Q&A: As Closures Mount, Independent Pharmacies Must Diversify Services
Douglas Hoey, CEO of NCPA, discusses what pharmacies can do to increase revenue and avoid shutting their doors.
Over 300 US pharmacies have closed since December 2024, largely due to pharmacy benefit managers and stalled legislative reform, according to the American Economic Liberties Project.1 Independent pharmacies, critical in many communities, need to adapt to survive. Douglas Hoey, RPh, MBA, CEO of the National Community Pharmacists Association (NCPA), said many are turning to niche services like long-term care at home. Others are expanding into clinical offerings such as compounding, immunizations, and mobile outreach to remain sustainable.
Q&A: As Closures Mount, Independent Pharmacies Must Diversify Services / Sherry Young - stock.adobe.com
Drug Topics® sat down with Hoey at the American Associated Pharmacies (AAP) Annual Conference, held April 10 to 12 in Austin, Texas, to discuss what pharmacies can do to increase revenue and avoid shutting their doors, as well as the importance of independent pharmacies in the health care landscape.
READ MORE: Q&A: Douglas Hoey on PBM Reform, Optum Rx Cost-Plus Announcement | AAP 2025
Drug Topics: As community pharmacies continue to close around the country, what can pharmacies do to increase revenue and avoid shutting their doors?
Douglas Hoey, RPh, MBA: Pharmacy closures are an issue, and it's not only independents. Of course, we don't advocate or we don't represent the chains, but the chains are closing too actually, 3 times as fast as the independents, and the independents are closing too fast. As far as things that pharmacies can do, some of it is continuing to look for niche services. Long term care (LTC) at home is one example that I know a lot of our members have gotten more involved with to serve patients who qualify for long term care at home. Usually, the contract rates are better for those patients. That's one thing pharmacies are doing.
Another thing that pharmacies can do, and this is not easy, but it's to look at their contracts, and those that are paying them below their cost on a consistent basis, make the decision as to whether or not they can still continue to have that contract. We hear this from pharmacy benefit managers (PBMs) all the time. We say, “PBMs, you're paying pharmacies too low.” We don't negotiate the rates, but what we're told, the rates are below their cost. The PBMs come back and say, “Well, 95% of them signed the agreement, so I must be paying them too much. I'm going to cut it down the next year.” As long as pharmacies continue to sign the contracts, the PBMs are going to continue to offer a lower reimbursement. We would recommend that pharmacies look at those contracts and make the independent business decision they have to make. We can't tell them to. They have to make their own. If that contract is paying them below their cost, is that a contract they can afford to continue to serve? I don't say that lightly, because that would mean turning patients away, which is the exact opposite of everything in our bodies as pharmacists. The more people that walk through the door, the better. But there may be some instances where the people walking through your door are putting you out of business because of their insurance, and there may be decisions that have to be made where those patients have to find another pharmacy, just like physicians will turn patients away if they don't take their insurance.
With the number of closures, patients are going to have a harder time finding a pharmacy, and that should go up to their employer, that should go up to their insurance company, to say, “look, the pharmacy I go to has turned me away because your rates are so low. I can't find another pharmacy because of distance, geography or other pharmacies have gotten wise to it too and are refusing to accept some insurances.” As long as pharmacies keep signing the agreement, they tell us “We're just going to go lower the next year.” Those are a couple of things.
I did just come back from the CPESN meeting, Community Pharmacy Enhanced Service Network, their mid-year conference. I'm talking to a lot of pharmacists there who are providing patient care services and getting paid for them. Some states are more advanced than others, or have more opportunities. I talked to some pharmacists in Iowa. Their network is averaging several thousand dollars a year in services. It's not enough to make it turn around if the ship is sinking, but it can be a life preserver, and it can help to soften some of the losses in the dispensing area. There are some clinical service areas that are helping some pharmacies, as well as the LTC at home, and of course, compounding has been a lifesaver for many pharmacies for many years. With tariffs supposed to be kicking in, I think there'll be even more drug shortages, which could mean even more opportunities for pharmacists to take care of patients through compounding.
I guess the last thing I'd mention would be things like immunizations, which is an important area. Most of our pharmacies do that already. The more they can do those immunizations, the better. Getting out and going out to schools and churches and businesses, and I know a lot of our members have mobile immunization units that have been successful for them, as well as travel vaccines. Just filling those gaps that the big guys can't fill. The big guys are closing, so they're especially vulnerable, and communities need those services provided by independents.
Drug Topics: Is there anything else you wanted to say?
Hoey: Appreciate the work of our independent pharmacists. In health care, there's a lot of people who'd like to make it an assembly line where one size fits all and every patient is the same. If patients were robots, that would work great, but they're not. People have individual needs, and our members are the safety net for all those people who fall off the assembly line. I think just reminding payers, members of Congress, and media, that without independents, it's beyond a health care gap. I mean, people will die, and I don't mean to be hyperbolic, but people will die without independents. You need us here. Pharmacy deserts will expand. You need us here. Don't wait until it's too late to pay pharmacies fairly for the services that we provide.
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