Changes on the Horizon

JANUARY 01, 2007
Fred M. Eckel, RPh, MS; Pharmacy Times Editor-in-Chief

Change is the order of the day in pharmacy, and with change come questions about the future.

Witness the recent battle over pharmacy benefits management (PBM) company Caremark, initiated by a $21-billion bid by CVS and a counteroffer by Express Scripts.

There is speculation that a merger of this size could trigger yet more industry consolidation, with the potential for deals between other retail chains and large PBMs.

Mergers as large as this one generate questions for patients, for the industry, and, of course, for pharmacists.

If retail chains succeed in acquiring large PBMs, however, there are reasons to be optimistic about the outcome. What is the alternative? Many recent developments affecting our industry have been driven by forces that were outside the control of pharmacy and often not operating in our interest. In contrast, mergers or acquisitions driven by retail pharmacy could put senior pharmacy executives in a position to shape the future of these combined companies—and, potentially, the evolving industry.

This situation would present opportunities to show that PBMs can operate for the benefit of patients and pharmacists. It could bring greater transparency to the PBM industry and potentially drive down overall health care costs for patients and employers.

Instead of using mandatory mail-order programs to drive patients away from community pharmacies, retailers with a large PBM operation would have a strong motive to ensure that patients continue to have access to medications through their local pharmacist, if they choose. Giving patients that choice would enable us to demonstrate that providing drugs is not just a commodity service—that we provide other services, such as information and medication management, that patients find valuable and help ensure better outcomes.

There are business risks, too. Over the years, retail chains have experienced failures as well as successes in their attempts to acquire and operate PBMs. Some of the risks appear lower this time around, however, due to the additional business driven by Medicare Part D and the larger market overall.

Change is inevitable in this industry, whether it is driven by legislation, another round of industry consolidation, or the emergence of powerful new players. It is up to us to live with the uncertainty, assess the impact, and adapt.

Mr. Eckel is professor and director of the Office of Practice Development and Education at the School of Pharmacy, University of North Carolina at Chapel Hill.