BMBiology

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I raised this issue in the Target thread and it looks like it may be coming true:

"Wal-Mart Stores Inc said on Tuesday that lower margins in its pharmacy business had emerged as a drag on profits, as it gets paid less by drug plan managers and as fewer customers pay in cash, since Obamacare has increased the ranks of insured Americans.

The company warned that the margin squeeze would continue for at least the remainder of the year, although a spokesman told Reuters the pharmacy business is profitable and that Wal-Mart has no plans to sell it or find a partner to share the risk.

The disclosure comes as retailers weigh the merit of running drugstores on their own. In June, Wal-Mart rival Target Corp agreed to sell its loss-making pharmacy division to CVS Health Corp in a deal that will see CVS operate the pharmacies in 1,600 Target stores."

http://finance.yahoo.com/news/wal-marts-drug-problem-pharmacy-010156307.html?.tsrc=applewf

I am sure your grocery chains are going thru the same problem. Expect more consolidation in the pharmacy business.
 
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Reirrac

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To be frank, the pharmacy business model looks weak. There's too much dependence on insurance for revenue. And insurance companies are always looking to cut costs which includes reimbursement rates. Very few people want to spend money on healthcare unless they really need it, and its a life or death situation. Quite a difference compared to consumer spending on entertainment and luxury goods.
 
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BMBiology

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My reaction to this post
Six months ago: "There goes BMB on the crazy train once again."
Today: "Hmmm."
You must admit I have been right on. Of course I don't want to be right because this hurts everyone.

I have worked with pharmacists who didn't know a thing. They just want to dispense. They didn't care about customer service. They didn't even know anything about the drugs they are dispensing. But yet, they were still employed. Those days are long gone. They will be replaced as the industry consolidates further and as pharmacy schools keep on pumping out new graduates. It will be a dog eat dog world.
 

rxdawg21

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Having personally worked for Wal-Mart until recently, the profit and loss monthly statements I saw and our markets annual pharmacy profit they would be fools to sell their business. At my store our overall store lost money due to insane shrink and accidents costs (very poor customer base) and the only reason we turned a profit was due to pharmacy. Other stores that actually were ran well and made a profit, pharmacy was almost half of the overall net profit. I left Wal-Mart in December of 2014. I can say that at my store our gross profit went from 20% to 17.5% on prescriptions from December of 2013 to January of 2014. I can only imagine it continuing to drop.
 
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BMBiology

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Any truth to Walmart replacing their pharmacy manager with store manager?
 

pillpharmer14

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This is in no way an endorsement for CVS, but it's only a matter of time until they swallow up the entire industry. The only way to compete with them is to acquire grocery stores and consolidate. So yes, I think it's only a matter of time before reimbursement rates cost the pharmacy so much money that it offsets the extra revenue generated for the grocery business. What Target did was make a sound financial decision and don't think for a second that other grocery chains (and retail chains) didn't notice.
 

awval999

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This is in no way an endorsement for CVS, but it's only a matter of time until they swallow up the entire industry. The only way to compete with them is to acquire grocery stores and consolidate. So yes, I think it's only a matter of time before reimbursement rates cost the pharmacy so much money that it offsets the extra revenue generated for the grocery business. What Target did was make a sound financial decision and don't think for a second that other grocery chains (and retail chains) didn't notice.
They would never be aloud to swallow/buy/merge with Walgreens.
 

BidingMyTime

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The pharmacy must have a PIC. That makes no sense. It's not like there is any substantial raise between staff and pharmacy manager at any retail sweatshop.
This. Pretty sure that a PIC is legally required in all states, so there will always be a pharmacy manager. Now who the pharmacy manager answers to could always change (ie Walmart could set it up that the pharmacy manager answers to the store manager....)
 

Swishers

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This. Pretty sure that a PIC is legally required in all states, so there will always be a pharmacy manager. Now who the pharmacy manager answers to could always change (ie Walmart could set it up that the pharmacy manager answers to the store manager....)
Just like at Walgreens.
 

pillpharmer14

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They would never be aloud to swallow/buy/merge with Walgreens.
Who? Walmart+Walgreens? I'm not so sure. It's not that difficult to parade a bunch of numbers about independent pharmacies and exaggerate your competition to the FTC. People said the same thing about Medco and express scripts.
 

Leper Messiah

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This is in no way an endorsement for CVS, but it's only a matter of time until they swallow up the entire industry. The only way to compete with them is to acquire grocery stores and consolidate. So yes, I think it's only a matter of time before reimbursement rates cost the pharmacy so much money that it offsets the extra revenue generated for the grocery business. What Target did was make a sound financial decision and don't think for a second that other grocery chains (and retail chains) didn't notice.
I do think that when CVS/Walgreens finally get their duopoly, that's when they'll start pushing back hard against the PBMs. Corner the market, raise the price.
 
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I have worked for Wal-Mart for 20 years and I see no sign that the pharmacies are in trouble. On the contrary, the pharmacies are money makers for Wal-Mart. I have concerns about the future of pharmacy. I expect the PBM's to continue squeezing pharmacies. I think we will find, going forward, that we pharmacists will not only be micro-managed to death but also that the profit will be squeezed out of pharmacy by the PBM's.
 

MountainPharmD

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I don't think Wal-Mart pharmacies are in any more trouble than any other pharmacy independent or chain. Margins are down for the whole retail pharmacy industry due to continued PBM abuses. When you have an entity like PBMs that operate with zero regulatory oversight and essentially have a license to steal this is what happens.
 

awval999

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Who? Walmart+Walgreens? I'm not so sure. It's not that difficult to parade a bunch of numbers about independent pharmacies and exaggerate your competition to the FTC. People said the same thing about Medco and express scripts.
CVS and Walgreens. They will never be aloud to merge.
 
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