- Pressing need for efficient drug procurement, delivery as costs rise
- Trxade platform speeds up delivery, cuts costs
- Such efficiencies crucial to keeping America’s independent pharmacies alive
- Around half of 24,000 independent pharmacies have already signed on
These days, critics of the U.S. health-care system may be tempering their censure. After all, the sector has proved its worth in the battle against the coronavirus pandemic. Yet some of the fault-finding had merit. The system is bloated and plagued by inefficiencies. Even doctors agree, as a recent report in the “Journal of the American Medical Association” (“JAMA”) indicates (https://ibn.fm/bL7C1). Digital technologies may help streamline processes and methodologies, making some areas, such as pharmaceutical distribution, more efficient and, importantly, more effective. With that in mind, the Trxade Group (NASDAQ: MEDS) has developed a pharmaceutical supply-chain trading platform that is already helping pharmacies cut costs and get faster delivery.
No other country spends more on health care than the United States. National expenditure in the sector accounts for around 18% of gross domestic product (“GDP”). Unfortunately, recent studies have shown a lot of that money just goes down the drain. That conclusion, published in JAMA, details that “approximately 30% of health care spending may be considered waste.”
A major portion of that — $230.7 billion to $240.5 billion — can be attributed to “pricing failure,” which includes “medication pricing, payer-based health services pricing, and laboratory-based and ambulatory pricing.” Of these, medication pricing is posing the biggest challenge, as new high-cost specialty drugs become more widely prescribed. But, say researchers, cost pressures in pharmaceuticals can be reduced by “increasing market competition… and reforming price transparency,” which is exactly what the Trxade pharmaceutical trading platform is designed to do (https://ibn.fm/I0H6D).
The web-based platform allows pharmacies to discover the best-available prices for prescription drugs, a feature that independent pharmacists find especially advantageous. It also helps pharmacies avoid negative reimbursement costs, which reduce already thin profit margins. The Trxade Group is hoping to show most, if not all, of the 24,000 independent pharmacies that its platform is a better deal than the conventional system, and the company appears well on the way to doing so. An estimated 11,400 pharmacies have already signed up.
These cost pressures are particularly trying for independent pharmacies that are competing with giant chains such as CVS, Walgreens, Rite Aid and Walmart. In the past, these smaller businesses have depended on pharmacy benefit managers (“PBMs”) to reduce the purchase costs of drugs. PBMs are third-party administrators of prescription drug programs that were supposed to contribute to lower prices by their consolidation of buying power.
However, it appears the cost savings procured have been mainly used by PBMs to build their own businesses. Some PBMs now have revenues that exceed those of the top pharmaceutical manufacturers. For example, Express Scripts reported revenue of $100 billion in 2017, about twice as much as Pfizer, which is the largest pharmaceutical company in the world. Incredible as it may seem, the distribution of pharmaceuticals is a much more lucrative business than the manufacture of pharmaceuticals. Indeed, distribution margins also exceed those earned by pharmacies at the retail level.
However, the online marketplace hosted by the Trxade Group offers pharmacies a real opportunity to reduce purchase costs. Called the Trxade Exchange, the platform gives small pharmacies access to the wider pharmaceutical distribution network, allowing them to search for and view products from manufacturers, buying groups, and wholesalers on a real-time and continuous basis. By increasing competition and price transparency, the Trxade Exchange is giving today’s independent drugstores a new lease on life.
For more information, visit the company’s website at www.TrxadeGroup.com.
NOTE TO INVESTORS: The latest news and updates relating to MEDS are available in the company’s newsroom at http://ibn.fm/MEDS