get more scripts and new patients.

But be quick. You have a short timeframe to work with.

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OUTLOOK | Dealing With DIR Direct and indirect remuneration (DIR) fees create extra costs for pharmacies, patients, and the healthcare system. See how momentum is building to eliminate them.

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NOTES | Preventing Abuse Learn how independent pharmacies can help their communities and patients through better education about prescription opioids.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2018

MONEY | Hassle-Free Buying

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ELEMENTS

The business magazine for independent pharmacy

ON THE WEB Find more strategies, tips, and expert advice to improve your business at pbahealth.com/elements

VOLUME 7, ISSUE 2 JUNE 2018 PUBLISHER & EDITORIAL DIRECTOR Matthew Shamet EDITOR Kirsten Hudson ART DIRECTOR Lauren Ruiz CONTRIBUTING WRITER Greyson Honaker COPY EDITOR Torrie Wright

Here Are the Pharmacy Inventory Control Methods Every Pharmacy Needs to Know Inventory is your pharmacy’s biggest investment. A healthy business requires minimizing inventory on hand and maximizing inventory turnover. Discover the best pharmacy inventory control methods to make the most of your inventory. Read more at pbahealth.com/pharmacy-inventory-controlmethods.

9 Things Your Independent Pharmacy Website Has to Have Many patients will get their first impression of your business from your website. Is it a good

INTERESTED IN ADVERTISING? elements@pbahealth.com

one? Learn the most essential elements your website needs to make a great impression on patients. Read more at pbahealth.com/ independent-pharmacy-website.

Here’s the Most Important Difference Between Cash and Profit Your Pharmacy Can’t Afford to Miss Every business decision you make affects your cash and profit. But the two aren’t one and the same. Learn how to find the sweet spot where you can maximize profits while maintaining a positive cash flow. Read more at pbahealth. com/difference-between-cash-and-profit.

Follow Elements magazine on Facebook and Twitter for pharmacy business tips and advice, news announcements, industry Elements magazine is published quarterly by PBA Health.

Copyright© 2018 PBA Health. All rights reserved.

Neither this publication nor any part of it may be reproduced without written permission by PBA Health.

information, and exclusive offers.

Introducing

Personalized Coloring BookS! The Wonderf ul World of Animals & A Visit to My Pharmacy These entertaining and educational, 20-page coloring books feature exciting stories, filled with interesting facts and activities about the world around. Learn how the stories unfold in these interactive, beautifully illustrated coloring books.

Personalized coloring books are the perfect add-on to your annual marketing plan—and it’s aimed to inspire creativity in all age groups!

Features: • Story • Maze • Connect the Dots • Word scramble • Original illustrations by Teldon’s own Ljiljana Majkic • And much more...

Size: 8.375” x 10.75” | Imprint: 7” x 2” in black on the cover *Minimum order size is 250 and in increments of 250 thereafter. These products can only be ordered in conjunction with your calendar order and cannot be purchased on its own.

How and When to Use

Coloring Books Parents love it when you engage their kids It warms their hearts and shows you care, while helping you stand out from the competition.

Are you a compounding pharmacy?

Give them out with each purchase of flavored cough syrup or cold medicine.

Halloween/Holidays Hand out a personalized coloring book to the kids in your neighborhood, in addition to candy or gifts.

A Usef ul Tool to Drive Clients or Prospects to Your Online Presence Run a coloring book contest. Parents will have to continually engage you through emailing the finished colored page and then will have to visit your website to see the results. Offer a small prize ($25 gift card to a family restaurant) and see how quickly they engage you throughout the year.

Call to order: 1 . 8 77. 5 4 4 . 45 75

Don’t forget to order your 2019 Wall Calendars!

NEWS

The included drugs go as far back as 1939, but most of the drugs were approved after 1998. Some information, like labeling supplements and approval letters, are only found on the website, not the app.

HOW PHARMACISTS CAN USE THE APP Pharmacists can use the app to educate themselves about drugs, learn about recently approved drugs, or access pertinent information to help patients.

Search the app by product name, active ingredient, or application number. You’ll see the drug’s name, type, marketing status, TE code, RLD, and reference standard. You’ll also find the drug’s approval history with accompanying labels.

Pharmacists can use the app to help answer patients’ questions, but you can also show them how to use the app themselves. The

FDA GOES MOBILE

drug information on the app can come in handy if patients lose or ruin the drug’s label. They can access directions and warnings through the app.

“With the launch of the Drugs@FDA Express mobile app, we’re bringing the public important information about drugs in an easyto-use, mobile format,” Kahn said.

Download the free app through your mobile device’s app store.

A new smartphone app from the FDA makes finding drug information easy

ON THE APP Information on every human drug is only a few finger taps away, thanks to a new mobile app from the U.S. Food and Drug

The Drugs@FDA Express mobile app houses information

Administration (FDA).

on every FDA-approved human drug. Here’s what you can

The FDA has turned one of its most popular web pages,

find on the app to educate yourself or your patients.

Drugs@FDA, into a mobile app that pharmacists and patients can access from their mobile devices. “The FDA is continuously

• Approved labels for approved drug products

seeking ways to bring information to consumers in more accessible

• Generic drug products for an innovator drug product

formats,” said Jeremy Kahn, a spokesperson for the FDA. “We hope

• Therapeutically equivalent drug products for an

that by making this important health information more easily

innovator or generic drug product

accessible, we can help empower patients and providers in making

• Patient information for drugs approved since 1998

their treatment decisions.”

• All drugs with a specific active ingredient

The Drugs@FDA Express mobile app contains information on FDA-approved brand and generic prescription and over-the-counter

• Approval history, including approval letters and review packages of a drug

(OTC) human drugs, as well as biological therapeutic products.

Information includes labels, reviews, and patient information. The app features the most recent product approvals, within seven days.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2018

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TRENDS

SCHEDULING APPOINTMENTS Your pharmacy can’t afford to miss out on offering this service Pharmacy’s appointment-based model (ABM) is getting an

FILLING A NEED

update. Adding clinical services to a model that already works

A new study published in the Journal of the American

can dramatically improve patient care.

Pharmacists Association (JAPhA) in March reveals a gap the ABM

With the ABM, pharmacists synchronize patients’ chronic medication refills to a single appointment date, typically every 30, 60, or 90 days.

That approach has worked well. “Numerous studies show that

can fill: immunizations.

Researchers studied 24 Kroger pharmacies with a total of 840 patients enrolled in an ABM program. It included 30-minute, in-person appointments. During the appointments, pharmacists

the ABM increases medication adherence, which translates into

assessed patients’ need for vaccinations, using their vaccination

more prescription fills per year for the pharmacy—a key driver

records if available, and offered appropriate vaccinations

of revenue in the current system,” said Lindsay Kunkle, Pharm.D.,

on the spot.

R.Ph., Senior Director, Practice Advancement & Pharmacist Engagement at the American Pharmacists Association (APhA).

But those traditional benefits are only the beginning.

