A pharmacy business model to squawk about

April 10, 2016

The future of pharmacy can be reduced to a single word.

David StanleyI don't think much of self-proclaimed “visionaries” who make bold predictions of what the future holds. Show me the person who in 1990 accurately predicted the impact of the internet on people's lives and maybe I'll listen to her.

Mostly, though, people are about as accurate when they forecast the future as the pharmacy manager I saw quoted in a 1998 trade magazine article who said, "We're doing this for one reason, to help us free up time so we can spend more with the patients."

Are you spending more time with patients now than you were in 1998? Unless you bought your own store, as I did, I'd be willing to bet everything the future holds for me that the answer is no.

See also: Reformulate, remonetize - and let the patient beware

My two cents

Despite the foregoing, I'm going to make a guess as to what the future holds for our profession.

Chickenization.

I don't mean members of our profession being afraid to confront the powers that be over our deteriorating professionalism, although that certainly is a cause. I'm talking about pharmacy following the model of the chicken industry - specifically, the relationship between the country's largest chicken processor, Tyson Foods, and the “contract farmers” who actually raise the company's birds.

These farmers take delivery of Tyson's chicks, buy Tyson's feed to give them, raise them in barns that meet Tyson's specifications (which can change and leave the farmer with no choice but to pay for expensive modifications), and are paid according to a “feed-in-to-pound-out” ratio.

The only thing the farmer actually owns is the barn itself, the piece of capital that just happens to be the worst investment in the whole industry. As journalist Christopher Leonard told National Public Radio's The Splendid Table: "The farmers have almost no control over the most important things in the operation ... So essentially they end up taking orders from a big company like Tyson Foods in the same way a serf might be tied to a lord many, many years ago."

See also: Working together for the greater good: MD vs. RPh

Same story, different names

Now, let's rewrite some of that with minor changes.

“Pharmacists take delivery of the PBM's drugs and are sent their client's prescriptions, which must be filled in pharmacies that must meet the PBM's specifications (which can change and leave the store owner with no choice but to pay for expensive modifications).

The pharmacists have almost no control over the most important elements of the operation ... So essentially they end up taking orders from a big PBM in the same way a serf might be tied to a lord many, many years ago.

 

Oops, already morphing

Is it really that hard to imagine such a scenario in pharmacy's future? It's not nearly as much of a stretch as it would have been in the 1990s to envision the rise of Facebook.

As a matter of fact, parts of it are already here. PBMs are paying pharmacists “incentives” for achieving goals that will help them attain or keep their coveted Medicare star ratings. These “incentives” could easily be applied to things such as filling a certain number of prescriptions an hour. Contracts could also be easily written so that you'd have no financial viability without these “incentive” payments. And a mandate that all contracted pharmacies must have a drive-through? Not hard to imagine at all, is it?

“When you spend a lot of time going around small towns in rural America,” said Leonard, “where raising meat is still the economic bread and butter, the phrase chickenization is actually a pretty loaded political term ... When a business becomes chickenized, it essentially means farmers become powerless. Transparent markets are replaced by contract arrangements and companies get a tremendous amount of control over the business.”

For a generation now, the big thinkers of our profession have talked about a future happy time when pharmacists make clinical contributions to patient outcomes, but what has happened over the past 20 years is that we have moved toward the Tyson business model.

That must stop. We must nip the chickenization of our profession while it is still in the bud. For that to happen though, we must stop being chickens.