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Joe Moose, co-owner of Moose Pharmacies in the Charlotte, North Carolina area, is trying to adapt to the changes COVID is dealing with. The chain expanded services to the sidewalk, hired additional drivers and tripled home deliveries.
Tobin’s pharmacy and department store had already stocked the shelves with Easter and Mother’s Day items last spring and the staff had just placed their Christmas orders. The Economowoc, Wisconsin store had been operating in a razor as retail sales moved online and mail-order pharmacies withdrew their patients. He lost money in a bottle of every 4 full pills, so the front of the store, where he sold clothes, cosmetics and jewelry, had been making up for the losses of pharmacies for years.
“And then a covid hit,” said Dave Schultz, who co-owned the store with his brother. “And that was the final straw.”
The covid-19 pandemic sank many companies in 2020, particularly those that rely on face-to-face sales to stay afloat. For pharmacies (especially independent pharmacies), pandemic blockages exacerbated long-standing economic pressures. Many small, owner-run pharmacies adapted quickly, offering their traditional amenities more safely or taking advantage of new services created by the pandemic, such as covid testing and vaccinations. But others, like Tobin, became victims of the pandemic, closing its doors for good.
It is too early to quantify how many pharmacies succumbed to covidi and assess how patients will be affected. The total number of pharmacies has decreased less than 1% in the last five years, as pharmacy chains get bigger, while independent community pharmacies (often the last place left to fill the prescription in some small towns) don’t work. Rural Policy Research Institute found that 1,231 were independently owned rural pharmacies, about 16%, closed permanently from 2003 to 2018, long before the pandemic. And according to the Institute of Drug Channels, after five years of falls, the number of independent urban and rural pharmacies fell below 20,000 for the first time in 2020.
Income of covides testing and vaccinations can help keep some independents afloat, but this entails additional costs and logistical challenges.
“Pharmacies are struggling,” he said Harry Lactantius, president of PRS Pharmacy Services, a consultancy in Latrobe, Pennsylvania. “We’re getting calls from a lot more pharmacy owners who want to sell their stores. They’ve had enough.”
He said most pharmacies saw a decline in prescriptions last year as customers were hesitant to visit their doctors for anything but emergencies. This fall in business also meant fewer sales of over-the-counter medications and ancillary items sold in stores. Meanwhile, pharmacies had to buy protective equipment to keep employees and customers safe and strengthen their technology to cope with the new reality.
Lattanzio said some independent pharmacies, which had always preferred the personal touch of answering phones to staff, have had to invest in new systems to handle thousands of calls a day from people looking for vaccines. Costs increased even with falling revenues.
“For the most part, they lost money,” Lattanzio said. “If I didn’t lose money, you were doing something really good.”
When Lattanzio opened its first pharmacy 20 years ago, it saw a gross profit margin of 36%. Now, independent pharmacies are lucky enough to see margins of 3% to 5%, if they survive the pandemic. Much of this decline comes from the impact of pharmacy benefit managers, which manage reimbursements for prescription drugs from public and public health plans in pharmacies. These PBMs, often aligned with large pharmacy chains, systematically extracted the benefits of independent pharmacies. This left many smaller chains or unaffiliated pharmacies unable to withstand the additional success of the pandemic.
“I’m afraid to see the result,” said Joe Moose, co – owner of Moose Pharmacy, a chain of seven pharmacies on the outskirts of Charlotte, North Carolina. “The delay in payments, the rising cost of continuing to operate in the early days, combined with the fact that repayment is already so poor: the covid may be the last key to the coffin for some of us.”
Moose Pharmacy is trying to adapt. When it had to stop shopping at the store during the pandemic, the chain expanded services to the sidewalk and hired additional drivers. Home deliveries tripled. Workers passed on food, toilet paper, paper towels and shampoo to customers.
“We had to build our website. We introduced technology so people could send us text messages from the parking lot. I had to comply with HIPAA,” said Moose, owner of the chain with his brother. “And keep in mind that all of this is happening with no changes in the refund.”
Covid also disrupted the drug supply chain. In normal times, the supply of medicines from the pharmacy is automated, so that when you distribute medicines, substitutions appear on delivery the next day. But Moose and his staff had to resort to the old way of summoning five or six wholesalers to see who had the drug in stock.
When covid tests were scarce, pharmacies taught their employees to perform quick tests. Once the vaccines arrived, Moose looked for patients who couldn’t make an appointment with a smartphone, who couldn’t drive to mass vaccination clinics, or who were just afraid to leave their homes.
Employees delivered vaccines to an elderly man with cancer, whose wife had died a year earlier. He and his disabled adult son did not want to risk going out and contracting the virus.
“But he trusts us and so we deliver medication to him probably every two weeks,” Moose said. “So it made sense for us to bring him the vaccine.”
Tripp Logan, a pharmacist in Charleston, Missouri, said one of his three pharmacies is in rural Mississippi County, which has no hospital or chain pharmacy for the 14,000 residents. There, four independent pharmacies and the county health department formed a consortium to help distribute coveted vaccines.
“It started with a group text, and the next thing you know, we’re vaccinating hundreds of people a week collectively,” Logan said.
Because pharmacies can earn up to $ 70 per covid test and $ 40 for each vaccination, many pharmacies get new revenue to offset some of the retail losses, said Owen BonDurant, president of Independent Rx consulting in Centerville, Ohio.
“Therefore, this has led to a significant increase in short-term profit margins,” BonDurant said. “Probably Covid has saved a lot of pharmacies. Because the PBM pressure has been so hard, especially in some of these rural and city pharmacies, many of them are still about to stop working.”
The cash infusion from the Federal Wage Protection Program also kept many pharmacies afloat and allowed some investments to position them better for the future.
“We should have closed or sold because the PBMs were brutal last year and killed many of our friends in Wisconsin,” said Dan Strause, president and CEO of Hometown pharmacy in Madison, Wisconsin. “Without the PPP, there would have been much more than facing the same fate.”
Some of the changes born out of necessity could be maintained. In a recent survey according to the National Association of Community Pharmacists, 3 out of 5 community pharmacists said they expected more pharmacies to offer cure point tests after the pandemic and more than half said other pharmacies will make vaccines.
Hashim Zaibak, CEO of Hayat Pharmacy in Milwaukee, he said his pharmacy is studying testing for flu, streptococcus and hemoglobin A1C levels for people with diabetes and will continue to offer vaccines.
“These changes have come to stay,” Zaibak said.
Tobin owners considered selling their pharmacy, but found no buyers and closed it permanently in September. Schultz said it’s unclear if they could have survived if the covid hadn’t happened or if vaccine revenue would have helped. Meet two other independent pharmacies in Wisconsin that closed the last 18 months.
“The real core of the matter is that you are paid, in some cases, $ 60 for the cost we end up paying for the medication,” he said. “How do you justify this part of your business?”
Oconomowoc has an independent pharmacy, two grocery stores and a Walgreens to serve its 17,000 residents. But Schultz cares about many of the older, sicker customers who relied on the personalized care the pharmacy provided. One of his former pharmacists now works at an out-of-town pharmacy, but distributes medication to some of Tobin’s most vulnerable former clients when he was on his way home.
“She just didn’t think they would survive going anywhere else,” he said.