What these trends are and how to respond
- Long-time macro trends continue to shape independent pharmacies
- These include consumer-related and industry trends
- By understanding these trends and their implications, owners can decide how to capitalize on them
Shaping the future
What are the major forces and drivers affecting independent pharmacies in 2019 and beyond?
At McKesson ideaShare 2018, Chris Dimos, McKesson’s President of Retail Solutions, shared his thoughts on major trends affecting the industry. In addition, articles and studies show remarkable consistency in assessing major trends.
These trends — categorized as consumer-related and industry trends — are not new. They have emerged over a long period and will continue for the foreseeable future.
- Rising expectations
- Aging population
- Increase in chronic diseases
- Adoption/use of technology
- Preferred networks
- Specialty drugs
- Labor market
For independent pharmacy owners it is important to be familiar with these trends, understand how they affect pharmacy, and develop ways to capitalize on them.
Listed are 10 trends affecting pharmacy and implications for pharmacies. There are links to articles on SmartRetailingRx that go into greater depth on many trends.
10 macro trends
Implications for independent pharmacies
1. Rising expectations
- Americans have rising expectations for service, timeliness, selection and cost.1
- 83% of consumers think best-in-class experiences raise their expectations for all experiences.2
- You are judged not just against direct competitors, but against all other companies that consumers buy from.3
- Independents have higher satisfaction levels than chains.4
- Differentiate on service and constantly improve to meet rising expectations.
- U.S. consumers say they will spend 17% more for excellent service.5
2. Aging population
- In the U.S. there are 46 million people over age 656; 10,000 turn 65 each day.7
- In 2018, there are 43 million enrollees in Medicare Part D plans.8
- On average, seniors fill 27.6 prescriptions per year, double that of younger people.9
3. Chronic diseases
- ~133 million Americans (~40% of the population) have chronic diseases. This is projected to be 157 million by 2020.10
- Almost one third of the population has multiple chronic conditions.
- Common chronic illnesses are diabetes, hypertension, heart disease and depression.
- Consumers increasingly want to be involved in making decisions about their healthcare.
- Engage and empower consumers. Educate them, provide information, coach, and give patients choices and control.
5. Adoption/use of technology
- Consumers of all ages increasingly use technology in their daily lives.
6. Reimbursement and margins
- Drug reimbursement and margins continue to decline, putting constant pressure on pharmacies.
- Diversify revenue with clinical services like vaccinations, MTM, CMRs and point-of-care testing. See “Opportunities in point-of-care testing.”
- Constantly improve efficiencies by using technology to streamline and automate.
- Industry consolidation has been underway for years and has accelerated with the CVS/Aetna merger and Rite Aid’s sale to Walgreens and Albertsons.
- The number of independent pharmacies is declining slightly. 11
8. Preferred networks
- From 2011 to 2018 the number of Medicare Part D plans with preferred pharmacy networks grew from 7% to 98%.12
- 99% of seniors in individual stand-alone Part D plans enrolled in plans with preferred networks.13
- Networks are placing greater emphasis on performance metrics.
9. Specialty drugs
- The specialty market continues to grow rapidly. Spending on specialty drugs increased 11% in the past year; it is nearly 50% of drug spending.14
- There are opportunities for retail pharmacies in specialty drugs.
- Develop a strategy for the specialty market and try to get specialty drugs your patients are most likely to need.
10. Labor market
- With unemployment at record lows it is increasingly difficult to hire and retain top staff.
Staying competitive in today’s market requires understanding the major trends shaping the industry. After understanding these trends it then means developing clinical, financial and marketing strategies to stay ahead of the curve and to differentiate your pharmacy.
1 “American Express Study Shows Rising Consumer Expectations for Good Customer Service,” Peter Roesler, Inc., December 18, 2017. LINK
2 The Rise of Consumer Expectations infographic, Assurant, May 2018. LINK
3 The Rise of Consumer Expectations infographic, Assurant, May 2018. LINK
4 “U.S. Pharmacies Raise Bar for Customer Satisfaction,” J.D. Power, August 28, 2018. LINK
5 “American Express Study Shows Rising Consumer Expectations for Good Customer Service,” Peter Roesler, Inc., December 18, 2017. LINK
6 Fact Sheet: Aging in the United States, Mark Mather, Population Reference Bureau, January 13, 2016. LINK
7 “Growth in Retiring Baby Boomers Strains U.S. Entitlement Programs,” Janet Adamy and Paul Overberg, The Wall Street Journal, June 21, 2018. LINK
8 “An Overview of the Medicare Part D Prescription Drug Benefit,” Kaiser Family Foundation, October 12, 2018. LINK
9 “4 Trends Shaping the Retail Pharmacy Business,” McKesson, August 20, 2018. Article cites “Medicine Use and Spending in the U.S.: A Review of 2017 and Outlook to 2022,” Iqvia Institute for Human Data Science. LINK
10 “About Chronic Diseases,” National Health Council, accessed November 9, 2018. LINK
11 “New Data: Pharmacy Owners’ Profits Fall as Industry Competition Rises,” Adam J. Fein, Drug Channels, January 9, 2018. LINK
12 “New Study: Preferred Pharmacy Networks in Medicare Part D Plans Save Seniors and Taxpayers Billions Each Year,” Coalition for Affordable Prescription Drugs, March 13, 2018. LINK
13 “New Study: Preferred Pharmacy Networks in Medicare Part D Plans Save Seniors and Taxpayers Billions Each Year,” Coalition for Affordable Prescription Drugs, March 13, 2018. LINK
14 “4 Trends Shaping the Retail Pharmacy Business,” McKesson, August 20, 2018. Article cites data on specialty drugs from Specialty Pharmacy Times. LINK