Vaccination rates in those pharmacies were nearly 25 percent higher than the control pharmacies that didn’t offer ABMs. “With access to statewide immunization information systems,

Appointments not only improve convenience and adherence,

pharmacists can access a patient’s vaccine history, screen for and

Kunkle said, but can also help identify and address gaps

close gaps in immunization care, and contribute immunization

in patients’ care.

information to empower the rest of the healthcare team,” Kunkle said.

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pbahealth.com/elements pbahealth.com/elements

“Numerous studies show that the ABM increases medication adherence, which translates into more prescription fills per year for the pharmacy—a key driver of revenue in the

AN APPOINTMENT TO MODEL When pharmacies offer immunization services as part of a scheduled appointment with patients, they can: • Assess immunization status • Recommend needed vaccines • Administer immunizations as allowed by state law or the patient’s healthcare coverage • Refer patients to a provider who can administer the vaccine, if needed • Schedule appointments to receive the remaining doses of a multi-dose vaccine series

current system.”

These results not only introduce a new, lucrative, and effective service in the appointment-based model; they also point to the possibility of offering other services through an ABM. “This study shows that adding patient care services, such as

the calls to patients beforehand to identify changes, confirm refills, and answer questions.

“In the ABM, pharmacists and technicians take a proactive approach, resulting in fewer phone calls, more meaningful

immunization screening and delivery, to the ABM can improve

interactions with patients, prescribers, and insurers, and more

people’s health and increase patient and pharmacy staff

focused time for pharmacists to provide patient care services,”

satisfaction,” Kunkle said. “The ABM can be the platform upon

Kunkle said. “With the shift to proactivity, many pharmacists and

which patient care services are delivered by optimizing workflow

pharmacy staff members report being more satisfied employees.”

and freeing up the pharmacist to spend more time with patients.”

Some pharmacies also schedule appointment times for patients to pick up their medications. During these appointment

IMPROVING PATIENT SATISFACTION

times, pharmacists meet with patients to answer questions, offer

Patients even prefer the model. In the JAPhA study, more than

consultations, perform comprehensive medication reviews, and

90 percent of patients said they would recommend the ABM

provide other needed services.

program. And more than half said getting vaccinated at their appointment was convenient.

Besides the clear health benefits, patients also make fewer trips to the pharmacy and get one-on-one time with their pharmacist.

“It often does not take much convincing to get patients into

IMPLEMENTING ABM IN YOUR PHARMACY Any pharmacy can put an ABM in place.

“Every pharmacy will need to evaluate their workflow and systems, their physical space, and patients’ preferences and needs

the ABM because it can simplify their life, improve their care, and

as they implement the ABM,” Kunkle said. “The ABM does not

result in better health,” Kunkle said. “When you explain the ABM to

require any fancy technology or other expensive modifications to

patients who are on multiple chronic medications, they are often

be effective. But there are definitely components that can be added

elated about the prospect of spending less time visiting and on the

to create value and efficiency for patients and the pharmacy staff.”

phone with the pharmacy.”

The ABM also reduces stress for pharmacy staff. Normally,

For a detailed walkthrough on starting an ABM, check out the APhA Foundation’s implementation guide at aphafoundation.org/

pharmacists and pharmacy technicians react to calls and walk-ins

appointment-based-model. It discusses how to phase in an ABM

throughout the day, which disrupts their workflow.

on top of current workflow, the materials needed, and other

The ABM differs from simple medication synchronization with

mechanics of the model.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2018

9

RETAIL

BARE SHELVES How understocking products creates a stale and unappealing front end

Independent pharmacies commonly fail to stock enough product

The museum effect makes patients feel like they’re attending

in their front ends, leaving gaps and bare spaces on the shelves.

a closeout sale from a dying business. And it gives the impression

A sparse row here. Some blank spots there. Sometimes an entire

that your pharmacy isn’t invested in anything front-of-the-counter.

section left empty.

“It’s telling your customers, ‘Come here for your prescriptions.

A few bare spots may seem harmless. But empty shelves make your pharmacy feel like a stale history museum. Not a modern,

But we’re not really paying attention to the front end or OTCs.’ So, they’ll probably shop for those items elsewhere,” Lentz said.

active retail pharmacy.

“When the department is sparse, it looks more like a display

FOCUSING ON RETAIL

than a well-stocked fixture,” said Kyle Lentz, Category Analyst at

More practically, when you don’t fully stock the shelves, you risk

Hamacher Resource Group (HRG), a firm that improves results

running out of products patients need. By the time you notice an

across the retail supply chain by addressing dynamic needs such

item is out of stock, it could take days to get a new shipment. And

as assortment planning and placement, retail execution strategy,

that could damage your pharmacy’s reputation if it happens with

fixture coordination, item database management, brand marketing,

items patients expect.

and analytics. “It doesn’t look shoppable.”

Dave Wendland, Vice President, Strategic Relations and a member of the owners group at HRG, coined the term “museum effect” to describe this sparsity in the front end.

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“It may be a high-demand product you should always have inventory of,” Lentz said, “because if you don’t, you’re going to lose sales.”

The museum effect occurs at every retail outlet, big or small,

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Lentz said. But the effect occurs more often at independent

ADJUSTING TO YOUR BUSINESS’S NEEDS

pharmacies because they place emphasis on patient prescription

But if pharmacies have too much space, Lentz recommends filling

needs more than the retail aspects of their business.

wide rather than filling back. “If you have two products, it’s better to

Independent pharmacies would do well to shift their focus

double face the product rather than putting one in front and one in

and adapt to the changing industry. “As margins shrink behind-

back,” he said. “But if you have extra shelves in your front end, you

the-counter, they can gain some of that margin back by selling

really need to reevaluate your assortment. What products can you

over-the-counter products,” Lentz said. “Pay attention to your front

add that will benefit your customers?”

end like it’s a crucial part of your business rather than something additional that you have to offer besides prescriptions.”

He suggests creating a customized end cap that you change monthly. Like an allergy end cap in March, a summer end cap with first aid supplies and sun care products, and a back-to-school end

HOW TO AVOID THE MUSEUM EFFECT

cap in August. “Otherwise, you can take that fixture down and add

Talking about stocking enough product is one thing. It’s another to

a counseling area or expand your waiting area,” he said.

do it. You don’t want to overstock either because when items sit on the shelf, money sits on the shelf.

Beyond those top categories, pharmacies will have their own specializations that influence their stocking strategies.

“There’s a difference between stocking too much inventory and stocking the right amount of inventory,” Lentz said.

Most importantly, pharmacies need to know what their particular patients buy. The catch-all categories only go so far. To

Each pharmacy will have different demands and needs. But

get a good grip on your sales, Lentz suggests mining point-of-sale

Lentz said all pharmacies should keep certain general categories well stocked. The top five categories for independent pharmacies are cough and cold, digestive, vitamins, pain relief, and first aid.

(POS) data for at least a few hours a month.

“If pharmacists know what’s selling, they’ll be in a much better position to manage their stock,” Lentz said. “Better self-awareness

Within those categories are best-selling items that HRG calls

of your front end is going to equal better outcomes and better

Never Outs®. “Never Outs generate the majority of sales for that

sales. You’ll stock the right product, stock the right amount of that

category. They should never be out of stock because customers are

product, and build your categories based on the importance to

looking for those products,” Lentz said.

your pharmacy customers.”

