Independent Pharmacy Begins to Evolve

Independent pharmacy hasn’t changed much in 30 years. The pain points that plagued independent owners in the 1980s and the 1990s sound familiar: downward pressure on reimbursement, shrinking margins, new technologies.

“So many of the concerns I learned first-hand working in independent pharmacies during pharmacy school and as a new pharmacist are still with us,” said Brian Nightengale, PhD Senior Vice President, Community and Specialty Pharmacy for AmerisourceBergen and President of Good Neighbor Pharmacy. He is celebrating his first year as president of GNP at ThoughtSpot 2017.

“But that’s not all we hear about from our customers today, he continued. “It is about making a decent profit on shrinking reimbursement. It is about getting access to patients in the face of narrower and narrower networks. It is about limited distribution and not even being able to get specialty products from the distributor.”

Strategies that served independent pharmacy so well in the past no longer meet the needs of independent pharmacy today.

“Independent pharmacy has come to an inflection point,” Nightengale said. “We need to evolve the business models and the focus in order to continue to succeed. Those pharmacists who are willing to change and innovate have a good chance of creating a good future for themselves and to create healthier futures for their patients. And we have to evolve AmerisourceBergen in ways that support our customers in their own evolution. We have to be customer focused, not company focused.”

AmerisourceBergen has already adjusted its own internal structures to help focus attention on the customer, and ultimately on the patient. Front end merchandising, distribution, business coaching, manufacturing, and the functions that directly affect independent pharmacies have been taken out of separate divisions and streamlined into a single business unit.

Why change a structure that was already one of the most successful in the industry? To make it even more successful in the industry that is evolving, Nightengale said.

“We transformed ourselves internally to be 100% supportive of our external customers,” he explained. “We didn’t want our structure to get in the way of our customers. We are evolving and realigning our internal resources to help drive and support the evolution of independent pharmacy.”

Too many successful independents resist change, he noted. They have done well using a familiar skill set and don’t see the need to evolve. Some are frustrated enough to sell their stores and retire. Others believe they can carry on with business as usual.

“We want to get to store owners before they reach that point,” Nightengale said. “We want to help them change to meet future challenges. And we are seeing it happen.”

Community pharmacy enhanced services networks (CPESNs) are one of the early changes, he said. A generation of clinically trained community pharmacists has stood ready to provide clinical services-as soon as payers extended reimbursement coverage.

“From a payer’s perspective, that’s backwards,” he added. “A new generation of pharmacists saw that we first have to create a model that is valuable to patients. Then we can approach payers with something meaningful to sell.”

Pharmacists must also evolve with their patients and customers. The first step is to recognize the difference.

A customer wants convenience and speed, while a patient is willing to forego a bit of convenience in return for a long-term relationship, according to Nightengale. The bread and butter of the independent pharmacy has long been older patients with multiple medications who value the relationship and personal attention they can get from an independent.

But today’s older patients did not grow up with texting and Amazon and being able to buy anything from anywhere. Independent pharmacy must find ways to convert customers who grew up with Amazon-like instant service into patients who value relationship, he said.

“The reality is that you can get a really good relationship in a grocery store pharmacy, in a chain pharmacy,” Nightengale said. “There has to be a reason to come to an independent pharmacy that goes beyond the independent pharmacist. We have to support the individuality of independent pharmacies and give them the scope and the scale they need to grow and expand.”