Predictions from the experts on the pharmacy of the future.
On the surface, the pharmacy model hasn't changed much since its introduction in 1752. You meet with a doctor who sends the prescription to the pharmacy, where you then pick it up. It's an accepted routine and one that went unchallenged for hundreds of years. Then the pandemic hit, forcing consumers to shift their habits — and for pharmacies to adapt quickly.
Still, there were plenty of clues — even before lockdown — that the future of the pharmacy was in flux. First, lower profits for brick-and-mortar pharmacies as payments for filling prescriptions continue to shrink. Second is the increase of online pharmacies and mail-order services – a growing number of alternative medication delivery methods.
Now, as we look to the future of pharmacy, it's clear that consumer preference, pharmacy innovation, and technology disruptions will all play a role. The question is: How can pharmacies innovate to remain profitable and relevant in the consumer's health care journey?
We tackled this topic in our latest Relevant Health Roundtable. Representing payers, pharmacies, health plans, and pharma tech, our fantastic line-up of panelists included:
- Randy Hanna, Vice President, Pharmacy at Blue Cross & Blue Shield (BCBS) of Minnesota
- Amy Sayers, Director of Product Management & Business Development at IngenioRx
- Brad Fluegel, Healthcare Advisor and Former SVP of Walgreens
- Stu Libby, Chief Executive Officer of Zipdrug
Read on to learn how COVID-19 accelerated changes, the industry’s response, and what we can expect from the pharmacy of the future.
The Pharmacy of COVID-19
Operating during COVID-19 was different for all businesses, and pharmacies were no exception.
"Pharmacies themselves had to adapt," Brad said. "They were all open as essential businesses — they were one of the few places that people could actually go to buy products and pick up scripts. They were a pretty important part of the fabric of dealing with the pandemic."
Amidst the worst of the pandemic, not everyone was excited to head out to the pharmacy, especially when the number of cases continued to rise. Suddenly people were frantically looking for alternative ways to get a larger quantity of their prescriptions — such as 90-day supplies through the mail or home delivery. Stu described this frenzy of activities as "doomsday prep."
Payers, pharmacies, and health plans stepped up in a big way to ensure that patients had what they needed to say healthy. "All the pharmacies accelerated their activities … home delivery from store, home delivery from central fill," Brad said.
Randy recalled how the team at BCBS rallied around a single purpose. "As a plan, we had to figure out how we could ensure members could get their medications," he said.
To make this happen, BCBS removed quantity limits, adjusted utilization management programs, and removed prior authorizations on some medications to limit the amount of paperwork for doctors. They also opened up benefit design to ensure that everyone could get a 90-day supply through the mail or home delivery. "We saw a significant uptake of mail-order utilization," he said.
So how did this impact consumers and pharmacies?
"People hoarded their prescriptions in March, but then there was a bit of a gap," Brad said. "But we came back to a new normal with an elevation of home delivery."
Another thing that helped keep brick-and-mortar pharmacies relevant during the pandemic was the COVID-19 vaccines. As they became available, pharmacies were back on the front line to help get as many people vaccinated as quickly as possible.
The Need for Transformation and Innovation
It's fair to say that the pandemic highlighted the weaknesses of the current pharmacy model while shedding light on opportunities to become more relevant to consumers.
"Many people still enjoy coming in and picking up their drugs and interacting with their pharmacies. They are still filling a billion scripts a year at Walgreens and CVS. So, I think that experience is still important for a lot of people," Brad said.
"Sometimes people want to get their drugs right away and have an interaction with a person, and sometimes they are happy just having those things delivered to their house. I think there's going to be a multi-module approach in the pharmacy of the future that will involve open-door, brick-and-mortar pharmacies for the foreseeable future," he said.
But that doesn't mean that in-store pharmacies can go back to business-as-usual as if the pandemic never happened. Instead, according to the panelists, these businesses will need to transform to become more relevant — and there are a few ways that they can do that.
Reclaiming the Space
It's no secret that drug stores and pharmacies are under pressure. While stores carry an array of household and convenience products, profit margins are slim since competitors, like Amazon and dollar stores, often underprice these types of products.
"This is space that must be monetized," said Stu. "The real estate was the biggest competitive advantage ten years ago, and today it's kind of becoming a liability — unless new approaches are embraced."