THE TOP 5 CATEGORIES TO NEVER RUN OUT OF Keep these general categories in your pharmacy’s front end well stocked.

1. COUGH AND COLD

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2. DIGESTIVE

3. VITAMINS

4. PAIN RELIEF

5. FIRST AID

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SOLUTIONS

HASSLE-FREE BUYING A new pharmaceutical ordering service offers quality, convenience, and ease for independent pharmacies After working a 12-hour shift, you’re ready to wind down for the

service from PBA Health, makes placing product orders easy. With

day. The last thing you want to do is pull together a product order.

features like order replication, a frequent purchases listing, and

“Pharmacy staff is overworked these days,” said Clark Balcom, Senior Vice President and COO of PBA Health, an independently owned pharmacy services organization that provides group purchasing services, expert contract negotiations, and distribution

multiple search options, BuyLine streamlines secondary ordering, so you spend less time restocking inventory.

“BuyLine is the fastest, easiest, and most convenient order management solution of its kind,” Balcom said.

services. “When they get to the end of the day, it’s important that they have a fast and hassle-free inventory replenishment solution

STREAMLINED BUYING

that takes care of the bottom line and also gets them out the door

Besides making ordering fast, BuyLine also offers what pharmacies

toward home.”

need: low prices on a full line of products. That means more than

BuyLine™, a new online secondary pharmaceutical ordering

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pbahealth.com/elements

just generics.

You can shop brands, generics, over-the-counter (OTC) products, refrigerated products, and controlled medications (certain qualifications apply) on BuyLine.

“BuyLine is an independent pharmacy-owned and controlled

FEATURES TO KNOW

secondary pharmaceutical supplier solution that offers the

BuyLine™, a new online secondary pharmaceutical ordering

industry’s lowest pricing on the broadest line of brand and generic

service from PBA Health, has the convenient features you’ve

pharmaceuticals,” Balcom said.

been looking for.

EARNING LOYALTY REWARDS

Easy online shopping

Similar to earning airline miles or accumulating rewards points

Shop any time on the intuitive, easy-to-use website.

on credit cards, BuyLine offers loyalty rewards points on generic pharmaceutical purchases.

“BuyLine seeks to deliver the full benefits of pricing as upfront,

Everyday low prices BuyLine offers competitive prices on a full line of products

off-invoice, discounts,” Balcom said. “However, it also rewards

and regularly updates pricing to reflect market changes

pharmacies with variable rewards points on each qualified

and trends.

purchase. These rewards points are additional savings that accumulate similar to dollars and can be applied at checkout

Full line of products

on future purchases.”

BuyLine offers brands, generics, over-the-counter (OTC)

Every time you log in, you’ll see your accumulated loyalty rewards points right away. You can easily apply them during

products, refrigerated products, and controlled medications (certain qualifications apply.)

checkout whenever you choose.

Loyalty rewards points EASY ONLINE SHOPPING

Includes a loyalty rewards program to earn points

You don’t have to wait for phone calls or use clunky faxes to order

on generics purchases. Redeem the points on any

product. BuyLine features a modern, up-to-date website where you

future orders.

can easily order pharmaceuticals like you would order products on a personal shopping website.

After creating an account, the website is available 24 hours a day, seven days a week for you to place product orders. Orders

Live chat Have a question? Use BuyLine’s live chat feature when shopping to get your questions answered—fast.

are fulfilled during business hours.

A FOCUS ON QUALITY Not all secondary distributors are created equal. Especially when it comes to quality.

“There are ‘fly by night’ secondary suppliers popping up every day,” Balcom said. “Many of them are operated by people with an equity interest beyond that of the pharmacies. With the acceleration of wholesaler consolidation, we believe it will

manufacturers and supplied to pharmacies through PBA Health’s

be increasingly important for independent pharmacies to have

VAWD-certified facilities.

complementary solutions that are controlled by independent pharmacies for the sole benefit of independent pharmacies.”

Pharmacies today often feel pressured to compromise quality

FINDING THE BALANCE With years of contract negotiation experience with primary

and safety to address depressed margins and overworked staff,

wholesalers on behalf of independent pharmacies, Balcom

Balcom said. “But pharmacies can never forget that we are in

recognizes that pharmacies must manage a careful balance

the business of health care. Therefore, quality and safety

between buying from their primary wholesaler and

remain paramount.”

secondary sources.

BuyLine has the credentials pharmacies can trust. All BuyLine products are sourced solely and exclusively from original

“By offering industry-leading generic pricing, BuyLine provides pharmacies the opportunity to directly improve savings,” he said.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2018

15

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Bo Garmon - Loan Officer

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“BuyLine is an independent pharmacy-owned and controlled secondary pharmaceutical supplier solution that offers the industry’s lowest pricing on the broadest line of brand and generic pharmaceuticals.”

“And by offering brand pharmaceuticals, BuyLine also provides pharmacies with an opportunity to improve overall profit margin

pharmacies it serves.”

“BuyLine brings independent pharmacies the balance

by achieving higher levels of generic compliance. And, therefore,

of a broad line of products, industry leading prices, quality and

higher levels of financial incentives with their primary

safety, and the added assurance of no external equity holders.

wholesaler contracts.”

It is the only solution that offers independent pharmacies all

Balcom said pharmacies should carefully evaluate how to use secondary suppliers as part of their overall buying strategy if they

the above today.”

Learn more about BuyLine at pbahealth.com/buyline.

want to significantly increase margins. They need to consider purchases made through the secondary supplier and purchases made through the pharmacy’s primary wholesaler relationship.

“To do this, a pharmacy truly needs to consider the breadth

SHOPPING SECONDARIES

and type of product lines available and how an appropriate use of those lines results in an overall increase in financial

Independent pharmacies need to do their research

performance,” he said.

before shopping a secondary distributor. “The quality,

Balcom said PBA Health is available to provide guidance

safety, and integrity of the supplier should always come

to pharmacies on how to handle that balance. “With a little

first,” said Clark Balcom, Senior Vice President and COO

guidance on how to properly use BuyLine within the pharmacy’s

of PBA Health. He recommends pharmacies ask these

primary wholesaler relationship, pharmacies end up saving

questions as they consider a secondary supplier.

time and money.”

• How many years has the supplier operated?

INDEPENDENTS FOR INDEPENDENTS Independent pharmacies today want to support other independent businesses. But independent supplier options have seriously diminished in recent years. BuyLine is one of the few secondary supply options out there that’s still independently owned.

“Pharmacies should consider the equity and control structure of the secondary supplier solution,” Balcom said. “BuyLine is

• Does the supplier guarantee that it sources products directly from original manufacturers?

• Does the supplier hold necessary industry certifications for safety and quality?

• Does the supplier have a strong and consistent track record with respect to licensure with federal and state regulatory agencies?

an independent pharmacy solution and has no external equity holders. It is designed solely for the benefit of the independent

ELEMENTS | The business magazine for independent pharmacy | JUNE 2018

17

FEATURE

ESSENTIAL CREDENTIALS How to protect your pharmacy by verifying the credibility of your suppliers and distributors

Profit margins matter to independent community pharmacies

pharmacies. “The pharmacy would also incur significant liabilities

more than ever today. So, independent pharmacy owners often

in regard to the licensure of the facility and individual pharmacists

shop secondary distributors to try to save money where they can.

and civil responsibility for patient harm or death,” Catizone said.

