These days, patients expect different things from their retail pharmacy. They want the same level of convenience and service from their pharmacy as they do from retailers in other industries, like food, travel and entertainment. To meet that demand, a number of nontraditional healthcare companies are getting into the retail pharmacy business.

In this edition of Ask a Supply Chain Expert, McKesson’s Mark Edwards describes how the trends of changing consumer preferences and nontraditional healthcare companies might affect your pharmacy business—and what you can do to keep meeting and exceeding patient expectations.

What are you responsible for in your role at McKesson?

Edwards: I oversee our central fill operations team, which runs seven central fill sites across the country. We fill more than 30 million prescriptions a year for our retail pharmacy customers. We also do specialty drug and compliance packaging. We can send the prescriptions we fill to pharmacies to dispense to patients, or we can ship prescriptions directly to patients with our mail order service and home delivery. We see ourselves as the epicenter of our pharmacies’ supply chain as pharmacies are starting to fill upwards of 50 percent of their prescriptions
through centralization.

As that epicenter, how do you fit into a retail pharmacy’s supply chain management strategy?

Edwards: We look at supply chain management like this: Is your pharmacy getting the right drug to the patient when and where they need it? And is it in the best packaging to meet patient needs? Your job is to focus on the right drug, ensuring patients are getting the correct medication from their provider and preventing potentially harmful drug interactions. Our job is to focus on getting that drug to patients safely, accurately and on time. That’s our goal.

What links in that supply chain do your retail pharmacies say are getting more challenging?

Edwards: Without a doubt, it’s right packaging, right time and right location. Those three links in the supply chain are under a lot of pressure. The pressure is coming from new market entrants. These are companies that exist outside of healthcare getting into pharmacy. An example is Amazon buying PillPack.1 These new market entrants challenge the traditional ways that patients view your pharmacy. Those three links in the supply chain—right packaging, right time and right location—also are under pressure from patient choice, which goes hand in hand with new market entrants. Patient preferences are changing. Patients want their drugs in more convenient packaging. They want to pick up their drugs immediately from your pharmacy, if not delivered right to their front door. If your patients can’t get those things from your pharmacy, they’ll get them from someone else.

How does using a central fill facility help retail pharmacies deal with those supply chain challenges?

Edwards: Theoretically, you could tackle those challenges yourself. You can re-package drugs in blister cards or put them in pill pouches that have all the drugs that a patient takes at one time. You can hire more people to fill prescriptions faster. And you can start a home delivery service. But doing those things can be costly. You might not have enough volume to justify the extra time and money that it would take. On a per-script basis, central fill can do those things faster and cheaper than your pharmacy. A central fill facility has the technology, drug inventory and delivery network to meet the challenges of packaging, time and location created by all those new market entrants and patient preferences.

Do new market entrants and patient preferences create any drug safety issues for retail pharmacies?

Edwards: They can, yes. Filling prescriptions in a safe manner is probably one of the supply chain management issues that keeps our customers up at night. That’s the “right drug” link in the supply chain. It’s challenging enough to do on a routine basis when you’re filling and dispensing drugs. If you break your routine to re-package drugs on site, or to separate drugs for immediate pickup or home delivery, you introduce an opportunity for human error. That could result in a patient getting the wrong drug at the right time, or the right drug at the wrong time. This is where central fill automation comes in. By automating your fill-and-dispense processes, you’re making every single step more accurate. With the multiple checks an automated system performs, you’re making sure that everything’s correct: the prescription, dosage and packaging are all as they should be. And your drug is getting to the right place at the right time. That level of precision won’t change even if you tweak your processes to compete with new market entrants or to meet new patient preferences.

How does optimizing a retail pharmacy’s supply chain help from a business perspective?

Edwards: That’s another big thing that keeps pharmacists up at night: rising costs and decreasing reimbursement rates. That combination can really hurt your margins. Your supply chain can be a source of savings to help protect them. You can find savings in your supply chain by becoming more efficient. One way to do that is by centralizing your inventory and your fill-and-dispense functions. Another way is by automating manual tasks. It’s all about labor and technology. Optimizing your supply chain can help on the revenue side, too. You’re able to fill more prescriptions, so that generates more revenue for your pharmacy. It also lets your pharmacists practice at the top of their licenses. So instead of putting pills in pouches or dropping prescriptions in the mail, they’re counseling patients or running clinical programs that can generate additional revenue for your pharmacy.

What other supply chain trends should retail pharmacies stay on top of?

Edwards: One thing I think you’ll see in the near future is a blurring of lines between pharmacy and retail. Your medications will be included with other things that you’re having delivered to your home. Your seller won’t segregate your prescriptions from everything else that you bought online. It won’t be any different than when you walk out of a pharmacy now. You have everything you came in for. So your supply chain will need to adjust to those new expectations from your patients. It will need to be able to handle both drugs and merchandise.

What do you enjoy most about working with retail pharmacies on their supply chain issues?

Edwards: It’s a constant puzzle. Each pharmacy is different. Each market is different. Each patient is different. And everything is changing at such a rapid pace. You’re trying to figure out where the patients are going. You’re trying to figure out where the market is going. Then you’re trying to figure out where the pharmacy needs to go to be successful. That’s what I enjoy most about it. There’s always a puzzle that you’re trying to solve, and each puzzle progressively gets more challenging.

Editor’s note: Have a question for one of our supply chain experts? Please leave a comment below and let us know what you’d like to see covered in a future edition of Ask a Supply Chain Expert.

Related: Learn more about McKesson’s central fill solutions for retail pharmacies

1Amazon's PillPack may be gearing up to serve the retailer's employees before broader rollout, analyst says,” CNBC

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McKesson editorial staff is committed to sharing innovative approaches and insights so our customers can get the most out of their business solutions and identify areas for operational improvement and revenue growth.

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