Unleash Profitability: Recover Lost Profit from Net Negative Prescriptions
In this episode of The Bottom Line Pharmacy Podcast, join us as we sit down with Arica Collins, PharmD, and Founder of RetailMyMeds.com, to delve into her industry innovation that empowers independent pharmacies.
Discover how Arica’s groundbreaking solution effectively utilizes a dashboard to outsource prescriptions, tackles profitability challenges in independent pharmacies, and explore the significance of this innovation in light of impending DIR fees in 2024.
If you prefer to read this content, the video transcript is below.
Scotty: All right. Welcome, everybody, to another episode of The Bottom Line Pharmacy Podcast. And today, we’re excited to have Arica with RetailMyMeds on and learn more about that. Hot topic today. As you can see, I’m sweating over here. So, Arica, we are super excited to have you. And let’s just start with tell us a little bit about your background and kind of how you got into RetailMyMeds and what is RetailMyMeds?
Arica: Sure, well, thank you for having me this morning. So RetailMyMeds is a passion project of mine. I am an independent pharmacy owner. I have owned an independent pharmacy for about 15 years. And realizing a couple of years ago that we were increasingly being under-reimbursed on prescription claims. And really, I saw no other solution in sight. I decided to think out of the box and create a new solution that I think would be beneficial for not only myself, but for many pharmacy owners. So in 2021, I was filling prescriptions at the bench just like many of my colleagues are today. And I had a specialty drug come across the counter, cost $20,000, totally drained my cash flow, and I had a net loss of $200 on that one claim. And I thought, jeez, this is not sustainable. And it’s ridiculous that we have to do this. So it occurred to me that someone’s making money on this prescription. Perhaps they should be the ones filling the prescription. And I decided to transfer that prescription out. To the PBM-owned mail order pharmacy for fulfillment. And I’m realizing that they probably pay a whole lot less for medications than we do in the retail setting and have much larger buying power. So, that process worked and it was quite easy to do. And from there we just continue to build on the process. So two years ago, we started RetailMyMeds and have developed a turnkey process that can be implemented essentially in any pharmacy now. And essentially, it’s a way to redirect under-reimbursed prescriptions to mail order for fulfillment, but have those prescriptions coordinated through the retail pharmacy setting. So that patients do not have to choose between pharmacies. We don’t have to take a loss on those prescriptions to help our patients. And we should not ever have to be in a position to choose profit over patients or patients over profit. That is ridiculous in my mind. So, we just started building upon the process. We developed a dashboard that is very intuitive for pharmacy technicians to utilize in the pharmacy and implement in any workflow. It allows you to coordinate multiple patients, multiple prescriptions, and multiple refill dates all in one platform. And so I think, the program has a lot to offer a lot of pharmacy owners at this stage in the game.
Scotty: So a prescription comes in the pharmacy. It’s a specialty. It’s a loss for the pharmacy. They know it. What happens? Walk us through that process with RetailMyMeds.
Arica: Sure, you know, the process is actually, it can be used for specialty drugs, brand name drugs. There are a few generics that you can’t win on. So anything that the pharmacy is actually losing money on as a candidate for the program. So what would happen is when a prescription comes into the pharmacy, that may or may not be the ideal time to have a conversation with the patient about what’s happening in the pharmacy as far as reimbursements go. And I know that that’s sort of a taboo topic as well with our contracts. You know, you can’t really say, hey, we’re being under reimbursed on this prescription. But my go to line is, I can’t purchase this prescription cheaply enough to make profit on it. And I have to make a profit to stay in business. And so even though we are not able to fill this prescription for you here, locally, we’re going to be working with a program that will allow us to coordinate that prescription for you so that you don’t have to do anything different, but still come to your pharmacy every month to pick up your prescription or every 90 days. But we’re going to coordinate this for you through a program and utilize your mail order pharmacy. And you know that seems to be a very positive conversation. 99% of the time, we’ve had very little pushback on that at all in our program. But, a prescription, you know, and when I say is I don’t know that the prescriptions that walk in the door today are the ones that you really need to be focusing on is for coordination. You really want to be looking at prescriptions that are perhaps on MedSync, prescriptions that you filled last week so that you have a little bit of time to get those prescriptions in the door. We like to give at least 2 to 3 weeks so that those prescriptions can be coordinated through mail order. The prescriptions can get where they need to be and so forth. And then you have the conversation with the patient. They agree. They enroll in your program. You transfer or have a new prescription sent to the mail order for fulfillment. The technician that will be running the program in your pharmacy now works as a patient advocate on behalf of the patient so that they have access to retrieve medications to make sure that you’re getting your medication and you’re getting it affordably. But most of all, you have access. You’re maintaining access for that patient. And I think that’s a really hot topic now as well. You know, we all know that DIR fees are killing pharmacies and the cost of doing business is really unsustainable. But the fact that we’re really threatening to have a situation where there are pharmacy deserts and we don’t have enough access for patients is a real threat. And so I think that this program provides a middle ground where we can’t control necessarily what’s happening in the industry right now, but we can still provide access. So you get the prescription sent to mail order, the technician coordinates it, brings it back into the pharmacy. Puts it with the other prescriptions that are ready for pickup, that are still fulfilled locally. And that’s the process essentially.
