Looking 5 years forward, the Pharmacy Benefits Manager (PBMs) industry is expected to grow. Why is this? The number of new generic medications entering into the market is expected to slow down, due to these blockbuster drugs loosening their patent exclusivity; diminishing industry revenue. Pharmacy Benefits Managers are known for negotiating lower prices for generic drugs, which helps increase profitability. Moreover, viewing this industry from an economical standpoint, we will see more growth in public and private healthcare insurances, decrease in unemployment rates, and more consumers covered under a prescription drug plan. The Patient Protection and Affordable Care Act (PPACA) is expected to keep expanding over the next five years. Penalties for uninsured consumers will force new consumers into the marketplace.
In 2015, the penalty for being uninsured increased by 1% and nearly doubled in 2016 and will be adjusted for inflation thereafter.
While the industry is consolidating, it enables Pharmacy Benefits Managers to have the leverage required to secure low-cost drugs from Pharmaceutical Manufacturing companies. Major players have aggressively started acquiring smaller companies in an attempt to increase their retail pharmacy network, bargaining power with drug manufacturers and customer base.
Pharmacy Benefits Managers that offer mail ordering services will begin to see the strongest growth. This is because of their lower cost on prescription medications they can offer, from selling direct to consumers at a lower operating cost. This is something we’re starting to see more often in the retail setting. More patients are being automatically switched over to mail order pharmacy.
Industry profitability is predicted to continue its upward trend over the next couple of years. We will begin to see more specialty medications and biologic therapy. The PPACA will expand consumer access to lower-cost generic drugs by preventing brand-name manufacturers from making label changes to the brand name or listed drugs; delaying generic products.
Patents for a remarkable number of blockbuster drugs started to expire in 2011 and continued this “patent-cliff” into 2016. The majority of these therapies are considered small molecule drugs and used to treat common conditions that affect a great size of the population. This “patent cliff” has started forcing more pharmaceutical companies to pivot their focus on developing large molecule biologic drugs, which are used to treat rare conditions (also called “orphan” medications) that affect a smaller size of the population. Biologics benefit from a 12-year patent period to justify its investment into innovative treatment. This becomes more advantageous, as you compare this to smaller molecule therapies like your blockbuster drugs, that have only a 5-year patent period. Thus, the PPACA will assist to accelerate generic approval for these generic alternatives, or biosimilars, to biologics--which are very costly drugs on the market.
Typically, Pharmacy Benefits Managers benefit from lower cost of generics because of their ability to negotiate stronger discounts. The steady drop in the number of new generics into the marketplace will impel growth in industry profitability. We will see Pharmacy Benefits Managers likely to witness stronger pressure to pass on cost savings to more consumers. Greater regulatory scrutiny is expected to expand compliance costs for PBM’s. New regulations will require PBM's to disclose more information on discounts and rebates from pharmaceutical manufacturers, forcing PBM's to become more transparent.
Major companies with most Market Share
The American Pharmacy Purchasing Alliance, APPA, is thanking all the participants that were present during the Wise Choice Pharmacy Summit that happened recently. The event, held in Orlando, Florida, brought together pharmacy owners, pharmacists, pharmacy students, pharmacy vendors among others, to unite under one voice.
“We would like to sincerely thank all the participants, including sponsors, vendors, and keynote speakers that made the Wise Choice Pharmacy Summit a success,” says APPA President, Joshua Pirestani.
“In recognition of our sponsors, APPA would like to extend appreciation and gratitude to GRX Marketing, Gensco Laboratories, Scripps Safe, CSI Specialty Group, Benzer Pharmacy Franchise, Live Oak Bank, VoiceTech, Pharmacists United for Truth and Transparency, Timer Cap, FisherBroyles, InfiniTrak, and Network MD,” adds Joshua.
APPA would also like to acknowledge the kindness and personal commitment from colleagues who enabled the event to happen.
