Flash Returns Newsletter June 2018

PBMs in the Spotlight


Staying in business has never been more difficult for independent pharmacies. One of the major reasons is the relatively new and monstrous power of the middle man in the pharmaceutical industry. There are still options for profitability, more on that later. Groups like the NCPA, state boards, and thousands of independent pharmacy community members have been screaming about PBM practices for years. Arbitrary and monopoly like networks, DIR games, predatory audits, fluctuating reconciliation reporting practices and scoring, and credentialing designed to exclude have been adding up over the last 10+ years. Small businesses pharmacies are under pressure, and our patient’s families and our companies will be the loser if profitable independent pharmacies go extinct.


Important things have happened in as recently as Just May of 2018 and the year preceding it. 60 Minutes outlined the problem of PBMs for about 10 million viewers on May 6th, and I’m sure the public was shocked to learn that the world’s biggest PBM doesn’t feel contractually obligated to help a city reign in it’s drug spend. The term pharmacy benefit manager doesn’t appear to be a good title for this class of middle man if they don’t feel obligated to manage the pharmacy benefits of their customers. Maybe Pharmacy Industry Beneficiaries is better? They seem to be making more money than manufacturers, wholesalers, pharmacies, and reverse distributors and have their position in the supply chain as a middle man thoroughly entrenched. States like Arkansas have passed legislation with teeth (passed Feb. 2018), but federal action is likely to be the only thing of consequence for these Fortune 100 companies. President Trump thankfully gave a much-anticipated speech on May 11th focused on drug pricing and sustainability for the nation’s healthcare system. Unfortunately, PBM stock prices rose as no specific legislative proposals were mentioned. Congress must step in, and pharmacy lobbying groups have the ball in their court to ramp up the pressure. It has to be articulated that when margin leaves pharmacies and networks are limited to corporate mail order, patient care quality goes down. Further, that state and local congressional districts lose an important business to an often out of state corporation.


There are thousands of independent pharmacies thriving and expanding in the U.S. To do so, every aspect of the pharmacies business model has to be cared for and updated. Inventory management is not a daily task, it is a profitability driver. We see all the time pharmacies who has $15,000+ of cash and credit sitting on their shelves in the form of expired or expiring drugs. Having a technician spend an hour picking them and slapping a UPS label on the box is a great ROI move for any pharmacy to do today. FlashReturns.com has a portal designed so registration and returns can take less than 5 minutes. Negotiating with secondary wholesalers, marketing specialty products to local prescribers, utilizing short dated buys, collaborating with innovative GPOs, and building cash business in compounding are all options for independent pharmacies. Each task needs an in house champion, with clear goals and the tools they need to succeed. This is all easier said than done when there are more tasks than time, however not focusing on and investing in solutions is no longer an option.