Philadelphia, PA - October 25, 2010
The National Community Pharmacists Association (NCPA) today announced the availability of the 2010 NCPA Digest, sponsored by Cardinal Health, which found that independent community pharmacy owners were able to generally stabilize their businesses in 2009 despite a stagnant economy, the growing influence of government health care programs, declining prescription drug reimbursements and the questionable business practices of giant pharmacy benefit managers (PBMs).
"The NCPA Digest findings demonstrate that an independent community pharmacy business model that is adaptable, yet rooted in sterling customer service and competitive pricing, has a viable place in today's marketplace," said Douglas Hoey, RPh, NCPA Acting Executive Vice President and CEO. "Independents helped their patients and their businesses by diversifying their revenue streams through providing convenient patient services, such as immunizations, and helping patients manage their prescription costs and medication regimen in a down economy."
Hoey added, "As a result, after a sharp drop in the number of pharmacies in 2006 when Medicare Part D went into effect, the number of independents has generally stabilized and grew modestly."
Now in its 78th year, the NCPA Digest provides a comprehensive analysis of independent community pharmacies' financial state. Noteworthy findings include:
The average independent community pharmacy's pretax profit margin remains at 3.2% for the second year in a row. That, combined with a dependence on prescription drug reimbursements for more than 90% of revenue, leaves independents vulnerable to any changing dynamic in the marketplace and limits business expansion opportunities. By contrast, publicly traded chain pharmacies sell much more front-end merchandise that often yields higher profit margins, while major PBMs saw their profits increase five-fold during this decade.
The government's role is likely to accelerate further with passage and implementation of the Patient Protection and Affordable Care Act. Fortunately, in that legislation NCPA garnered bipartisan support for a critical fix to mitigate draconian cuts to Medicaid generic prescription drug reimbursement; an exemption from an onerous and duplicative accreditation for the continued selling of durable medical equipment; and common-sense disclosure requirements for PBMs in the health care exchanges that will be operational in 2014.
The NCPA-endorsed PBM Audit Reform and Transparency Act (H.R. 5234) would expand to millions of additional Americans the cost savings and pharmacy choice expected to result from greater PBM transparency. Collectively, these measures support patient access to independent community pharmacies. At the same time, two trends accelerated by the economic downturn—surging Medicaid enrolment and tightening state budgets—create uncertainty for these pharmacies.
"As an independent community pharmacy owner I can attest to the impact of the government becoming our largest business partner and for the need to let our elected leaders be aware of our concerns," said Joseph H. Harmison, PD, NCPA President and pharmacy owner in Arlington, Tex. "By remaining proactive we can continue providing the caliber of patient services that earned us high marks in the most recent annual J.D. Power & Associates pharmacy satisfaction survey."
The National Community Pharmacists Association (NCPA®) represents America's community pharmacists, including the owners of more than 22,700 independent community pharmacies, pharmacy franchises, and chains. Together they represent an $88 billion health-care marketplace, employ over 65,000 pharmacists, and dispense over 40% of all retail prescriptions. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com.
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