The US pharmacy landscape has faced many challenges in 2023, including prescription drug shortages, rising drug costs, labor shortages, long lines at retail pharmacies, retail pharmacies closing locations, and even bankruptcy for some. There were also employee walkouts protesting unsuitable working conditions at retail pharmacies across the country in the fall, which the internet deemed “Pharmageddon.”
In the wake of these challenges, the pharmacy landscape will need to experience some big changes as many of these businesses will need to adapt to the needs of their customers as we move into 2024.
How Health Tech Will Impact Profits and Patients
Combining leading health technology with a personalized care approach will be the trend to drive the most impact in the pharmaceutical industry in the new year. Investors are seeing the profitability of innovative health tech that positively impacts patients and their pharmacy experience, and they are inclined to get on board, albeit cautiously as technology and AI development speed up.
Responsible AI, AI directed and monitored with expert human oversight, is changing the way healthcare is delivered. The benefit to patients will come when technology replaces inefficiencies, re-deploying medical professionals to allow them to spend more time providing high touch, personalized care for their patients. Pharmacies who use it right, will have more effective teams in their critical roles in the healthcare continuum with far greater efficiency so they can be, well, more “human” for their patients. With the breadth of new ideas pitched every day, investors are seeking profit but not at the expense of efficiency. For pharmacy frontrunners, striking the right balance of that with purposeful care, opportunity knocks.
Pharmacies Must Address US Drug Pricing & Shortages
Retail or brick and mortar pharmacies will need to make changes in 2024 to increase profits, and some are already taking steps to accomplish this. CVS, for example, recently announced that they’ll be testing a “cost plus” payment model in the new year in hopes of fixing their stagnant growth margins. These types of models are known for bringing drug pricing transparency into the pharmacy industry, which we may be seeing more of in the future. Indeed, the Inflation Reduction Act, attempts to restrain prescription drug price hikes, but the law doesn’t impact all Americans with prescriptions, and for those on Medicare, drug price increases are allowed to align with rising inflation.
Drug price hikes have been exacerbated by drug shortages, caused in part by the consolidation of U.S. drug distribution by PBMs, pharmacy benefit managers, ie Express Scripts, CVS Caremark and Optum Rx. Robert G of The Washington Post last month argued that consolidation granted too much power to the PBM. He says, “The same corporations that are deciding where Americans should buy their drugs are often running those drugstores.”
Despite the many challenges facing the pharmacy landscape, the industry is projected to continue its growth. A report by APNA Consulting states that the Global Pharmacy Market value is estimated at 1123.1 Billion USD in 2023 and is expected to grow at a rate of 4.6% over the next five years.
Online pharmacies have also seen increased revenue in 2023 and are projected to continue in 2024. PersonalRx, for example, saw over 600% revenue growth in 2023 and is projected to continue growth into 2024 and beyond. With health tech improvements and innovations, digital pharmacies have a unique opportunity to provide patients with a higher level of care than traditional retail pharmacies can.
The Future of Medication Management & Medication Adherence
Digital pharmacies that invest in innovative technology and prioritize patient care have the potential to improve medication management for countless Americans, with an emphasis on improvements for the elderly.
Since many elderly Americans have multiple medical conditions, they also have multiple prescriptions to take, and often, family caregivers handle their medication management. Pharmacies that provide efficient solutions, such as automatic refills, delivery, and personalized care, have the power to decrease the burden on millions of family caregivers.
One critical area that digital pharmacies can impact, especially for aging Americans, is to finally address medication adherence. Improved medication adherence can improve a patient’s health outcome through pharmacist-led support and a coordinated effort to change patient behavior through technology that tracks whether or not a patient has taken their meds. We’ve seen proof in 2023 that tech enabled, high touch, personalized care pharmacies can increase medication adherence. This increase positively impacts many patients but is especially beneficial to the 12% of Americans aged 65 and older who take ten or more maintenance medications. [LINK TO CASE STUDY]
Aging in Place 2024 Predictions
As the American population ages and the percentage of people older than 65 (1 in 6 people in 2020) continues to increase, we’re experiencing a shift in the way we approach elderly care. According to AARP research, more than three-quarters of Americans aged 50 and older are expressing a desire to age in place, which is to grow old in the comfort of their own homes and communities but they face many challenges, one of which is access to medications.
Pharmacy deserts, areas outside urban environments which have lost over 10 percent of their local pharmacies, significantly impacts lower socio-economic populations, in which nearly 75% of Americans over 65 find themselves. In order to effectively address pharmacy deserts and support those aging in place, delivery pharmacy solutions must be more than just delivery. Pharmacies, often a central warehouse of patient health data, play a critical role in the healthcare of aging adults and those focused on personalized service who deliver medications automatically have a unique opportunity to positively deliver meds, and a healthier outcome, for this population moving forward.
The pharmacy industry is projected to see profitable growth for years to come. With online pharmacies now placing an emphasis on purpose over profit, we predict more positive change for patients and their caregivers whose daily lives are impacted by these businesses into 2024 and beyond.