Chain, independent drug retailers strengthen strategic alliances

The drug store industry has taken the gloves off. But its bout with the forces that threaten its future is likely to go many rounds and to require all the swiftness, steely nerves and endurance chain pharmacy leaders can muster.

The threats to chain and independent pharmacy retailers are well documented but no less daunting now than they were a year ago. Among the toughest:

White House and congressional ignorance of and indifference to pharmacy’s challenges and its health care contribution;

U.S. fiscal policy that consistently targets community pharmacy for the brunt of its health care cost-cutting efforts, most notably this year in the Medicaid program;

“Low and slow” reimbursement policies among the prescription drug plans administering the Medicare Part D drug benefit program, which have stretched many independent and small-chain pharmacies to the breaking point as the PDPs hold up payments for Medicare scripts dispensed—in some cases for 45 and even 60 days, according to angry pharmacy owners;

Continuing resistance from pharmacy benefit plans and corporate health plan sponsors to the notion of paying for advanced pharmacycare programs like disease management, patient education and disease outcomes monitoring and management—despite growing evidence that those programs save significant health care costs over the long run by keeping patients out of hospitals and acute-care settings;

A very mixed progress report on the launch of Medication Therapy Management, which Congress mandated as part of the Medicare Part D program, but which has spurred much confusion about what constitutes MTM, which patients qualify for it, who pays for it, who delivers it and how much it costs.

The threat posed by mail order pharmacy continues—particularly mandatory mail plans that severely penalize plan members who opt to purchase their prescriptions from local pharmacies rather than from the faceless mail order facility sponsored by their plan.

Those and other threats have spawned an unprecedented era of coalition building among chain and independent pharmacy groups. Realizing they have much in common when confronted by massive Medicaid funding cuts, clumsy and ill-informed government policies and other forces that undercut already-slim pharmacy profit margins, organizations like the National Association of Chain Drug Stores, the National Community Pharmacists Association, the American Pharmacists Association and the Food Marketing Institute have joined forces to lobby on behalf of all of retail pharmacy. Also joining the battle have been pharmacy educators, state pharmacy associations and pharmacy policymaking groups.

The result is the creation of alliances like the Coalition for Community Pharmacy Action and the Community Pharmacy Foundation. Both collectively under those umbrella organizations and individually, pharmacy leaders are lobbying hard on Capitol Hill and in state houses to turn back budget cuts to pharmacy reimbursement, mandatory mail order plans in public health programs and other threats to the industry.

Thus far, their efforts have met with only limited success. Despite an occasional victory in the legislative arena—most notably in ongoing efforts to turn back a mandatory mail provision in the new funding bill for military programs like TRICARE, the military health plan, and in efforts to win over new supporters among legislators in Congress—the pharmacy lobby all too often finds itself on the short end of the stick when it comes to the divvying up of federal health care dollars for programs like Medicaid.

One executive with NACDS, interviewed by Drug Store News in late July, issued his own wry commentary on the lobbying power and economic clout of chain and independent pharmacy versus that of powerful groups like the pharmaceutical and insurance industries. “PhRMA employs 40 outside firms to lobby on its behalf. We don’t,” said Paul Kelly, vice president of government affairs for NACDS.

“They are sort of everywhere” on Capitol Hill, he added in an interview in late July. “And they’re smart. They develop good arguments that make sense to policymakers. We have good arguments, too, but they’re just in more venues where [lawmakers and staff] are to make their points to support their goals.

“Ultimately, this industry, I think, is going to have to focus more on our natural grass-roots power, and that has to be done more effectively,” Kelly added. “We have to focus those assets, which, if done properly, could be very impressive and very effective. Drug stores are going to have to get used to the idea of making time for some of their people to communicate with members of Congress.”

Kelly cited the grass-roots lobbying effort that went on last year, in which chain and independent pharmacies enlisted their own customers who were members of the military or their dependents in successful bag-stuffer campaign. “Patients were getting information on how to call Congress and weigh in on these TRICARE [mandatory mail] provisions, and it succeeded.”

In his first presentation to members of NACDS as the group’s new president and chief executive officer earlier this year, Steven Anderson rallied the industry to take the offense in communicating the value of community pharmacy.

The new CEO echoed the oft-repeated call by former NACDS chairman Tony Civello for all of retail pharmacy to “speak with one voice” and forge a more powerful coalition to spearhead common goals. “It’s time for a change. And NACDS is going to lead that change,” Anderson declared in his “State of the Association” remarks at the NACDS Annual Meeting in Scottsdale, Ariz. “My goal is to position NACDS to take the lead in uniting the industry and to take the offense in developing the strategy and framing the message. We must make sure that no one has more authority than we do when it comes to the dictates and developments that impact chain pharmacy,” Simply said. “We need to quit playing defense.”

“We must promote an accurate perception of this industry that promotes the value of pharmacy, our importance to the local community and the national economy, and the critical role pharmacy plays in health care and patient outcomes,” Anderson added.