Review of the Irish community pharmacy sector 2013/14 sustainability in a changing environment

Review of the Irish community pharmacy sector 2013/14 sustainability in a changing environment

Contents Appendix 1 Appendix 2 Appendix 3 Foreword Executive Summary Section 1: The Irish community pharmacy environment Section 2: Role and perception of community pharmacy Section 3: International best practice and what Ireland can learn Section 4: Financial impact of government intervention Section 5: Financial performance of the sector Conclusion Methodology References Glossary 3 4 6 14 22 28 36 47 48 49 50 While every effort is made to ensure that the information outlined in this report is accurate, Fitzgerald Power Limited, The Irish Pharmacy Union and contributors can accept no responsibility for loss or distress occasioned to any person acting or refraining from acting as a result of the material contained in this report. This publication has been prepared as a guide and should not be construed as professional advice. Professional advice should always be taken before acting on any information contained in this publication. Re-publication and dissemination (other than brief quotations with appropriate attribution) is expressly prohibited without prior written consent. (c) 2015 Fitzgerald Power Limited. All rights reserved. 2

Foreword The combined impact of State reimbursement rate cuts and poor prevailing economic conditions have brought the sustainability of the community pharmacy sector into question. The traditional business model is under threat and it is clear that changes will be required to protect the position, identity and independence of community pharmacists. There is a growing realisation that scale and a willingness to adapt will underpin future sustainability. Collective purchasing and pharmacy owned symbol groups are the market s reaction to scale concerns. Pharmacy remains a local business and to offer a point of difference, will be important for symbol groups to continue to focus brand identities around the individual pharmacists that make up their networks. This is the unique selling point that supermarkets and multiples are unable to replicate. In terms of adaptability, pharmacists continue to expand the range of non-dispensing services they offer and there is an increased focus on developing the in-store customer experience. This two-pronged approach is essential. A clear, consumer focused in-store offering unique to community pharmacy with products and services tailored to local factors will help build sustainability. On behalf of the IPU and Fitzgerald Power I would like to thank all of those individuals who completed the survey and contributed to the preparation of this report, particularly our case study participants and our interviewees, Kathy Maher, Oonagh O Hagan, Ger Rabbette, Michael Tierney and Maurice Fitzgerald. I hope you find this report useful. Stuart Fitzgerald Business Advisory Director Fitzgerald Power 12th February 2015 There is a growing realisation that scale and a willingness to adapt will underpin future sustainability. 3

Executive Summary In October 2014, the Irish Pharmacy Union commissioned Fitzgerald Power to examine the community pharmacy sector and report on the principal factors shaping future sustainability. The research which followed included a survey of community pharmacists, in-depth financial case studies, interviews with pharmacy sector experts and a study of national and international reports, research projects and statistics. Our review of the community pharmacy sector for 2014 focused on: The Irish community pharmacy environment: Although healthcare budgets and State payments for medicines are falling there are increased demands being placed on community pharmacists by our ageing and growing population. With large pharmacy chains expanding their footprint and supermarkets encroaching on traditional pharmacy business, competition has never been more intense. These environmental pressures are pushing pharmacists towards collective purchasing and symbol groups. Role and perception of community pharmacy: While medicine dispensing remains the core pharmacy activity there is a growing focus on providing healthcare services. Consumers are broadly positive to the sector and would welcome an expanded healthcare role for pharmacists, but their loyalty to individual stores is waning. Maintaining and increasing consumer loyalty is a key challenge for pharmacists with customers under the age of 34 particularly likely to drift between pharmacies. International best practice and what Ireland can learn: Community pharmacists in other countries have been provided with the legislative framework to increase their health service offering. The introduction of a Minor Ailment Scheme in Ireland would be a logical first step towards an expanded role, with international experience demonstrating that even more can be done. Medicine Use Reviews and Health Screenings are examples of services that are having positive impacts on patient outcomes and health service resources in other countries. Financial impact of government intervention: The State has extracted 1.733bn from the community pharmacy sector since 2009 through reduced payments for medicines and cuts to fees and mark-ups. This has brought the sustainability of some shops into sharp focus and we estimate 200 pharmacies may be at risk of closure following the full implementation of reference pricing. Financial performance of the sector: Current turnover contraction will continue for a further 12 months as the full annual impact of FEMPI and reference pricing takes effect. The profit margin gains that pharmacists have achieved, principally through the use of buying groups, were not sufficient to offset turnover reductions. Cash generation suffered as a result. Within this context pharmacists have concentrated on cost saving initiatives. The State has extracted 1.733bn from the community pharmacy sector since 2009 through reduced payments for medicines and cuts to fees and mark-ups. 4

