A month after the Federal Trade Commission cleared the controversial merger of Express Scripts and Medco Health Solutions, in-store pharmacies are exploring avenues that cut pharmacy benefit managers out of the equation.
With about 95% of filled prescriptions paid by a third party such as a PBM, according to Mike James, vice president of the Association of Community Pharmacists Congressional Network, in-store pharmacies are very much at the mercy of PBMs, which act as middlemen in negotiating what health plan sponsors pay for drugs and how much pharmacies are reimbursed.
In recent years, those payments have diminished, says Scott Wink, pharmacy director for the Piggly Wiggly Carolina Co., who’s been handed lower reimbursements almost every year for the past 10. And the merger — considered by some to have created a duopoly controlled by Express Scripts/Medco and CVS/Caremark — is expected to make matters worse.
Desperate to recoup profits where they can, enterprising pharmacies are catering to a long-overlooked member of the family: the beloved pet (see the story here). The pet prescription business is a perfect fit since the vast majority of cat and dogs — more than 99% — are uninsured, meaning PBMs don’t apply.
What essentially amounts to a cash business is also relatively easy to enter since many of the drugs that pharmacies already dispense to humans are also effective in pets. While Kroger has brought pet-specific drugs to all of its pharmacies, Wal-Mart, Target and Walgreens only dispense pet prescriptions for which there is a human equivalent.
What’s more is that federal legislation could bring additional business to in-store pharmacies.
Presently, veterinarians in certain states can legally deny a patient’s request for a written prescription, requiring that they obtain the drug in-house or not at all. But The Fairness to Pet Owners Act of 2011 would require veterinarians in all states to write a prescription whether or not they plan to dispense the drug in-house, and disclose to clients that they may fill the prescription either at the clinic or an off-site pharmacy.
The emerging segment shows promise amidst uncertainty, as it hearkens back to the days when patients received reimbursement from their insurance company for prescriptions paid for at the pharmacy, outright.