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Our Take: Drugstore chains claim ‘Pharmageddon’ had minimal impact on stores, say they’re listening to workers

Nov 06, 2023

“Pharmageddon” — last week’s planned, three-day walkout by pharmacy workers at CVS and Walgreens — is over, though it remains unclear how widespread it was or whether it achieved anything of consequence. 

Because most pharmacists and pharmacy technicians are not unionized, those who organized the walkout relied on social media to spread the word. Leading up to the walkout, which began on Oct. 30 and ended Nov. 1, organizers said anywhere from 900 to as many as 5,000 workers might participate. 

Apparently, far fewer actually did. 

CVS Health’s CEO, Karen Lynch, said employees had called in sick at a few stores, Reuters reported, but no stores closed and no shifts were disrupted because of the walkout. 

A spokesperson for Walgreens said only three of the company’s pharmacies were closed temporarily during the three-day period and “no more than a handful of pharmacists” had walked out. 

At least one organizer disputed those statements. Shane Jerominski, an independent pharmacist who previously worked at Walgreens, said on Monday that “thousands of stores were understaffed” and 25 pharmacies closed in 15 states, The New York Times reported.  

The three-day event followed walkouts by CVS pharmacy workers in the Kansas City area in late September and Walgreens pharmacy workers in several states in early October. 

Pharmacy employees say chronic understaffing, reduced hours, inadequate training for technicians, and productivity quotas imposed on them by corporate management are jeopardizing patient safety. 

The staffing issues and other challenges existed years before the pandemic and have since intensified.  

Michael Hogue, CEO of the American Pharmacists Association (APhA), noted in a statement that “For far too long, employers have made the situation worse than it needed to be. Supervisors who are not pharmacists do not understand the needs of care teams and make unreasonable demands on time-based productivity. Quotas on the number of prescriptions filled per hour or vaccines administered per day, or even time to answer the phone, simply fail to recognize that the pharmacist-patient relationship is not transactional. It is a special covenant—and supervisors who distill everything down to numbers and time metrics are destroying that relationship in the name of profitability.” 

Hogue said corporate chain pharmacies are not the only places where understaffing is a problem and that pharmacists in hospital outpatient pharmacies, federal facilities, and mail facilities have told him about “the same burnout from inadequate staffing.” 

“The profession and industry need long-term solutions, and we need immediate action,” Hogue said. 

A spokeswoman for CVS told CNN the company is “engaging in a continuous two-way dialogue with our pharmacists to directly address any concerns they have.”

In a statement to Becker’s Hospital Review, CVS said, “In response to recent feedback from our pharmacy teams, we’re making targeted improvements to address their key concerns, including enabling teams to schedule additional support as needed, enhancing pharmacist and technician recruitment and hiring, and strengthening pharmacy technician training. Our goal is to develop a sustainable and scalable action plan to support both our pharmacists and our customers.” 

A spokesperson for Walgreens told CNN: “Our leaders are in our pharmacies regularly, listening to concerns and frustrations and responding to feedback. We have taken steps over the last two years to improve pharmacists’ experience, advance the profession, and enable them to provide the high value care they were trained to do.”

CEO Karen Lynch told Reuters CVS has spent about $1 billion on improving wages for pharmacists and pharmacy technicians. 

But CVS also said in August it would cut approximately 5,000 jobs and has since filed two rounds of Worker Adjustment and Retraining Notification (WARN) notices affecting workers in at least nine states, according to Becker’s. It’s not clear what types of positions are being eliminated.

CVS released its third-quarter earnings report last week, which showed the company has made a profit of $6.3 billion in the first three quarters of 2023 and $264 billion in revenue during the same period. 

The report also showed that CVS’ pharmacy and consumer wellness segment earned $85.6 billion in revenue in the first three quarters of this year, and 1.2 billion prescriptions were filled during those nine months.

Our Take: Over the last several decades, the major drugstore chains have driven thousands of small, independent pharmacies out of business, but in recent years competition from Amazon, Walmart, and to some extent even Dollar General has put the pinch on CVS, Walgreens and Rite Aid. 