Section 1 The Irish community pharmacy environment

1 The Irish community pharmacy environment 1.1 A challenging market Over the last five years a series of environmental changes have caused upheaval in the Irish community pharmacy sector. The impact of the recession was twofold: it depressed consumer confidence and it forced policy makers to reduce healthcare spending, resulting in significant cuts in pharmacy revenues. The FEMPI legislation that followed would have caused pharmacy closures but for the availability of additional procurement margins, which are now being eroded. As closures have been uncommon, one statistic that is difficult to quantify is the significant number of pharmacies that have gone through some form of insolvency process in the last 12 months. These situations are invariably caused by unsustainable debt obligations that can no longer be serviced as profits continue to fall. Insolvencies are largely unseen by the general public as no noticeable change in day to day operations occurs. Table 1.1: Ownership profile Pharmacy Ownership: 2013 2012 Movement Single outlet 833 902 (8%) In chain ownership: Corporate 149 136 10% Other 755 663 14% Total 1,737 1,701 2% Figure 1.1: Competitive threats 76% 67% 28% 18% 11% Fitzgerald Power derived: PSI (total outlet numbers), IPU Outlet Database (October 2014) Environmental pressures are driving many community pharmacists from the market with 22% of respondents to the Fitzgerald Power survey (which was undertaken as part of this study) considering selling their pharmacy. Pharmacy multiples and chain operators expanded their footprint in 2013 as trading conditions continued to present challenges for single outlet independent pharmacists. The market is now intensely competitive. Over the last three years international supermarket chains have opened in-store pharmacies and out of town healthcare centres have become commonplace. When these competitive threats are coupled with the growing consumer trend of sourcing medicines online, or from international markets, it becomes clear that pharmacists must be willing to innovate and improve efficiencies if they are to build sustainable business models. Source: Fitzgerald Power survey I am concerned with the threat of patients buying medicines in other jurisdictions I am concerned with the threat of patients buying medicines online A greenfield pharmacy has opened in my area in the last 12 months A large supermarket in my area operates a pharmacy An out of town health centre operates in my area In the midst of this uncertainty an unusual phenomenon is occurring, the independently owned greenfield opening. This is being driven by an increase in the number of qualified pharmacists, downward salary pressures within the larger chains and a belief amongst pharmacists taking the plunge that the risk : reward trade-off of business ownership will reconcile in their favour. According to the PSI, there were 36 of these new openings in 2014 (as at 1st October 2014), with 46 in 2013 and 43 in 2012 1. 6

1.2 Doing more with fewer resources As discussed in more detail in section 4 of this report, we estimate the government has extracted 1.733bn from the medicine supply chain since 2009. Figure 1.2: State savings from reduced payments to pharmacists 500m 472m 472m The dramatic fall in pharmacy income has coincided with more demands being placed on pharmacists. This trend is set to continue as our aged population grows. In 2011, it was estimated that 532,000 people in Ireland were aged 65 or older. By 2026, that figure is expected to be closer to 850,000 2. Figure 1.3: The population aged 65 and above 2011 532,000 400m 300m 200m 100m 326m 299m 164m 2010 2011 2012 2013 2014 Source: PCRS 2026 2046 850,000 1,400,000 0 300,000 600,000 900,000 1,200,000 1,500,000 Source: CSO Population and labour force projections 2016 to 2046 An inevitable consequence of an ageing population is an increase in age-related illnesses. When this is combined with current and expected increases in chronic conditions caused by factors such as obesity, smoking and dietary deficiencies it is reasonable to expect that Ireland s healthcare system will demand more from pharmacists in the years ahead. This is something pharmacists are seeing in their everyday practice. One in three respondents to our survey noted trends in patients presenting with specific serious illnesses, with type 2 diabetes the most commonly mentioned condition. In 2011 it was estimated that 532,000 people in Ireland were aged 65 or older. By 2026 that figure is expected to be closer to 850,000. 7

An inevitable consequence of an ageing population is an increase in age-related illnesses. 1.3 The changing nature of the community pharmacy sector With healthcare budgets and payments from government schemes falling, pharmacists have had to find ways of doing more with fewer resources. The principal reaction to these environmental pressures has been the organisation of pharmacists into buying groups. These groups have gained popularity in the last five years as independents search for improved procurement margins to counteract the impact of government reimbursement rate cuts. The majority of pharmacists are now members of at least one buying group. Our survey indicates this number is growing. Table 1.2: Buying groups in operation in Ireland Axium Indepharm Link Pharma Le Cheile Pharmasave Privately operated Member operated Wholesaler operated Wholesaler operated Member operated Source: Fitzgerald Power research Pharmacists who have managed to maximise their procurement margin through the use of buying groups have fared better than pharmacists who relied on traditional procurement practices during the FEMPI and reference pricing era 3. 1.4 New developments 2014 marked the emergence and rapid growth of the community pharmacy symbol group, with four of the buying groups mentioned above developing a branded offering. These moves were largely driven by competitive pressures in the market place, with independents finding it increasingly difficult to compete with super groups and multiples both in terms of advertising capacity and in-store consumer experience. 18% of respondents to our survey joined a pharmacy symbol group in the last 12 months. Table 1.3:Pharmacist owned symbol groups in operation in Ireland Axium Indepharm Link Pharmasave CarePlus Haven Life totalhealth Source: Fitzgerald Power research Today s consumer expects value for money, quality and relevance, such as personalised offers. They are hungry for information, often researching carefully before making buying decisions. With many purchasing decisions being researched online, where bottomless budgets and slick advertising campaigns give big brands a natural advantage, the symbol group model seems to make sense. However, given the early stage of development, it has not been possible to evaluate the success or otherwise of this model. Buying groups have been necessitated by two factors; The lack of scale economies available to independents. A growing drain on the owner operator s time. The amount of time owner operators spend on administrative tasks is increasing annually with over three quarters (77%) of survey respondents stating that new regulations and guidance issued by the Pharmaceutical Society of Ireland are overburdening their businesses. 8