Bonnie: And I think that’s the beauty of it, because we hear that a lot. This patient, we hate to turn away this one particular fill because they have eight other things with us. And if we turn away even that one or maybe two and they have to go somewhere else because you know, I’m kind of lazy, the American population can be, convenience is huge. So you don’t want to have to go to multiple places. So I think that’s big. People can actually still have this delivered, still put, like you said, with their other scripts. So they really don’t know the difference. And you’re able to save that patient from possibly moving everything. And so I know that’s been a concern in the past for some people. And like you mentioned, the DIR fees, I mean, that is the hot topic, obviously. And this is just another way everyone is having to look for ways around that. And this is a way and a huge way, in my opinion, looking into this is, they can see this stuff and, you know, possibly save in that area.
Kendell: And I have a fundamental question. This is a little bit even before RetailMyMeds kicks in. Something we’re noticing with a lot of pharmacists and you’re obviously a very proactive pharmacist because you knew one specialty drug, you knew how much that one fill was going to cost you, you said around twenty grand and then you knew your profit or loss on each and every line item. So go a little bit farther back. If I was a new pharmacy owner or a pharmacy owner, that doesn’t really get in touch with technology that much, could you relate? How did you identify that drug and actually know? Because once it goes out, whether you’re getting reimbursed and then the DIR fees there are so many moving pieces just to identify what are you actually making on one drug I find is a big challenge. So how did you figure that out with that drug? And how do you coach pharmacies that you’re talking to now?
Arica: Great question. You know, I’ve always been a very proactive pharmacist. I think realizing that early on, that you have to look at claims on an individual claim basis. I mean, I have a lot of pharmacy owners that come to me and say, “Well, I know what my DIR fees are by plan.” And I said, but if you fill X drug, do you know if you are actually making or losing on that prescription? “Well, no, not really.” Okay. So it’s imperative at this point. I cannot stress that enough that you have to know on an individual claim basis. And if you don’t have that capability in your software, call your software company and really just force that issue that this has to be in there. And most already do on some level. So I think that’s what’s important is just to make sure that you’ve got the information in the system that you have the tools to evaluate on a claim-by-claim basis and then make that decision.
Bonnie: We call it the fill and pray method. We see that a lot.
Arica: You know, that used to be really common to do that. Fill it all and when the dust settles hopefully you’re profitable.
Bonnie: Just hope you work out. Yeah. The end. But yeah, you’re right. I mean, there’s just no way with everything going on in independent pharmacy right now you cannot do that. I mean, you have to look at what you have and you mentioned a big thing earlier is cash flow. We all know, we talk about that a lot for many different other topics and reasons. But cash flow at a pharmacy is just everything. Cash is king. And so, this is a big topic even if people are looking at those things with the weight loss drugs out there right now. That’s where we’re seeing a lot of pharmacies, you know, their top line revenues are growing, but they’re not making any money on these, or not much. Or instead, their profit, their gross profit is the same as it was. You know, we were looking at prior months or prior year-to-date numbers from the previous year, their sales are way up, but there’s no difference.
Scotty: Well, that goes back to what Arica was saying. You have to be engaged in these DIR fees. You have to know because I’ll get on a call with a client and be like, hey, you know, your revenues are way up this month. Do you realize what’s going on? Are you doing these injectables? “Well yeah, we’re doing these injectables.” Well do you realize, like, what’s happening here?
Bonnie: And it’s eating up their cash because they’re not…
Scotty: And they’re like, “No, I had no idea.” You know, well go look at it and come back to us. And then they’re like “You’re right.” So you got to be engaged. You have to know what you’re doing behind that bench. And a lot of pharmacies just don’t. You just have to.
