I recently had the privilege of presenting at my first Executive War College. It was a great opportunity to address laboratory and diagnostic leaders about the common challenges and opportunities shared between laboratories and the pharmacy sector. One of the most common shared challenges is downward pressure on reimbursement rates. Both the diagnostics business and the pharmacy business are about serving more patients, and revenue compression makes this difficult.
There are several current trends that affect both laboratories and pharmacies, including:
- A continued, exponential increase in healthcare costs.
- An increase in missed clinical visits―while predicated on the COVID-19 pandemic, a significant gap persists
- Patients are receiving more clinical services at pharmacies including vaccinations, test-to-treat for COVID-19, strep throat, or flu, HIV PrEP and PEP, and chronic disease management. According to a J.D. Powers 2021 US Pharmacy Study, 51% of pharmacy customers have used health and wellness services at the pharmacy in the past year.
- Growth in specialty medicines, which now account for 55% of prescription spending―up from 28% in 2011 and driven by auto-immune and oncology specialties.
- Patients visit pharmacies ten times more frequently than other healthcare providers―pharmacies provide convenient access, price transparency, and communication portals to increase patient engagement.
- Pharmacies are playing an important role in healthcare deserts―95% of Americans live within 5 miles of a pharmacy
- Legislation continues to expand the role of pharmacists as healthcare providers.
- Most prescriptions (70% according to the Centers for Disease Control) rely on a diagnostic test from a laboratory.
Fortunately, there are many opportunities for laboratories and pharmacies to work more closely together to achieve the common goal of doing more good for more patients.
The Intersection of Diagnostics and Pharmacy
In today’s environment, influenced by the trends noted above, it’s absolutely necessary for labs and pharmacies to work together. One important way that laboratories and pharmacies are already working together is in the area of companion diagnostics and genetics. Companion diagnostics are required for targeted treatments pertaining to all major cancers and newer areas such as thalassemia and obesity. Companion diagnostics, next generation sequencing (NGS), and pharmacogenetics all play an important role in ensuring that patients are prescribed the right therapies and that those therapies are working.
Labs and pharmacies are also working together on routine testing (e.g., international normalized ratio (INR) blood tests, complete blood count (CBC), etc.), and toxicology. Pharmacists rely on laboratories for this vital diagnostic data. Even in the pathology space, where previously there was limited collaboration between labs and pharmacies, growth in immunotherapies has created a need for labs and pharmacies to work together more closely.
Pharmacies need laboratories and laboratory data. Medications often require tests prior to prescription. In some states, for example, pharmacists can prescribe statins, with the proper diagnostic data and documentation. Pharmacists also rely on diagnostic data to counsel, prescribe, and coordinate care for chronic disease management. Diagnostic data is also needed for specialty medication workflows.
Likewise, laboratories need pharmacies to take advantage of new opportunities. Pharmacists can now order and prescribe in certain states.
- Thirty-seven (37) states currently allow direct access testing.
- Thirty-nine (39) states recognize pharmacists as providers.
- At the end of 2021, federal legislation was established, allowing pharmacists to prescribe oral medication to COVID patients.
Many large pharmacies are actively seeking laboratory partners, particularly partnerships with labs that can provide rapid turnaround times and competitive pricing on complex tests. Value-based care models require quality care, which can lead to more diagnostic testing such as closing gaps in care for diabetes patients.
Laboratories and pharmacies share so many common challenges and goals that there are real opportunities to leverage advocacy power. For example, the state of California now allows pharmacists to order a pharmacogenomics test. In the state of Kentucky, pharmacists can now order and prescribe colorectal cancer screening. Getting more pharmacists enrolled to provide these services can be big wins for labs. Payor management is another commonality between labs and pharmacies where strong collaborative advocacy can play a role.
Examples of Successful Laboratory and Pharmacy Collaboration
There are many opportunities for strategic partnerships and specialization between laboratories and pharmacies. Here are just a few examples we’ve seen.
Summing up, the expanding role of the pharmacy and pharmacists creates a bright opportunity for laboratories. Pharmacists are a new group of healthcare providers―tens of thousands of new providers. If pharmacies and labs can work more closely together, we can create a unique patient experience that makes it easier for patients to get the care they seek.
It’s a shift in perspective. Pharmacies are not an enemy or a competitor of hospitals or laboratories. They are a potential partner. Working together can not only diversify revenue streams but increase revenue for all parties.