1.5 The education anomaly The logical assumption that these market pressures would negatively impact on undergraduate enrolments is not borne out by the research. There has been a 63% increase in pharmacy undergraduate enrolments since 2004 4. Table 1.4: Total full-time pharmacy undergraduate enrolments in Ireland 2013 2014 Number of students Female Male Total Female Male Total University College Cork 136 83 219 150 84 234 Royal College Surgeons in Ireland 141 57 198 143 59 202 Trinity College Dublin 177 76 253 176 86 262 Total 454 216 670 469 229 698 % of total 2013 2014 Number of students Female Male Total Female Male Total University College Cork 20% 12% 33% 21% 12% 34% Royal College Surgeons in Ireland 21% 9% 30% 20% 8% 29% Trinity College Dublin 26% 11% 38% 25% 12% 38% Total % 68% 32% 100% 67% 33% 100% Source: Higher Education Authority Our education system is producing highly qualified pharmacy graduates for export to other markets. There is no available evidence to suggest policy makers have considered the cost of educating an ever increasing number of candidates for a sector that is struggling to find a commercial rationale for growing employment. Independently owned greenfield openings are being driven by an increase in the number of qualified pharmacists and downward salary pressures within the larger chains. 9

The expert view Ger Rabbette, CEO, Uniphar Changes in the community pharmacy environment since the FEMPI legislation was enacted Reimbursement rate cuts introduced as part of the FEMPI Act stripped revenue and profitability out of the community pharmacy sector. The challenge for pharmacists in the aftermath of these cuts was to find ways to manage the impact of the legislation. Most pharmacists achieved this through improved purchasing practices and a move towards generic dispensing. These initiatives created procurement margins that the government is now, unfortunately, removing from the supply chain through reference pricing. Reference pricing adds another layer of competition to an already competitive sector and standalone operators with small turnover profiles, despite the fact they may be providing an essential primary care service in their community, will struggle to survive. The FEMPI Act ushered in a period of change and upheaval that looks set to continue. With consolidation and group expansion an undeniable feature of the sector, the current challenge facing community pharmacists is protecting their identity and individuality in an increasingly corporate and brand oriented marketplace. While this is undoubtedly a challenge, it also presents a huge opportunity. Pharmacist-owned symbol groups will have the economies of scale necessary to compete with large chains and multiples. If the local loyalty and goodwill that pharmacists enjoy can be coupled with a well-resourced, modern retail proposition, a compelling offering will emerge that will protect the position, identity and independence of the community pharmacy sector. Drug price reductions and the impact on Irish patients The market will shrink over the next two years as government continues to extract value from community pharmacists and right across the pharma value chain. Following the full implementation of the State s cost cutting programme, drug prices in Ireland will be on a par with European averages. Given the size of our population and our economy, this will lead to further drug shortages, as manufacturers, who are also under pressure, will favour larger and/or higher margin markets when a drug is in short supply. European legislation allows for free trade and competition between companies operating within the EU and while this free market approach is a vital cog in the wheel of progress, it has led to a number of cases of drug shortages. If prices go any lower, the supply of medicines to patients will become an even greater issue and unfortunately, given the bureaucratic nature of the EU, Irish legislators may be powerless to do anything about it. Health Service efficiencies were quite rightly a principal focus of the government s austerity programme but policy makers need to ensure they don t go too far. A shockwave has hit the market, causing wholesaler consolidation and many smaller pharmacies to teeter on the brink of collapse, but to date, often thanks to the extra efforts of pharmacists on the frontline, patient care has not suffered. I have no doubt that community pharmacy will return to strength in the post austerity years and the operators that remain will continue to provide a high quality service to their patients, but the services pharmacists offer are largely limited to the medicines they have access to. If government continues to drive down medicine prices they are playing a dangerous game and, ultimately, the patient will suffer. 10

