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3 Rules of Surviving Amazon

How can Independent Community Pharmacy Survive Amazon? Here’s 3 suggestions:  Major: Hey guys, my name’s Major. This is Darshan, and […]

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July 26, 2018 Community Pharmacy, Law of the Land

How can Independent Community Pharmacy Survive Amazon?

Here’s 3 suggestions: 

Major: Hey guys, my name’s Major. This is Darshan, and today we’re gonna be discussing three things pharmacists need to do to stave off Amazon. We are with the Gavel & Pestle Podcast. Darshan, what are the three things we need to know?

Darshan: First things first, Major, we should probably talk about what the word “stave off” means, because you know what?

Major: I was wondering about that.

Darshan: That’s just big words right there.

Major: “Stave.” Who uses that in conversation?

Darshan: I know. I’m that guy. I’m just using the words stave off to mean like keeping people out-

Major: Like put off. Keep them away.

Darshan: Put off. Yeah. There you go.

Major: Okay.

Darshan: But, here’s the key piece that you and I are talking about, which is can pharmacists survive? We did a podcast for Amazon coming on. We talked a little bit about how Amazon’s going to take over the world, but what does this mean for pharmacists? What do we as a profession need to do so that we aren’t simply just waiting to be mowed down by the giant machine that is Amazon?

Major: Speaking of, Amazon recently acquired PillPack. That’s why we’re primarily talking about this. Because there are some concerns that the demand for pharmacists might diminish. Darshan, let me ask you this, when the GPS became big the demand for cartographers dropped significantly just because there wasn’t an actual need for physical mapmakers at that time. Is this comparable? Is diminishing demand for the pharmacists a concern?

Darshan: It’s such a great question. Major knows this; I’m a huge reader of Reddit, and this is a problem but it continues to be an addiction I try to stave off, but it doesn’t work-

Major: Stave off or put off?

Darshan: I know, right? The question is, did the need for cartographers drop off when GPS came on? And there was a recent comment on Reddit where they asked about well, “Are there any cartographers? Do people need to be cartographers?”

Major: Oh now? Yes.

Darshan: Turns out it’s a massive need.

Major: Now, yes, but at the time, I actually had a buddy who was going to school for it and he had to drop out and change direction. He had to pivot because there wasn’t many placement opportunities for him. Nowadays, there certainly is with map-making opportunities and different boutiques, so to speak, but with those specifics, that’s a different story. I was just using that on the surface to kind of compare to the demand for pharmacists.

Darshan: And I actually agree with you; the point I was making is the same one, which is people who are going to stay and do the same thing, if you’re going to be a cartographer, if you’re going to be a pharmacist who wanted to do the same thing 20 years ago, you’re probably gonna die off. But, if you’re to be that pharmacist who adapts, who changes, who sees what this new world looks like and knows how to be part of it, you would be very much in demand. When Google Maps was coming on, when Apple Maps was coming on, and to come on and go, “We know what this new world looks like, and here’s where the opportunity lies.” People can makes millions if you know where the world is going, talk to people, learn about it, and then go, “Here’s where I can position myself.”
Today we’re gonna talk-

Major: Do they have to do that within Amazon? Do they have to be absorbed by the giant? Or can they exist outside of that? Or is that what we’re gonna talk about today? I don’t mean to jump [crosstalk 00:03:44].

Darshan: Well that’s gonna be part of what … Well I guess we just did right?

Major: I’m so excited about this, like wow.

Darshan: Well and that’s always a good thing. So here’s how I think about Amazon. Now when we think about Amazon, say I don’t know, five, six, seven years ago, we thought about Amazon being that company that made all the things, sold all the things. And the Amazon came up with its Amazon Marketplace. And what was the Amazon Marketplace? Anyone can get onto Amazon and use it as a virtual store and sell their stuff off Amazon. So your goods will literally compete against Amazon and be sold by Amazon. Amazon’s happy ’cause they’re still making a cut. You’re happy ’cause you’re still going to one place to get things. So the question to ask is in the future will pharmacies become competitors to PillPack? Can you imagine being a pharmacist sitting in New York City and trying to sell and access a patient in Albany? And you could only do that now because Amazon gives you the ability to access those patients.

Major: Right.

Darshan: Amazon connects you. That would open up opportunities for pharmacists that simply doesn’t exist. Is Amazon gonna do that? I don’t know. But if you compare to the current business model, it is very much within their current business model. So maybe Amazon is going to offer some opportunities and offer growth opportunities that we simply didn’t consider. Then there’s a question of what you just mentioned, which is people creating specialties. In cartography, it was creating what are called hyper-local communities. Which is looking at where is the closest Dairy Queen and what is around the Dairy Queen? But in the case of pharmacy, that could be talking about vet prescriptions. That could be talking about schedule two drugs. That could be talking about narcotics, that’s schedule twos. Specialty drugs, personalized care, emergency antibiotics, compounding. All of which are opportunities that simply are difficult to achieve using a PillPack.

Major: So at the beginning-

Darshan: And that … Go ahead.

Major: At the beginning of the podcast we said we were gonna talk about three things pharmacists need to know. So what’s thing number one?

