Company
A large US nationwide retailer with thousands of stores and a pharmacy department within each store.
Annual Revenue Range:
$30B – $40B
Industry:
Retail Pharmacy
Locations:
USA
Deployed Solution(s):
Vistaar SmartPricing
Business Challenges
• Like all other pharmacies in the United States, this pharmacy faced ongoing challenges with declining insurance payments controlled by Pharmacy Benefits Managers (PBMs), who dictate insurance rates and seek to maximize their contract benefits with pharmacies.
• The company historically dominated the uninsured market through an aggressive value-priced program for generic drugs but has recently started facing stiff competition from pharmacy discount cards such as GoodRx.
• In addition to market driven challenges, limited resources within the pricing organization also hindered their efforts towards creating a scalable and successful price management process. Insufficient control led to reactive pricing, whereas a manually intensive price entry practice caused widespread pricing inconsistencies and left the team with inadequate capacity to capitalize on strategic regional pricing opportunities.
Vistaar Solution Highlights
• Customized Pricing optimization strategies tailored for varying objectives of Margin, Volume, Price Image, and a blend thereof.
• Strategy assignments to products based on price sensitivity, basket dependency, consumer profile, market share, regulation, etc.
• Store segmentation based on competitive profile and state reimbursement rates, delivering regionally optimized prices.
• Optimized price recommendation for every drug, considering competitive price reference, PBM reimbursements, contractual terms’ impacts, uninsured patient impacts, cannibalization between payment types, and more.
Sources of value
The company achieved an impressive ~8-10% effective margin improvement over three years by optimizing Usual & Customary (U&C) pricing and improving the PBM reimbursement rates for hundreds of drugs. This can be accredited as a direct success driven by Vistaar’s data-driven pricing strategies, which not only improved margins but also fueled a ~3-5 basis-point market share increase within two years after implementation. Vistaar’s objective-driven pricing attracted new customers and eventually led to the company becoming the most dominant pharmacy in the market.
Vistaar SmartPricing for Pharmacy goes beyond surface-level analysis. It uncovers hidden opportunities in the “long tail” of your product portfolio, ensuring regionally optimized pricing for maximum impact.
Imagine offering uninsured patients 15% lower cash prices! Vistaar’s pricing strategies made that a reality, leading to a more positive price image and attracting a new segment of customers.