Arica: I think it’s important to understand too a lot of pharmacy owners think that sales equals success. But you can’t deposit revenue. You know, you deposit profit, right? So, I mean, you guys are the accounting gurus, but… I used to think that, oh, if I could just hit this number of sales. Well, traditionally, historically, I guess that was a big thing. You could depend upon that because you knew that you were going to be guaranteed a certain percentage of sales as profit if you ran your pharmacy appropriately. But that was well before the fluctuating fees came on board. And, you know, things keep getting going from bad to worse. So it’s absolutely imperative in my mind to not think about even any type of profitability number unless you’re looking at net profit after DIR fees. You just need to go ahead and plan on that and build your expenses around that net profit number after DIR and then you know exactly how much you need to set aside also for those takebacks.
Bonnie: And Arica, I know you were telling us last week and we were looking into it, and this dashboard that you’ve come up with kind of hones in on three areas. I know you were talking about that. Talk to us some about that. I think you said the net loss avoided, DIR fee avoided, acquisition cost.
Arica: Right. So in developing this program we really stuck to these three key performance indicators that would, I guess, identify the success of the program that each store is having. Well, you know what I’m saying? I said that backwards. But the success that each store is having is based on how much, how many prescriptions are transferring out and so forth. And so the key performance indicators that we’re looking at are acquisition cost avoided. So that’s automatically going to help our cash flow, right? Because you’re not having to tie that money up in inventory. You’re looking at net profit or net loss avoided. So there are a number of claims that we feel actually in the pharmacy that even without DIR accounted for, you’re still losing money on. And so if you can eliminate those early on, the low hanging fruit, if you will, you know, those are ones that you can actually you know, you can save money. You can eliminate that expense of doing business right off the top. And then the third line that we look at is estimated DIR avoided. So it is an estimate, but we do estimate once we either assist the member in putting in the DIR fees in their system or we have them to call a good friend of ours to enter those fees and, you know, hopefully that gives the owner or the person in charge of the program an idea of what’s happening on that front with those numbers.
Scotty: Yeah, going back to that if you’re, that’s one of our pillars is getting those DIR estimates in your script system. If you have not done that and you’re listening. You absolutely have to. And that’s just, you do it right now, you do it. Get off this call and just do it. So you got to have that in place. You got to know what’s going across your bench there.
Kendell: And slight plug. If you go to our website and type in the DIR fees, there’s several videos in the media resources that we’ve done and oh my goodness, so fabulous. A lot of information from people or industry experts in that area that share this knowledge. So check it out. It’s a must watch podcast.
Scotty: I think that acquisition thing, the cost metric is a key metric there, as you were saying, Arica, because the, you know, cash has a pharmacy has an inherent cash flow issue. You know, you’re paying that wholesaler before you’re getting reimbursed. So there’s a 10 or 15, 30-day lag in cash flow for a pharmacy. So getting that, you know, in your example, the $20,000 acquisition out of your cash flow process is huge. So that’s something I think is very notable. Now on that being said, do you, you know, we’re using mail order to facilitate these prescriptions. Do you, does RetailMyMeds have any conflicts? Are there any PBMs that you are connected to or anything like that.
Arica: No, we are independent. We are not affiliated with any PBM, any provider, any anyone.
Scotty: You do your own thing. All right.
Arica: I do my own thing.
Scotty: You know, that’s a thing, that’s an important question because I think a lot of people would ask that question.
Arica: Well, that’s another question I get a lot, too, is, are you the mail order provider? No. We don’t want your under reimbursed prescriptions. But you know, what we will do is we will give you a turnkey program to implement in your pharmacy so that you can coordinate these prescriptions through the associated mail order with the patient’s insurance. So it’s a really easy process to implement, too. And I think that that I’d like to stress that point if at all possible. You know, the training is very simple and very straightforward and easy to implement.
Scotty: Are there any threats to a pharmacy with this model? Is there anything that might raise a flag for a pharmacy owner out there.
