Well, today is Black Friday. Big box stores, Malls, and pharmacy chains all over the country are working hard to make their year end profits in the fourth quarter of the year. I heard that most of the chain operations make 50% of their profits for the year in the fourth quarter. Small business won't see that much interest during this time as we usually can't afford to offer so called deals and give away merchandise below cost, well unless you are talking drugs. If you are talking drugs then every day is Black Friday for many independent pharmacy owners. Why do we dispense prescriptions every day that we lose money on? Because our patient's pharmacy benefit provider believes that the only service we provide is putting pills in a bottle. Case in point, the new Express Scripts contract that has a 40 cent dispensing fee. As those of you in pharmacy are aware the spread on what we pay for the drug and what we are paid for the drug is just about even. In other words we get exactly what we pay for the drug from the PBM's. Add the dispensing fee and viola we make 40 cents per prescription. Too bad the average price for a brand drug is over 150 dollars and the average generic is over 50 dollars. Add the fact we have to finance the drug for the patient (really their insurance company) and we have a firestorm made for negative cash flow. Wait, we can make up the difference by filling more generics right? That was a true statement back before 2009. Every PBM has dropped the cost of generics to the actual acquisition price the pharmacy pays for the generic drug. So, we have to make our profit on the front end merchandise of the store. Well, most Black Friday Pharmacy chains make anywhere from 60 to 80 percent of their sales on their front ends sales. You know, merchandise made in China, cigarettes, and alcohol. Most independent pharmacies make most of their profits from their pharmacy departments with less than 10 percent of sales from the front end merchandise. With profits declining from the pharmacy departments and small sales from the front end departments, what will independents do to remain profitable? The old adage "if you can't beat them, join them" holds true. Independents are selling to chain pharmacies in larger numbers than in the last several years, or we will need to start taking a page from the chain pharmacy playbook. China products, cigarettes, beer, wine and lots and lots of snack foods.
When I graduated from pharmacy school many many years ago I never thought that as a pharmacist I would have to become a convenience store clerk in order to make enough money to pay my bills. With Uncle Sam and most major employers being focused on just paying for product, our professional services are being overlooked. Don't be surprised that one day your local drugstore is either no longer there or they have become the local big box clone. I am looking for Black Friday stuff to give away today below cost. You guessed it, most of the prescriptions I fill today.
Spot on. If you want to change the world, tell a better story. Regardless of the final outcome, every day we stay in the fight, we make a difference.
ReplyDeleteMy Dad attended a social event recently and met a gentleman who had type 1 diabetes. Dad shared that his son had diabetes and his new friend shared a tip, "There's a local diabetes program that changed my life." Dad inquired further to find that it was our pharmacy DSMT program. Pharmacists do change lives. Keep telling our story and we will keep fighting the PBM monsters.