The options and potential savings can seem endless. The

Liabilities could also include criminal charges, even if you aren’t

market is made up of large wholesalers, regional and specialty

aware that you bought or dispensed illegitimate pharmaceuticals.

wholesalers, and thousands of small companies licensed by

The FDA includes a statement to healthcare practitioners on its

U.S. states as merchant wholesalers.

website that states, “If you purchase drugs from illegal, unlicensed

But buyer beware: Those savings could come at a high cost.

sources (foreign or domestic) you are putting your patients at

“There is a network of rogue wholesale drug distributors that target

risk of consuming drugs that may be unapproved, counterfeit,

healthcare practitioners using aggressive marketing tactics and

contaminated, ineffective, or dangerous. If you purchase drugs

offering medications at deeply discounted rates,” said Jeremy Kahn,

from illegal sources, you may be subject to criminal investigation.”

a spokesperson for the U.S. Food and Drug Administration (FDA).

Illegitimate distributors introduce substandard and counterfeit

Since 2012, the Department of Justice has prosecuted more than 95 corporations and individuals for criminal charges related to

products into the drug channel, and they often come with an

selling unapproved drug products, or receiving and administering

attractive price tag. Substandard and counterfeit pharmaceuticals

unapproved drug products to patients.

can include the wrong dose, contain no active ingredient, contain

And liability isn’t the only threat to your pharmacy. Harm

the wrong active ingredient, include harmful ingredients,

to patients’ health inevitably leads to harm to your pharmacy

be ineffective, or be contaminated. If you don’t know who’s

practice. “We’re in the quality health care business. If you’re

credible, you could expose your pharmacy and your patients

going to provide quality health care to patients, you have to have

to dangerous products.

a quality product,” said Nicholas Smock, Pharm.D., MBA, President

“The risks are significant,” said Carmen Catizone, M.S., R.Ph.,

and CEO of PBA Health, an independently owned, VAWD-accredited

D.Ph., Executive Director of the National Association of Boards

distributor and pharmacy services organization based in

of Pharmacy (NABP). “First and foremost, the patients of that

Kansas City, Mo.

pharmacy can be injured or killed by counterfeit products or adulterated and misbranded products.”

In one far-reaching incident in 2003, investigators discovered that more than 100,000 bottles of Epogen® were counterfeit

“If you don’t have integrity in your pharmaceutical product, how could you have integrity in your health care? You need to provide 100 percent in the quality of your product and 100 percent in your services,” he said.

after a liver-transplant patient experienced crippling spasms and debilitating health problems for months while taking the medicine.

GETTING TO YOUR PHARMACY

The drug’s labels had been forged to indicate a dosage strength

The drug distribution channel is a complicated web of interchange.

20 times the actual dose.

Nearly 40 percent of finished drugs are imported, according to

That’s one of the many recorded stories of patients who have

the FDA. And, nearly 80 percent of active ingredients come from

suffered from counterfeit or substandard drugs. The worst cases

overseas sources. Ingredients can be sourced from one country,

involve life-saving drugs for conditions like cancer and autoimmune

packaged in another, and then repacked in another.

disease. But even the smaller cases can still harm patients.

These risks make it paramount for independent pharmacies

Often, you can draw a straight line from manufacturer to distributor to pharmacy within the U.S. But sometimes, drugs may

to ensure the credibility of their distributors, said Rebecca Snead,

bounce from one manufacturer to several different wholesalers,

R.Ph., FAPhA, CEO and Executive Vice President of the National

and even pharmacies, before finally ending up at your pharmacy.

Alliance of State Pharmacy Associations (NASPA). “It is the right

“A pharmacy buyer should always ask the seller where the

thing to do for our patients. The pharmacy profession was founded

product is sourced from and about the storage conditions used to

on the platform of assuring patients have access to a safe and

handle it,” Smock said.

effective drug supply. One adverse effect due to selling an illegal,

Although the U.S. distribution channel is heavily regulated and

contaminated, or unapproved drug—or even worse, death—is

is one of the safest in the world, loopholes exist that opportunistic

too many.”

distributors exploit. For example, they seek licensure in states with the fewest requirements and the least stringent enforcement.

LIABILITY FOR PHARMACIES

They buy pharmacies to function as distributors, so they can sell

Besides the concerns of harming patients, buying from illegitimate

drugs to other wholesale distributors under the guise of a medical

distributors can also result in financial consequences for

emergency transfer. And, some pharmacies that supply nursing

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19

homes and hospices order huge quantities of drugs at discounted prices and sell the excess to secondary distributors for profit.

SNEAKY STRATEGIES

through improper storage and handling. For example, refrigerated

Many illegitimate distributors gain licensure in states with

products that change hands can easily lose potency and

less stringent requirements or lax enforcement. These

effectiveness without the right storage conditions.

distributors seek licensure in states where:

But even without fraud, medicine can become adulterated

And here’s the biggest takeaway for your pharmacy today: The most common culprits are secondary distributors. And, these

• The state doesn’t require pedigrees • Licensure of out-of-state wholesale distributors is either optional or not required at all • Wholesale distributors can register for one wholesale distribution license and use the same license across the country for several entities • Inspection requirements for wholesale distributors are lacking • A wholesale license is issued to a wholesaler with the same name and address as a pharmacy Source: National Association of Boards of Pharmacy (NABP)

fraudulent distributors often appear to have legitimate standing.

In a 2013 report on the rising problem of the integrity of the prescription drug supply, the NABP said the incidents “point to the roles of licensed wholesalers in distributing counterfeit drugs and unapproved foreign-sourced oncology drugs.”

In many of the fraud cases, independent pharmacies were unknowing accomplices. They purchased pharmaceuticals from licensed secondary distributors they thought were legitimate.

Which leads to the question, then how can pharmacies avoid counterfeit and substandard drugs?

HOW PHARMACIES KNOW WHO TO TRUST The best way for pharmacies to avoid dispensing substandard and counterfeit drugs is to take proactive steps to verify the credibility of every wholesaler they buy from.

“Where you see the counterfeit and fraudulent drug channel is when people take risks with how they’re doing their purchasing,” said Perry Fri, Executive Vice President of Industry Relations, Membership and Education for the Healthcare Distribution Alliance (HDA) and COO of the HDA Research Foundation. “Are you buying from a company that you don’t know anything about?”

WARNING SIGNS

due diligence under national law. “Today, there’s pretty specific

Look out for these indicators of counterfeit drugs.

requirements that are put onto pharmacies in terms of who they

At the basic level, your pharmacy is required to perform certain

should be doing business with and what they should expect from • Product packaging and label aren’t in English • Words are misspelled on the bottle

that business relationship,” Fri said.

In 2013, Congress passed the Drug Supply Chain Security Act

• “Rx Only” designation is absent

(DSCSA, or Title II of the Drug Quality and Security Act), which created

• Expiration date is missing or has passed

measures to enhance pharmaceutical traceability.

