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Anjana D. Patel is a shareholder at Baker Donelson and can be contacted at apatel@bakerdonelson.com.
Sam Maddula is the CEO of Workshop Strategy and can be contacted at sam@workshopstrategy.com.
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Thriving Amid Change: A Guide for Independent Specialty Pharmacies Considering Strategic Partnerships or Sale
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Independent specialty pharmacies face growing financial and operational pressures from rising drug costs, restrictive PBM contracts, and regulatory complexity, prompting many to explore strategic partnerships or sales as a means to sustain clinical excellence, preserve autonomy, and ensure long-term viability in an increasingly challenging health care environment.
Independent specialty pharmacies play a vital role in today’s health care ecosystem. These pharmacies manage the distribution of high-cost, high-touch therapies, oversee complex cold-chain requirements, and provide individualized patient counseling that cannot always be replicated by large-scale operations or centralized call centers.
However, this personalized approach to care is increasingly threatened by shrinking reimbursement rates, inflexible pharmacy benefit manager (PBM) contracts, and an ever-evolving regulatory landscape. For many pharmacists, these mounting administrative and financial burdens are encroaching on the time and energy once devoted to direct patient care. In this environment, pharmacy owners are increasingly exploring partnerships—or even full acquisitions—with larger enterprises to preserve clinical excellence while safeguarding the economic value they’ve built. This article outlines the key challenges faced by independent specialty pharmacies and offers practical guidance for evaluating strategic partnerships.
Mounting Pressures in the Independent Pharmacy Landscape
Independent specialty pharmacies face a confluence of challenges that collectively threaten their sustainability. Escalating drug costs, particularly for biologics and limited-distribution drugs, continue to outpace flat or declining reimbursement rates. Even small reductions in prescription margins can destabilize financial operations, impacting staff retention and owner compensation. Compounding this, major chains, payer-owned specialty arms, and integrated health systems are increasingly diverting prescriptions into narrow or exclusive networks, thereby reducing patient referrals to independents while operational expenses—such as around-the-clock cold-chain monitoring, insurance, and trained personnel—remain fixed.
The influence of national PBMs further exacerbates the issue, as they often dictate reimbursement through non-negotiable contracts, opaque rebate systems, and audit chargebacks that can erase months of revenue. Simultaneously, compliance requirements grow more intricate, demanding additional administrative oversight without a corresponding increase in reimbursement. Notably, independent pharmacists routinely deliver high-value clinical services, such as medication therapy management, adherence support, and readmission prevention—yet these contributions are rarely reimbursed under current fee-for-service models. Although these barriers may be manageable individually, their combined effect can leave even the most resilient pharmacy operators overwhelmed and financially strained.
Strategic Partnerships: Unlocking Scale and Sustainability
For some independent pharmacies, partnering with a larger platform may offer a viable path to long-term clinical and financial sustainability. A well-aligned strategic partner can bring enhanced purchasing power, leading to more favorable drug acquisition costs. Such partnerships can also offer leverage in PBM negotiations, potentially stabilizing or even improving reimbursement margins.
A pharmacist standing in front of a shelf filled with medications. Image Credit: © arhendrix - stock.adobe.com
Operationally, affiliation with a larger entity provides access to centralized resources—ranging from human resources and IT infrastructure to data analytics, outcomes reporting, and call center support—allowing pharmacists to focus more on clinical care. Dedicated regulatory compliance teams can monitor evolving requirements and reduce risk exposure. Additionally, partnerships may create opportunities to participate in value-based reimbursement models that recognize and reward the clinical services pharmacists already provide. Finally, a strategic transaction enables owners to “take chips off the table,” monetizing the value of their business while continuing to serve in a clinical leadership role.
Transaction Structures: Flexibility to Fit Your Goals
Contrary to common perception, an outright 100% sale is not the only option. Owners may choose to sell a majority interest while continuing in their role as clinical leaders. These arrangements often include competitive salaries, performance bonuses, and earn-outs tied to future growth milestones. A range of transaction structures exists to accommodate different objectives, and working with experienced advisors is critical to understanding the financial and governance implications of each. Pharmacists must weigh what they are relinquishing against what they retain and ensure alignment with their long-term goals.
Preparing for a Transaction: Preserving Value and Autonomy
Preparation is key to ensuring a smooth and value-maximizing transaction. Pharmacy owners should first ensure alignment among all stakeholders regarding goals, timing, and the distribution of proceeds. Operational and compliance issues—such as outstanding legal matters, contract obligations, or lease terms—should be addressed in advance to present a well-run and attractive business. Organizing documentation is essential, including PBM contracts, wholesaler agreements, audit results, supplier rebate records, and patient outcomes data.
Evaluating potential partners goes beyond financial considerations. Cultural fit is critical—pharmacists should engage with peers who have previously joined the platform to assess whether promised infrastructure investments were delivered and whether clinical autonomy was preserved. Advisors with pharmacy transaction experience—legal, accounting, and investment banking professionals—can help negotiate favorable terms and identify potential red flags before closing.
Life After the Deal: Clinical Focus With Operational Support
After a transaction closes, many independent pharmacists experience significant improvements in their day-to-day responsibilities. Administrative burdens such as DIR-fee reconciliations, PBM audit responses, and payer reporting are often offloaded to centralized teams. Technology platforms may be upgraded to automate inventory forecasting and patient outreach for adherence. Access to broader limited-distribution drug lines can increase both revenue and the pharmacy’s ability to meet complex patient needs.
Compensation structures typically reflect a clinical leadership role, including a fixed salary or independent contractor agreement supplemented by bonuses tied to defined clinical or business metrics. In transactions where equity is retained in the combined entity, owners may also benefit from future upside through recapitalization events or public offerings.
Conclusion: Strategic Alignment Without Compromising Values
Exploring a strategic partnership or sale does not represent a departure from the professional ideals that guide pharmacy practice. Instead, it can be a means of preserving those ideals amid rising economic and regulatory pressures. With careful planning, thoughtful partner evaluation, and experienced guidance, independent specialty pharmacists can ensure financial stability, preserve clinical autonomy, and continue to deliver the personalized, expert care that defines their profession.
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