Strong medicine

Shopko’s exit leaves impact on pharmacy sector

Posted on Sep 27, 2019 :: Health Insurance
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Posted by , Insight on Business Staff Writer

When Shopko began selling off its pharmacy business last December as a precursor to the retailer’s eventual bankruptcy and closure, consumers were shocked, confused and angry. What would happen to their prescriptions? What did it mean for their prescription drug coverage?

The incident underscored the close relationship people have with the employees at their pharmacies and their concern about prescription drug coverage.

“For consumers, the pharmacy (insurance) benefit is the most visible and the most utilized,” says Chuck Rynearson, vice president of health analytics and pharmaceutical benefits at Menasha-based Network Health.

Shopko originally sold the pharmacy files of 25 Wisconsin stores to Kroger, the owner of Pick ’n Save, with CVS and Walgreens later picking up additional parts of Shopko’s pharmacy businesses as the retailer entered bankruptcy. For consumers, the closure of Shopko’s pharmacies was a huge headache as they found themselves at a new store and making sure their information was up to date. Some small communities found themselves without a pharmacy altogether.

The news also left other pharmacies scrambling as they faced a rush of customers looking for a new home, which meant adding and updating files as well as making sure they had enough medication in stock and employees to meet the higher demand.

When Shopko closed its pharmacies, Hometown Pharmacy — a pharmacy and complementary health care services provider headquartered in the Columbia County village of Rio — hadn’t planned on opening additional stores in Northeast Wisconsin, but then former Shopko pharmacists began reaching out. Hometown Pharmacy, which has more than 70 locations in Wisconsin, partners with independent pharmacists to open locally owned stores and still have group buying power.

The Shopko pharmacists were concerned “their patients would be losing their only pharmacy option in town and be forced to drive elsewhere,” says Katelyn Schiltz, a spokeswoman with Hometown Pharmacy. “The pharmacists wanted to continue serving their patients and knowing our business model and our approach to health care, they wanted to partner with us.”

By working with Hometown, local pharmacists can reduce the burden of running their own businesses by assisting them with tasks such as HR, payroll, marketing and ordering, so they can focus on their patients, Schiltz adds.

This year, Hometown Pharmacy has opened 10 new stores, including six in the region. New stores in Brillion, Sister Bay and Winneconne provided those communities with a local pharmacy after Shopko closed.

“We were not actively looking to open any new pharmacies this year, so when we started receiving the calls and emails from people wanting us to bring our services to their communities, that was when we decided we needed to help out,” says Schiltz, adding that the company also heard from community leaders looking to bring a new pharmacy to their town following Shopko’s closure.

Schiltz says Hometown Pharmacy looks to set itself apart from big box retailers by being proactive about customers’ health.

“We want to be a place where you go to stay healthy so that you don’t need prescriptions in the first place,” she says. “We want to be a regular part of your health care team, and we take the time to get to know you.”

Lessons learned

After watching what happened with Shopko, Network Health wanted to ensure it gave its members plenty of time to prepare when it decided to change its preferred pharmacy for its commercial health plan customers from CVS to Walgreens beginning Jan. 1.

Rynearson says Network began spreading the word in July about the upcoming change along with the information that their insurance would already be accepted at Walgreens if customers wanted to make the switch earlier. Walgreens was already the preferred pharmacy for Network’s Medicare plan members.

“Anyone who has gone through the process of transitioning a prescription from one pharmacy to another knows it’s not always easy, and to do that at the first of the year is just crazy,” Rynearson says. “You want to limit disruptions as much as possible.”

Network’s decision to partner with Express Scripts as its new pharmacy benefits manager for all lines of business led to the switch from CVS to Walgreens, Rynearson explains. ESI has managed benefits for Network Health Medicare members since 2005, but with this transition, employer group and individual plan members are now also included.

“We’ve been working with Express Scripts already, so it made sense to move the commercial side there as well. The Express Scripts network contains Walgreens pharmacies, which are easily accessible for most of Network Health’s service area,” he says. “Several Walgreens locations have 24-hour pharmacies, which means our members can pick up prescriptions when it’s convenient for them.”

Rynearson says the move allows Network to gain efficiencies and savings that can be passed on to its members.

Keeping costs in line

While it’s no secret health care costs keep increasing, Brent Eberle, senior vice president and senior pharmacy officer of Navitus Health Solutions, says Navitus customers saw their drug spend stay flat from 2017 to 2018. A pharmacy benefits manager, Navitus works with self-insured businesses or third-party administrators.

“We’re looking to see that trend continuing for 2019,” he says. “That’s a real positive. There are some very specialty drugs out there with huge costs associated with them that get a lot of attention.”

The costs of other drugs have stayed in line or lowered due to the addition of more generic drugs and the creation of narrower networks, Eberle says.

“A narrower network reduces options for consumers, but it helps lower costs, and if you live in an area without a big selection, it makes sense to go that route,” he says.

When Shopko announced its closure, Eberle says his team looked quickly to make sure any members in those areas had other options available.

“We just wanted to make sure our members were taken care of and provided them with the information to help them,” he says.