As noted in Susan’s post yesterday, a company called Purkinje hired a survey company to conduct a survey that found that 84 percent of the public would like to be able to get their prescription drugs directly from their doctor. A “blog” named Phamagossip (see more below) dutifully published the press release from the company. I read this and smelled a rat.
Sure enough, Purkinje sells a product line to set physicians up an in-house medication dispensing program. Here’s how the company describes the program:
Will I be a full service pharmacy?
No. The key to a successful dispensing program is to identify physician prescribing habits. Doctors typically prescribe the same medications repeatedly, and the ideal in-office formulary consists of the most frequently prescribed medications in the most commonly ordered strengths and package sizes. In-office dispensing is not meant to replace the full-service retail pharmacy, but rather to provide a subset of medications that make up 80% of prescriptions, depending on specialty. We recommend that you only stock 20-30 of your most commonly prescribed generic medications. This way, you can cover up to 80% of your patients’ medication needs while keeping inventory costs and overhead low.
OK, let’s add up the negatives:
1. It still takes staff time to make sure the proper medication is dispensed, and to secure the inventory.
2. The patient’s insurance plans have to get on board. One of the reasons the small pharmacies are going out is because they can’t get their wholesale costs down far enough to make enough money on dispensing. This is where the generics come in, which often cost less than the co-payment.
3. Some states restrict or prohibit physician dispensing.
4. There is a perception of a conflict of interest.
5. You don’t have the full prescription record for the patient – the pharmacy is likely to have it
6. Be careful on how you set this up to avoid running afoul of Stark rules. Patients must be offered a choice.
For the urgent care center, drugs and imaging make those centers profitable. The retail clinics popping up are down the aisle from a pharmacy, but don’t dispense directly. In communities where a pharmacy may not be available later in the evening or on Sundays, perhaps it can make sense. Otherwise…….
OK, now let’s dig deeper into the full release, and look at the service that Purkinje packages and sells. The drugs to be dispensed, typically generics, are pre-packaged and for acute situations, such as antibiotics. I’ll buy the patient convenience argument to a point. Pharmacies used to locate near where physician offices congregated. The big pharmacy chains are more convenience store than pharmacy, and they tend to locate in high traffic locations, as do the supermarkets and big box retailers that are also in the business. The pharmacy itself doesn’t take a lot of space, and even with pharmacists earning $100,000 or more, the volume can generate a decent profit per square foot even on low margins per item. (In retail, the key metric is usually measured per square foot of space).
Medical Economics magazine ran a good piece last year on in-office medication dispensing. At least one physician claimed to be netting $5-6,000 a month, or $60-72,000 a year. Interesting – and don’t assume you’ll do the same. Other articles I read bring it down to $1 per prescription, or $20,000 a year.
Here’s the takeaway: the underlying survey was simply to push the clients product – there are other, bigger companies who provide the same services. Tread carefully, carefully assess the impact on staff and operations, and do a feasibility study.
As for Pharmagossip – it is a blog hosted on Google’s free service and is based in the