Expert Discusses Financial Impact of the Pandemic on Pharmacies

In an interview with Pharmacy Times® at the American Society of Health-System Pharmacists Midyear Meetings and Exhibition, Michael Brown, vice president of Managed Services at Cardinal Health, discusses ways for pharmacists to help manage costs post-pandemic.

Q: How did the pandemic affect the financial bottom line for pharmacists and how will it continue to affect these costs into the future?

Michael Brown: Pharmacy is in, obviously, the health care system, and with the pandemic, there was quite a few changes that happened. Health systems were suffering from reduction in staff. They were turning off all non-essential procedures. With that, that had a pretty major impact on the health system itself as with pharmacy. The patients we were seeing in our health systems were COVID patients and/or emergence patients. By nature, they're pretty high intense therapies, high intense drug therapies.

If you look at from a pharmacy perspective, our drug cost/patient/day went up, and once the new drugs that came out to treat COVID, our drug costs spiked. We were dealing with that, same thing happened with the staffing in our pharmacies. You're turning off services, and we have individuals dedicated those services, so caught in a dilemma, do you pay the salaries or those people or do you lay them off? Typically, we'd have to lay them off.

However, you have to have staff there all the time. You're running into more overtime, you're running into downtime, so our salaries went up per patient/day as well. We suspect that to continue; those new drugs are still in the market. They're still impacting our drug budgets. We're going to see those because they pandemic is not over, we're still seeing COVID patients, we're slowly bringing it back up. We're slowly bringing people back on staff. However, because you laid people off, they had to find other jobs, and the labor market is really tight right now, so we're seeing increased salaries.

Q: What are ways for pharmacies to help manage the costs post-pandemic?

Michael Brown: Post pandemic, I think we were so focused on pandemic of just treating our patients, and there was a lot of things going on, we had drug shortages that we were dealing with, so you're just looking to secure the drug supply. There was a lot of therapies out there that you had no idea whether they were true or working, so you're putting a lot of energy in that figuring that out, just to help these patients and save these patients. Towards the end of it, because we were down staff, your focus so laser focused on 1 patient type, you started to realize, what weren't we doing that we should have been doing? What are some of the very basic things that kind of went by the wayside?

We're trying to, and I would suggest for anybody, but our teams are really laser focused on making sure we're hitting the basics again. Let's make our dollar go as far as it can today. So are we purchasing correctly? So are we buying off our contracts? Are we buying the right drugs? How's our inventory levels? Do we have too much inventory? Do we not have enough inventory? But it's very, very basic stuff. Looking at who does what: do we have a pharmacy refilling automation machines? Or do we have them up on the floors doing clinical activities? If they're not, we need to readdress that we need to get everyone back to doing day-to-day pharmacy work, because that's the best way to get back to you make sure all of our old protocols make sure all our policy procedures are back in place, doing exactly what they were designed to do to improve quality and keep costs down.

Q: As we move into the endemic stage of the pandemic, what impact could this have on the financial outlook for pharmacies?

Michael Brown: I think that's a really good question, I think to answer that you really have to see where health systems are today. Right now, from a financial standpoint, they are hurting, either their margins have declined significantly, or they're losing money. When that happens, the tendency is for the executive suite to say, “hey, we need to cut costs, and the fastest way to cut costs is to cut labor.” That's the exact wrong thing to do in pharmacy because most of the costs in pharmacy are associated with the drugs. To control those drugs, you need to have your pharmacist up on the floor working with the physicians, making sure that they're utilized correctly. You cannot have them down doing what I'd say day-to-day tech work. If you're cutting your technician staff, that's what they're going to have to do. The leadership in pharmacy today have to be advocates for their staff. They have to be justifying their staff and proving that they're there and they're having results. You can say you can cut this; this is what the ramifications are going to be most likely it's going to be a reduction in quality, it’s going to be a reduction in employee satisfaction, and ultimately, you're going to see an increase in your cost your drugs spin across the system. Or you can go in there and say “hey, we're going to invest in our staff,” and this is what you're going to see we're going to see improved quality. We're going to see improved employee retention and we're going to see a reduction in your overall expenses with your programs that are designed to just do just that, but you have to be an advocate for your staff.

Q: How are rising inflation rates affecting pharmacies specifically?

Michael Brown: I think you're affecting us like the way they're affecting everyone else. There’s inflation, there's a demand, and then there's a supply. In health care that's across, especially with salaries, it's across every profession. In pharmacy, we're seeing that the technicians, we laid them off, they went out of their jobs. We're also seeing that in the marketplace, we're competing with markets we never competed before for our staffing, for our technician staff, and we're competing on price.

Salaries are definitely going up in this inflationary market. Same thing with pharmacy; pharmacists left, they're leaving the profession, they're saying, “I'm burnout, I'm done, I have the opportunity to go do something else or retire.” Our pool is shrinking. Now we're competing back on price. It's important to pay attention to that we have to do something about it.

Q: How could pharmacists help patients who may be struggling with rising inflation?

Michael Brown: In the inpatient side, I don't think there's going to be a big problem, because of the DRG systems that we operate under, however, as we move more to an outpatient setting, which both health systems are, you're getting into the clinics, you maybe have a retail program that you're starting up or a specialty program you're starting up, it is going to be a big deal.

When you think about all the COVID medications, whether it be a vaccine, or the therapeutics to treat COVID, those are going to move outside of where they used to be reimbursed by the government, they're going to go to commercial plans, the insurance plans. That's going to have an economic effect on our patients, they're going to now be required to pick up copays, deductibles, etc. We have to pivot our focus, we can't just be solely focused on cost within the hospital, we have to start thinking about how do we make sure we're getting access available to our patients on the outpatient side?

We are really going to have to turn into more of a patient advocate, if you will. We want to do services that are driving revenue back to the health system, but we can do a patient advocacy along with that. We're going to have to look at the patient assistance programs that the manufacturers have out there. We need to maximize those to their fullest extent. We need to become experts on copay cards. I spent my life in inpatient management pharmacy, I didn't know what a copay card was, I have to know what that is today, especially if we're following that patient out into the community. There's also grant programs out there that we need to become more aware of that is that patient advocacy from a pharmacy perspective to make sure that these patients can financially afford the medications are being prescribed and it's being dispensed.

Q: Anything to add?

Michael Brown: I think the biggest thing I would like to add is that health system, pre-pandemic, we talked a lot about, “hey, we need to have programs that follow that patient.” We're really good about managing patients inside the hospital, but we need to follow them out into the community. Traditionally, it has been a silo, whether you're an inpatient pharmacy, or you're a retail pharmacist, those days are gone, and we need to break that barrier down. We need to be more focused on following that patient and really helping them, so there's really 2 things that if you're a health system, pharmacists today.

You're still going to have to focus on quality and controlling costs on the inpatient side, but on the outpatient side, you need to bring in new forms of revenue, you need to think about a retail strategy, a strategy, a home infusion strategy. At the same time, you have to be a patient advocate to make sure that they can afford the prescriptions that are being prescribed to them. It's a little bit of a paradigm shift. However, it's one that's needed, and COVID is definitely ramping that up at a much quicker rate than it was pre-COVID.