From apothecary to PharmD: 160 years of caring for patients

America’s first pharmacist would be lost in a retail pharmacy today. With the advances in retail technology, new drugs and delivery systems, and online adjudication and payment, the practice of pharmacy has changed dramatically since Parisian apothecary Louis Hébert set up shop in what would become Nova Scotia in 1605.

But the role of the retail pharmacist has changed remarkably little. Hébert was the sole medical provider for what was then France’s only settlement in North America. He grew medicinal plants, bought and sold botanicals, and supervised the colony’s gardens.

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Retail pharmacy wasn’t much different in America’s first recorded pharmacy, opened in Wildwyck, New Netherland, in 1663. Gysbert Van Imbroch launched a general store that sold drugs along with coal, pots, pans, and cast-iron stoves in what is now Kingston, N.Y.

Fast-forward to 1912 and the opening of Morgan’s Pharmacy in the Washington, D.C., suburb of Georgetown. While pharmacy remains the core business today, OTC and front-end sales are key elements.

One of current owner Barry Deutschman’s prize artefacts is a copy of a receipt for a delivery to the White House in the early 1960s. The customer was famous, Jacqueline Kennedy; the delivery list includes staples such as aspirin, “Almay Face,” Revlon nail polish, and “spot strips.”

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A focus on healthcare, customers

“Pharmacy has always been a retail-oriented segment in the healthcare industry,” said Chuck Wilson, PharmD, vice president of operations for Health Mart, the independent pharmacy brand owned by wholesale giant McKesson.

“The business model has always focused on healthcare, but pharmacists have been business people as much as they have been healthcare providers. In some cases, the pharmacy has become almost a convenience store. People talk about the growing economic importance of the front end, but retail pharmacists have always looked after the whole person by helping them get well and stay healthy, as well as by taking care of everyday needs,” Wilson said.

The business model

That basic business model, which focused on drugs and catered to customers’ every need, first appeared in 754 AD in Baghdad and developed along with the disciplines of medicine and pharmacology in the centuries that followed. The endlessly flexible retail pharmacist model was soon adopted by Europe and then North America.

By 1721, there were at least 14 apothecary shops in Boston. But it was Spain that licensed the first pharmacist in the Americas in New Orleans in 1769. And it was a 1770 edict from the Spanish governor of New Orleans, Don Alexandre O’Reilly, that first recognized pharmacy as a profession distinct from medicine and surgery in what would become the United States.

Newspaper advertisements suggest that there were apothecaries in virtually every U.S. city by the end of the 18th century. Most physicians mixed and dispensed medications, and most pharmacists treated patients.

In 1808, the Massachusetts Medical Society published its Massachusetts Pharmacopoeia, the nation’s first. The first US Pharmacopeia appeared in 1820.

When pharmacy changed forever

The Philadelphia College of Pharmacy, created in 1821, changed pharmacy forever. The College published its first dispensatory in 1824, a cookbook of previously secret recipes for medications imported from England. Generic competition had arrived, and pharmacists across the growing country began concocting a growing stream of medications.

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American pharmacists couldn’t have asked for a better business model. About 170 different plant-based drugs from North America and another 50 from Latin America appeared on the 1820 USP or the National Formulary, published in 1888 by the American Pharmaceutical Association, now the American Pharmacists Association (APhA). 

But compounded botanical drugs varied widely in potency, even when made by expert pharmacists from the same recipe. The active ingredients in botanicals differ based on the specific variety, growing conditions, processing, storage, and other variables.

Parke, Davis & Company transformed the practice and business of pharmacy with its first standardized pharmaceutical extract, Liquor Erogtae Purificatus, in 1879. Dupont, Lilly, Bayer, Pfizer, and a growing list of chemical companies rapidly expanded research and development programs to create and commercialize an ever-growing list of standardized pharmaceutical products and medication delivery systems.

Gelatin capsules were first produced on a large scale in 1875, and then tablets and enteric-coated tablets in 1884. By 1900, most pharmacies carried manufactured medications and compounding was on the wane. William Procter, APhA’s first corresponding secretary, worried about this. “If the preparation of medicines is taken from the apothecary and he becomes merely the dispenser of them … he relapses into a simple shopkeeper,” Procter wrote.

The rise of chain pharmacy

For many retail pharmacists, that is exactly what happened. The growing availability of standardized, manufactured medicines and the growing urbanization of America helped fuel the growth of drugstore chains.

In 1901, Charles Walgreen Sr. bought a Chicago drugstore where he had worked as a pharmacist. By 1916 he had nine stores and the Walgreen Company was born.

Walgreen was as much a business innovator as he was a pharmacist. The merchandising and sales concepts that were fueling the rise of retail giants such as Sears and Montgomery Ward also fueled pharmacy growth and product innovation, although not always in the pharmacy department.

In 1922, Walgreens introduced the malted milkshake and customers lined up three and four deep at the soda fountain. The chain opened four storefronts at the Chicago World Fair in 1933. Experiments in novel fixtures, layout, lighting techniques, and colors transformed pharmacy design across the industry. In 1950, Walgreen opened its first self-service store and became the largest self-service retailer in the country within three years.

CVS, Rite Aid, Thrifty, Happy Harry’s, and other chains soon joined the fray. Retail pharmacists had the option to become part of the chain world, where the emphasis was on sales and moving more product out the door. They could remain independent and compete with chains. Or they could go out of business.

