Studies Reveal Pharmacy Challenges

DAN ALAIMO

ALEXANDRIA, Va. — Sales growth from prescriptions has been flat to down for the past year across all channels, including supermarket pharmacies, according to recent research.

However, supermarket pharmacies have carved out a niche in the marketplace that has the potential for more growth in the future, especially as retailers promote their services and integrate pharmacy with the whole store, experts said.

“The supermarket now is fully integrated into the pharmacy market,” said Laura Miller, senior economist at the National Association of Chain Drug Stores, Alexandria, Va. “Where it was growing into it for many years, now it is a part of the base. People think of a supermarket as a place to get prescriptions, and they also think of it as a place to get things that are associated with that, the HBA and OTC.”

According to the recently released “2008-2009 Chain Pharmacy Industry Profile,” the NACDS reports that supermarket prescription dollar sales declined slightly from 11.5% in 2006 to 11% in 2007. These numbers were from both NACDS and IMS Health, Parsippany, N.J.

The decline, which is consistent with other research, is a result of more prescriptions shifting to generics, lower-priced generic programs, and higher insurance co-pays that are resulting in patients filling fewer prescriptions, according to experts. The NACDS study also showed that the number of supermarkets with pharmacies declined 8.6% from 2006 to 2007.

“The discount generic programs are continuing to ripple through the entire retail prescription market,” said Mille. “I don't think we've seen the end of that impact yet, but it's in conjunction with other current trends.”

Because of the highly competitive market, “the supermarkets need to keep on top of their game, because the customers can always go someplace else. The more innovation retailers can put into their sales experience, the more they can find out what the customers really like, and the more they can get those customers to come back,” Miller said.

COMPLIANCE IS KEY

Patient compliance is at once the biggest challenge and the greatest opportunity facing retail pharmacy, said Doug Long, vice president, industry relations, IMS Health.

Referring to flat growth in prescriptions, which he termed “cyclical,” Long said, “This is a tough business. But it is not devoid of opportunities, and the biggest opportunity I am an advocate of is that the best use of the health care dollar is for prescriptions, and there's plenty of opportunities in compliance, persistence and adherence,” he said. Long presented new IMS findings at a recent NACDS pharmacy conference.

Characterizing this as “the leaky bucket,” he noted that of 100 prescriptions, 50% to 70% of patients go a pharmacy; 48% to 60% come out of the pharmacy with the drugs; 25% to 30% of the drugs are taken properly; and 15% to 20% of all prescriptions are refilled as prescribed.

“That has to change,” Long said. “What also has to change is the attitude of retail pharmacy in not ignoring it when people don't pick up their prescriptions. You have to capture the refills, and there is nobody better able to do that than retail pharmacy. That will lead to better health for the patient, and also lead to more revenue for you and the pharmaceutical industry.”

One big factor in reduced compliance is higher insurance co-pays, Long said. The percentage of patients who consistently take their hypertension drugs as prescribed over one year goes from 49% when the co-pay is zero to $7.99; to 37% when the co-pay is $8 to $12.99; and to 28% when the co-pay is $13 to $46.95. “The higher the co-pay, the lower the compliance,” he said.

This challenge is the same for supermarket pharmacy, Long told SN after the presentation. “A lot more emphasis has to be paid to maintaining people on their therapies by a more proactive approach — making sure those people get their refills, and are more compliant and persistent,” he said.

GROWTH CHALLENGE

Noting the 11% of supermarket pharmacy customers who changed stores in the past year, Jim Wilson, president, Wilson Health Information, New Hope, Pa., said, “Once they start using a supermarket pharmacy, they are more likely to keep using it.”

Wilson recently released his “2008 Pharmacy Satisfaction Digest.” The biggest challenge for supermarkets is to grow their pharmacy business, he said, “because people aren't likely to go in and try the supermarket pharmacy. They need some kind of new campaign or initiative to get them in there, whether it is better pricing or some other mechanism. Anything they can do to help people save money on prescriptions will be positively perceived.”

Confirming the NACDS and IMS numbers, Wilson noted, “We did see a significant drop in the number of prescriptions and the number of different medications that are being purchased across all store types.”

Customers are more demanding this year than last, he said. “If they do go into a food-store pharmacy, there is a very high likelihood that they will be satisfied. So the challenge is, how can I attract them enough to get them to walk in the store and fill a prescription?”