At this week’s Total Pharmacy Solutions Summit, two of the most strategic minds in pharmacy economics delivered a keynote that should be required reading for every pharmacist who owns a business, leads a department, or cares about where the profession is going. They opened with an analogy that hits harder than any policy paper.
The current state of pharmacy looks like Tower Records in 2003. The product is real. The need is real. The demand is real. But the business model is broken. And if it doesn’t change, the outcome is already written.
The Diagnosis That Finally Got Named Precisely
The speakers were Pooja Babbrah, executive vice president of strategy and industry alignment at the National Council for Prescription Drug Programs, and Seth Joseph, managing director of Summit Health. Their argument was precise and unflinching.
PBM-driven margin compression has undermined dispensing economics, with growth in prescriptions and revenue failing to translate into profit, indicating a structurally misaligned distribution and reimbursement model. Pharmacists’ proximity and visit frequency create outsized care-delivery potential amid projected physician shortages. But scope expansion alone is insufficient without scalable operational and payment infrastructure.
That last sentence is the most important thing said at any pharmacy conference this year. Scope expansion alone is not enough. Getting legislative permission to do more clinical work does not generate revenue if there is no payment infrastructure to capture it. The Main Street Pharmacy Access Act could pass tomorrow and produce minimal financial benefit for a community pharmacy that has no billing infrastructure, no credentialing framework, and no payer relationship for clinical services.
This is the gap the profession has been talking around for years. This week, it got named precisely, and it got paired with a concrete proposed solution.
The PHARMS Model – What It Is and Why It Matters
Babbrah and Joseph proposed a new structural framework: PHARMS, Pharmacy Health Alliances for Reimbursable Medical Services.
PHARMS is a model of regional alliances designed to standardize reimbursement, streamline credentialing, and establish shared technology infrastructure between groups of community pharmacies and regional health plans. Instead of every independent pharmacy attempting to negotiate its own clinical service agreements with payers, a game that individual pharmacies almost always lose, PHARMS creates a regional bloc of pharmacies that negotiates collectively, builds shared credentialing standards, and deploys common technology infrastructure that individual pharmacies could never afford or build alone.
The logic is identical to what has already worked in other fragmented provider markets. Independent physician practices formed IPAs to negotiate with payers. Independent hospitals formed health systems and regional networks to negotiate with insurers and achieve economies of scale in technology procurement. Independent pharmacies have been attempting to negotiate one by one with PBMs and commercial health plans for three decades. The outcome of that individual negotiation strategy is documented in the 300 closures in 90 days reported in this newsletter’s prior issue.
PHARMS doesn’t require a national infrastructure to start. It requires pharmacies in the same regional market who recognize that their collective patient panel is large enough to matter to a regional health plan, and who are willing to standardize their clinical service delivery enough to be credentialed as a network rather than as individual providers.
The Economic Threshold That Defines Success or Failure
Babbrah and Joseph named a specific number that most pharmacy clinical service programs don’t reach, and that explains why most of them don’t achieve financial sustainability.
Below roughly 250 clinical services monthly, programs remain financially negligible. Surpassing that threshold enables repeatable workflows, economies of scale, and demonstrable ROI for service delivery.
This number is the truth that most pharmacy clinical service advocates don’t say out loud. A CGM program that serves 30 patients is not a service line. It’s a pilot. A pharmacogenomics consultation service with 15 patients per month is a clinical experiment, not a revenue stream. The overhead of credentialing, billing, documentation, and patient management is relatively fixed regardless of volume. Below the 250-service-per-month threshold, the fixed overhead of running a clinical service program consumes more than the revenue it generates.
The PHARMS model solves the volume problem by aggregating patient encounters across a regional network. A network of 10 pharmacies, each contributing 25 CGM education visits per month, reaches 250 combined visits and crosses the economic threshold that no single pharmacy could reach alone. The billing infrastructure, the payer credentialing, and the outcomes reporting are shared across the network, making the per-pharmacy cost sustainable.
This is the operational architecture that the 25 NCPA Stroke Belt pharmacies, covered in last week’s newsletter, demonstrated at scale: 11,188 encounters across 25 pharmacies in six months translates to approximately 90 encounters per pharmacy per month. Individually, that volume is below the threshold. Collectively, across the network, it is well above it, and it produced documented outcomes that moved payers.
The Harps Food Stores Proof of Concept
Drug Topics published a companion piece this week featuring Jennifer Griffin, PharmD, and Duane Jones, clinical director of Harps Food Stores, a regional grocery chain operating 39 pharmacy locations across Arkansas, Missouri, and Oklahoma. The Harps story provides the most concrete available evidence that the PHARMS model is not theoretical.
Today, Harps pharmacists provide test-and-treat services for strep and flu, oral contraceptive prescribing, A1C testing, and Medicare Part B-billed vaccines across all 39 locations. These are not pilot programs at a few flagship stores. They are standard operating procedures across the entire 39-location network.
The model started with early adoption of point-of-care testing well before COVID-19. When the pandemic arrived and demand for POC testing exploded, Harps was operationally ready in a way that competitors were not. The first-mover infrastructure investment, made during a period when demand was modest, paid off at the moment of maximum opportunity.