Darshan: Thing number one is the Amazon Marketplace. Keep an eye out, keep an ear out. Is that gonna be an opportunity for you? Number two, consider offering things that Amazon is not well positioned to offer. Schedule twos, specialty, personalized care, antibiotics, compounding.

Major: Well you can offer, that’s legal to offer.

Darshan: Right. Very much so. Here’s a third option. Amazon is really good at delivering goods. What Amazon’s not the greatest at, and still struggles with this, is delivering services. And what you can do, and what CVS, for example, is doing, and what Walgreens are doing, is partnering with healthcare practitioners. Maybe partnering with a nurse practitioner and allowing them to come and give … and sort of have a teaching session at your pharmacy. Maybe they diagnose patients at your pharmacy ’cause your pharmacy’s more convenient.
Now you’ve gotta be careful ’cause there are stark laws, and there are anti-kickback laws that all come into play because you can be given kickbacks and the like. But overall partnering with certain healthcare providers may very well give you opportunities you hadn’t thought of. So that’s three. Here’s the thing Major. We never stop at giving them what we promised. We give them always one more. And here’s our one more. The enemy of my enemy is my friend. How do you stave off Amazon? Consider partnering with people you traditionally thought of as your enemy.

Who do pharmacists traditionally think of as their enemy? They think about reimbursement. They think about how they aren’t being paid enough. So your PBMs. Your GPOs who may theoretically be helping you, but you feel like you don’t have enough of a margin. You, as the pharmacy, are now going to go, “PBM. If you don’t support me, I die off. You don’t have a base to do to, ’cause my patients are going to Amazon. What you need is to live ’cause Amazon’s going to flatten you out.” Maybe there’s an opportunity in the future to actually start partnering with PBMs and getting better pricing to allow for better opportunities for patients.

Major: So just real quick-

Darshan: And that … Yeah.

Major: PBM, what is a PBM?

Darshan: Oh. PBM is your pharmacy benefit manager.

Major: Pharmacy benefit manager.

Darshan: So when you go to … Correct. So what does that actually mean? So when you get insurance, it’ll be like your Blue Cross, Blue Shield or it’ll be your Aetna. They often will say, “You know, we’ll take care of your healthcare, but we are handling your actual drugs.” So Optum, Caremark, all those are your PBMs. And what they’ll do is they’ll negotiate all the bits and pieces associated with your prescription drugs.

Major: Okay.

Darshan: They’re called PBMs.

Major: So just to review, the three things a pharmacist needs to stave off or put off Amazon, number one there’s still hope for the Amazon Marketplace. You could-

Darshan: Yup.

Major: Thing number two, offer options and services that they cannot offer yet. That you can offer, legally. Number three, enemy of my enemy is my friend? Is that-

Darshan: Yup.

Major: All right.

Darshan: And option four, is partner with other healthcare providers.

Major: So I have a question for you Darshan. So either losing a substantial chunk of business or going out of business altogether can be seen as one of the top concerns pharmacists have when it comes to Amazon steps into the pharmacy market. That’s what we’re talking about the three things pharmacists need to … The current podcast. So is there another concern that pharmacists need to have about Amazon’s acquisition of PillPack?

Darshan: What are you thinking about Major? Talk to me a little bit more about what you’re thinking about.

Major: No, no. I’m not thinking about anything specific. I’m just saying is that all that we need to think about?

Darshan: About whether just pharmacists are … Well, explain the question to me. I’m sorry. I feel like I didn’t quite catch it.

Major: So we’re focusing right now specifically on one thing and that’s reduced demand of pharmacists. How can we exist after that chapter? How can pharmacists exist after that? That being the primary concern, could there be another concern? Is there something waiting in the wings that we haven’t thought about or?

Darshan: Oh. So I think the other thing that you’ve gotta think about is pharmacists are going to start landing up in a situation where they are … How should I put this? They’re gonna start getting desperate ’cause they’re gonna see the patient volume start changing. And the mixture start changing.

Major: Oh wow, yeah.

Darshan: And fewer patients will go. And because of that, you’ll see pharmacists taking shortcuts. And those shortcuts could very much result in problems. That can result in pharmacists filling, say opioid prescriptions that are inappropriate because you don’t wanna lose that patient ’cause that patient comes consistently. You might land up in a situation where marketers are going and building a relationship. We talked about these relationships being built with other providers, but if not done appropriately, it can be hugely problematic. And the Department of Justice, the Office of Inspector General, they’re all looking over your shoulder. I can assure you, they’re looking closely. And if they are looking closely … I mean recently I heard, I think it was like a two billion dollar situation where, I think it was like 700 odd healthcare providers were collected because they were inappropriately billing. So fraud is going to become a huge problem if pharmacists aren’t careful. So let’s do this Major, why don’t we make our next talk about fraud and what pharmacists should be aware of as they continue in a post-Amazon world?

Major: Hey, that sounds like a great idea. Well guys, thanks a lot for listening to Gavel and Pestle. My name’s Major, this is Darshan. Stay tuned for fraud and pharmacists.

Darshan: Thanks guys.