Vaccine Profitability Increases for Pharmacies

There is no doubt that pharmacists’ role in immunizations dramatically increased with the COVID-19 pandemic, as pharmacies administered vaccinations to much of the country’s population.  In addition to solving a public health crisis, at approximately $40 per dose, the Medicare Part B administration fees for COVID-19 initial and booster vaccines created additional revenues for pharmacies.  With declining drug ingredient cost reimbursement rates and negligible dispensing fees, vaccines were a welcomed revenue stream for many pharmacies.

As we approach the annual flu season, another vaccine opportunity will present itself to pharmacies.  Medicare Part B payments for vaccine administration have increased 77%  this year.  For influenza, pneumococcal, and hepatitis B vaccines, the administration reimbursement increased from $16.94 per dose in 2021 to $30 per dose in 2022.  This change is a nice reversal in immunization reimbursement rate trends, after we saw the rate decrease from $20.88 to $16.94 in 2019.

For 2022, the Medicare Part B pharmacy payment for COVID-19 vaccine administration remains at $40 per dose.  Because commercial reimbursement rates often follow the rates set by Medicare, it is expected that this administration rate increase will have wider reaching effects, beyond simply those of the Medicare population.

For the 2022-2023 flu vaccine, two of the four strains included in the quadrivalent vaccine will differ from the 2021-2022 version.  This coming fall, the influenza vaccine will include the following strains:

  • H3N2 component: A/Darwin/9/2021 (H3N2)-like virus (for egg-based vaccines) or A/Darwin/6/2021 (H3N2)-like virus (for cell culture or recombinant vaccines)
  • Influenza B: B/Austria/1359417/2021-like virus
  • Influenza B: B/Phuket/3073/2013 (B/Yamagata lineage)-like virus
  • Influenza A: A/Victoria/2570/2019 (H1N1) pdm09-like virus (for egg-based vaccines) and A/Wisconsin/588/2019 (H1N1) pdm09-like virus (for cell culture or recombinant vaccines)

Knowing that two new strains are included should enable pharmacists and healthcare practitioners to have more educated discussions with their patients concerning the importance of receiving the 2022-2023 influenza vaccine.  With the increased reimbursement rates available to pharmacies, we expect that vaccines will continue to play a key role in retail pharmacy profitability, as pharmacies continue to seek alternative revenue streams outside of traditional drug dispensing.

 

Posted June 28, 2022

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