In the latest edition of Drug Topics, senior pharmacist Truman Lastinger describes a scenario for what he describes as Retail Pharmacy in the US.
Because US pharmacy is a bit ahead in evolution than Australian pharmacy his comments are very relevant for today’s Australian pharmacy, the practice of which has split into three components- Retail Pharmacy, Community Pharmacy and Clinical Pharmacy.
The retail Pharmacy type in Australia is modeled on the US version, but has not yet reached the physical size and diversification of the US model. The Australian Community Pharmacy is struggling to re-invent itself and while the opportunity exists, it continues to wait to be passively led from the “top down”.
Unless there is a revolution and leaders emerge from the “bottom up” Community Pharmacy is in danger of dying.
I have never said that before because I have always known there is a better model for community pharmacy.
I still believe that a right turn can be taken at the next pharmacy crossroad.
The current Australian political climate is very much taking us down the health model involving private health insurance and “user-pays” principle and the possibility of the PBS being privatised.
We are just in transition, leaving the universal Medicare scheme behind and moving to a model that only the wealthy can sustain.
That is what the US health system comprises.
Truman Lastinger reflects on whether US Retail Pharmacy (which we would equate as being community pharmacy in Australia) can survive in that type of climate, because he is living its effects now.
And because he is of a similar age to myself, I find his thoughts resonate with mine.
He opens his article with the comment:
“The way I see it, retail pharmacists are no longer relevant in healthcare. They have allowed themselves to be relegated to the position of over-educated technicians.
It didn’t have to be this way. In the 1960s, pharmacists had a chance to step up to the plate and become responsible for medical and pricing decisions, but they decided to defer to the powers that be and allowed pharmacy associations and universities to make decisions that were detrimental to the business of retail pharmacy.”
That statement very much reflects a point of view I can align with, because we had a similar situation occur in Australia at a later date.
That decision has been at the root of disharmony between academia and what we call in Australia, Community Pharmacy.
And since that event we have seen Community Pharmacy subdivide into Retail Pharmacy (warehouse-type pharmacies) and Clinical Pharmacist Practices.
All the above Australian Practices are really extensions of Community Pharmacy, each new variant simply leveraging itself from the original model and creating new barriers that hold back a unified profession.
Truman Lastinger claims that for US pharmacy there was a wrong turn at the crossroads in 1960.
“Pharmacy associations and universities tried to turn pharmacists into professionals by having them charge a professional fee when they dispensed a drug.
This effectively limited the potential for profit on the drug involved.
At that point, retail pharmacy lost control of its business.
Universities were teaching pharmacists more and more skills that they had no time to use in their practices — even if pharmacy boards had permitted, which they did not.
For example, pharmacists were taught that clinical pharmacy is the highest form of pharmacy practice.
But now, in the retail setting, there is no time to use this training.
Pharmacists are totally overworked by managers who are only concerned about the bottom line.
This bottom line has been affected by “professional fees” and illusory Average Wholesale Prices (AWP’s)that have no relationship to what manufacturers actually charge for drugs.
The manufacturers could offer pharmacies a discount and still make a huge profit.
This discount situation actually benefited Pharmacy Benefit Managers (PBM’s) and insurance companies, which soon realized that they could demand large discounts from drug manufacturers by threatening not to put their drugs on their preferred lists.
At the same time, retail pharmacies were locked in at a low “professional fee.”
Now the PBMs and drug manufacturers are enjoying the profits that retail pharmacies could have shared if they had not accepted the “professional fee” in the 1960s.”
A parallel situation has followed here in Australia, and it is called the Pharmaceutical Benefits Scheme (PBS) which is just a publicly owned version of a US Pharmacy Benefit Manager.
The PBS has followed an identical pathway and we now see the PBS “product” in the last stages of its life cycle, commoditised to a format and cost structure that suits it becoming a supermarket department, rather than a system that has moved to health enhancement with appropriate payment for the skilled pharmacist professional.
The recent privatisation of Medibank is but one further step towards the US health model.
While I can empathise with the thinking of Truman Lastinger I know that there is a model of clinical pharmacy that does work in a community pharmacy because my management consulting company did the pilot study over 35 years ago.
There are other models that would suit pharmacy, as long as each pharmacy specialises in what it provides.
Some of these models have been developed outside of pharmacy yet they have drugs at the heart of their programs and no pharmacist at the centre.
That strikes me as strange, but there is no advocate organisation for clinical pharmacists and they are one of the few health professions that do not have a full provider status and therefore cannot access Medicare or the PBS for a range of reimbursement supports.
Provider status is a must for this sector of pharmacy.
Truman Lastinger also has a comment for drug manufacturers.
