Viewpoint: Start charging for your services now

May 8, 2006

The handwriting is on the wall. With pharmacy being reimbursed at alow and slow rate under Medicare Part D and severe cutbacksexpected in the payment for generic drugs under Medicaid, communitypharmacy will need a new business paradigm in order to survive andgrow into the 21st century.

What pharmacy needs to do is to start charging for services it has offered for free until now. A dispensing fee is already charged and covers the basic, minimal functions necessary to provide a prescription product in compliance with state and federal regulations. What other services can pharmacies demand payment for? Here are some examples:

Pharmacy should also bill for their professional and clinical services. Examples include:

Traditionally, multiple services have been provided by community pharmacy for free, while a profitable markup was maintained on the commodities sold and dispensed. The markup is undisclosed to the consumer, who is left to assume that the price paid is fair and that market forces (i.e., competition) will take care of any required adjustments. Today, community pharmacy is no longer able to make the necessary pricing adjustments, with the majority of Rxs paid for by third-party plans providing minimal reimbursement. Without changing the compensation approach, retail pharmacies will either have to reduce their services or close their doors.

This is where a fee-for-service pricing system can make a difference. All prescriptions are priced using the same format. Consumers should be able to select the level of service required in addition to the items purchased and be charged accordingly. The item purchased should be priced at cost. Extra services should be available as options at predetermined rates. Full disclosure of prices allows consumers to identify what they are paying for and to assess its value. Services can be paid for by consumers or by their insurers. The decision of a third party to cover all or part of a service charge would be determined by the plan's perceived value of the services and overall comprehensiveness of the plan coverage. This would be no different from a home insurance plan including coverage for temporary lodging or an auto insurance plan covering a rental vehicle.

Charging for services makes providing the services economically viable and allows the pharmacy to allocate staffing hours more efficiently. Consumers can control their costs by electing to purchase basic or premium services. With Rx pricing uniform and offering full disclosure, consumers can compare competing pharmacies based on the service charges required by each pharmacy and the value that each service provides. When comparing community pharmacies with mail-order options, consumers can identify services that are available only at their corner drugstore and opt to purchase service independently of product if necessary.