“I recently attended the Wise Choice Pharmacy event hosted by APPA as a vendor. I have attended many events in our industry and was specifically impressed with the APPA speakers. We heard about unfair PBM Practices and other challenges an Independent Pharmacy faces today - along with real solutions. It was a really great networking event to speak with other vendors and find synergies for our mutual customers. Great job APPA!” says Casey Smith, Vice President of Sales at Illumigent Health.
“The Wise Choice Pharmacy Summit was a great event for pharmacy leaders and owners to interact in a personal way. It gave all parties an opportunity to learn a lot of valuable information about critical changes and issues facing our industry. GRX Marketing was thrilled to be a part of this event and looks forward to future opportunities through APPA like this one,” narrated Nicolle McClure, GRX Marketing Vice President.
Following that APPA is an association made up of pharmacy professionals within the pharmaceutical purchasing industry, its aim is to educate pharmacy owners about the different options available for pharmacy business owners including franchise and specialty information and opportunities. The Wise Choice Pharmacy Summit provided this platform.
“APPA is committed towards the advancement and empowerment of pharmaceutical professionals by acknowledging their efforts and empowering them through education, networking and advocacy, which would assist in their professional growth and goals,” concludes Joshua.
About American Pharmacy Purchasing Alliance
The American Pharmacy Purchasing Alliance is a leading pharmacy purchasing association dedicated to serving the needs of its members through education, networking, and the delivery of a unified voice for all participants in the pharmacy purchasing industry. Through ongoing collaboration, our alliance creates an environment that encourages the exchange of ideas and information, increases productivity through new technology, and furthers legislation designed to benefit our industry. For more information, visithttp://www.joinappa.com
How many times has a patient presented to you with a prescription for a “specialty medication" that you were unable to fill? It could be that you are not able to order the medication from your wholesaler. Or worse, the patient’s insurance is mandating a specific pharmacy different than yours. It can be frustrating when a current or prospective customer is coming to you, the pharmacist for a solution to their chronic and sometimes rare, condition.
There is no finite definition for what qualifies as a “specialty medication". In general, specialty medications are used to treat chronic or complex conditions and usually require special handling or administration and close monitoring of the patient. Sometimes, these prescription medications are indicated for rare diseases, which means that the disease affects less than 10,000 people. And they are therefore given “orphan drug status” under the Orphan Drug Act of 1983. This Act allows for fast-track FDA approval for drugs intended to treat these rare diseases due to limited drugs available on the market.
Some "specialty medication" manufacturers may limit the number of pharmacies who have access to order their medication. These are deemed “Limited Distribution Drugs,” or LDDs for short. When attempting to order one of these medications from your wholesaler, you may notice that the drug’s name is not listed in the system. Or it may take you straight to a screen that reads, “due to manufacturer limitations, this product is only available through a limited distribution network” and to contact the manufacturer directly.
Upon calling the manufacturer, you may find out that in order to gain access to this drug, there are many rigorous requirements to meet first. It is also worth mentioning that all manufacturers are different and have different specifications that must be met. A common theme among these manufacturers is some sort of specialty accreditation. This is often the first step to becoming a Specialty Pharmacy.
Achieving accreditation proves a commitment to quality and standards that are becoming the norm in the specialty space. Accrediting bodies such as the Accreditation Commission for Health Care (ACHC) and the Utilization Review Accreditation Commission (URAC) are arguably the most reputable in the field. Both sets of standards set the stage for core activities such as:
Accreditation is strongly recommended but could become mandatory by payers in the near future in order to ascertain preferred contracts for reimbursement purposes. The entire process can take up to six months to a year for full accreditation and can be very arduous and labor intensive.
The key is to connect with a professional who has been through the process. Ideally, they should have been able to achieve and has maintained accreditation for some time. Embarking on a project like this size could be overwhelming and a competent expert can guide you through the process.
There are many resources available though, if you choose to take on a project independently. However, there is a lot of competition out there in specialty pharmacy but accreditation can set you apart from others.
