NCPA Executive Update

NCPA Executive Update delivers insights on legislative, regulatory, policy, and industry developments from NCPA CEO B. Douglas Hoey, Pharmacist, MBA, to NCPA members and pharmacy leaders every Friday.

Looking Into the 2017 Crystal Ball | NCPA Executive Update | January 6, 2017

by NCPA | Jan 06, 2017

Dear Colleague,

Doug Hoey

Each year Chain Drug Review asks NCPA and other pharmacy organizations to get out the crystal ball and forecast some of the trends we anticipate in the New Year.

My column in the Jan. 2 issue of CDR focused on three themes—aggregating independents; pharmacists being recognized for the value they provide beyond a typical pharmacy experience; and solving the case of the disappearing dollars contributing to the higher cost of prescription drugs.

Harnessing the power of independently owned pharmacies has long been a goal for independents. Buying groups and PSAOs have helped independents gain greater cost efficiencies making them more competitive, but still independents have more marketplace upside that's yet to be realized.

Collectively, independents would be both the largest chain by store count and prescription drug sales in the country, yet we have only modestly tapped into this potential because we are so fragmented (and because of antitrust laws that limit certain activities). The independence of Independents is important, but so is maximizing buying and operational scale.

Consolidation is happening all around health care and independents are equally affected. Some PSAOs and buying groups merged in 2016 and others may be considering doing the same in 2017. That should be a good thing for independents and the communities they serve.

Top issues for community pharmacy are consistently higher prescription payments and lower acquisition costs. Importantly, though, the value that payers place on networks of pharmacies that help them manage costs and health outcomes is increasingly being tied to whether pharmacies will have the opportunity to dispense prescriptions to the plan's beneficiaries.

Local networks of pharmacies providing enhanced services as part of an overall health care solution are developing in states across the country. These networks will differentiate the average pharmacy experience from those pharmacies that produce greater health and economic outcomes. Some payers will give networks of pharmacies preference to dispense prescriptions if they show they can solve other problems like patient adherence, medication access through true home delivery, or transitions of care from hospital to the community.

The cost of prescription drugs will continue to be in the spotlight. However, there will be greater attention placed on the role PBMs play in increasing prescription drug costs. This is a new concept for many outside of pharmacy. On the flip side, pharmacists, when given the opportunity, have the unique expertise to lower overall health care costs. Our prescription drug payment system lost its way years ago and now has it backward. Pharmacies are considered a cost center and PBMs were supposed to be a cost saver. The EpiPen controversy from this summer showed that's outdated thinking.

With EpiPen, the wholesale acquisition price is $608. Mylan says it gets $284 and several pharmacies I spoke with said they are paid between $10-$30 depending on the plan to dispense, counsel, carry the inventory, etc. That leaves approximately $300 that is not accounted for. The search for where those dollars are going is likely to go on in 2017.

You can provide some clarity to our crystal ball gazing by taking a few minutes to fill out our annual member priority survey (owners/managers). Your input will be used to determine where NCPA allocates its advocacy and educational efforts in 2017. We've decided to keep the survey open through the weekend. Your participation is greatly appreciated.

Doug Hoey

P.S. Congratulations to Rep. Buddy Carter (R-Ga.) for his appointment to the House Energy and Commerce Committee.

Carter is, of course, the only pharmacist in Congress. The E&C Committee will be one of the influential committees charged with carrying out President-elect Trump's promise to repeal the Affordable Care Act and figuring out how to replace it.