Michael Barbella

Community pharmacists can expect problems on their hands over average manufacturer price (AMP) at the start of the year, followed by the need for tamper-resistant Rx pads in April. For hospital R.Ph.s, they have to guard against hospital-acquired infections, since Medicare won't be paying for the care associated with HAIs next year. Both community and hospital pharmacists can look forward to a knockdown, drag-out Presidential race in November that could determine how health care is provided in the future. 

Optimism reigns for community pharmacists

How optimistic are pharmacists? When asked what kind of business year they were expecting for 2008, 80% of the 460 respondents indicated that it was good, very good, or excellent. That figure represents a 15% jump over last year's figures, reversing a five-year downward trend. Not since 2002 have R.Ph.s expressed that level of optimism. Interestingly, while only 65% of pharmacists surveyed last year expected a good, very good, or excellent year for 2007, in the current survey, 74% reported that this year will actually be good or very good, and another 10% expect this to be an excellent year. 

Undoubtedly higher Rx volume plays an important role in the overall optimism and pharmacists are expecting a healthy growth in sales for next year. More than half of all respondents-59% in fact-predict that sales will increase in 2008 by an average of 10%. In addition, 67% of respondents predict that operating expenses will rise. 

The optimism and improved profits came despite a sense of increased competition. While last year Medicare Part D topped the list of worries, this year's focus turned to increased competition from big box and supermarket pharmacies offering discounted generics. When Kmart first introduced its discounted generic plan last year-followed shortly thereafter by Wal-Mart's own plan-it set in motion an increasingly competitive market, with chains and big box pharmacies offering steeply discounted and even free generic medications.  

Although cash customers make up only 10% of the business for most pharmacies, it is clear that the discounted generic movement is having an impact. Respondents pegged the discounted generics as their top concern, with 33% of respondents indicating that it was a negative factor impacting their company, followed by Medicare Part D (32%) and the move of some cough and cold medicines behind the counter (19%).  

Now that Medicare Part D has moved out of the initial shock-and-awe phase, pharmacies are beginning to get a better grip on its true impact. Nevertheless, Part D was the top news item for 2007, with 28% of respondents selecting it as the top story, followed by the release of the AMP rule (17%), the drug error TV exposé on "20/20" (10%), and the growth of in-store clinics (9%).  

While the Presidential election is less than a year away and will certainly be a top news story for 2008, many pharmacists are ambivalent about how important it will be for pharmacists. Forty-three percent of respondents indicated that they did not expect the new President to have an impact, while 25% said that they did. The remaining 31% were unsure of the impact. Still some respondents hoped that "the elections will focus on the healthcare issues and, thus, will impact the delivery of health care." 

Respondents were more comfortable commenting on the importance of specific government programs. When asked specifically about how Part D was impacting their business, 28% of respondents indicated it had a positive impact on their pharmacy, while 37% felt it had a negative impact. The remaining 35% did not know what impact the program has had on their pharmacy. In comparison, last year, 55% of respondents felt the impact was negative, while only 24% saw it as a positive. As one respondent this year noted, "Part D had a dual effect. First, it created severe problems with reduced cash flow and lower profit margins, but it increased the volume of business and helped many patients take medications that they previously were not taking because of cost. Many patients qualified for additional help with their prescriptions and had no help previously." 

One of the promising aspects of the Part D program has been the increased opportunity to deliver medication therapy management services to patients. 

' survey found that 34% of community pharmacists reported they are providing MTM services, although only 18% were actually reimbursed for it.

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Among the questions asked were what is expected for sales, salaries, and staffing for 2008.

FAIR OR FOUL?

The new technology has been anxiously awaited. According to Ron Bone, senior VP of distribution support at McKesson, the new tags will be used with the ongoing On Track system that is being utilized by a consortium of companies to use RFID to track pharmaceuticals in a real-world environment. In addition, AmerisourceBergen is waiting for the new UHF RFID protocol before rolling out its Track and Trace pilot program in May. 

RFID technology has been around for several years and has been touted as a key step in improving security and increasing speed in the pharmacy supply chain. RFID tags are small computer chips that can be used to replace bar codes on individual items or larger pallet shipments. The technology received a major boost when Wal-Mart announced it wanted its top suppliers to move exclusively to RFID. Unlike the ubiquitous bar code, RFID tags are computer chips that can store a significant amount of data and can transmit those data to readers that can be inches, feet, or even yards away from the actual tag. RFID is already in use for wireless payment systems like the ExxonMobil Speedpass and for automatically paying tolls on many highways. 

Last year, about half a dozen vendors teamed up to advocate the use of UHF technology for item-level tagging of pharmaceutical products. The companies, which included ADT/Tyco Fire & Security, Alien Technology, Impinj, Intel, Symbol Technologies, and Xterprise, cowrote a paper that said UHF outperforms HF (high frequency) at the item level and is the "right choice" for enterprise-level RFID applications in the pharmaceutical industry. 

The paper contradicts a March 2006 report from ODIN technologies which concluded, after various tests, that HF tags outperform UHF tags. 

"The industry has long thought that the only way you can utilize RFID [tags] is through high frequency," said Gordon Adams, senior VP of sales for Vue Technology. "There are technological challenges with using UHF for RFID purposes. Liquids and metals are very hard on RF-one absorbs RF, the other blocks it. Our technology can work with either UHF or HF." 

According to Adams, the tracking system, touted by Vue Technology as "a major breakthrough," settles the debate among RFID users and vendors over the effectiveness of UHF RFID technology in pharmaceutical applications. Both UHF and HF tags have been tested and deployed in the pharmaceutical industry, and conflicting reports have touted the benefits of the two technologies.  

Vue's item-level tagging solution is based on its TrueVUE RFID Platform. It works by reading the data on RFID tags attached to pharmaceutical products and transmitting the data through reader antennas embedded in pharmacy shelves, countertops, and receiving stations. The technology leverages Gen II UHF tags from popular suppliers and standard Gen II readers to track any pharmaceutical product, from liquids and pill bottles to blister packs or gels. 

In a move that could significantly improve the monitoring and tracking of retail drugs, RFID (radio frequency identification) solution providers have developed an inventory tracking system for the pharmaceutical industry that uses ultrahigh-frequency (UHF) RFID tags.

Author | Michael Barbella

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FAIR OR FOUL?

RFID tracking system tags drugs at item level