Pharmacies are certainly trying something new. One strategy is to make pharmacies a destination for healthcare services and support. CVS has HeathHUBs within stores, and Walmart is rolling out freestanding Walmart Health clinics that offer primary care services. Other pharmacies, like Walgreens, are leveraging the expertise of primary care doctors from within the community.
"Each of them is trying to become a neighborhood health destination in building the pharmacy of the future," said Brad.
"It's been interesting to see the different models emerge," said Amy. "They almost took a page out of environmental design and an environmental wellness piece." She compared the change to a cafeteria redesign where you put a discounted salad bar in the front and keep the fries way the back.
Some pharmacies are reclaiming store space for health-related activities — for example, holding yoga classes or a diabetes support group. "It changes the whole notion of bopping in to pick up just a prescription or going through a drive-through, or getting your favorite laundry detergent or mascara there," said Amy.
Randy chimed in to share that pharmacy innovation isn't limited to large chains. "It's not only the larger pharmacies that are changing their processes and focus; we also see it in the smaller, independent pharmacies as well."
Elevating the Role of the Pharmacist
"The pharmacy is the front line," Stu said. "The member talks to their pharmacist ten times more often than they talk to their primary care provider, on average. It's really underutilized."
The problem is that, all too often, the interactions with pharmacists are extremely limited. But are there ways to reimagine the pharmacist-client interaction to be more valuable?
Amy sees an opportunity for pharmacists to operate at the top of their licenses. "So they're not just putting pills in a bottle and meeting some sort of daily quota, but they really have an opportunity to work with their clients and help them on their care journey."
Brad agreed that most pharmacists don't want to be "pill monkeys." He said, "They want to interact with people and help them get better."
So how might a pharmacist lead the way to better health?
"Just think about the competitive advantage, from a wellness standpoint, that a large grocery store chain [has] with their in-store pharmacy and the programs and services they can offer," Amy said. For instance, imagine if a person who's newly diagnosed with diabetes "could get — all packaged together with their prescription and supplies — three healthy meals to get them started."
How would that help them manage their condition from a whole-person health perspective? "The pharmacist is in a position to help do that," she said.
And yet, payments need to evolve to match an elevated role that requires more time and effort. "Pharmacists really have a role to play. We need to figure out the right set of incentives to make them do all those things," Brad said.
Leveraging Technology For Better Outcomes
Creating the pharmacy of the future will likely take more than redesigning stores and the customer experience. A significant opportunity for pharmacies is technology innovation.
"One of the things that's interesting in the industry right now is the application of AI to try to target why people aren't adherent on a person-by-person basis," Brad said. "The potential is getting some of that targeted messaging out to consumers to help them stay adherent."
Another opportunity is to use technology to encourage better performance from the pharmacies. Stu explained how his company, Zipdrug, does just that:
"Zipdrug is the first of its kind, a unique platform that connects patients to pharmacies based on merit, based on outcomes from the claims data … so we're kind of democratizing the pharmacy world and rewarding the best pharmacies with the best opportunities."
Technology can also streamline the delivery of medications for people who don't feel the need to visit an in-store pharmacy.
"The silver lining is that [COVID-19] propelled the pharmacy of the future to be active now. I believe that the pharmacy of the future isn't on Mainstreet. The pharmacy of the future is in the industrial park. It's a closed-door model where the patients are brought in digitally, and drugs are leaving the facility with messengers through existing infrastructure and going to the patient's home," Stu said.
So, What's Next for Pharmacies?
We wrapped up our conversation by asking our guests for quick predictions about the short-term future of pharmacy. Here's what they expect to see within the upcoming year.
- Randy: "The industry is more focusing on population health and keeping members healthy, giving them the right tools to be healthy and get to them before they have a condition or are sick."
- Brad: "I think that pharmacies will become increasingly a place for people to receive broader healthcare services beyond picking up pills."
- Stu: "I think if you build it, they won't come. It has been: Pick the right location with the right amount of foot traffic and, BOOM, people show up. I think it will be based more on data. The pharmacies that have demonstrated they can keep a population adherent — those are going to be the winners in the short term future.
- Amy: "The growth of the pharmacy as part of the overall health continuum and supporting the member from the overall health perspective."
Want to Know More About the Pharmacy of the Future?
This post covers just a few highlights from the roundtable. If you'd like to learn more about the pharmacy of the future, check out the recording of the entire webinar for full insights.
Watch now: Relevant Health Roundtable on Pharmacy of the Future.