APPA would like to thank all the sponsors, vendors, presenters and participants who attended the Wise Choice Pharmacy Summit and made it a success. The Wise Choice Pharmacy Summit was held on Saturday, September 24th, in Orlando, Florida. All the segments of the presentations were informative and educational. A lot of valuable information about critical changes and issues pertaining in the industry, was shared.
In addition, we greatly appreciate all the feedback received and everyone is welcome to share their comments and suggestions with us. All the feedback matters and helps us serve our community better.
As mentioned at the event, the Wise Choice Pharmacy Summit will be held after every 6 months. The next event will be held in Washington DC. Event information including dates, venue, presenters, topics etc., will be updated on the website as well as sent out as soon as they are finalized.
Again, thank you very much to everyone who attended and made this event a success! APPA is determined to make each event greater than the previous.
Pharmacy Industry Summit
What was your journey like to get where you are?
When I was fifteen, my family moved from Dallas, Texas to Haughton, Louisiana and built a mobile home park. I learned a great deal about work ethic for the next few years from my dad, and that I wanted an education. After business school I moved to Atlanta and worked for the US Small Business Administration as a Commercial Loan Officer lending working capital to businesses impacted by disasters. Four years later, I moved into a finance role with a top 3 Drug Distributor. A year later, I took on a sales leadership role in Hospital sales. My responsibilities grew to managing a team of Retail Independent sales consultants, and I soon realized that independent pharmacies needed help with Exit Strategies. In 2008, I started a Pharmacy Transition team for the drug distributor and soon grew it to 5 people. In 2009, in the midst of the banking crisis, I created a partnership with a start up bank that was focused on Veterinary and Dental lending. Live Oak Bank funded their first pharmacy loan in 2010 after meeting with them at NCPA in the fall of 2009. I joined the bank in 2014 as head of pharmacy lending.
How do you see the company changing in two years, and how do you see yourself creating that change?
Live Oak Bank continues to evolve with broader products and services. We recently launched Equipment Leasing with no money down equipment financing and $1 buy outs, and a complete business banking package is being launched very soon. We are expanding beyond a pharmacy acquisition financing bank only.
Can you share a time when you have had to expand a core product or service set through innovation?
Because we understand the pharmacy industry so well, we’ve been able to put together longer leasing terms with some automated packaging equipment. We realize that the typical life cycle of this automation is more than 5 years.
How do you see the landscape of the independent pharmacy changing in the next few years with all the consolidation happening?
Community pharmacy needs to combat PBM’s. I’m part of a think tank with industry leaders, and our focus is to educate community pharmacy on a changing payment model. This model will evolve over time, and it’s critical that community pharmacy helps define it. It’s much more than auto refilling cholesterol and hypertension medications. I really like the investment that NCPA is making to help define the new payment model.
With several consolidations occurring industry wide, how are you helping your customers to compete in today’s marketplace?
We’ve made more than nine hundred loans in 8 years, and with several hundred loans still in our portfolio, we have the ability to share best practices among all of them. We have a team of 6 Relationship Managers that focus on only our Pharmacy portfolio, and they lead our customers to organizations and professionals who can mitigate risks and drive more profits.
With the many changes occurring in the industry how do you think it will impact Medicare and Medicaid reimbursements for your customers?
If the past is indicative of the future, we’ll have to continue to innovate as chances are that reimbursements won’t increase.Explain what LiveOak Bank does.
We finance pharmacy acquisitions, commercial real estate, provide working capital, refinance notes, lease automation and equipment, finance expansions and start ups. However, it doesn’t stop at funding. We stay engaged with Relationship Managers dedicated to your continued success. Soon, you will be able to use Live Oak Bank for all your business banking needs, online and secure, and completely integrating all your accounts.
If some of our readers are interested in financing through LiveOak Bank, how should they reach out? Call me directly at 910-212-4951. I’ll put them in touch with one of our 5 Loan Officers, and we’ll work diligently to determine if we can help.www.liveoakbank.com/pharmacy is another easy way to reach out to us.