To boost their bottom line, the chains have added other sources of revenue, mostly through primary care services, and looked for ways to trim costs. They’ve closed hundreds of stores, with more closings in the works. Rite Aid has filed for bankruptcy protection. 

Pharmacy benefit managers have contributed to the financial challenges the chains (and other pharmacies) have had to navigate as well. Emily Le Coz, a senior investigative reporter with USA Today, noted in an NPR podcast titled ‘Pharmageddon’ and the Future of Retail Pharmacies, “PBMs have reaped greater and greater profits for themselves at the expense of pharmacies, who are receiving less and less in terms of reimbursement.”  

According to Le Coz, the majority of brand-name prescription drugs are now sold at a loss because pharmacies are buying them at a greater cost than they are receiving in reimbursement.  

Direct and indirect remuneration (DIR) fees — various fees PBMs charge beyond their administration fees, usually after the point of sale — are a big part of the problem. According to the National Association of Chain Drug Stores, CMS said the use of DIR fees increased 107,400% between 2010 and 2020. 

In the APhA statement, Michael Hogue said, “I’m also calling on CVS/Caremark, Express Scripts, Optum, and all other PBM companies to immediately cease the assessment of DIR fees on retail prescriptions and ensure your contracts result in payment to pharmacies of at least their cost for the medicine they are providing plus a reasonable fee for doing so. You are breaking the backs of community pharmacies and are ultimately complicit in the workplace issues I am describing. Your corporate policies are unfair, restrict trade, and are causing the closure of hundreds of pharmacies across America. You are worsening health disparities and creating a new public health emergency. Soon there will be no pharmacies (chain or independent) in most communities to administer vaccines or provide testing for infectious disease.”

B. Douglas Hoey, CEO of the National Community Pharmacists Association (NCPA), said, “The independents have been the canaries in the coal mine,” and now “it’s all coming home to roost,” referring to the amount of control PBMs have garnered and the way they’ve steered people away from independent pharmacies and toward the big box pharmacies.   

“It has overloaded the system, and also that corporate mentality of just, ‘we’re going to work the workers to death,’ I think that’s coming home to roost, too,” Hoey added. 

APhA CEO Hogue pointed out another problem the industry faces: a sharp decline in the number of applications to pharmacy schools. This means we could soon add pharmacists to the list of health care worker shortages.  

What else you need to know
Pfizer is closing facilities in New Jersey and North Carolina and cutting five drug candidates from its pipeline as part of the $3.5 billion cost realignment program the company announced last month. The Peapack facility in Gladstone, N.J., will close by mid-February, according to a WARN document. That closure will affect nearly 800 employees, based on the WARN notice; Pfizer told Becker’s Hospital Review that most of them would be transitioned to other positions with the company in New York City or Parsippany, N.J. The company will also close its Kit Creek facility in Morrisville, N.C., and an 85,500-square-foot gene therapy manufacturing plant that opened in December 2021 in nearby Durham, N.C. Pfizer has not filed WARN notices in North Carolina or said how many employees would be affected by those closures.  

Regarding the terminated research programs, three of the five are Phase I oncology candidates: two being evaluated for non-small cell lung cancer and one for solid tumors. The remaining two candidates were in Phase II testing; one was being evaluated for patients with scar tissue in their kidneys and the other for patients with atopic dermatitis or psoriasis. 

The Department of Health and Human Services (HHS) will take the lead on overseeing the development and use of artificial intelligence in health care, based on an executive order President Joe Biden issued last week. The executive order directs HHS to create a task force to develop a strategic plan with policies and frameworks for the responsible deployment and use of AI and AI-enabled technologies. HHS is also tasked with accelerating grants awarded through the AIM-AHEAD program and establishing an AI safety program to receive and act upon reports of “harms or unsafe health care practices involving AI,” per a fact sheet released along with the executive order. 

