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| Walmartification of pharmacy is complete: Rants and Musings of a Retail Pharmacist |
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by The Redheaded Pharmacist - September 19, 2011
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Provided by The Redheaded Pharmacist
Yes, I’m making up words this Monday morning. Though I’m sure that the term "Walmartification" has been coined by someone else anyway. But the term seems to be a fitting one for community pharmacy.
You see, something happens when an industry is altered thanks to Walmart. The business model of Walmart has always been drive costs down to the bare bottom no matter what the consequences. But that is a good thing right? Lower costs means more people can afford a given good or service. It brings down the cost of entry for someone buying everything from a vacuum cleaner to dog food. But sometimes quality can be compromised. And there is no better example of the destruction that a race towards a price point floor can do to an industry than the example of community pharmacy.
Walmart saw themselves as revolutionary years ago when they came out with their $4 generic list. Here was a way everyone could buy medications that were generic for a reasonable price without the need for insurance. Seniors and lower income families could save big by getting generic medications instead of more expensive brand name drugs when available. Everyone was happy.
But the reality was that this $4 generic drug list experiment is really costing this industry a lot. The $4 list was a cut throat pricing strategy devised simply to drive competitors out of a business. But the illusion of value masks the hidden truth about an idea like the $4 generic prescription drug list: that it is unsustainable. You just can’t sell something for next to nothing (or in some cases now in retail pharmacy actually nothing) and expect to survive long term. It just doesn’t work.
So what did Walmart think would happen and what actually happened to the industry they invaded with a pricing war like no other? Well, Walmart counted on everyone converting ALL of their prescription needs to Walmart pharmacies. They wanted the more expensive medications instead of just those $4 scripts they would be losing money on every single fill. But that didn’t exactly happen as planned. People simply got the cheap drugs from them and didn’t necessarily transfer their other prescriptions to Walmart. And guess what Walmart? Another thing you probably didn’t expect to happen unfolded in this industry as well: everyone matched your ridiculous offer. So there was no need to come to a Walmart when everyone else matched your price anyway.
The plague that has sickened the community pharmacy business for quite a while now is the sin of duplication. One chain will implement an idea so insane it is laughable if viewed by any kind of reasonably objective criteria. Open all stores 13 hours a day? Sure, why not? Have walk in flu shot service with no addition staffing to cover the strain created by the extra workload? Of course, it is what the other guys are doing. Everyone justifies a really bad idea by pointing out that other pharmacy chains who have equally as inept leadership already do something similar themselves. If it is good enough for Walgreens or Rite Aid then it is good enough for many others whether it makes money or not.
But back to Walmart. They thought they could drive away competition and become the singular provider of retail prescriptions in America. Create a price is the only thing that matters attitude among the general public and then undercut everyone no matter how insanely low you have to go just to eliminate competition. But when you can’t make money selling a good or service it will catch up to you eventually.
And for community pharmacy customers that vague eventually descriptor is now. Look at the staffing at you local pharmacy now. It doesn’t matter what name is on the sign out front. How long does it take someone to ring you up or fill a prescription? Is it longer or shorter than say 5 years ago? How’s the service? Are there people willing or able to take the time to help you or is it like a fire drill behind the counter at your local pharmacy? What happened to create this madness? Do you really not know what this $4 generic list has done to the business of selling prescriptions?
You see this $4 generic list had some negative consequences. Ask you pharmacist the next time you pick up your medication what country that generic drug was manufactured in and what their quality standards are for making that product. See if even the pharmacist has heard of these manufacturers seemingly coming out of nowhere. Ask about the recalls that happen literally daily now. Are government regulations really that much stricter now or is something else behind all of these product recalls? But they wouldn’t sell something in the United States if it wasn’t safe right? We catch all the substandard products that come into this country don’t we? Are we really collectively this naive?
How much time does the average pharmacist now get to try and properly evaluate your prescription order to make sure it doesn’t kill you for example? Hey, it is nice to get drugs for cheap but at what price are we collectively paying for that bottom of the barrel price tag? Have error rates gone up because pharmacies are now rushed compared to years ago? It would be interesting to do a study and find out. And those results might just shock people.