The Affordable Care Act has stirred up a lot of opinions in the years since it was created. Many appreciate the fact that it enables coverage for those who have pre-existing conditions and would otherwise not be eligible for health insurance. However, a lot of people point out that the Act (nicknamed ACA or Obamacare) has several faults that have lead to rising healthcare costs and other negative effects.
Many of these effects are seen in the pharmaceutical industry. This might be surprising to some since, at first glance, it would seem that the industry has not suffered much under the ACA. However, it’s important to note that Obamacare does have a huge impact on pharma and that most of the people who feel this impact are those who need medications the most.
The ACA Structure and Its Faults
The things that make the Affordable Care Act admirable are also some of the things that make it less feasible, at least in terms of medication costs. People with pre-existing conditions (who were previously uninsured) are now covered by health insurance. Because of their existing illnesses, they usually have several prescriptions to fill, and they take advantage of their insurance to do so. This increase in utilization drives up the cost of healthcare for insurers. In turn, insurers who want to keep their business usually have no choice but to pass on their expenses to their customers. People therefore end up with higher insurance payments and higher co-payments — both of which make healthcare even more expensive than it used to be.
Letting Big Pharma Run Amok
However, it’s unfair to put the blame on increased consumption alone. The monumental rise of medication costs is happening not just because more and more people are filling their prescriptions, but also because the drug pricing is not in the government’s hands.
One of the biggest drawbacks of the ACA is that it doesn’t regulate the actions of Big Pharma. In fact, there is evidence that the White House willingly entered into a deal with drug manufacturing giants to get their support for the healthcare bill.
Big Pharma has indeed showed support for Obamacare. For example, patients in the doughnut hole (i.e. the gap in Medicare drug coverage wherein seniors have to pay out of their own pocket) can now enjoy a 50 percent discount on their medications. Pharmaceutical companies also approved the increase in Medicaid rebates and agreed to give up $80 billion of their revenues to get the ACA’s reforms underway.
While all of these might seem like a huge sacrifice, these concessions are actually not a big deal to drug manufacturers. In an industry that earns billions of dollars a year, $80 billion isn’t much — especially in the light of what the ACA can do for Big Pharma. According to reports, it seems that the healthcare bill will maintain government non-interference (meaning the White House can’t order companies to lower their drug prices) and prevent the importation of drugs from Canada and Mexico, which have cheaper prices. The government will also stop rebates in Medicare Part D and ensure that infusions drugs would remain in Medicare Part B (which allows pharmaceutical companies to get paid more).
All of these factors combined have created a favorable environment for Big Pharma. As a result, chain pharmacies and independent pharmacists have no choice but to increase their prices, if they want to survive. The only solution to this is to reopen Obamacare and improve its provisions — not just to regulate the actions of Big Pharma, but also to create a level playing field in the pharmaceutical industry.
In the US, there are lot of pharmacy franchise options. These franchises will give you an open platform to explore yourself and attach the entrepreneur tag beside your name.
I am sure; it would be something like, “wow! Owning my own business would be the best thing in the world”. And the next thing that pops up in your mind is the kind of franchise that you want to take up. Usual thoughts will direct the minds to McDonalds, KFC, etc. However, it can be fascinating to know that in US there are opportunities to venture into a franchise sector that is 99% recession proof. Yes! You read right. Pharmacy franchise is a blessing in disguise. Imagine helping people while generating revenue for yourself. The best way to do social service is to serve the people directly. Pharmacy franchises are the way to do it.
The Top 3 Pharmacy Franchises Are:
Anything you choose will involve money. Thus, the investment should really serve your purpose. Faster growing companies can always be a better choice for multiple reasons. The freedom to work and adaptability factor will open up a lot of opportunities of work. The ultimate choice is yours!
American Pharmacy Purchasing Alliance
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