“The profits generated by the manufacturers are phenomenal.
When a drug manufacturer can pay a fine in excess of two billion dollars for illegally promoting off-label use of its drug and still stay in business, something is wrong with the system.
Now some manufacturers are buying up generic drugs and pricing them with massively high AWP’s, and nothing, apparently, can be done to stop them.
In order to increase their own income, the universities went to an extended curriculum, resulting in the PharmD, which they said would make the pharmacist a professional.
The universities continued to entice students to come into pharmacy by promising high salaries. They have been successful in recruiting, because now any person can get student loans and can go to school for six to seven or more years.
Upon graduation, pharmacists are saddled with high payments and big debt.
With many independent pharmacies now out of business because of reduced profits, pharmacists then have to accept positions in megapharmacies, where even with that doctorate degree all they can do is try to keep up with the prescription output required by management to sustain business.
This requirement for prescription output is driven by the “professional fee” and the artificial Average Wholesale Price (AWP).”
The drug manufacturers have been massively successful in generating a high income model.
Part of that model involves paying politicians, researchers, journal peer review panels, consultancy fees to doctors – an excessive amount of money for the services rendered.
These amounts are recouped as marketing expenses and rolled into the price of new and existing drugs.
The same expenses are publicly claimed to be part of research and the legitimate reason for recouping these costs through drug price increases.
They have also introduced or promoted constraints on community pharmacy in areas of compounding, the sale of complementary medicines, and lobbying for favourable regulation such as advertising direct to consumer and down-scheduling drugs without a conscience (because not all down-scheduled drugs are safe).
Manufacturers have been successful in suppressing community pharmacy and pharmacy wholesaling profit margins to a bare minimum, leaving little financial muscle to combat these adverse strategies.
Their sheer size gives muscle and money to projects that are damaging to community pharmacy, but always well hidden from view.
Truman Lastinger continues:
“For a while, pharmacies could increase profit by increasing prescription output.
But then, with PBMs and insurance companies claiming more and more of this profit by demanding more in discounts and in moves toward AAC (actual acquisition cost), things soon got to the point that in order to make a profit, pharmacies had to cut personnel.
With these cuts in personnel, pharmacists have become too busy to intervene unless they see something really detrimental to the customer.
Even then, the managers are not happy, because they falling behind in their prescription outputs.
Meanwhile, physician assistants and nurse practitioners are right where pharmacists could have been.
With a lot less education than pharmacists receive, they make decisions for patients and are able to receive pay based on these decisions.”
The first sentence of the above extract describes exactly the position of Australian community right now.
We are seeing disruptive tactics being employed by government and Retail Pharmacies pushing their pharmacies to do more and more PBS items for a lower and continuing lower return (the co-payment discount is just a foretaste of what is yet to come).
The last sentence describes the fact that pharmacy leaders have not recognised these self-evident trends.
They have not set out to deliberately re-engineer a new community pharmacy infrastructure and health delivery service, allowing the extreme pressures to be removed and to also encourage Community Pharmacy leaders to start the process from the bottom-up.
They have been blind to competitor health professionals, enabling them to supersede some of the roles that pharmacists have aspired to provide.
Addendum: The importance of taking the long view is underscored by George Santayana’s famous dictum, “Those who cannot remember the past are condemned to repeat it.”
Along those lines, here is additional food for thought, from Winston Churchill, speaking in Britain’s House of Commons May 2, 1935:
“When the situation was manageable it was neglected, and now that it is thoroughly out of hand we apply too late the remedies which then might have effected a cure. Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes its jarring gong — these are the features which constitute the endless repetition of history.”
I have lived through three business cycles of 20 years – a total of 60 years in pharmacy.
Since 2000 I have been the editor of i2P trying to deliver some of the lessons from history for current day pharmacists.
The reason for starting i2P was initially to draw attention to the nursing and medical professions setting out to impede pharmacy progress in the primary health care space, and to counter some of the pharmacy leadership organisation strategies that were corrosive and divisive for the profession.
It’s been a corny anecdote to say that “pharmacy is at the crossroads” and it is an expression that is obviously used in the US as well.
So to conclude this article I would simply say that if pharmacy makes the right turn, right now, there is still time to avert the disaster that Truman Lastinger refers to.
It requires strong leadership and I would further point out that to one of the most important sectors of pharmacy practice – the clinical pharmacists – there is no leadership organisation to drive and advocate for them at all.
Much still left to do – just do it!
Truman Lastinger tells the story of his 58 years in retail practice in “Farming to Pharmacy: Memories of a Sharecropper’s Son,” available from Amazon and booklogix.com.
Contact him at email@example.com.