Reference pricing adds another layer of competition to an already competitive sector and standalone operators with small turnover profiles, despite the fact they may be providing an essential primary care service in their community, will struggle to survive. Sustainability in a turbulent market As the government continues to remove value from the supply chain, the community pharmacists that will survive and prosper in the years ahead will be the ones that continue to maximise procurement margins, especially in areas where prices are not government regulated. For operators without scale, this can only be achieved through collective purchasing. The use of buying groups is now widespread and the purchasing power these groups offer helps to keep their members viable. Each pharmacy is different and the demographics of each local market are different, but for many, coupling the benefits of collective purchasing with a locally focused, pharmacy owned symbol group is the next survival step. To compete with chains, multiples, supermarkets and the internet all pharmacy operators will need to: Cut administrative costs. - - Free up pharmacists time to maintain the strong clinical relationship with patients. Provide a compelling consumer offering. Advertise through national channels. What the future holds for the community pharmacy sector I think we can expect a reduction in pharmacy numbers as reference pricing forces unviable pharmacies out of the market and with pharmacy numbers shrinking and super-groups expanding the community pharmacy sector will be under pressure. It is not inconceivable that in ten years time community pharmacy will mirror the convenience store market with symbol groups and large super-groups, such as Lloyds and Boots accounting for the vast majority of trading units. But the pharmacy market isn t quite the same as the grocery market. In the face of these pressures, I feel the sector is best supported through the development of strong symbol groups, which will give community pharmacists the back office support and marketing muscle to compete with the super-groups, but which will protect that special link that each pharmacist has with their local community, as a clinician and first port of call on matters of health. These initiatives are only possible as part of a larger organisation and are at the heart of why so many community pharmacists are now considering symbol groups. A further benefit will be access to Business Intelligence systems that were previously uneconomical for single shop operators. coupling the benefits of collective purchasing with a locally focused, pharmacy owned symbol group is the next survival step. 11

Section 1 conclusions and key findings Government reimbursement rate cuts, reduced consumer spending and changing purchasing patterns are forcing independent operators to consider their position in the market. Some will exit, but those that remain may be running vastly different enterprises in the future. Continued pressure on drug prices may lead to more cases of medicine shortages. This will negatively impact on pharmacists and patients alike. The years ahead will demand more from community pharmacists as our aged population grows. A consolidation appears to be underway in the market, with large pharmacy multiples and other chains expanding their footprint. Independent pharmacists are responding by joining symbol groups and purchasing collectively. Pharmacy undergraduate enrolments continue to grow despite market pressures. The impact of the recession was twofold: it depressed consumer confidence and it forced policy makers to reduce healthcare spending resulting in significant cuts in pharmacy revenues. 12

Section 2 Role and perception of community pharmacy

2 Role and perception of community pharmacy 2.1 A dispenser of medication - the traditional role Medicine dispensing remains the core activity of the community pharmacy sector. This activity includes evaluation of the safety and appropriateness or otherwise of a prescription and the preparation, packaging, labelling, recording and transfer of the prescribed medicine and relevant advice, information and warnings to a patient or suitable intermediary who will be responsible for the administration of the drug. Medicine sales are broken down between State schemes and private dispensing. Table 2.1: Pharmacy medicine dispensing categories Dispensing category General medical scheme Drugs payment scheme Drugs payment scheme - sub threshold Long term illness scheme High tech drugs scheme Private dispensing Patient type State funded State funded Private State funded State funded Private Source: Fitzgerald Power research 2.2 Other roles the community pharmacist fulfils Pharmacists also assume the role of community healthcare advisors, providing advice on matters including the safe and effective use of medicines. Table 2.2 lists the healthcare services provided by respondents to our survey and the change from 2013. There was growth in nearly all categories in 2014, indicating a willingness amongst pharmacists to assume a more central role in community healthcare delivery. The biggest changes in service provision related to; Lipid / cholesterol screening. Blood pressure measurement. Cardiovascular / health screening. The majority of pharmacies surveyed administered flu vaccinations in 2014. Pharmacists also assume the role of community healthcare advisors, providing advice on matters including the safe and effective use of medicines. 14

Table 2.2: Pharmacy healthcare services offered Service 2014 % of pharmacy outlets 2013 % of pharmacy outlets Diabetes screening 26% 22% 4% Lipid / cholesterol screening 32% 19% 13% Blood pressure measurement 80% 68% 12% Glucose measurement 36% 28% 8% BMI screening 52% 46% 6% Lung capacity screening 5% 3% 2% Obesity / weight management 36% 34% 2% Smoking cessation services 52% 48% 4% Diabetes management 19% 17% 2% Nutrition 20% 19% 1% Asthma management 24% 18% 6% Cardiovascular / Health screening 22% 9% 13% Pregnancy test (in-pharmacy) 1% 3% -2% Hypertension management 19% 17% 2% Administration of flu vaccination 55% 48% 7% Needle exchange programme 10% 7% 3% Emergency contraception 93% 89% 4% Disposal of unwanted medicines 84% 86% -2% Monitored dosage system (not care homes) 91% 88% 3% Fertility treatment dispensing service 50% 49% 1% Home delivery service 55% 53% 2% Supervised methadone service 46% 42% 4% Advice and supply of medicines to nursing homes 33% 32% 1% Veterinary pharmacy services 17% 19% -2% Night services 7% 7% 0% Percentage change since 2013 2.3 Expanding the role of pharmacists Source: Fitzgerald Power survey 2014 As skilled healthcare professionals, pharmacists appear to be well positioned to support GP s and accident and emergency departments by dealing with routine healthcare matters in a convenient and accessible setting. As covered in detail in Section 3 of this report, there is strong international evidence to suggest expanding the healthcare role pharmacists provide can have significant positive impacts on patient outcomes. Our research suggests a number of additional services could be carried out by pharmacists, such as medicine use reviews, minor ailment prescribing and chronic disease management services. In relation to minor ailments, a recent UK report found that 1 in 7 GP visits and 1 in 12 accident and emergency visits could be dealt with by a pharmacist 5. 15

