Access Insights 2024: The State of Retail Pharmacy

PC: Coincidentally, you also moderated a panel on “The State of Retail Pharmacy.” What main concerns and challenges did you dig into?

Roth: I think what was more interesting to me were the conversations I had while we were preparing for the panel. The panel really had a negative attitude on needing help. They're between a rock and a hard place, because the PBMs establish reimbursement. So, they set the sell prices, and if you have to buy through the wholesaler, the wholesaler is basically in charge of their cost of goods. The retailers sit between two bundled models.

Yesterday, one of our panelists talked about how specialty is a little bit easier to focus on because you have a couple hundred products and everything is managed at the NDC level, whereas a retailer tries to basically balance everything they have in their portfolio. One of our panelists, Sarit Roy, one of the regionals, he has a great point of view. I mean, he's been looking at his business by product mix, by patient, by payer and by provider. I haven’t heard of another pharmacy looking at it that way, and he's managing his book of business that way. I just haven't seen that level of creativity be offered with the larger entities that are out there. I do think they're thinking more about Amazon than they kind of led on, because a lot of people brush Amazon aside.

That’s what’s surprising about both Amazon and Cost Plus to me, the light that they’re shining on the difference between what insurance costs on a product versus what cash costs on a product, and we're seeing cash now tick up into the 10% to 15% of level of our pharmacy business. It’s become prevalent for generics. I was hoping the panel would talk more about what they think it's going to take for a cash market to evolve.

So, I have this idea that I posed to a couple companies, and it's different than what I think has been done so far. But my concept is, if the insurance plans want a high price, there's a separate NDC that works on that product, and then you take the same molecule, and you put it in a different package and a different NDC, and that's what goes to the VA, Kaiser, and that also becomes your cash price. It wouldn’t have a negative impact on your government pricing policies, because all three of those categories are not subject to what feeds into your government price calculations.

These are the types of innovative ideas that we need to be more comfortable embracing. Mina Dada on our policy panel from Sidley Austin, I was glad to hear her say yesterday that manufacturers get more and more comfortable with innovative moves that haven't been done before. In pharma, we’re seeing manufacturers try new ideas left and right. I hope there's a solution to help the retailers. I do think it's going to require some rethinking by the manufacturers, because we do need them out there. I don't know what plan B looks like

Full Interview Summary: The pharmaceutical industry is currently facing significant challenges, particularly in terms of product access and commercialization. Factors such as pharmacy economics, prior authorizations, and step edits are making it increasingly difficult for manufacturers to launch new brands in retail settings. Additionally, the growing prevalence of generic medications is contributing to these challenges.

To address these issues, manufacturers are exploring various strategies. These include greater collaboration with stakeholders, increased use of data and technology, and innovative approaches to product launch and commercialization. However, the industry still faces significant hurdles, and finding effective solutions will require continued effort and innovation.

By leveraging data and technology, manufacturers can gain a better understanding of the challenges they face and develop more targeted and effective strategies. Additionally, increased collaboration between stakeholders, including manufacturers, pharmacies, and payers, is essential for addressing the complex issues facing the industry.