• Lot number is omitted • Generic name or active ingredient isn’t printed with brand name • Product appearance, packaging, prescribing information, labeling, or indications for use are unfamiliar • Patient labeling or product information are missing

“The DSCSA creates a tighter, closed prescription drug distribution system to prevent harmful drugs from entering the supply chain, detect harmful drugs if they do enter the supply chain, and enable rapid response when such drugs are found,” Kahn said.

The DSCSA creates a national, interoperable, electronic system to track and trace pharmaceuticals all the way through the drug channel. The law is being implemented gradually through 2023 and

Source: U.S. Food and Drug Administration (FDA)

it requires pharmacies to be more stringent with recordkeeping and verifying licensure, among other requirements.

If you need help complying with the provisions of the

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“There is a network of rogue wholesale drug distributors that target healthcare practitioners using aggressive marketing tactics and offering medications at deeply discounted rates.”

DSCSA, Snead said state pharmacy associations have resources

illegitimate distributors can create false paper trails with sparkling

in partnership with the American Pharmacists Association (APhA),

records. In 2012, fraudulent distributors falsified their pedigree

the National Community Pharmacists Association (NCPA), and the

while distributing more than $1 billion in diverted drugs to

Partnership of Safe Medicines.

unwitting pharmacies.

But pharmacies need to go beyond the track and trace requirements, especially as the law phases in gradually, because

THE RIGHT CREDENTIALS

vulnerabilities still exist.

To ensure your distributor’s credibility, look for additional

Smock said verifying the credibility of distributors requires two things: evaluating their pedigree and making sure they have the right credentials.

“The number one thing is, ‘Does the distributor buy directly

credentials. “You’ve got to look at the credentialing body,” Smock said.

State licensure is the basic requirement for a credible distributor. You can verify wholesale drug distributor licenses on

from the manufacturer?’” Smock said. “Ask them for their

the FDA’s website at fda.gov. But licensure on its own can’t give your

pedigree and see where they’re actually buying it from. With

pharmacy complete assurance of a distributor’s credibility. Every

pharmaceuticals, there should be a valid paper trail. And raise

state has its own standards of practice required for distributors

concerns about the price if it seems too good to be true.”

to obtain licenses. Some states have stricter requirements than

The FDA also advises healthcare professionals to know the

others, which makes it easier for distributors to obtain licenses in

source of the prescription drugs they purchase. The distributor’s

some states and makes it harder for pharmacies to know which

pedigree should verify that it sources all of its product directly

distributors they can trust.

from the manufacturer.

Pedigree is a good start to ensuring credibility, but it’s not

Catizone said that some states don’t have the resources to regularly review and verify distributors to ensure they maintain

enough on its own. For one thing, each state’s requirements

licensure standards. “In some cases that NABP encountered,

vary. And, some states don’t require pedigrees at all. For another,

unscrupulous wholesale distributors deliberately misrepresented

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21

licensure, falsified information to indicate licensure when the facility was not licensed, did not report that a license was revoked or suspended, and withheld licensure status in order to avoid

QUESTIONABLE ACTIONS

disclosing disciplinary actions against a license,” she said.

In 2004, the NABP set a higher and more unified standard by creating an accreditation program for drug distributors called

How do rogue distributors get away with their actions?

Verified-Accredited Wholesale Distributors® (VAWD®). To become

Sometimes they use loopholes like these.

accredited, distributors must pass the NABP’s compliance review process, which includes a rigorous review of operating policies and

Seeking out states with less stringent laws

procedures, licensure verification, a survey of a facility’s operations,

Because some states have stricter laws than others,

and screening through the NABP Clearinghouse.

illegitimate distributors will often apply for licensure in states with the fewest requirements.

“VAWD accreditation plays a pivotal role in preventing counterfeit drugs from entering the United States’ drug supply,” Catizone said. “VAWD accreditation helps ensure that the wholesale

Taking advantage of the “5 percent rule”

distribution facility operates legitimately, is licensed in good

Some states allow pharmacies to sell drugs to other

standing, and is employing security and best practices for safely

pharmacies and wholesalers as long as the sale of those

distributing prescription drugs from manufacturers to pharmacies

drugs doesn’t exceed 5 percent of the pharmacy’s annual

and other institutions.”

prescription drug sales. Illegitimate pharmacies will abuse this allowance and sell more than 5 percent.

Unlike licensure, VAWD standards apply equally to every distributor no matter the state they reside in. When you work with VAWD-certified distributors, you know they’ve met the strictest

Manipulating the emergency transfer exemption Pharmacies can sell drugs to distributors during medical

standards that currently exist.

Several states including Indiana, North Dakota, and Wyoming

emergencies without being deemed a distributor. So,

require VAWD accreditation for licensure. Optum Rx, a pharmacy

illegitimate pharmacies will use the pretense of a medical

benefits manager (PBM) that processes nearly 20 percent of the

emergency to sell drugs to distributors.

nation’s prescriptions, announced in 2016 that pharmacies that contract with the company must only buy from VAWD-accredited

Exploiting drug shortages

wholesalers. Optum Rx will no longer pay for any claims that don’t

Fake pharmacies will find out which drugs are

come from VAWD-accredited wholesalers, and it could charge

in short supply at hospitals, buy up far more than

additional clawbacks and may even revoke contracts.

they need, and then sell them to the gray market.

During the shortages, companies will charge hospitals

ANOTHER FEATURE TO LOOK FOR

1,000 times the cost of the drug.

Another element pharmacies can look for when choosing distributors is membership in the Healthcare Distribution Alliance

Using an intracompany transfer

(HDA). HDA, formerly the Healthcare Distribution Management

Transferring drugs between companies under

Association (HDMA), represents primary pharmaceutical

common ownership isn’t considered distribution.

distributors. Its members include 36 pharmaceutical distributors

Illegitimate companies use several strategies to

throughout the U.S. And it serves as a link between the nation’s

disguise transactions between pharmacies and

pharmaceutical manufacturers and more than 200,000 pharmacies,

distributors as intracompany transfers.

hospitals, long-term care facilities, clinics, and other facilities.

Although HDA isn’t a credentialing body, it gives pharmacies

Source: National Association of Boards of Pharmacy (NABP)

assurance because of its sourcing verification. “Our members are companies that typically are part of what we’d call the direct supply chain,” Fri said. “So, they buy directly from manufacturers and sell directly to the pharmacy.”

Additionally, the HDA constantly works to improve supply chain security in a variety of ways among distributors. “The safest and most secure supply chain is at the core of our mission

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FOLLOWING THE LAW Under the Drug Supply Chain Security Act (DSCSA), enacted in 2013 and which is being phased in through 2023, independent pharmacies have certain requirements to help keep the drug supply chain safe.

Here’s what the law requires pharmacies do: • Confirm the entities from which they purchase prescription drugs are licensed • Receive, store, and provide product tracing documentation • Investigate and properly handle suspect and illegitimate drugs, including quarantining the drugs • Notify the FDA and trading partners if they find an illegitimate drug Source: U.S. Food and Drug Administration (FDA)

statement, so everything we do aligns with that,” Fri said. Among

counterfeit bottles were identified by missing degree symbols in

other initiatives, it offers educational opportunities, industry

the temperature instructions.

forums, and guidelines. “We do a lot of work on the supply chain

Also, aggressive offers are a telltale sign of fraud. “If you

side. How can we advance business process, technologies, logistics,

receive a call that is too good to be true, it probably is,” Snead

operations to make the supply chain safer and more efficient?”

of NASPA said. “Make sure you verify before you buy.”