2.4 How consumers might respond to this expanded role The perception of pharmacists in Irish society is extremely positive, with 96% of consumers rating their professionalism and 93% their medical advice, as good or very good. Healthcare remains one of the few markets where buying hasn t shifted substantially online and where people rate quality as more important than price 6. In this regard consumer opinions play an important role as positive consumer attitudes have a bearing in sectors where the quality of the service is important to consumers. Figure 2.1: The perception of consumers to the community pharmacy sector: I rate the professionalism of pharmacists as good or very good I would like my pharmacist to be able to prescribe for minor ailments I would like my pharmacist to be able to advise me on medicine regimens I rate the medical advice provided by community pharmacists as good or very good 96 % 94 % 94 % 93 % Consumer satisfaction will become even more important to pharmacists as they offer an ever increasing range of patient-related services and as the consumer becomes more informed. Patients are supportive of an expansion in pharmacists roles, with 91% agreeing they would like their pharmacist to take blood pressure tests, 94% to treat minor ailments and 94% to offer advice on medicine regimens. GPs are still seen as an important source of health care advice, but 57% of patients say they would talk to their pharmacist before their GP and a majority of people, 59%, said they do so to avoid the cost of a GP visit 7. 2.5 Consumer loyalty in community pharmacy Loyalty to individual stores is under threat and now just 48% indicate that they always tend to use the same pharmacy. This had been as high as 60% two years ago. Medical card holders and the elderly tend to be more loyal and there is increasing evidence of a drift amongst younger customers. Up to 1 in 7 drifters indicate that they simply wanted to try a different pharmacy, with only 8% citing price as the principal factor. A small number were dissatisfied with service. The primary drivers of drift remain convenience, moving to a shop in a different area and difference for the sake of difference 8. Figure 2.2: Customer loyalty: 20% 22% 48% 60% Source: Behaviour and Attitudes: Pharmacy Usage & Attitudes, May 2014 The pharmacy I visit most regularly is a large chain 2012 The pharmacy I visit most regularly is a large chain 2014 I always shop in the same pharmacy 2012 I always shop in the same pharmacy 2014 Source: Behaviour and Attitudes: Pharmacy Usage & Attitudes, Positive consumer attitudes have a bearing in sectors where the quality of the service is important to consumers. May 2014 16

2.6 The value proposition Owner run pharmacies are still more popular than large chain stores but large chain stores are catching up within important demographics, with 33% of customers between 25 and 34 using a chain store regularly, as opposed to 53% who use owner run stores. Older consumers are still far more likely to use independent stores, with 80% of those between 50 and 64 saying their regular pharmacy is owner run. Figure 2.3: Consumers whose regular pharmacy is an owner run outlet: 54% 53% 72% 80% 79% <25 25-34 35-49 50-64 65> Consumers noticed and appreciated greater value for money on medicines in 2014, with 82% rating value as good or very good. Although there had been a shift to supermarkets for toiletries over the past decade, we are now seeing some movement back to pharmacies, with an increase from 13% in 2009 to 28% in 2014 of people who buy toiletries in pharmacies. Supermarkets, however, still have this market captured at 71% and are also catching up on non-prescription medicine sales which are up from 37% in 2009 to 47% in 2014, while pharmacies are up at a lower rate of 52% to 54% over the same period. Figure 2.4: Where consumers buy nonprescription medicines: Any pharmacy 2009 Any pharmacy 2014 Supermarkets 2009 Supermarkets 2014 52% 54% 37% 47% Source: Behaviour and Attitudes: Pharmacy Usage & Attitudes, May 2014 Women use pharmacy services more often than men and are generally more positive towards the sector. In gender terms, they are the pharmacy sector s most important demographic. 54% of women say they have visited a pharmacy in the last week and 91% in the last month, whereas the numbers of men visiting are 27% and 64% respectively. Unsurprisingly, the majority of people visited pharmacies to fill a prescription. There appears to be significant room for improvement in patient oriented services as only 1 in 12 say they visit a pharmacy to specifically ask for advice. Offering loyalty schemes may be a way of retaining more customers. It is an underused marketing ploy amongst community pharmacists, with only 30% of consumers saying pharmacists offer a very good loyalty scheme, while 44% say their pharmacy doesn t offer one at all. This result appears to be skewed towards large chain stores, where loyalty schemes are more common. Source: Behaviour and Attitudes: Pharmacy Usage & Attitudes, May 2014 Owner run pharmacies are still more popular than large chain stores but large chain stores are catching up within important demographics 17

