‘Micro-Fulfillment’ Model Brings Same-Hour Delivery to Pharmacies

Estimates for the number of U.S. prescriptions dispensed in 2021 hover around 4.4 billion.

Let that sink in as you also imagine the countless telehealth and office visits, phone calls, text messages and recurring refills generating that mountain of medication orders.

More mindboggling still is the fact that even through the worst of the pandemic, most consumers donned a mask and went into a physical pharmacy to pick up their meds.

Stand in line with possibly sick people during COVID-19? Why didn’t they just use delivery?

“I have my own theory about it,” NowRx CEO Cary Breese told PYMNTS’ Karen Webster. “Pharmacy really hasn’t changed for about 100 years in this country. Consumers have just grown accustomed to the idea of a pharmacy being a place you drive to, you park your car, you get out, you walk in, there’s a counter, you stand in line and your get medications.”

That’s ironic at best, considering that the pandemic turned Americans into a delivery-obsessed nation that now expects everything to simply show up. Making it doubly ironic is the fact that 50 or so years ago, many (possibly most) local pharmacies offered home delivery.

“We’ve lost some of these things, and people just have the mindset that [it] must be the rule and must be the way it is when it’s not,” Breese said.

Bringing back the good old days of personal-touch pharmacies — safely and at scale — is the mission NowRx is on, especially as major retail chains like CVS announce plans to close numerous locations, and with demographic shifts favoring growth in prescription delivery.

We see this in new data. Per the January edition of PYMNTS’ Connected Economy Monthly Report, millennials “are the most likely of any demographic age group to obtain healthcare-related products and services online, with 46% of them (13 million) doing so in December. This compares to just 27% of Generation X and 13% of baby boomers and seniors.”

Given their penchant for home delivery, millennials are at the forefront of how the connected economy is restoring at-home pharmacy delivery with digital precision.

Get the report: Consumers Rush Online to Shop and Stay Well

Remaking Rx Logistics

In a bid to outprice and outperform the dominant pharmacy chains and eCommerce pushes like Amazon Prime Rx, NowRx is betting on a strategy that borrows the best of several sectors.

Taking a page from the ridesharing playbook and adding its own ideas around logistics, Breese said the idea of same-day and even same-hour medication delivery “painted a picture of a microfulfillment strategy where we have a fulfillment center, but it’s not in some faraway state or some faraway place, but local. We can get out there and deliver same day and even same hour because sometimes medications are quite urgent.”

Breaking down the economics of the concept, it becomes clear why competitors should take notes.

“Our locations are about a third of the size of a big CVS or Walgreens the way we do our fulfillment,” he said. “It’s a third the cost per square foot for rent because it’s commercial space. We can do about three times the volume of a traditional retail store. If you multiply all of that out where a typical pharmacy might spend $6 or $7 per prescription just to rent space, not even counting all the variable costs, our costs are 1/27th of that for fixed overhead.”

And where Uber and Lyft hit a wall monetizing each mile driven, delivering prescriptions at scale offers a profit model that beats rideshare or even food delivery with sheer size.

“The delivery becomes more efficient at higher volumes,” Breese said. “More customers per square mile — that is part of the disruption. We’ve built a very scalable software platform that can’t just run one or two or five locations but can run 500 or 1,000.”

As the latest take on ultrafast delivery powered by microfulfillment, NowRx is creating a platform with transparency, precision and speed, optimized end to end. And it’s not counting on the U.S. Postal Service this time, as other prescription-delivery does.

“Don’t forget,” he said, “when we send something by mail, that package gets picked up by a courier from a mailbox, taken to a fulfillment center that sorts it,” possibly ends up on a plane or a different truck destined for a different location, all to reach your house. “That cost of mail delivery ends up being comparable in some cases higher than our courier delivery.”

Breese said he isn’t impressed with the big chains doing delivery for an $8 fee now becoming standard.

“We wanted to build a system where we absorb the delivery cost,” he said. “We make up for it in the efficiencies for the facilities that we have and the processing we have inside the pharmacy. I can tell you for the typical pharmacy customer where their copay amount for medication is maybe $15 or $20 already, they are very reluctant to want to spend another $8 or $9. If you look at a Medicare patient where their typical copay is zero or just a few cents, they’re on fixed incomes.”

NowRx is betting the competitive advantage of free delivery will prove to be pretty persuasive.

See also: NowRx Brings Integrated Healthcare Model Into the Digital-First Economy

Changing the Mindset

There are other benefits to the pharmacy microfulfillment and same-day delivery equation. Physicians like it because it solves administrative hassles while keeping patients happy.

“Our software systems help with the insurance processing and something called a prior authorization process, which can be a big pain in the neck for doctors,” Breese said.

“Doctors like their patients to use NowRX,” he added. “There’s no referral fee paid or anything. We just save the doctor’s time by solving these pain points in pharmacy for both patient and doctor. And there’s a little-known concept in the pharmacy industry called ‘medication adherence,’ which is a measure of how much a patient takes their medications according to the doctor’s orders.

Breese said medical adherence is a $300 billion issue annually and something the NowRx platform helps with, which in turn leads to better outcomes and higher star ratings.

With same-day and same-hour delivery heavily dependent on proximity, NowRx’s expansion plans for 2022 will see more patients in more cities benefit from its on-demand model.

“There’s sort of a balancing of going wide, but also going deep in the existing territory,” he said of expansion. “We recently announced signing leases for new space in Denver, Colorado; Las Vegas, Nevada; Bellevue, Washington; and we’re getting ready to announce some other states soon as well. But at the same time, those are net new territories for us. We’re also adding more locations inside California, both north and south, and Arizona as well.”

He acknowledged the challenge, but he said he thinks stakeholders are ready for a new solution.

“There’s a lot of big players in the industry, from the insurance payer side, from the pharma manufacturers to the wholesale groups to the doctors. Anytime you’re coming in as the new kid on the block with a new idea trying to change the mindset of all those parties, [that] is probably the biggest challenge.”

Read also: How NowRx Is Tightening Data Privacy in the Pandemic-Driven Telehealth Age