The cultural dimension of the implementation story is equally important. Pharmacists at Harps did not immediately embrace the clinical service expansion. Change is never fun, and it’s always a little difficult. But once they embraced it and got through the change piece of it, you can ask any of their pharmacists about every program they’ve implemented, and they would never go back to the way it was before.
That trajectory, from resistance to enthusiasm to advocacy, is the standard implementation pattern for successful clinical pharmacy service expansion. The pharmacists who built CGM programs, pharmacogenomics consultations, and GLP-1 coaching services that this newsletter has covered across the year uniformly describe the same arc. The period of change is difficult. The period after it is professionally rewarding in ways the previous model wasn’t. The challenge is getting through the change.
The Practical Guidance for Where to Start
Babbrah and Joseph were deliberate about offering implementation guidance that is honest about the complexity most pharmacy teams underestimate.
Start with fee-for-service medical billing rather than complex value-based care. The value-based care contracting model, where the pharmacy earns shared savings or performance bonuses tied to population health metrics, is the destination. It is not the starting point. The billing infrastructure, the outcomes tracking, the credentialing, and the payer relationship development required to participate meaningfully in value-based care take 12 to 24 months to build. The pharmacies that tried to start with value-based contracts before building fee-for-service billing foundations got the sequencing wrong and struggled.
Focus deeply on two or three core services to build staff competency. The pharmacies that tried to launch 12 services simultaneously failed. The competency required to deliver a clinical service consistently and at the quality level payers will contract for is built through repetition. A pharmacist who has conducted 200 point-of-care testing encounters is a different clinical resource than one who has conducted 20. The Harps model built POC testing competency first, then added oral contraceptive prescribing, then added A1C testing. Each service was built on the operational foundation of the one before it.
Target regional health plans before national payers. National PBMs have national leverage. Regional health plans have regional accountability, which creates a different negotiating dynamic. A regional Medicaid managed care organization whose member population overlaps significantly with a network of community pharmacies has a direct financial incentive to credential that network and pay for clinical services that reduce emergency department visits, improve chronic disease control, and close care gaps. Regional payers also have less bureaucratic overhead in the credentialing and contracting process, making the initial contract achievable in months rather than years.
The Tower Records Warning, Made Specific
The Tower Records analogy is precise because the comparison captures exactly the failure mode being described: a business with genuinely valuable product, real customer relationships, and documented demand, brought down not by irrelevance but by a distribution and margin model that the digital era made untenable. Tower Records’ customers loved music. They stopped buying CDs, not because they stopped loving music, but because a better distribution model arrived.
Pharmacy’s customers love their pharmacists. The Drug Channels salary data, the NCPA Stroke Belt outcomes data, the PLOS ONE Shields-UMass coaching study, and every patient satisfaction survey this newsletter has cited across the year all document the same finding: patients who have access to a relationship with a pharmacist value it deeply and use it extensively.
They will stop going to the pharmacy, not because they stop needing medication management and clinical support, but because a better distribution model, direct-to-patient manufacturer platforms, mail-order optimization, AI-assisted medication management, and telehealth, provides adequate substitutes for the parts of pharmacy value that are transactional rather than relational.
The PHARMS model is the structural response to that threat. It creates a reimbursement framework around the parts of pharmacy value that no platform can replicate: the clinical relationship, the systematic medication management, the community health worker role, the longitudinal chronic disease coordination. Those parts of the pharmacist’s value are not at risk of being automated or platform displaced. They are at risk of being financially unsustainable without the payment infrastructure that the PHARMS model proposes to build.
Your Action This Week
Identify two other independent pharmacies in your region that are either building or interested in building clinical service programs. Reach out to them this week.
Not to compete. Not to share proprietary information. To explore whether a shared approach to payer contracting, credentialing, and technology is something your collective patient panel could support.
The PHARMS model doesn’t require a national organization to build. It starts with three pharmacists in the same region who decide to negotiate together instead of separately. Identify those three pharmacies. They exist. They are likely already doing some of what you’re doing clinically. The question is whether the three of you can reach the 250-service-per-month threshold collectively that none of you can reach individually, and whether you’re willing to standardize your service delivery enough to be credentialed as a network.
That conversation, started this week, is the first step toward the structural fix the profession needs.
Tower Records is not the ending point of this story. It is the warning in it. The pharmacies that recognize the warning and act on the structural solution being proposed will be the ones building something the closures never had: a business model that survives contact with the market conditions that are already here.
Sources: Drug Topics (Total Pharmacy Solutions Summit Coverage: Pooja Babbrah and Seth Joseph PHARMS Keynote, August 2026), Drug Topics (Harps Food Stores: A Clinical Services Success Story, August 2026), NCPA (Prescription Drug Plans and PBM Contracting Reform: State of Independent Pharmacy 2026), NACDS (Pharmacy Market Data: Independent Pharmacy Financial Performance), National Council for Prescription Drug Programs (Babbrah Prior Publications on Pharmacy Clinical Service Payment Infrastructure), Drug Channels (Pharmacist Salaries and Employment in 2025, June 2026), Pharmaceutical Commerce (Cardinal Health: Financial Forces Reshaping Independent Pharmacy, August 2026)
