This article is part of a series of stories exploring “Business Trends and Communications Strategies in the Pharmaceutical 3PL Market.”
The way in which patients receive their prescriptions is changing.
What was once a primarily place-based setting is shifting to a more virtual and technological based environment. This trend has implications for the pharmaceutical logistics industry.
The conventional channels that patients use to receive medications are expanding with new opportunities to increase efficiency and convenience. The business of filling prescriptions is lucrative. In 2019, 4.38 billion prescriptions will filled from retail pharmacies in the U.S. valued at $446.2 billion. That number is a 6% increase from the previous year.
Waiting in Line
Traditionally, the method of prescribing and delivering medications involves human contact and some form of transportation to a local pharmacy. In order to obtain a prescription, patients must schedule an appointment with a physician. Once the physician writes a prescription, it is either sent electronically to the patient’s pharmacy or brought in hand to the pharmacist. The patient walks into their local pharmacy, waits in line, and then tells the pharmacist who they are so they know what prescription to fill.
This process can be time consuming as the pharmaceuticals cannot be handed over immediately. Patients usually have to wait additional time wandering around the store until the meds are picked. This is especially hard for elderly people or those who have mental impairments, making it difficult to leave their home.
Disrupting the Model
New companies such as Capsule have introduced free mobile pharmacy apps, making it easy and convenient to fill, refill, transfer and manage prescriptions. Mobile applications created by independent corporations or the pharmacies themselves focus on getting the right products to the right people in a timely and organized manner.
After downloading the Capsule application from an app store, patients make an account and enter their healthcare information. By doing so, patients can eliminate some of the monotonous paperwork that needs to be done in person. Once this information is confirmed by the software the patient selects a preferred address, date and time for drop-off. Once that order is submitted, the prescription is ready to begin packing and shipping. Within a brief window, patients will receive their prescriptions safely and securely as requested.
The entire process is much easier than the traditional method of waiting in a small corner of a pharmacy waiting to be called up. It is also a relatively inexpensive process if patients have the proper device to download the app, since delivery is free and only a copay is needed.
For apps with a pharmacy like Walgreens or CVS, patients will be asked if they prefer to pick up their medication curbside or have them delivered to their home. Then, the app will select the nearest available pharmacy to retrieve the prescription.
With the coronavirus spread through human contact, pharmaceuticals are now being delivered directly to the patient’s door. The company Capsule promises free delivery within two hours in their designated locations in New York City, Boston, Chicago, and Minneapolis, which is impressive for a business started in 2016.
While companies like Walgreens and CVS are long established and reputable, new players such as Capsule and PillPack aim to draw in customers similarly to industry giants. PillPack is an Amazon company that specializes in organizing multiple prescriptions for patients taking several medications. The difference is that Capsule and PillPack are strictly online, and can be used digitally through Amazon or their own website.
There has been an increasing demand for these services during the pandemic, opening the door for new players to grow. Covid-19 presents favorable opportunities for these emerging companies as they target patients that are isolating themselves at home during the virus.
Implications for Third Party Logistics
Third Party Logistics (3PL) companies are adapting capabilities to serve this new business channel. New industry entrants including Capsule are changing the way medications are moved within the supply chain.
Third Party Logistics companies including WDSrx ship large quantities of medications to large regional distribution centers of major retail pharmacies including Walgreens and CVS, where orders are divided and distributed further into brick and mortar retail stores.
Capsule has a different distribution model that skips over the large distribution center. Logistics companies ship smaller quantities of medications directly to local pharmacy warehouses in major cities. New services do not rely on large regional warehouses and instead receive medications much closer to their customers. This saves time and reduces cost because medications are received and delivered within a limited geographic area. As a result, prescriptions can be moved from one point to another at reduced costs and with less steps.
In terms of changing the current business model, companies will have to adjust themselves accordingly to market toward an online and delivery based operation. This could include introducing a mobile application and home delivery system to an already pre-existing pharmacy or create a separate entity all by itself.
Scott Cohon, the current Director of Sales and Trade Relations for Woodfield Distribution, LLC (WDSrx), states, “With patients wanting convenient, quick and cost effective medication alternatives, services like PillPack and their competitors will continue to eat away at the way we are/were used to getting our prescription drugs. The advent of these services will help to continue to increase demand for quick, out of the box thinking pharmaceutical logistics services providers. ”
Rapid increases in technology present new ways for patients to receive their prescriptions in a more efficient and convenient way. Prescriptions are now being transported directly to the patient’s door, completely changing the pharmaceutical landscape for the future. Companies that fail to adapt will find themselves struggling to keep up with the fast paced services performed by mobile pharmacies in a post-pandemic society.