In related news, the White House announced the launch of the U.S. AI Safety Institute (US AISI), which will operate within the National Institute of Standards and Technology. The institute will create guidelines, tools, benchmarks, and best practices for evaluating and mitigating AI risk; develop technical guidance to be used by regulators; and enable information-sharing and research collaborations with similar institutions in other countries, according to a separate fact sheet

Walmart Health entered into separate care coordination agreements with Ambetter from Sunshine Health and Orlando Health to increase access to health care in certain regions of Florida. Ambetter Health offers health plans provided by Centene on the Health Insurance Marketplace. With the new agreement, Ambetter from Sunshine Health includes Walmart Health Centers as a preferred provider in seven Florida counties. Initially, their collaboration will focus on patient engagement through care coordination and referral management, Walmart said in a news release. The collaboration with Orlando Health, a private, not-for-profit network of community and specialty hospitals, freestanding emergency departments, outpatient facilities, and urgent care centers in the Orlando area, is intended to streamline patient services, such as transitions of care, and enhance communication between providers at Orlando Health and Walmart Health centers. Healthcare Dive noted that the agreement with Orlando Health is Walmart Health’s first patient care coordination agreement with a health system. 

Cleveland Clinic will use drones to deliver prescription drugs to patients’ homes, beginning in 2025. Although the service will be limited initially to specialty medications and other prescriptions, the plan is to expand it to include delivery of lab samples, prescription meals, medical and surgical supplies, and items used for hospital-at-home services. The health system will use Zipline’s Platform 2 system, which it said can complete a 10-mile delivery in about 10 minutes. Cleveland Clinic’s chief of operations, Bill Peacock, said in the announcement that drone deliveries are more accurate and efficient than ground deliveries and are environmentally friendly. In the coming year, the health system will build out the necessary infrastructure and work to ensure the service complies with safety and technical requirements. Winston-Salem, N.C.-based Novant Health was the first health system to use Zipline’s technology to delivery prescription medications, starting in 2020, Becker’s Hospital Review reported, and several others have followed suit.   

The steps required for Parkview Health System to join with UCHealth have been completed and their partnership will begin on Dec. 1. In the announcement, Parkview Health CEO Darrin Smith noted that the 100-year-old health system based in Pueblo, Colo., serves a “very large number of patients” who are uninsured or covered by Medicaid, which has strained its finances and risked the sustainability of some services. He said the partnership with Aurora, Colo.-based UCHealth would stabilize Parkview Health and protect local jobs. UCHealth has pledged to invest $200 million in Parkview Health, a private, nonprofit organization and a Level III Trauma Center. UCHealth is a nonprofit health system with 12 acute care hospitals, more than 150 clinic locations, and 30,000 employees in Colorado, southern Wyoming, and western Nebraska.  

Jean-Jacques Bienaimé, BioMarin Pharmaceutical’s CEO for the last 18 years, will retire on Dec. 1, and Alexander Hardy, who resigned as CEO of Genentech on Nov. 1, will become BioMarin’s new president and CEO. Bienaimé is also stepping down as chair of the board, a role he has held since 2015, according to a press release. Richard Meier will take over that role. Genentech said in a statement that Ashley Magargee, who has been with the company since 2004, will serve as interim CEO until Hardy’s successor is announced. 

What we’re reading 
How The IRA Could Delay Pharmaceutical Launches, Reduce Indications, And Chill Evidence Generation. Health Affairs, 11.3.23
Stripped Privileges: An Alarming Precedent for Community Oncologists? Medscape, 11.1.23 (registration required)
Pharmacy Benefit Managers: History, Business Practices, Economics, and Policy. JAMA, 11.3.23

What else we’re reading 
The Kingdom of Speech, by Tom Wolfe. I picked up a copy of Kingdom of Speech after in a previous entry here I noted my fondness for Wolfe, and I read it cover-to cover in a lazy Sunday afternoon. It’s difficult to summarize exactly what Wolfe is after here, but the gist is a discussion of the importance of language — and its origins — in our development as a species. Spoiler alert, which he addresses in the first few pages, is that traditional theories of language advocated by Noam Chomsky and others are dead. Finished. No one cares anymore. Not even Chomsky.

It’s not a topic that I think about (or really care much about) but I read The Kingdom of Speech out of deference to Wolfe. What I found most interesting was the backstory between Alfred Russel Wallace and Charles Darwin, and the race to claim evolution as a unifying scientific theory. Another spoiler alert: Wallace beat Darwin to the punch, but Darwin took credit and spent a lifetime feeling guilty about it.

Hooking Up is a much better collection of short essays by Wolfe, which I highly recommend.


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