Walmart has in reality created a monster. They’ve created a consumer who wants prescription medications at prices so low that quality or convenience can’t possibly be included in the price you pay at the register. Pharmacies must cut staffing and find some deal with a drug company you’ve never heard of making a product in a country who’s safety standards might not be up to your personal comfort level. But hey, it’s $4 so all is well right?
As a business we’ve got to re-think the Walmartification of community pharmacy. Does it make sense to sell an item for less than the cost to distribute that item just because someone else does? Does it make sense to open stores until midnight or whatever simply because another chain does? Why can’t we afford to have one clerk running the registers at peak hours of the day to allow the rest of the pharmacy staff time to do other work? And how else do we control costs and try and squeeze out a profit in an industry where profits are almost a relic and a fantasy? Inventory control measures come to mind here. It is all a game to try and force a profit out of an unprofitable business model.
Walmart doesn’t care about quality. They want the sales. Sure you can get a pair of jeans for cheap. But do they fall apart in a six months? Is the stitching the same as it was decades ago when things were made to last? How about that button on the shirt that falls off after you wear it only a couple of times? It is called substandard manufacturing and it’s done to save money so a magical price point is reached for the consumer. But is an unrealistic price point really the metric to base a business model? For me the answer is a resounding no.
Walmart has turned retail pharmacy into nothing short of a commodity based business. And any time a commodity is sold there is the potential for a pricing war. And we are in the middle of a big one in community pharmacy. But the problem with our business is that there are lives at stake. And buying prescriptions from unproven manufacturers can have devastating results. Operating a pharmacy way below fully staffed can have consequences. Cutting inventory yet again to try and make up for the fact that the drugs on your shelf won’t make you a profit anyway will have consequences when Mr. Jones transfers out because we never have his medication in stock.
How many pharmacists have had customers say they want one generic brand over another recently? It is supposed to be the same right? It shouldn’t matter which generic a patient gets in theory. But what if things aren’t the same any more? What if patients are noticing a difference between two different generics because these days there really is a difference? What if there are manufacturers producing complete substandard medication simply to sell for cheap to drugstores so they can maintain a $4 per prescription price point that was unrealistic from Day 1? Have you ever thought about that possibility? I sure have and it worries me.
Every action has a reaction. And the reaction to Walmart’s $4 generic list can be best summed up by the flushing sound of a toilet bowl. Because as the water spins down and the drain empties an industry that was once a great service industry is going down that drain too. So thanks Walmart. You’ve got your wish. We are all selling drugs for the cost of a magazine. And the consequences of that decision can be seen day after day in your local pharmacy. Think about that the next time you are stuck in a long line at your pharmacy. I hope it was worth it.
The Redheaded Pharmacist.
The Redheaded Pharmacist has been working full time in retail pharmacy for more than a decade. He is in his mid 30s, and, yes, he has red hair.
Disclaimer: This blog represents the opinions of the author and the author alone. It does not represent any pharmacy group or organization. I also will leave out or change the names of patients/customers to protect their privacy and comply with government regulations regarding patient privacy rights and personal information.
The viewpoint expressed in this article is the opinion of the author and is not necessarily the viewpoint of the owners or employees at Healthcare Staffing Innovations, LLC.
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| oldpharmacist (KC,MO) |
on 22 Sep 2011 at 9:33 pm |
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| This will go on as long as the public sees us as dispensing a product, not a service. We have always given away the service for free but now we can't make up for it by charging for the product. Pharmacy has gone to hell. |
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| Marty (Coral Springs, FL) |
on 21 Sep 2011 at 1:04 am |
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| What makes you think that the pharmacies lose money on the $4 generic prescriptions? Actual costs for these meds are pennies for each unit (AWP is a made-up, meaningless number)! The pharmacies make less of a profit than they did before, but a profit nonetheless!! |
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| Anonymous (Reno, Nevada) |
on 20 Sep 2011 at 7:21 pm |
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| Is it something how this great U.S.A. has gone "DOWN THE DRAIN" Thank you for your point of view. |
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| Countryrxman (Covington, GA) |
on 20 Sep 2011 at 2:22 pm |
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| 35 Years ago it was Eckerds and Revco. Same problem just the names have changed. Now it is Rite Aid and CVS or Walmart or anyone else |
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