4 Big Trends Transforming the Business of Pharmacy

Trends Transforming the Business of Pharmacy

The survival of any business depends on recognizing and responding to major market changes

Today’s Retail Pharmacy Trends: The factors impacting the business of retail pharmacy


Compliments of Health Mart® Pharmacy

Adapting to changing circumstances is particularly relevant to independent pharmacy owners, as pharmacy is an industry in major transition. Understanding and acting on the following trends will help your business survive and thrive in this turbulent environment.

  1. Medicare growth continues. As America’s population ages, serving Medicare beneficiaries becomes increasingly important. In 2015, 41 million people were expected to be enrolled in a Medicare Part D plan.1 Seniors fill an average of 27.9 prescriptions annually at retail pharmacies, more than double the number of prescriptions for adults ages 19–64.2 More than a quarter of all prescriptions in 2014 were purchased through Medicare, and Medicare or Medicaid covers more than half of the prescriptions that an average independent pharmacy dispenses.3 Medicare will cover another 19.1 million people within 11 years.4Indicated action: Make targeting seniors a concerted focus. Because serving seniors is increasingly important, make the most of Open Enrollment season by marketing your pharmacy and helping seniors review their plan options to make better-informed decisions. And remember that new seniors are entering the system throughout the year. Reach out to seniors in your community with events at senior centers and by building relationships with prescribers who may refer seniors to your pharmacy. (See Make This Year’s Medicare Open Enrollment Count).
  2. Preferred networks have exploded. In 2015, 87% of Medicare Part D plans included preferred pharmacy networks, up from just 7% four years earlier. And, the criteria to participate in preferred pharmacy networks have changed; they now include performance on key quality measures.Indicated action: Gain and maintain access to preferred networks.Participating in preferred networks is necessary (even with the tradeoff of lower reimbursement) in order to have access to Medicare patients. Failure to participate in preferred networks will limit a pharmacy’s access to Medicare beneficiaries in Part D plans. Even though consumers have high satisfaction with their current pharmacy and pharmacies believe their customers are loyal, most Part D participants are likely to switch to in-network pharmacies. In fact, 85% of senior consumers say they would switch pharmacies to save even $10 or less on a co-pay.5Maintaining participation in preferred networks requires constant vigilance of strong performance (in the top 20%) on key Star Ratings measures. Find multiple ways to improve your pharmacy performance here on SmartRetailingRx.com.
  3. Prescriptions are becoming a smaller piece of the pie. For big pharmacy chains such as CVS and Rite Aid, prescription sales accounted for about 65–70% of revenue in 2014.6 However, in an average independent pharmacy, more than 90% of the revenue came from prescriptions, according to the 2014 NCPA Digest.7Indicated action: Focus on the overall value of the patient and broaden the products and services offered. Find other ways to serve your customers and generate revenues and profits, such as clinical services, front-end sales, new product lines and more. Independents are diversifying revenue streams, with 62% now offering immunizations, for example.8
  4. Specialty medications will dominate drug spending. While fewer than 4% of people use specialty drugs, those medications comprise nearly a third of drug spending, and that is expected to rise to at least 50% by 2020.9Indicated action: Develop a strategy for accessing this growing slice of the market.Although the bar for entering the specialty market can be high, partnerships offer a way for independents to use their unique capabilities of high-touch care and tap into a significant revenue stream. To learn more about offering specialty pharmacy at retail locations, download our white paper and case study here.

Your business already has experienced some of the impact from these changes, and now it is up to you to plan for the evolving challenges and seize the opportunities ahead.


1 “HHS FY2015 Budget in Brief, CMS Medicare Programs and Services.” LINK
2 “Retail Prescription Drugs Filled at Pharmacies (Annual per Capita by Age),” The Henry J. Kaiser Family Foundation, 2013. LINK
3 “Pharmacy’s Battle for Recognition Continues,” Drug Store News, Aug. 20, 2015. LINK
4 “Rising Health Care Costs Still a Challenge,” John Schultz, Chain Drug Review, Aug. 10, 2015. LINK
5 “Upfront Patient Views,” Drug Store News, Aug. 27, 2012. LINK
6 “5 Most Lucrative Retail Pharmacies in Rx Revenues,” Meghan Ross, Pharmacy Times, Aug. 25, 2015. LINK
7 “Profits Up Again for Independent Pharmacy Owners,” Adam J. Fein, Drug Channels, Dec. 2, 2014. LINK
8 “NCPA Digest: Community Pharmacists Promoting Medication Adherence, Generic Drug Savings,” PR Newswire, Oct. 28, 2014. LINK
9 “Specialty at Retail: White Paper and Case Study,” SmartRetailingRx.com, July 20, 2015. LINK