Five trends disrupting pharmacy (Part 1)

NCPA January 20, 2023

Dear Colleague,

Doug Hoey Last year I presented to a few thousand pharmacists Five Trends That Are Disrupting Pharmacy Practice. If you weren't able to attend one of the presentations where I spoke about this, over the next few Executive Updates, I'm going to share the summary of what I told those audiences.

Keep in mind that in those presentations I tried not to focus on NCPA's advocacy priorities like reforming Medicaid managed care to establish a fair reimbursement floor and additional pharmacy DIR reform. Those are essential elements toward NCPA's No. 1 goal of changing the pharmacy payment model; instead, my presentations were intended to focus on non-political topics. That said, the audience found that whether we like it or not, everything in pharmacy has a tie into the political realm. As we've heard many times, "get into politics or get out of pharmacy".

Without further ado:

Trend No. 1—Vertical integration of primary care. Henry Kissinger once said, "Who controls money controls the world." Along those same lines, the buying of primary care doctors by corporations such as health care systems, CVS-Aetna, Walgreens, and Amazon, is leading me to say, "Who controls primary care controls patient's health care." There is a land grab for primary care going on in our country. That is partially due to a predicted shortage of primary care physicians but also because vertical integration has allowed big corporations to have a stake in every step of the patient journey.

CVS-Aetna has made it clear that they want to influence the patient's health care decisions from cradle to grave. Their Minute Clinics, providing a menu of primary care services, are not new, nor is their ownership of Caremark. But adding Aetna to the mix provided a powerful tool to be able to steer patients into CVS brick-and-mortar and mail order pharmacies. CVS' strategy is not a secret. In an investor call last year, CVS CEO Karen Lynch said that primary care makes up only about 10 percent of national health care spending, but it wields significant influence over health-care utilization, and they need to "push into the primary care so that we can influence the overall cost of care."

Walgreens has also made no secret that it wants to be a player in the primary care game by shelling out more than $5 billion to buy a majority stake in VillageMD which operates primary care clinics.

Walmart also wants in on the primary care action. They say they are going to build 4,000 health care supercenters that will include primary care, dental, optical, imaging, and labs by the end of the decade.

Not to be outdone, Amazon is trying to acquire One Medical, a tech-enabled primary care provider, for $3.9 billion.

chartWhat's the response for independent pharmacies? The best health care is local. And CPESN® USA aggregates local networks of independent pharmacies that provide primary care services like immunizations and blood pressure checks. They are increasingly collaborating with primary care physicians to reach socially vulnerable populations.

The impact of vertical integration on competition and consumers is one of the areas that the FTC is reviewing. Drug Channels has a nifty chart that shows how vertical integration has grown — like a weed. I included it as my Trend No. 1 out of five to make clear to pharmacy owners that controlling primary care is where the big boys are going. And to alert savvy owners to adjust their business to stay one step ahead.


Doug Hoey

B. Douglas Hoey, Pharmacist, MBA