Generic Pharmacy Online

Pharmacies testing remedies for selves

20-Jan-2007: Chain drugstores are seemingly everywhere and have just about everything.

Pharmacy leader kings such as CVS, Walgreens, Rite Aid, Eckerd and New Jersey-based Drug Fair continue to pop up in prime locales, making convenient, one-stop shopping for anything from food to cosmetics to toys to seasonal items -- all while you wait for the pharmacist to dispense a prescription.

"You can get anything here," Mike Cassidy said Wednesday after picking up some items at the CVS on Route 28 in his hometown of Dunellen -- two miles away from the next CVS on Route 28 in Middlesex Borough and about a mile away from another CVS planned near Route 22 in Green Brook. "And most times, the things you get are cheaper."

It might look like business was never better. But in the last year, pharmacies have begun treating a new patient -- themselves. Faced with escalating costs, savvier consumers and tough Medicare Part D rules, pharmacies are experimenting with new ways to improve profits -- including patient clinics right inside the store.

"With the chain drugstores, there's one thing to understand," said Adam J. Fein, president of Pembrooke Consulting, which focuses on the pharmaceutical industry. "They've gotten bigger, but they've got a lot to lose."

Medicare Part D troubles

The most important provision of the Medicare Modernization Act of 2003 was the Medicare Part D drug benefit, which took effect Jan. 1, 2006.

For Medicare customers, there were certain advantages given the rise of drug costs over the years -- at least if they could decipher from the numerous plans to choose from.

But for pharmacies, an expectant boon had gone to bust.

Joe Roney, chief executive officer of the New Jersey Pharmacists Association, explained that the new flow of money used for a prescription purchase under Medicare Part D leaves the pharmacist waiting much longer for reimbursements.

"The financial impact is pretty severe," Roney said. "It's low pay and slow pay under the new system. It has to be changed, otherwise the community pharmacies are not going to be able to make money on prescriptions."

Before the initiation of Medicare Part D, each state would have its own reimbursement process and prices. In New Jersey, pharmacists would file their claims through a computer program and were paid every two weeks.

"They were paid like clockwork," Roney said.

But with the new provisions, the federal government contracts with private insurance companies and pharmacy benefit managers to administer the plan. And pharmacists -- from independent and chain stores -- contend the returns come too little and too late.

"The problem now is they're getting paid well below their acceptable limits, below their costs," Roney said. "And they have to wait 30 to 60 days to get their money. If you don't get paid every 30 to 60 days, you can't borrow enough money to pay the wholesaler."

Roney also contends that insurance companies are striking it rich as middle men under the new rules, taking in revenue in the form of monthly fees from patients, rebates from the drug makers and, now under the Medicare Modernization Act, money from the federal government.

Both Medco and United Health Care, for example, reported record earnings last year.

"The biggest problem in my view is the insurance companies are making and keeping millions and millions of dollars," Roney said. "And it's coming out of pharmacists' pockets."

To remedy the situation, some chain pharmacies are trying to eliminate the middlemen -- by joining them.

Wave of mergers

On Nov. 1, chain pharmacy CVS announced a merger with Caremark Rx, the second largest pharmacy benefit manager in the country.

The two entities are planning to form one operation -- a reported $21 billion agreement -- which will be designed to create benefits for employers while offering services from plan design to prescription fulfillment for customers.

But more immediately, it is expected to help ease the paperwork and the reimbursement delay for the pharmacist.

"With our direct access to the consumer and understanding of the administrative problems that occur today in the community pharmacy setting, we will be able to coordinate a smoother administrative process," said Tom Morrison, vice president of managed care for CVS.

"That allows the pharmacist-patient experience to focus on positive health-care outcomes rather than managing administrative disconnections due to a fragmented approach in delivering health care to patients," he added.

Most in the industry see the merger as part of the wave of industry consolidations. And certain pharmacies have tried their own approaches to keep up with such a union in different ways, whether it's Wal-Mart offering $4 generic drug prescriptions or Rite Aid's merger with Eckerd.

But CVS' proposed bold stroke also enables the chain to pick up additional capabilities for its pharmacy benefit manager subsidiary PharmaCare, a specialty pharmacy and mail-order service.

Following the merger, the National Community Pharmacists Association released a statement bemoaning that it will have a negative impact on patients' access to the pharmacy of their choice.

But because such an amalgamation eliminates the go-between in the pharmacy to insurance company chain, future consolidations may be the norm.

Industry experts also say pharmacy benefit managers such as Express Scripts and Medco Health Solutions are seeking to combine. Express Scripts even tried to outbid Caremark in its bid to merge with CVS this past week. CVS announced it still maintains to complete its merger with Caremark in this first quarter of 2007.

From lab to label

It seems the longer people stay alive, the more chain drugstores are thriving.

In a recent National Association of Chain Drug Stores survey, two out of every three patients who visited a doctor left with a prescription -- which led to a record volume of 3.4 billion prescriptions dispensed in 2005 or an increase of 59 percent from 1995.

"There's been a general increase in usage of prescription drugs because the obvious value they have in treating disease," said John Colaizzi, dean of Pharmacy at the Ernest Mario School at Rutgers University. "They tend to be more effective today and are more cost-effective as opposed to other types of treatment of disease.

"The other factor is the increase in the population of people who are elderly," he added. "Elderly people get to be elderly because of the availability of these drugs."

And chain drugstores seem to be benefiting the most out of all pharmacies with the increased life span.

"The total number of pharmacies in the United States (about 56,000) really hasn't changed much over the last 10 years," Fein said. "But the mix has changed with the chains becoming much larger." Fein said CVS, Walgreens and Rite Aid, three mail-order pharmacies and mass-market leader Walmart together dispense more than half of the prescriptions in the country.

"That's an amazing change from the past," Fein said. "In the past, you'd have so much more diversity. Now, you have a few big oak trees, and they're kind of sucking up the environment."

But there does appear to be an effort on the part of chain drugstores to keep a neighborhood relationship with their customers through medication therapy management. The national association said one of its missions in 2007 is to make the pharmacy more of a service industry, especially with so many more people needing and accessing continuous medication.

In fact, at the Eckerd on Route 22 in North Plainfield on Wednesday, a woman had an extensive conversation about her medication with her pharmacist.

She turned out to be a nurse.

"A lot of times," the woman said, asking not to be identified, "the pharmacist knows more about the medication than the doctor who prescribed it."

Colaizzi added, "Some people don't know how much the pharmacist really has to offer in terms of helping patients manage their medication therapy to get the optimum outcome or advantages from the use of medication. Sometimes, they are a little underestimated."

Source: Bridgewater Courier News

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