HOW TO SPOT FRAUD

the Supply Chain Security Toolkit for Medical Products. It can

If your pharmacy’s distributors carry the right credentials, you’re

help you develop processes, procedures, and tools for product

in good shape. But there’s always a risk of falsified credentials and

quality and supply chain security. “These materials provide

other factors. So, look out for the warning signs of substandard

overviews of clinical and retail pharmacy practices across APEC

and counterfeit pharmaceuticals.

economies, identifying best practices and resources to support

The FDA has also created a toolkit pharmacies can use called

The main sign of a counterfeit drug is lack of effectiveness.

If multiple patients report a lack of efficacy or if a normally effective

implementation toward ensuring the quality of drugs that reach patients,” Kahn said.

drug stops working, make sure to inspect the product.

Kahn suggested pharmacists check the Orange Book, which is also called Approved Drug Products with Therapeutic Equivalence Evaluations. It identifies drug products approved by the FDA and related patent and exclusivity information.

In addition, pharmacists can visually inspect the drugs before handing them to the patient, Kahn said. Look for misspelled words, foreign language, missing lot number, an outdated expiration date, missing “Rx Only,” or unfamiliar labeling. In the Epogen case, the

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SPOTLIGHT If one word could sum up Medicap Pharmacy in Owasso, Okla., it’s empowerment.

Even though Dr. Kathy Campbell, Owner of Medicap Pharmacy, is a Pharm.D. with 26 years of experience, she focuses her pharmacy less on prescriptions and more on prevention.

“I want my pharmacy to be a place where people come to not need medication,” Campbell said. “I use my talents and skillsets and resources to support people having the health they want to live the life they want.”

Campbell’s desire for her patients to not rely on medication

WEIGHING ALL THE OPTIONS This independent pharmacy’s weight loss program adds on profits

guides every patient encounter and every business decision. When wellness requires medication, she’ll maximize outcomes with her pharmacology expertise. But ultimately, she helps her patients live healthy lives through a whole health approach.

“I’ve never been the kind of pharmacist where I felt the pill was the only way,” she said. “To me, pharmaceuticals are a tool in the toolbox. I started using other tools to empower people to take charge of their health and well-being.”

She started offering consultation appointments years ago, where she consults with patients on their health and their medications. “I think that’s very unique in that people hire me to talk about their health and well-being and their medications.”

She charges for this service and she thinks other pharmacists should too. “We’ve relied too much on that single product entity called the prescription for our revenue, for our identity,” she said.

She also earns revenue by selling nutraceuticals and offering educational seminars on health topics, including her most popular seminar on hormone balance.

STARTING A WEIGHT LOSS PROGRAM But her major tool of empowerment—and profit—is her unique weight loss program.

The program spans 12 weeks and includes an initial detox, full body analysis, nutrient support, lifestyle analysis, and a Mediterranean diet, low glycemic nutrition plan. Through the process, Campbell provides health coaching tailored to each patient.

“I actually utilize my unique skillset as a pharmacist to impact the biochemistry. I tell my patients that it isn’t about me figuring it out, it’s about us figuring out your machine,” she said. “My intention is basically empowering people on the basis of lifestyle approach that will support their health and well-being forever.”

Medicap Pharmacy in Owasso, Okla., looks beyond medication to help patients.

The pharmacy offers personal health consultations, health seminars, a weight loss program, and more to empower patients to take charge of their health. Owner Kathy Campbell, Pharm.D., said acknowledging and caring for patients makes a difference.

WHEN PATIENTS LOSE, THE PHARMACY WINS The idea sprang from what she was already trying to do in diabetes prevention and reversal, which also focused on a whole health approach. Patients weren’t responding to that, so she created a new program with the same concepts and branded

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“I’ve never been the kind of pharmacist where I felt the pill was the only way. To me, pharmaceuticals are a tool in the toolbox. I started using other tools to empower people to take charge of their health

Kathy Campbell, Pharm.D., Owner of Medicap Pharmacy in Owasso, Okla., created a branded weight loss program that’s tailored to each patient’s unique biochemistry.

“One size fits all doesn’t work,” she said.

and well-being”

it as a weight loss program.

In the two and a half years she’s offered the program, Campbell

whatever we can do to brand ‘pharmacists make a difference in your health,’ I think is key for our profession going forward.”

has enrolled nearly 200 patients. And from a health perspective, it’s been a success. Many patients have seen dramatic reductions

ADVICE FOR INDEPENDENT PHARMACIES

in A1C levels, LDL cholesterol, and weight loss of up to 90 pounds.

For independent pharmacies looking to get into the $65 billion

“I have a lady who’s been losing weight, about 12 pounds in

weight loss industry, Campbell said the key is marketing. “The

a month,” Campbell said. “She came in with full body neuropathy,

weight loss program is not that different from what I would have

and that’s gone.”

done for anybody, any time,” she said. “But it was packaged and

Campbell has also seen a healthy boost in her business.

Patients pay for the program out-of-pocket, so she doesn’t have

marketed differently.”

Even if you have to outsource your marketing, as she does, it’s

to worry about third party reimbursements. “From a financial

worth the investment. “As independents, we wear way too many

standpoint, it’s been a product that’s really helped with cash flow

hats and we’re not good at half of them,” she said. “We don’t have

at a time when cash flow has been basically turned off at the spigot

a lot of resources, so we tend to do a moderately mediocre job at

by the PBMs,” she said. “This is a way for me to generate a different

something that really needs to be done well.”

product to sell.” The program costs patients $499 down and $99 per month.

More importantly to Campbell, the program has enabled her

Finally, if you decide to start a weight loss program, expect challenges. “It’s going to be very uncomfortable when you start something new,” she said. “Stay committed, stay engaged with the

to brand her pharmacy as a partner in health rather than a remedy

patient. I think it’s that therapeutic relationship that is ultimately

for disease, which she says is a major problem for pharmacy.

going to keep us valid.”

“If you think about it, where do you go to get healthy? Nobody thinks of a pharmacy,” she said. “I want to change that. Getting out

Learn more about Campbell’s weight loss program at drkathyweightloss.com.

from behind that counter, talking to patients, sitting down with patients, having seminars, educating people, getting it on Facebook,

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MONEY

COMPETING FOR CLOSINGS How to make the most of a competing pharmacy closing down When a competitor closes its doors, yours should open even wider.

A mass of current patients in your area actively looking for a new pharmacy doesn’t happen every day. Snagging even

prescriptions. “There’s going to be an exodus,” Beckner said. “That’s the period of uncertainty that you can take advantage of.”

It’s a golden opportunity. “You’re marketing to customers

a small percentage of those patients could dramatically improve

who’ve been forced to go somewhere else,” said Gabe Trahan,

your business.

Senior Director of Store Operations and Marketing at NCPA.

