Jacob Hyatt 7/20/24 Jacob Hyatt 7/20/24

The FAll of Pharmacy

It has become a little obvious that almost every pharmacy is overwhelmed, to put it nicely. Chain stores are criminally understaffed; and independents suffer such poor reimbursements that they are paying your insurance company for the privilege of serving you while slowly going out of business. Completing all the work piled up at the pharmacy has been impossible for about a decade but there was a time long ago when closing the store would involve finishing almost every prescription that had come in. Today that is physically impossible and pharmacies falling thousands of orders behind are putting both patient health and employee sanity at risk. To understand how we got here you must realize where the pharmacy is located, directly at the corner of where crap hits the fan.

It has become a little obvious that almost every pharmacy is overwhelmed, to put it nicely. Chain stores are criminally understaffed; and independents suffer such poor reimbursements that they are paying your insurance company for the privilege of serving you while slowly going out of business. Completing all the work piled up at the pharmacy has been impossible for about a decade but there was a time long ago when closing the store would involve finishing almost every prescription that had come in. Today that is physically impossible and pharmacies falling thousands of orders behind are putting both patient health and employee sanity at risk. To understand how we got here you must realize where the pharmacy is located, directly at the corner of where crap hits the fan.

If the healthcare industry is the behemoth that the size and state of the insurance cartels would suggest then directly at the bottom of that mountain from which all things roll down sits the pharmacy. The counter has become a source of frustration for patients as they often receive bad news that they are out of refills, the drug is on backorder, or the insurance company wants to pay for something else but not what was prescribed. It is a messy juxtaposition of the healthcare system coming together at once to set the pharmacy up for failure. As a greater and angrier pharmacist than I once pointed out

“Pharmacies are the human shields of the industry taking the bulk of abuse for things that they have little to no control over”

Conditions have become so bad that organized walkouts have occurred at both CVS and Walgreens. Staff insist that working conditions have deteriorated to such a point that they cannot safely run the pharmacy. Corporate counters with if you can’t get the job done there is another student loan debt slave who will. These are both true statements.

I’m reminded of the Seinfeld episode in which Newman describes why postal workers go crazy "The mail never stops". Physician reliance on the prescription pad and a system that cannot acknowledge patient agency have created a similar predicament with the pharmacy unable to hold up its end. Walgreens and CVS are happy to build the pharmacy, but they are not willing to staff the pharmacy and unfortunately that’s kind of the whole point. Despite creating a vertically controlled monopoly funneling prescriptions directly into their stores, causing a wave of demand a blind man could see coming, they still were not willing to make the investment needed in their personnel. How could such blatant mistakes be made?

The answer lies in the assumption that “you” the patient is the customer that the pharmacy is serving. It is an easy mistake to make from the patient’s perspective. The reality is the pharmacy serves a three headed monster: the patient, insurance company, and providers. So even if CVS were to hire more staff, they would not be helping at the register, they would be processing insurance claims and catering to the customer they do care about (the one that pays, rarely the patient). It may seem like you are getting very poor service. You are in fact getting the level of service that the insurance companies are paying for which is not much and may be a negative amount. Pharmacy is no longer a functioning business in its current form and so it will slowly cease to exist.

The big chains are not immune to this fact either although they may be diversified enough to survive the path ahead looks treacherous. Rite aid has filed for bankruptcy and plans to close around 200 locations. Walgreens recent earnings report crapped the bed worse than a dementia patient resulting in a 25% stock price reduction while CNBC anchors lament how the company cannot compete without owning one of the parasitic Pharmacy Benefit Managers that have decimated the sector. The brutal earnings are resulting in 450 locations shuttering their doors by the end of August as they seek to stop the bleeding. CVS has just completed a reduction in their number of Target locations. Fewer unprofitable stores and less employees may help improve efficiency, but the writing is on the wall. The National Pharmacy Association has reported that pharmacy closures are up 50% in 2024 for the year compared to 2023 at this time.

One of the reasons why the pharmacy keeps getting pushed around is the fact that pharmacists are the rarest of healthcare Pokémon. Their small numbers help explain why the world is so Pharmacoconuts.

Licensed Healthcare Professionals in the U.S.

Nurses – 3,900,000 Physicians – 1,077,115 Pharmacists – 270,137

Pharmacy itself is a house divided between those on the frontlines taking care directly of patients and everyone else who has a chair and a regular job where they are treated like human beings. Hospitals, insurance companies, long term care facilities, pharmacy lobbying organizations, academia, pharmaceutical sales or the holiest grail of all a remote work from home position, these are examples of what frontline employees would refer to as the golden ticket out of retail hell. They are being fought over desperately and it's not uncommon to see a remote position have a thousand applicants for one spot while CVS and Walgreens will have a dozen open spots and few takers.

The future does not look very bright for staffing either as most pharmacy schools have been reducing their class size, less applicants overall and a struggle to find quality candidates is the story everywhere. Pharmacy is a profession where strong math skills are a prerequisite and anybody who is good at math may balk at going a quarter of a million dollars in student loan debt for a position that pays not much more than many trades that you can get into directly out of school and be paid to learn on the job. Lack of Pharmacists will result in more duties being performed by technicians and a variety of other corners being cut to keep the doors open for a little while longer. My favorite cost saving measure recently deployed by CVS is the use of AI to answer phone calls because let’s be honest, they are getting paid 7 cents to fill your prescription and that does not cover the cost of an actual human answering your calls.

Things have become so apparently rigged that even the government has figured out the scam. The Federal Trade Commission chair Lina Khan recently released an interim report on the unfair business practices of the PBMs.

https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-releases-interim-staff-report-prescription-drug-middlemen

While some may view this report with optimistic hope the truth is that the FTC is trying to solve a crime, not prevent one. The murder already happened, and it was so blatant that even a bunch of government bureaucrats were able to figure it out. Most of the problems in this report will never be addressed and to be honest if they were the insurance companies would simply bring them back in six months under a different name. Your DIR fees that have bankrupted you will have a new name, but the same old song and dance and the FTC can begin a new multi-year investigation.

The endgame to me seems a little obvious by the insurance cartels but when you control so much of the narrative why bother with subterfuge. Step one drives pharmacies to the brink of bankruptcy. Step two is to buy them dirt cheap and further integrate their “healthcare” monopoly. Ultimately the real losers are the patients who relied on the pharmacy for all the services it used to provide like answering the phone. So, if you see an independent pharmacy still open stop in to take a look; you can tell your grandchildren what it was like to pick up your medicine from a local business the same day you needed it as opposed to waiting for it to be mailed out to you in the July heat from a company with a sadly ironic name like Caremark.

Jacob Hyatt Pharm D.
Father of three, Husband, Pharmacist, Realtor, Landlord, Independent Health and Medicine Reporter

www.pharmacoconuts.com

@Hyattjn

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