Arica: With regards to solicitation of patients, I think that that’s the most common question I get is, you know, if I give the mail order pharmacy the opportunity to have this patient’s information, will they be soliciting for all of their prescriptions? You know, the fact is we have not seen that to be a major issue because we already know that pharmacies, mail order pharmacies are soliciting our patients all the time. Especially the PBM-owned mail order pharmacies. When you log in to their mail order account, the patient’s mail order account for the first time you already see a list of every medication they’re taking, when it was filled last where it was filled, they already have all of that information. But I think what’s key at this point is, at this point in the game we have to lean into the relationships that we have with our patients now more than ever. And I think that sometimes pharmacy owners, even though we’re very appreciative, you know, we’re not used to asking for anything and we’re used to being the ones that are providing the solutions. And so to be able to lean into that relationship with your patient and say, they’re probably going to call you. But if they do and you have a question about what they’re asking you to do, just ask us because we’re coordinating this medication for you and it’s certainly your prerogative where you get your prescriptions filled. But if you would like us to help you and you would like us to remain, you know, local here for you to help take care of your prescription needs, just have a conversation with us first and we can tell you if you’re going to get a better deal or not. And I can say that in our number one test store, we’ve got 150 unique patients on this program, and we have not lost one patient to mail order. And I think it’s really endearing. You know, when you have a heart-to-heart conversation with your patient, just to say we can’t continue to do business the way we’ve always done that. But we would like, you know, we’re doing everything we can to stay here for you, but we may need your help. By large, they’re agreeable.
Scotty: Yeah. That’s exactly what sets the community pharmacy apart, is that value add that customer in that patient relationship. So it’s actually an opportunity to expand that relationship when you think about it. How about is there any concerns on a state board of pharmacy level with utilizing a service like this? I believe there might be one or two states out there that this could be a concern is that I may be mistaken there.
Arica: So to our knowledge at this point, you know, of course every state law varies and we have to be considerate of all state laws. We are not aware of any state other than potentially Texas right now that explicitly prohibits transferring, or having a prescription mailed from a mail order pharmacy to another pharmacy location, although we’re in the process of currently researching that law because it may have changed in December, we’re not sure. Legal is working on that as we speak. But what’s interesting is, you know, by and large, most boards of pharmacy have not contemplated this idea. This is a completely new idea. It’s an out of the box idea. And so, you know, there are a number of states who have already agreed. Yes, it’s fine for a pharmacy to ship to another pharmacy. There are a large majority of state boards who have never contemplated the idea. And then, you know, on the negative side, we have we know of one state right now that discourages that. So but we’re working through that as we speak. So hopefully that will change. But I think what’s important to remember is that your state boards of pharmacy are advocates for patients. They are in place to ensure the public health. And the program that we have with RetailMyMeds ensures accessibility. And we are taking care of our patients. And I don’t know how any board could argue with that fact, you know, that we are doing something positive to help the patients.
Scotty: Yeah. And the fact that the prescriptions are coming back to the pharmacy, I don’t see how that could possibly be a bad thing.
Arica: Yeah. And you know, and if the state board says it can’t come to the pharmacy, we’d rather have it shipped to the patient’s home. That’s perfectly fine. The patient can agree to do that as well. So, with RetailMyMeds, obviously, the idea is to have that prescription shipped back to the pharmacy for that additional point of contact and to pick up other meds at the same time. And, you know, to have that one additional opportunity to, you know, to be face to face with your patient for additional service offerings that you’re offering in your pharmacy. But if that’s not an option or the state board frowns upon that or you’re not sure you’re not comfortable with the fact that there’s not been a decisive opinion on that, then you can transfer or have that prescription sent directly to the patient’s home. And you’ll know when it’s coming because they’ll notify the mail order pharmacy will notify you, and then you pick up the phone, you call the patient and say, hey, I just want to let you know that this prescription is going to be heading your way today. I just wanted to give you a heads up. And that in itself is a service.
Kendell: And the last question I have is the injectables that are going on right now that, you know, low profit, high dollar, are those items that you’re seeing being used with this platform? Is that something that pharmacies could use to kind of get away from that?
Arica: It is. So there are a couple of different considerations for that. Kendell, great question, though. So, with your traditional Medicare plans, those will accept the GLP-1s the injectables without an issue. Typically, those are shipped on a 90-day supply. But we are seeing due to some shortages, some of those are shipped at 28-day supplies. But if a commercial payer is paying for the prescription, a lot of times the patients will use manufacturer coupon cards with that. Those coupon cards cannot be used at mail order, a PBM-owned mail order pharmacy. Because you think about the relationships that the PBM already has with the manufacturer, they’re already getting a discount on the cost of that drug. So they cannot use the coupon at the mail order level. But we do have solutions for that. If anyone is interested. We do have another pharmacy mail order pharmacy option that can be used for that particular clientele.