“Increasing script count is your primary benefit,” said John

“They’ve been forced. So, the advantage is yours.”

Beckner, Senior Director of Strategic Initiatives at the National Community Pharmacists Association (NCPA). “But there’s also an

UNIQUE OPPORTUNITIES

opportunity to sell a lot of ancillary and front-end products. So,

If an independent pharmacy closes, you have an inherent

you’re hopefully getting a total customer in terms of prescription

advantage over national chain pharmacies. “You may have first

customers and the opportunity to service their over-the-counter

shot at those customers because they’re used to the independent

needs as well.”

environment, they’re used to having a relationship with their

Before a pharmacy closes, it has to serve a notice to its patients 14 to 30 days in advance, depending on the state board of pharmacy’s regulations. When that happens, you have an open window to reach patients as they scramble to transfer their

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pharmacist, and they might be more inclined to transfer their prescriptions to another independent,” Beckner said.

Even if a national chain buys the pharmacy and keeps those customers, the opportunity still remains. “A lot of times when a

chain takes over, they’re not ready for the influx of new customers and the wait times get ridiculous,” Trahan said. “So, it makes for a great opportunity.”

PREPARING FOR NEW PATIENTS Caring for a sudden influx of patients will test your pharmacy’s capacity. You’ll need the staff, workflow, and infrastructure in place to handle the needs of numerous new patients. “Be prepared to succeed,” Trahan said. “You have one attempt to make that first impression.”

Take everything into consideration. Do you have enough parking to accommodate more patients? Do you have enough staff so patients don’t wait in line? Do you have enough inventory to fill all their prescriptions?

And, preparation includes providing more than prescriptions.

Competing against national chains for those customers means you

“A lot of times when a chain takes over, they’re not ready for the influx of new customers and the wait times get ridiculous. So, it makes for a great opportunity.”

also need a healthy front end. “You don’t have to match them,” Trahan said. “But you can’t have onesies on the shelves; you can’t be out of the best sellers.”

You should also prepare a singular message. Trahan suggests writing a script. That way every staff member communicates the same message to new patients.

“Everyone has to be on board. When a new customer comes in, what exactly are you going to say to them? Because everybody has to say the same things. From the clerk to the truck driver to the tech to the pharmacist,” Trahan said. “What will you do to make everybody seem excited that a new customer’s coming in?”

MARKETING YOUR PHARMACY Get your message out because you only have one shot to attract those new patients.

“When you do your marketing, make sure you say three things:

makes your pharmacy different. And they said to be specific

You have a choice. We’re ready for you. And, in just one call, we’ll

in your message. Don’t spout general claims about being family

take it from there,” Trahan said. “Because customers have no idea

owned or having great customer service. “You have to define

how to transfer prescriptions.”

exactly what makes you good,” Trahan said. “That’s how you’re

Also, reach out to doctors. “It’s always good to have an outside entity advocating on your behalf,” Beckner said. “If you could get

going to change customers’ experience.”

Patients also look for continuity, Beckner said. “For these

the medical community on board with what you’re doing and the

people who are forced to find a new pharmacy, there’s a little

services you offer, that’s a very important piece.”

bit of trepidation involved. They have to establish a new

NCPA provides a marketing toolkit to help patients capitalize on a competitor closing. It includes a customizable letter to

relationship. They’re worried about their files getting lost or where they’re going.”

prescribers, sample signage designs, templates for print, radio, and

Once you succeed at getting a patient to walk through your

social media ads, and more. Trahan also suggests getting a banner

doors, you still have work to do. Often, patients meet the clerk

printed that you can hang outside your pharmacy right away.

or technician first, and they never speak with the pharmacist.

And, Trahan said to prepare a marketing budget before you

Trahan and Beckner said pharmacies need to give patients an

begin your campaign.

official introduction.

DIFFERENTIATING YOUR BUSINESS

and greet every new customer from the competitor is extremely

Trahan and Beckner also emphasized the need to promote what

important,” Beckner said.

“Making sure the pharmacist has an opportunity to meet

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OUTLOOK

DEALING WITH DIR Strategies for pharmacies to take control of DIR fees and the push to end them Direct and indirect remuneration (DIR) fees create extra costs for

below cost. And their number one tool to quickly adjust to changes

pharmacies, patients, and the healthcare system. And momentum

in profitability—price shopping for drug acquisition—has been

is building to eliminate them.

taken from them because of retroactive DIR.”

More than 115 healthcare organizations are currently pushing legislation to eliminate the fees. The National Community

DEALING WITH THE PROBLEM

Pharmacists Association (NCPA) has heavily lobbied against them.

None of this is news to independent pharmacies. You’ve

And its CEO has written op-eds for various national media outlets exposing the practice.

In a February 2018 survey by NCPA, community pharmacists voted DIR fees as their top legislative or regulatory obstacle.

And, the PBM tactic has faced greater national scrutiny recently, with major media outlets highlighting the practice and Congress introducing bills to combat it.

4 WAYS TO REDUCE DIR FEE LIABILITY

But despite increased efforts, DIR fees continue to claw back

1. Increase generic dispensing above 94 percent

profit from independent pharmacies after the point-of-sale. And

2. Improve patient adherence in diabetes, blood

that can be detrimental for business. “In most cases, it’s months before pharmacy owners see the impact of DIR fees to profitability.

By then it’s too late to take action to impact margin,” said Melanie Maxwell, Senior Vice President, Pharmacy Services at Pharmacy Providers of Oklahoma Inc. (PPOk), an organization that negotiates third party contracts for independent pharmacies.

“Pharmacies are being forced to unknowingly fill prescriptions

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pressure, and cholesterol 3. Complete all medication therapy management (MTM) cases through Mirixa and OutcomesMTM 4. Partner with a pharmacy services administration organization (PSAO)

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“Pharmacies are being forced to unknowingly fill prescriptions below cost. And their number one tool to quickly adjust to changes in profitability—price shopping for drug acquisition— has been taken from them because of retroactive DIR.”

experienced the squeeze of DIR fees for years. In a 2016 NCPA

“PBMs have made it virtually impossible for anyone other

survey, 87 percent of community pharmacies said DIR fees

than themselves to estimate or project DIR liability. Contracts that

significantly affect their pharmacy’s ability to provide patient care

contain DIR fees do not have specific enough language to tie a

and to remain in business.

contract rate and DIR fee to an actual claim billed at point-of-sale,”

One pharmacist told NCPA that an initial profit of $53 turned into a net loss of $263 after the DIR fees. Another pharmacist told

she said. “PBMs continue to refuse to provide contract information on the claim transaction to tell pharmacies which contract applies.”

NCPA, “[I]t is very hard to plan a budget or allow for the same amount of employees to remain at our store if we are uncertain as

ELIMINATING AT THE POINT-OF-SALE

to how much we will actually make that week. We will be forced to

Although DIR fees remain firmly entrenched, momentum against

cut back or lay off employees due to these fees.”

them is building. At this point, no one is seeking to get rid of the

Over time, DIR fees have only gotten worse. According to a January 2017 fact sheet published by the Centers for Medicare & Medicaid Services (CMS), DIR fees increased by 22 percent

fees entirely, but they’re working to eliminate their application after the point-of-sale.

