Community Pharmacies May Benefit From Embracing AI for Enhanced Profitability

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Artificial intelligence (AI) may optimize cash pricing strategies in community pharmacies.

With shrinking reimbursement, increasing fees, the threat of closure and more, the US community pharmacies are facing major challenges.1 However, as artificial intelligence (AI) develops, there are new opportunities for pharmacies – particularly when it comes to a cash pricing strategy.2

cash pricing pharmacy

Without a cash pricing system, many pharmacy staff spend a lot of time manually determining prices. Image Credit: © Gorodenkoff - stock.adobe.com

The rise of cash-paying customers

The use of high-deductible health plans (HDHP) continues to grow. A 2023 study from the Kaiser Family Foundation found enrollment in these plans increased over the past decade, from 20% of covered workers in 2013 to 29% in 2023.3 As use of HDHPs goes up, pharmacies can likely expect to see more cash-paying customers at the counter.4

It’s also worth noting that customers forgoing insurance may instead utilize popular discount card programs, which are often built to benefit the PBM system – an issue that’s starting to gain attention on social media. A recent 12-minute YouTube video featuring one pharmacy expert’s analysis on how GoodRx took $7 from a local pharmacy has more than 6000 views.5

However, many pharmacies don’t have a predictable, sustainable, or patient-friendly cash-pricing system. “Until recently, we used an antiquated model for cash pricing,” Patrick Chancy, PharmD, of family-owned Chancy Drugs, a seven-store group in southern Georgia, said in an interview with Pharmacy Times. “The reality is PBMs are continuing to change the game. We knew we needed a better solution to compete successfully in our local market.”

A lift in profitability means good things for community pharmacy

So, what is the modern pharmacist to do when facing these headwinds? A new approach to cash pricing is one way to lift profitability. When Chancy looked into options for his pharmacies for cash pricing, he found a solution using AI that impressed him. “Pharmacies need to consider that many drugs are often priced too cheaply with the cash price. We didn’t even realize how much we were leaving on the table in comparison to our competitors,” Chancy said.

New data showed the power that AI can bring to cash pricing. In a 2023 analysis, the gross profit margin for pharmacies using AI for cash pricing was nearly 54%.6

Chancy, who uses AI, saw the impact almost immediately, “It gives us more consistency in our cash pricing. We now feel highly competitive to other drug discount programs out there.”

Less time spent on cash pricing, more time for patient care

What else can AI help with? Time. Without a cash pricing system, many pharmacy staff spend a lot of time manually determining prices. In a trends survey for independent pharmacies, over half of respondents (55%) said they spent 2 to 6 hours reviewing drug prices weekly, and 42% said they spent more time each week than they did 2 years ago.7

But the machine learning capabilities of AI mean that the system can calculate cash pricing quickly and repeatably. “It’s really doing its job. It’s taking the pressure off of us, so we can focus our time as pharmacists on caring for our patients,” said Chancy.

The power of AI to help find profitability in cash pricing paired with the time savings can really pay off for pharmacies – instead of having to hire more staff to work on a bespoke cash pricing strategy, pharmacies can instead invest profits found in cash pricing back into their business.

New technologies can drive success

“Our commitment is to our community,” Chancy said. “And we know that means we have to keep up with what our customers want while considering new technology that will help us work smarter and stay in business so we can keep doing what we do best.”

About the Author

Paige Clark, RPh, is the VP of pharmacy programs and policy at Prescryptive, overseeing the company’s policy work to drive awareness, utilization, and scope of trusted independent pharmacists nationally. Prior to Prescryptive, Paige spent 11 years at Oregon State University's College of Pharmacy, driving policy initiatives for the state’s licensed pharmacists, including the prescribing of birth control and tobacco cessation services. Paige also worked as the Staff Pharmacist Consultant for the Oregon Board of Pharmacy, managing rule writing, legislative endeavors, and regional and national policy work. She is a frequent speaker and presenter at national industry conferences and a multi-award winner, including several Pharmacist of the Year recognitions.

REFERENCES

  1. 2024 DIR changes may bring financial challenges to independent pharmacies. Pharmacy Times. June 26, 2023. Accessed June 26, 2024. https://www.pharmacytimes.com/view/2024-dir-changes-may-bring-financial-challenges-to-independent-pharmacies
  2. The sooner the better: why pharmacies need a smarter pricing system now. Pharmacy Times. February 6, 2023. Accessed June 26. 2023. https://www.pharmacytimes.com/view/the-sooner-the-better-why-pharmacies-need-a-smarter-pricing-system-now
  3. 2023 employer health benefits survey. Kaiser Family Foundation. Accessed June 26, 2024. https://www.kff.org/health-costs/report/2023-employer-health-benefits-survey/
  4. With cash customers on the rise, ai could be key to pharmacy pricing profitability. Pharmacy Times. August 17, 2022. Accessed June 26, 2024. https://www.pharmacytimes.com/view/with-cash-customers-on-the-rise-ai-could-be-key-to-pharmacy-pricing-profitability 
  5. How goodrx helped steal $7 from My Pharmacy (featuring algorithmic price fixing). YouTube. March 26, 2024. Accessed June 26, 2024. https://www.youtube.com/watch?app=desktop&v=NWJ9ZqxssWw
  6. Empower your pharmacy with Prescryptive Health. Prescryptive. May 1, 2024. Accessed June 26, 2024. https://prescryptive.com/who-we-serve/pharmacy/
  7. Rewriting the script: independent pharmacy trends. Prescryptive. 2022. Accessed June 26, 2024. https://prescryptive.com/2022-pharmacy-study-opt-in/
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