The expert view Oonagh O Hagan, Meagher s Pharmacy The consumer s demand for convenience and expertise The distribution of pharmacies throughout Ireland puts pharmacists in a unique position in the Irish healthcare chain. This access can become a cornerstone for improved patient care in our communities if pharmacists are given the opportunity to practice our profession. Our second initiative was to reorganise the dispensaries in all of our shops. It hasn t come about overnight, but the ultimate results have been greater dispensing efficiencies, shorter prescription waiting times and happy, loyal customers. Competing with other retailers in nondispensing categories If we are to improve patient outcomes, legislators need to be alive to the possibilities that an increased professional role for pharmacists can bring to healthcare delivery. The Flu vaccination scheme was a case in point with vaccination rates at an all-time high. The benefits are clear; less downtime, unclogged GP surgeries and more proactive patient care. The USA is leading the way in this regard, with pharmacists administering shingles vaccinations, providing chemotherapy and testing for HIV. Think of the cost savings for government and the positive impact on patients lives if chemotherapy could be provided by pharmacists in rural Ireland. If legislators can match the willingness of pharmacists, we can help deliver a level of expertise and convenience to the community that would match any healthcare system in the world. But within this context we, as pharmacists, need to be more proactive. Our customers are demanding longer opening hours, improved service and shorter prescription waiting times. In Meagher s Pharmacies we implemented two initiatives following the downturn. Firstly, we set out to improve the service we provide to our patients and customers. We recognised that our pharmacists are a wealth of expertise and experience that patients want to access, so we upskilled our technicians and got our pharmacists out on the counter interacting with customers. Pharmacy is, ultimately, a service industry, so for us cutting staff numbers made no sense. We increased our head count and the benefits have been huge. Since 2009, price and value for money have been the primary considerations for consumers. In an attempt to compete with the multiples, pharmacists began offering unsustainable discounts, with many lines carrying little or no margin. This pricing policy might work for large conglomerates that enjoy huge purchasing power but, for independent pharmacies, it could never last. In Meagher s we made the decision to move away from the mass market toiletries segment. Instead, we focus on our unique selling point. We identify what the supermarkets and multiples can t sell and we try to sell it better than anyone else. By stripping out 20% of our non-dispensing lines we reduced dead stock, de-cluttered our shops, improved the clarity of offer to our customers and increased profitability. Another means of competing with supermarkets and multiples is to make the most of information technology. The systems within a pharmacy contain a huge amount of data that can be harnessed to drive efficiencies and profitability. We recently introduced a business intelligence program that sits on top of our POS and dispensary systems producing information such as; margin per category, best sellers lists and staff productivity. I.T. is facilitating better decision making and the information that is now available at the touch of a button is removing the guesswork from running a business. 18

We recognised that our pharmacists are a wealth of expertise and experience that patients want to access, so we upskilled our technicians and got our pharmacists out on the counter interacting with customers. The importance of a strong internet presence The consumer trends are impossible to ignore, but building a compelling e-commerce offering for pharmacy is not straightforward. It took us more than 12 months to get the Meagher s Pharmacy site up and running and the drain on our resources was significant. We discovered ways to improve the online store along the way, but our principal discovery was that there is no one stop shop out there to guide you through the process. While there is undoubtedly a move towards online retailing I feel that pharmacy is a business based on service and professional advice and, as such, the majority of our customers will remain offline. The patient wants access to the personal expertise pharmacists offer and this is something they can t find on the internet. What the future holds for the community pharmacy sector I hope the Irish community pharmacy sector won t come to resemble the UK where consolidation and the expansion of large pharmacy chains have chipped away at independents. Continued consolidation will strip us of our individuality and point of difference and, ultimately, our patients will suffer. I would like to see strong independent pharmacies continuing to play a significant role in the Irish healthcare system for many years to come. So why are consumers interested in online shopping? The answer is convenience. Rather than developing an online presence that will always struggle to compete with the larger players, the focus should be on delivering excellent patient and customer experiences in our pharmacies. In my view, if it comes to a choice between improving the in store experience or building an online presence, the store wins every time. We identify what the supermarkets and multiples can t sell and we try to sell it better than anyone else. 19

Section 2 Conclusions and key findings While the traditional role of medicine dispensing remains the core activity there has been a noticeable growth in healthcare services offered by pharmacists. Although consumers are broadly supportive of this increased clinical role only 1 in 12 say they visit pharmacies specifically for advice. This points to an opportunity to improve customer engagement. It will be necessary to free up pharmacist time to capitalise on this opportunity. More and more, consumers are purchasing over the counter medicines in supermarkets. While competing with supermarkets in some categories is unsustainable, over the counter medicine sales are crucially important to pharmacies. Proactive patient engagement will help to protect this category with patients more likely to favour a pharmacy for medical matters that require advice. Competing for customers below the age of 34 is a key challenge for all players in the Irish pharmacy market, with creativity required to build loyalty schemes that resonate with this demographic. A compelling online offering may be difficult to execute. The focus instead should be on delivering excellent patient and in-store consumer experiences. Our research suggests a number of additional services could be carried out by pharmacists, such as medicine use reviews, minor ailment prescribing and chronic disease management services. 20