“We are hearing significant noise from community pharmacy

per year between 2010 and 2015. “Part D sponsors and PBMs

about the need to ‘eliminate DIR fees,’” Maxwell said. “In actuality,

are engaging to a greater extent in arrangements that feature

the work to address DIR fees is mostly focused on eliminating

compensation after the point-of-sale, and the value of such

the retroactive element to DIR fees. Changes are being pushed to

compensation is also generally increasing,” the report said.

require PBMs to disclose DIR fees at point-of-sale. This effort just

Even though pharmacies understand the detrimental effects of DIR, Maxwell said many pharmacies may not realize

addresses the transparency issue.”

If pharmacies knew the fees upfront, they could adjust their

the extent of the techniques PBMs use to confuse the issue

business strategy to account for the losses to their bottom line.

in pharmacies’ contracts.

And ideally, make up for them.

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“Eliminating DIR fees will restore a pharmacy’s ability to gauge profitability at point-of-sale, drug by drug, allowing more competition between drug wholesalers,” Maxwell said. “Pharmacies will also benefit by eliminating the need for complex accounting procedures to accrue for DIR fees that are virtually impossible to project.”

Two bills currently under consideration in Congress address the transparency issue, S. 413 and H.R. 1038, which Maxwell said is the path to DIR elimination. The bills would prohibit Medicare Part D plan sponsors and PBMs from retroactively reducing payment on clean claims submitted by pharmacies under Medicare Part D. The American Pharmacists Association (APhA) and NCPA

A LOOK AT BILLS S. 413 AND H.R. 1038 Legislation currently introduced in the Senate and House is taking aim at DIR fees. Here’s how these bills could improve matters for independent pharmacies.

Prohibit retroactive DIR fees on independent pharmacies

back the bills. Both organizations said the bills will not only help

The bills will prohibit Medicare Part D plan sponsors

pharmacies but will also save billions of taxpayer dollars by

and PBMs from retroactively reducing payments

reducing inflated drug costs.

on clean claims submitted by pharmacies under

CMS has also started to push back against DIR. In a proposed

Medicare Part D.

rule published in November 2017, it requested comments on how to address the rising problem of DIR fees. After reviewing 1,400

Increase drug pricing transparency

comments on the issue, CMS said in its April 2018 final rule, “We

Prohibiting retroactive pharmacy fees will make the

believe the statute provides us with discretion to require that Part

Medicare Plan Finder more accurate. It will also allow

D sponsors apply at least a portion of the manufacturer rebates

the Centers for Medicare & Medicaid Services (CMS)

and all pharmacy price concessions they receive to the price of

to have better oversight.

a Part D drug at the point-of-sale.”

Create reduced cost-sharing and greater budget PHARMACIES PLAY A PART

predictability for beneficiaries

Even though the fate of DIR hinges heavily on legislation,

DIR fees punish Medicare Part D beneficiaries who

pharmacies don’t have to sit on the bench.

use their drug plan to fill prescriptions. Retroactive

DIR depends in part on factors that pharmacies have influence over.

fees lead to inflated drug costs, which are the basis for beneficiary cost-sharing amounts.

“DIR fees are currently tied to pharmacy performance,” Maxwell said. “Pharmacies can lower their DIR liability by focusing

Preserve access to independent community

on increasing generic dispensing above 94 percent; improving

pharmacies

patient adherence in three key areas: diabetes, blood pressure,

These bills will help independent community

and cholesterol; and completing all of their medication therapy

pharmacies stay in business, which means better

management (MTM) cases through Mirixa and OutcomesMTM.”

care for patients. Often located in rural communities

Pharmacies can also gain leverage against PBMs by partnering

and inner cities, independent community pharmacies

with a third party network to negotiate their contracts. “Pharmacies

provide much-needed health care. The number of

that utilize pharmacy services administration organizations (PSAOs)

independent community pharmacies declines every

for contracting typically benefit from negotiated DIR fees as well

year, putting patients in underserved communities at

as contract rates,” Maxwell said. “Pharmacies that have direct

risk of losing the only pharmacy in their community.

contracts with PBMs and are located in rural or underserved areas also have the ability to negotiate contract terms including DIR fees.”

Source: National Community Pharmacists Association

Every pharmacy can use its voice. NCPA offers independent pharmacies resources to get involved in advocacy, including letter templates to send to representatives and media suggestions for raising awareness. It also has a Legislative Action Center where you can stay up-to-date on current issues and find ways to participate.

ELEMENTS | The business magazine for independent pharmacy | JUNE 2018

33

NOTES

BY THE NUMBERS

PREVENTING ABUSE How independent pharmacies can help their communities and patients through better education about prescription opioids Despite opioid abuse trending as a hot topic right now, many patients still don’t know how to prevent misuse in their own homes.

And they may not get the education they need from healthcare

62 Percent of adults who said their healthcare provider hasn’t spoken to them about safe prescription opioid storage or disposal

9/10 Number of adults who keep leftover prescription opioids for future use

35 Percent of adults who said they’re not aware of safe disposal methods

providers. In fact, 62 percent of adults said their healthcare provider or pharmacist has never spoken to them about safe

Source: AAOA Prescription Opioid Awareness Survey, March 2018

storage or disposal of prescription opioids. That’s according to a survey commissioned by Allied Against Opioid Abuse (AAOA), a national education and awareness initiative to help prevent the abuse and misuse of prescription opioids.

“Unfortunately, there is a significant knowledge gap regarding safe use and disposal of opioid products,” said Mallory Ward, a

their rights, risks, and responsibilities associated with these pain medicines, patients can take an active role in preventing misuse and abuse before it occurs.”

representative for AAOA. “There is an urgent need for outreach to patients, caregivers, and the public around proactive steps to take

PATIENTS’ RIGHTS

to mitigate the likelihood of misuse before it begins.”

More patients need to know their options when it comes to opioids, such as partial fills and alternative treatments.

TALKING TO PATIENTS

“Patients have the right to know the full scope of the pain-relief

As a consistent touchpoint for patients taking opioids, pharmacists

options available to them, including non-opioid treatments, and

have an opportunity to educate patients every time they pick up or

should make informed decisions about the medications they take,”

refill a prescription.

Ward said.

“It is essential that pharmacists have a conversation with

According to the AAOA survey, 47 percent of adults said they

patients every time an opioid is prescribed or refilled to make

don’t know about their right to partially fill a prescription. And, 67

sure they understand the potential risks and side effects of the

percent said their healthcare provider hasn’t talked to them about

medication, which includes dependence, addiction, or overdose,

alternative pain treatments to opioids.

especially with prolonged use,” Ward said.

And because it’s a sensitive topic, patients need to know they

If pharmacists focus on education and awareness, they can make a big difference to prevent opioid abuse and misuse. “Patient-

can turn to their pharmacist. That means being the trusted and

pharmacist conversations about tips and actions they can take to

accessible professional they’ve come to expect.

reduce instances of abuse and misuse at home is a significant step

Discussing safe storage and disposal is important because opioid misuse can start in the home. “By reminding patients of

34

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forward as we develop solutions to address the national opioid epidemic,” Ward said.

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