Justin WilsonThe retail pharmacist prospers

“I’m a second-generation pharmacist, and I’ve been hearing about the imminent demise of the independent pharmacist for as long as I can remember,” said Justin Wilson, PharmD, who owns three pharmacies in Oklahoma. “Yes, we have lost some independents. A lot of that is pharmacy owners aging out of the business. And a lot is pharmacists who didn’t have the business acumen to survive. Not only do we take care of our patients, we do it in ways that pay the bills and lets us keep the doors open.”

Bradley ArthurCompeting with chains can be challenging, said Bradley Arthur, PharmD, owner of the Buffalo, N.Y.-based independent Black Rock Pharmacy. Competition also suggests other business opportunities.

 “We are starting to hear of pharmacists who are working in traditional physician office settings,” said Arthur, who is incoming president of the National Community Pharmacists Association.  “Progressive practices recognize that as healthcare reform continues to develop, they are going to be measured on outcomes - not on the quantity of activity they engage in, but the quality of that activity. A pharmacist is perfectly situated to help them improve quality. That is why, in a nutshell, I am a believer in moving pharmacy from the dispensing function to more comprehensive clinical services.”

Health Mart’s Chuck Wilson has identified two key drivers that are influencing retail pharmacists. One driver is economic. Payers have been cutting dispensing fees for decades. Chains can compensate by increasing prescription volume and front-end sales. Independents can become more efficient in their dispensing operations and add clinical services.

The other driver is the shift to value-based payments. The Centers for Medicare and Medicaid Services (CMS) is leading the shift from payment for services to payment for outcomes. State Medicaid agencies are following their lead, and commercial payers are moving in similar directions.

 “Pharmacists are playing a much larger role in helping patients stay out of the hospital and out of the emergency room, but payment for those new roles isn’t keeping up,” Wilson said. “Pharmacists are being forced to create a much more efficient model at the point of care, so they can deliver all those services and still keep the doors open.”

New avenues

The University of California San Francisco created the first six-year PharmD program in 1955. Sixty years later, clinical services are a profitable reality.

“We want our pharmacists out front, talking with patients,” said Justin Wilson. “We want them to have the time to look for [drug] interactions, examine adherence, educate patients, and deal with other potential problems before they happen. We are getting away from a commodity-based practice to one where we are part of the healthcare team and actively working with patients to improve their outcomes.”

The first step is to redesign dispensing workflows using many of the tools chains have developed. Assembly-line workflows, robotics, and other tools can dramatically improve dispensing efficiency. Interactive voice response can handle up to 60% of phone calls, he said, which frees up clerks, technicians, and pharmacists.

The extra time let him open a travel immunization service for patients who need special immunizations for overseas missions and other travel.

He also expanded a basic diabetes care clinic to include insulin pumps and pump training. A hormone replacement therapy (HRT) program includes compounding. Medication therapy management can be an important contributor to cash flow. So can medication synchronization, which can dramatically improve adherence, cash flow, inventory turns, and patient outcomes.

“I look at all of our clinical services as one ancillary care service,” Justin Wilson said. “It’s easy to get bogged down by looking at just diabetes or just HRT. But if I look at the big picture, I can generate some pretty significant revenue.”

Into the future

Stacie MaassRegulatory change has boosted the movement toward clinical services. Twenty-five years ago, pharmacists rarely gave injections. Today, pharmacists routinely administer immunizations in all 50 states.

“Immunization by pharmacists is really about access to healthcare,” said Stacie Maass, BS, JD, senior vice president of Pharmacy Practice and Government Affairs at the American Pharmacists Association (APhA). “Pharmacists are educated and trained to provide multiple clinical services that used to be available only in physician offices. The specific services you might want to provide depend on your business plan and the needs in your community.”

Healthcare reform has created even more opportunities, including the growing acceptance of pharmacists as healthcare providers with direct reimbursement.

State innovations

Washington State has the most pharmacist-friendly provider regulations. Starting January 1, 2016, commercial health plans are required to cover services provided by a clinic-based pharmacist operating within their scope of practice if the same service is covered when provided by other healthcare professionals. Provider status rolls out to community pharmacists in 2017.

Anne Burns“Washington is one of the broadest examples of pharmacists being paid for services within the commercial sector,” said Anne Burns, RPh, APhA's vice president of Professional Affairs. “With immunizations as a model, we can see pharmacists providing a variety of patient services and being reimbursed for those services. There are even pilot programs on the horizon where pharmacists are helping to treat minor ailments under collaborative practice agreements or protocols [with physicians].”          

STAR Ratings

CMS is also boosting pharmacy services and reimbursement through its STAR ratings program that evaluates Part C and Part D health plan quality, access, and services for Medicaid recipients. Not only do pharmacies get STAR ratings; prescription drug measures for other providers are heavily weighted. Pharmacy-related measures account for 48% of STAR ratings for stand-alone Part D Prescription Drug Plans (PDPs) and 17% for Medicare Advantage PDPs. Medication-related measures also count heavily for physician and health system ratings.

“My PSAO, my contracting entity, gives me my STAR rating report card every month,” Arthur said. “I can challenge our pharmacy staff to improve our quality performance. It’s just a matter of repurposing your assets in the store. Help your staff to be less focused on ‘how many scripts did I do today?’ and more on ‘how many patients did I impact in a positive way today?’ That will in very short order start to yield real dollars for the pharmacy.”

Justin Wilson is equally upbeat. Payers are moving toward pharmacist reimbursement as they recognize the true value of retail pharmacists.

“As a pharmacist and a business owner, I just keep doing the things that are best for my patients,” he said. “If I make business decisions with that mindset, everything else seems to work itself out. If I’m doing what is right for my patients, I’m doing what’s right for my business. That’s how you make retail pharmacy successful.”