Section 3 International best practice and what Ireland can learn

3 International best practice and what Ireland can learn 3.1 The need for international comparison When predicting the role community pharmacists may play in Irish society in the future, it is useful to look at their counterparts in other advanced economies. Although all countries will have some degree of distinctiveness there are many common problems, such as a lack of resources, a shift towards elderly care and overburdened Accident and Emergency rooms. This commonality provides opportunities to learn from international experiences. International comparisons also allow us to observe and measure the success of various policy changes in similar countries and to weigh the costs and benefits carefully and empirically. Our research has focused on initiatives that may be most useful to implement in an Irish context. 3.2 Vaccination services In many developed economies pharmacists have added vaccinations to the services they provide. In Canada, between 40-50% of pharmacies offer vaccinations 9. In Ireland, 907 pharmacies provided flu vaccination services to over 40,000 patients during the 2013/14 season, where 24% of those vaccinated had never been vaccinated before and 85% were in an at-risk group 10. The network of community pharmacies throughout Ireland provides the health service with a unique opportunity to engage locally with patients in a more efficient way. The success of initiatives such as the flu vaccination scheme indicates an expanded healthcare role for pharmacists has merit. International evidence indicates there are numerous opportunities to offer additional vaccine services to Irish patients. In the UK, the NHS now vaccinates all 70-year olds against shingles and in New Zealand and the USA this service is provided by pharmacists 11. The New Zealand experience also shows that vaccinating for pneumococcal pneumonia, diphtheria, tetanus, pertussis and meningococcal disease can also be done effectively by pharmacists. These vaccinations can quite easily and cost effectively be added to the list of products and services supplied and administered in Irish pharmacies. 3.3 The natural development of the community pharmacists role As front line healthcare providers, pharmacists have always developed relationships with their patients, offering help and advice in navigating medical issues. Health promotion services have become the norm, to varying degrees, in other countries with Canada, UK, USA, New Zealand and Australia moving in a similar direction. In Canada, it is estimated that 25-50% of pharmacists offer smoking cessation services 12, with programmes covering prescription cessation drugs, nicotine replacement therapy and advice and support. As detailed in section 2 of this report, our research indicates a willingness amongst pharmacists to provide a more rounded health service offering to their patients with the number of non-dispensing services offered in community pharmacies continuing to grow. 3.4 The Minor Ailment Scheme With the growing realisation that Ireland is facing a medium term pull on health resources and a more general long term shift in healthcare provision it appears there is room to do more. Programmes have been put in place in other advanced economies to relieve the burden on GPs and emergency rooms through the implementation of Minor Ailment Schemes. Minor Ailment Schemes enable medical card patients to receive treatment for minor ailments, ranging from sore throats to infections, from their local community pharmacy. 22

Studies have consistently shown that a significant number of GP consultations and A&E attendances could be effectively dealt with by pharmacists. Studies have consistently shown that a significant number of GP consultations and A&E attendances could be effectively dealt with by pharmacists. In the UK, it is estimated that 15-20% of a GP s workload and over 5% of A&E time is spent dealing with minor ailments. Studies have also shown that pharmacists are just as effective at resolving minor ailments, with resolution rates equal to that of general practice or emergency rooms 13. Internationally, pharmacists provide advice for a number of ailments such as; aches and pains in joints and muscles, respiratory problems, stomach problems such as nausea, vomiting and diarrhoea, dermatitis and mild eczema, dysmenorrhoea, fungal skin or nail infections and heartburn. An examination of similar programmes implemented in other countries, indicates the benefits are substantial. In the UK, a Minor Ailment Scheme has been rolled out on a partial basis, covering one-third of all pharmacies. According to recently published research, the scheme could save the NHS over 1 billion a year 14. Another study by the UK Pharmacy Practice Research Trust has shown that resolution rates for symptoms after a Minor Ailment Scheme consultation are as high as in a doctor s surgery and the vast majority of patients, over 90%, were satisfied with the service and willing to reuse it in the future 15. These successes have meant that the scheme has now received backing from The College of Emergency Medicine and The Royal College of General Practice and there are plans to expand the programme across the UK 16. Similar programmes have been designed and implemented in countries, such as Canada and Australia, where the initial results are positive. 3.5 Further expansion Policy makers in other jurisdictions have used Minor Ailment Schemes to validate expanded roles for community pharmacists. This role expansion has led to numerous successful initiatives such as Medicine Use Reviews. A Medicine Use Review is a consultation-based service undertaken by a pharmacist to assist patients to understand and manage their medicines, ensuring they get the greatest benefit from their treatment regimen. Research shows that 50% of patients with chronic diseases do not take their medicines as intended. Under the MedsCheck diabetes system in Ontario Canada, pharmacists help patients living with diabetes by training them to use and dispose of diabetic supplies and advising on medication and lifestyle changes. This particular programme works through a 30 minute oneon-one appointment where a pharmacist reviews the medications and advises the patient on the regimens 17. The potential benefits of this are clear as non-compliance on medicine regimens can have a long term negative effect on the patient s health and increase long term healthcare costs. Studies in the UK have shown that pharmacists can increase adherence by 10%, which will save money throughout the health service as a whole by reducing costs in other parts of the system 18. In Canada and the United States, pharmacists advise on serious conditions like arthritis and cancer, while in parts of the United States chemotherapy is administered by specially trained community pharmacists. In Australia, pharmacists have started screening for bowel cancer 19 and in the United States, pharmacists can test for HIV. Irish pharmacists could offer similar services, if provided with sufficient resources, training and regulatory support. Policy makers in other jurisdictions have used initiatives such as Minor Ailment Schemes to validate expanded roles for community pharmacists. 23

