Permissionless innovation in the pharmacy business model: The case for the membership pharmacy model
Year: 2023
Type: article
Abstract: Objective: To discuss the difference between volume-based to value-based pharmacy models, focusing on how these models impact prescription adherence and patient outcomes.Application of the valuebased pharmacy model will be described in the context of Good Shepherd pharmacy located in Memphis, TN. Case Summary:The volume-based model is centered on prescription fulfillment, with pharmacies incentivized to maximize the number of prescriptions filled.Conversely, the value-based model treats prescription fulfillment as an expense and emphasizes medication adherence as the primary goal.This shift in focus leads to a radical change in the pharmacy's business model, aligning economic incentives with patients' best interests.In the value-based model, pharmacies operate on a membership or subscription basis, where revenue is generated through recurring membership fees instead of individual prescription fills.This encourages pharmacies to manage prescription fulfillment efficiently and help patients reduce their prescription burden, ultimately improving their bottom line. Practice Implications:The value-based pharmacy model is distinguishable from the volume-based model in several aspects.In the value-based model, prescription fills are considered an expense rather than a profit center, and the inventory model shifts from "Just-in-Case" to "Just-in-Time."Medication synchronization of patients' refills is a key feature of the value-based model, as it reduces operational costs and maximizes profit per patient.Key performance indicators also shift from being product-centric to patient-centric and reward the organization for improving adherence. Conclusion:The value-based pharmacy model represents a significant departure from traditional pharmacy practices.By incentivizing pharmacies to promote medication adherence and focus on longterm customer relationships, this model has the potential to improve patient outcomes.Further research is needed to study the model's impact across different settings and patient populations, financial sustainability, and means of spread and scale. J o u r n a l P r e -p r o o f
Source: JAPhA Practice Innovations
Authors: Kenneth C. Hohmeier, Phil Baker, Ethan Lobo
Institution: University of Tennessee Health Science Center
Language: English
Subfield: Pharmacology
Domain: Life Sciences
Open Access status: hybrid
Estimated APC paid: $850
OpenAlex ID: W4390101605