Viewpoints

Pharmacy Faces a Decisive Year in Washington

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Events this year could determine the future of retail pharmacy.

As the year begins, supermarkets are faring comparatively well on the dismal retail landscape with their strength summed up by the old mantra, “People have to eat.” However, pharmacies are not doing nearly as well. It turns out that people don't have to take medicines, or at least they don't think so when faced with hard choices and high prices on other necessities.

U.S. spending on all health care, and particularly prescription drugs, has slowed significantly in the past two years. According to the National Health Statistics Group of the Office of the Actuary of the Centers for Medicare and Medicaid Services, spending on health care increased 6.1% in 2007, the slowest growth since 1998. Spending on prescriptions at retail increased 4.9% in 2007, compared to 8.6% in 2006.

This continued into 2008. For example, last fall Pfizer reported that U.S. sales of cholesterol drug Lipitor were down 13% through the third quarter. With more uninsured and unemployed Americans, and higher prices in nearly all areas, consumers are choosing to either not fill prescriptions, or reduce the prescribed dose they are taking to make them last longer. This is a dangerous practice that has been shown to lead to higher overall health care costs.

Discount generics programs — and ones offering free antibiotics — adopted widely by U.S. food, mass and drug chains, help consumers and drive traffic, but cut into pharmacy profits. These keep people coming to stores for their medicines and other purchases, while creating goodwill with customers.

Now health care reform is on the second burner of the American government agenda — the economy being front and center. Yet the two are clearly intertwined. Action on the economy is expected to come as early as February, driven by a new administration that has indicated that it will not hesitate to deal with big issues, so the debate on health care will follow shortly (see story, New Day for Reform, at right).

The associations representing retail pharmacy, including the Food Marketing Institute, National Association of Chain Drug Stores and National Community Pharmacists Association, are now pulling their chairs out to take a place at the table. This is good, as the stakes are high.

An economic recovery will help pharmacy, but if a national health insurance plan is implemented, pharmacies could see a quick and dramatic reversal of the current slow growth trends. More access to health care means more prescriptions will be filled and taken as directed. However, if retail pharmacy does not demonstrate the value that it contributes to the process, legislators and regulators will look to mail order or Canada to save money on medicine. If retailers are excluded, the implications are disastrous for pharmacy.

NACDS has launched “Project Destiny,” a program geared to show government, payers and consumers the important role retail pharmacy plays. The value of supermarket pharmacy is clear and strong when it comes to patients, prescriptions and the foods they eat. Retailers and their representatives need to make Washington fully aware of this.

Contributors

David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Jon Springer

Jon Springer has been writing about food, food retailers and food retailing for more than 10 years, and is in his second tour of duty with Supermarket News. His prior experience includes covering the...
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