Bonnie: Well Arica, tell us how, if someone’s listening and they think this would be great for them to try out, like what’s the best way to get going?
Arica: Absolutely. So the best thing to do is just to visit our website. We’ve got a couple of videos on our website. You can enter any or your contact information. We can set up a call that way through our website or book a call with us through our Calendly link, which is calendly.com/RetailMyMeds, and we can have a, schedule a call just to determine if this is a good fit for the pharmacy and answer questions on a, you know, on an individual level. And then if someone decides they’d like to enroll, we can typically get that done in about 24 hours. And, you know, the training is like I said, pretty straightforward and they’ll be ready to go.
Bonnie: And I think you mentioned you were going to be at some of the shows might be popping around, some of the trade shows this summer and this fall. So you guys may see her around. Definitely something to look into with everything going on. I mean, we’ve got a few clients that have already started talking to you about it, so we’re excited to see how this works out.
Arica: Thank you. Yes.
Kendell: So the end of every episode we have a bottom line. So it’s the Bottom Line Pharmacy Podcast. So it’s basically a key takeaway, a few sentences. We all take turns going round table about the bottom line. I’ll cue us up, and Arica if you’re ready, you can jump in there. We’ll save the best for last, however you feel comfortable. But I’ll start with my personal bottom line. And I have a bad habit of giving four or five bottom lines, so I’ll try to stick to one. I will take one. Okay. Succinct. It will be very succinct. The bottom line for me is fundamentally, you have to know what you’re doing at a prescription level. And then if you know what you’re doing at the prescription level, you can take action with some different resources like we have here. But the bottom line is you need to know, are you winning? Are you losing? And even if you’re breaking even or winning slightly, how much cash are you tying up? So, okay, I’m done. I’m stopping there.
Scotty: Kendell, you always hit that bottom line, like right on man.
Bonnie: I would just add stuff like this, to me is the epitome of independent pharmacy. So you’re doing what you can to go beyond. You know, a normal big box is just going to hand it back over and say this isn’t going to work. An independent is looking beyond that to do what they can to help their patients. And so I think this is fantastic way to keep, again, all those scripts in the same place. And it’s obviously I think you mentioned the other day, it’s promoting, accreditation, but also accountability and to take care of the patient, but also to take care of, we have to take care of our independent pharmacies, too. This is a business and you want to take care of the patients, but you got to make sure it works out to allow you to stay open and be profitable as well. So this is a good way to do that.
Kendell: Nice, Bonnie
Bonnie: Thank you, Kendell. I appreciate that.
Scotty: Is it my turn?
Bonnie: It’s your turn.
Scotty: I’ll just say, obviously from a managing your pharmacy perspective and cash flow and all that is very important. But you know, it’s just unfortunate that it is the way it is right now in pharmacy. I mean, you can’t you have to you know, sometimes you have to turn down patients because you can’t. It just blows my mind that it’s like that. But anyway, you know, the fact that it is that way, you’ve got to look outside the box. And Arica, I appreciate what you’re doing to come up with innovative, hopefully solutions that fit some pharmacies and can help them out so I applaud you for the innovation and for taking the hand that’s dealt pharmacy and doing what you can to help out. So I think it’s fantastic given the situation in the industry. So that’s my bottom line.
Kendell: Nice. Definitely that is very innovative what you’re doing, Arica.
Arica: Thank you. Thank you very much. I mean, it’s a labor of love. I think, you know, independent pharmacists care more about community and patients than just about anybody else. And we have to do what we have to do to survive the storm. And hopefully this is not the way our industry will always be ran or, you know, this is not the cards we’re always going to be dealt. But I think it’s important right now that we shift away from filling everything that we can fill and just taking the loss where we do and expecting everything to shake out and be okay. And start looking at a more of a prescription coordination model so that you can choose the prescriptions that you are profitable on and help coordinate the ones that you may not be profitable on for whatever reason. And I think that regardless of which wholesaler you have or which PSAO you have or what have you, wherever your located, every one of us are, we’re all sharing the common pain right now. And that is, you know, that is what to do with this lack of profitability while still trying to maintain patient care. So with that being said, I appreciate the opportunity to be here and if anyone has any questions, they can feel free to reach out to us at any time.
Scotty: All right. Well, thank you, Arica. Fantastic. Appreciate you again getting on and yeah, that will wrap it up.
Arica: All right.
Bonnie: Thank you. Appreciate it.
Arica: Thanks, guys.