These forces — generics scale; consolidation and integration; product mix shift; and reimbursement, performance and access— are shaping and impacting health care on all levels, noted Dimos.
Explaining generics scale, Dimos said that as the number of new small-molecule drug introductions dropped off, generic drugs became more commoditized. Some companies entered into generic purchasing partnerships with major wholesalers, and Dimos noted that one of the first was the merger of Walgreens and Alliance Boots and their subsequent investment into AmerisourceBergen, resulting in increased capabilities of scale.
“When there were a dozen or so buyers acquiring pharmaceuticals and an array of new generics was spawned by so many branded patents expiring, that fueled a lot of growth for pharmacy,” Dimos said. Today, he added, “there are a handful of companies controlling some very large market shares.”
Speaking to consolidation and integration, Dimos noted the traditional trend of “like dissolves like,” in which retailers bought retailers, PBMs bought PBMs and manufacturers bought manufacturers.
“We’re seeing more vertical integrations now,” Dimos added, citing the CVS acquisition of Caremark as an early example.
In terms of product mix shift, Dimos said the industry is seeing greater availability of specialty drugs. By 2020, he noted, it’s expected that specialty drugs could represent 50% of overall pharmacy revenues. “Generic profitability is starting to wane as payers become more transparent,” he said.
Referring to reimbursement, performance and access, Dimos said that while cost will always be important, value is where companies are going to be differentiated and measured. “
We’re seeing different levers being utilized to differentiate health care services, such as narrow-based networks in which companies have to earn the right to participate based on the value created,” he said, adding that product access is being influenced in terms of limited distribution for some of the larger molecules and “is really influencing how providers are being differentiated inside the overall health care continuum.”
To navigate through the forces shaping the health care industry, Dimos offered four strategic elements for helping independent pharmacies find profitability and achieve better patient outcomes.
First, independent pharmacy owners have to bolster their core business, Dimos said. This means “managing your business, your expenses,” especially labor and inventory. Health Mart is providing the means to help its independent pharmacies become more efficient in running their operations, Dimos noted.
The second step of the strategy is achieving “pharmacist-delivered services,” so that the pharmacist is able to practice “at the top of his license,” Dimos said. Achieving provider status is just the beginning, he explained. “Pharmacists need to educate other health care stakeholders about the new service they will be able to deliver as providers before someone pays them for it.”
Third, pharmacists need to “partner within the greater health care system,” he said. Pharmacists need to proactively enhance the relationships they forge with health care providers. “They won’t come to you,” Dimos advised. “You need to seek them out.”
Finally, pharmacies need to identify new revenue streams and not just rely on revenue from dispensing and earnings, Dimos said. He cited immunizations and Med Sync as two programs that Health Mart can help implement for its customers.