Pharmacy pricing has long been a contentious issue in the healthcare industry, with patients struggling to afford their medications and pharmacies facing challenges to remain profitable. However, the emergence of the cost-plus pricing model has given hope to patients and pharmacists alike, as it offers a more transparent and affordable pricing system. This article (and associated podcast episode) will explore the future of pharmacy pricing and the impact that cost-plus pricing models could have on the industry.
Cost-plus pricing is a model where pharmacies charge patients the cost of the drug plus a fixed service fee. This allows for transparency in pricing, as patients can see exactly what they are paying for their medication, and simplifies the pricing system. With cost-plus pricing, pharmacies can set their own service fees, allowing for variations in service level, and giving patients the opportunity to choose the level of service they desire.
However, the cost-plus model is not without its challenges. Mark Cuban's cost-plus drug company, for example, has faced criticism from pharmacists like Kyle McCormick, who argue that the company is not transparent about its pricing and is moving away from the original cost-plus model. Cuban's company claims to eliminate the middleman and sell drugs at cost plus 15%, but some believe that it is becoming more like a typical pharmacy. McCormick also fears that Cuban's company's large presence and voice will make it difficult for other independent pharmacies to differentiate themselves.
Marketing and branding are also becoming increasingly important in the pharmacy industry. Word-of-mouth referrals and personalized experiences are major drivers of growth for independent pharmacies, as patients are looking for more than just a place to fill their prescriptions. Blueberry Pharmacy, for example, has a unique brand, with everything being blue, and they send out blueberry lollipops with orders to create a memorable experience for patients. McCormick emphasizes the importance of adding value and impact to their marketing efforts, rather than just pushing content out for the sake of it.
In addition to cost-plus pricing, pharmacists are looking for new ways to provide affordable healthcare and reduce the administrative burden of insurance. McCormick believes in a first principles approach to pharmacy, which aims to reduce administrative burdens and provide low-cost healthcare. He also dreams of every generic drug being sold without the involvement of PBMs or insurance and hopes to be known as a pioneer of the cost-plus model in the pharmacy industry.
In conclusion, the future of pharmacy pricing is centered around transparency, simplification, and providing affordable healthcare. The cost-plus pricing model is gaining popularity in the industry, but there are challenges that need to be addressed to ensure its success. Marketing and branding are becoming increasingly important in attracting and retaining patients, and pharmacists are exploring new ways to reduce the administrative burden of insurance and provide low-cost healthcare. The pharmacy industry is evolving, and with the right strategies in place, it can continue to provide affordable and accessible healthcare to patients.
The Business of Pharmacy Podcast™ is an interesting and entertaining weekly podcast discussion on the business of pharmacy. Hosted by Mike Koelzer, an independent pharmacist in Grand Rapids, Michigan, each episode covers a new topic relevant to pharmacists and pharmacy owners. Listen to a new episode every Monday morning.