The expert view Kathy Maher, President, Irish Pharmacy Union A pharmacy based Minor Ailment Scheme There is compelling international evidence that expanding the scope of the services provided by community pharmacists in Ireland will reduce pressure on the health service. For example, the introduction of a Minor Ailment Scheme similar to those which operate in the UK would remove some pressure from GP services. This is important as a stated Government policy is to improve access to GP s. The primary aim of a pharmacybased Minor Ailment Scheme is to enable medical card patients to receive treatment for minor ailments free of charge directly from their local community pharmacy in a timely manner and without the need for a visit to their GP. Currently, GMS patients present at a GP s surgery to obtain a prescription for a treatment, even when the treatment is a non-prescription medication. We supply non-prescription medicines every day to private patients. It is a normal pharmacy activity with pharmacists providing advice and recommendations regarding these non-prescription medications. We deal with minor ailments as part of our normal practice, giving advice to patients on how to treat self-limiting conditions, i.e. conditions which will either resolve on their own or which have no long-term harmful effect on a person s health and distinguishing between minor ailments and symptoms, which may indicate potentially more serious conditions. The establishment of a community pharmacy based Minor Ailment Scheme would be a step towards delivering on the objectives of the Government s Healthy Ireland framework. This strategy aims to move towards a new model of integrated care, which treats patients at the lowest level of complexity that is safe, timely, efficient and as close to home as possible. The introduction of the flu vaccination service and reclassification of emergency hormonal contraception have shown that pharmacy can deliver, in a cost-efficient manner, services that patients want and avail of. A survey by Behaviour & Attitudes showed that there is strong public support for extended services by pharmacists, with 94% of respondents strongly agreeing that pharmacists should be allowed to prescribe some medicines for minor ailments. The number of flu vaccinations delivered in pharmacy has consistently grown and statistics show that pharmacists are reaching people who have never had a flu vaccination before but yet are in the at-risk group. The Minor Ailment Scheme is an internationallyrecognised extended pharmacy service, the implementation of which would demonstrate how the Government is enhancing public health access, delivering quality patient care and improving public health outcomes. International experience has shown that expanding the role and providing such a service has successfully alleviated pressure in healthcare systems. What a Minor Ailment Scheme would cost The scheme would be cost-neutral to the Exchequer. At present, GMS patients requiring a non-prescription medicine must present at a GP s surgery to obtain a prescription for it which, when dispensed, results in a dispensing fee being paid to the pharmacist. The fees for supplying medicines to patients under the Minor Ailment Scheme would be the same as those paid for dispensing the prescriptions, so the supply of medicine by the pharmacist would cost the same, whether it occurs on foot of a prescription or under the Minor Ailment Scheme. The GMS patient is not charged for the medicines. However, it is likely that they would be liable for the GMS prescription levy, if it applies to them. 24

The introduction of the flu vaccination service and reclassification of emergency hormonal contraception have shown that pharmacy can deliver, in a cost-efficient manner, services that patients want and avail of. The benefits of a Minor Ailment Scheme to patients and the Irish health care system The Scheme would bring significant gains for GMS patients who, as a result of the Minor Ailment Scheme, would be treated no differently to private patients. These patients would be granted easier access to appropriate health care. The HSE would also benefit, achieving a more efficient use of the valuable time of GPs. In the UK, it is estimated that 18% of a GP s workload is spent dealing with minor ailments, costing the NHS 2.5 billion. Research has shown that 80% of this cost is due to the cost of the GP s time and that 10 minor ailments: back pain, indigestion, dermatitis, nasal congestion, constipation, migraine, acne, cough, sprains and strains and headache were responsible for 75% of the cost of minor ailment consultations and 85% of the cost of prescriptions for minor ailments. These are ailments that we, as pharmacists, are best placed to provide advice on. Allowing patients to access appropriate treatments directly from their pharmacist makes GP time, a scarce and valuable resource, available for the care and treatment of patients with more complex conditions. What the future holds for the community pharmacy sector Dispensing medicine and advice is the core role of community pharmacy but pharmacists are highly skilled healthcare professionals, the first and often last port of call for patients. The introduction of a Minor Ailment Scheme, along with the established flu vaccination service and emergency hormonal contraception delivery would serve to improve accessibility to healthcare for patients. As an under-utilised resource, pharmacists know what we can do to alleviate pressures in the system and with constructive engagement, these roles can be developed. Pharmacists are pivotal in the health of their patients and an expansion of our role means that we will continue to have a central part to play. The Minor Ailment Scheme is an internationallyrecognised extended pharmacy service, the implementation of which would demonstrate how the Government is enhancing public health access... 25