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Economic analysis of a herpes zoster vaccination program in 19 affiliated supermarket pharmacies
RESEARCH
Economic analysis of a herpes zoster vaccination program in 19 affiliated supermarket pharmacies Megan A. Hedden, Peggy G. Kuehl, and Yifei Liu
Abstract Objectives: To examine the economic impact of providing herpes zoster vaccine (ZOS) in 19 affiliated supermarket pharmacies in a midwestern metropolitan area from the perspective of the pharmacy and to identify factors associated with greater rates of vaccine delivery and profitability. Setting: 19 affiliated supermarket pharmacies in the Kansas City metropolitan area. Practice description: Immunizations with ZOS were expanded from 2 pharmacies to all 19 affiliated pharmacies. Various methods to promote the vaccine were used, including personal selling, store signage, and circular ads. Practice innovation: In addition to a broad perspective pharmacoeconomic model, a localized perspective model is proposed to determine profitability for the service. Factors associated with greater success in vaccine delivery and profitability were identified. Main outcomes measure: Net financial gains or losses were calculated for each vaccine administered for each of the 19 pharmacies and for the entire supermarket chain. Results: 662 vaccines were given during the study period, accounting for 6.7% of all eligible patients. The profit per vaccine averaged $9.60 (5.7%) and $28.37 (18.9%) using the broad and localized perspective models, respectively.
Received June 27, 2013, and in revised form December 24, 2013. Accepted for publication February 8, 2014. Published online June 22, 2014. Megan A. Hedden, PharmD, is Pharmacist-in-Charge, AuBurn Pharmacy, Eudora, KS; at the time of the research, she was Community Pharmacy Resident, University of Missouri–Kansas City (UMKC)/Ball’s Food Stores Price Chopper Pharmacy. Peggy G. Kuehl, PharmD, FCCP, is Clinical Associate Professor and Community Pharmacy Coordinator, UMKC School of Pharmacy, and Director, Community Pharmacy Residency Program, UMKC. Yifei Liu, PhD, is Associate Professor, UMKC School of Pharmacy. Correspondence: Peggy G. Kuehl, PharmD, FCCP, UMKC School of Pharmacy, 2464 Charlotte Street, Kansas City, MO 64108. Fax 816-235-6008. E-mail [email protected] Disclosure: The authors declare no conflicts of interest or financial interest in any product or service mentioned in this article, including grants, employment, gifts, stock holdings, or honoraria. Previous presentations: American Pharmacists Association Annual Meeting and Exposition, New Orleans, LA, March 9-12, 2012, and Midwest Pharmacy Residents Conference, Omaha, NE, May 11, 2012.
Conclusion: Success of the ZOS program was demonstrated using both models. Certain factors correlated with greater profits when using the localized perspective model. Keywords: Herpes zoster, vaccination, pharmacist, community pharmacy, economic analysis. J Am Pharm Assoc. 2014;54:390–396. doi: 10.1331/JAPhA.2014.13140
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erpes zoster, commonly known as shingles, is a vaccine-preventable disease caused by reactivation of latent varicella zoster virus. According to the Centers for Disease Control and Prevention (CDC), approximately 50% of those who live to age 85 years will experience an episode of herpes zoster. This is equivalent to approximately 10 cases per 1,000 of the U.S. population older than 60 years, or an estimated 1 million cases, annually.1 Herpes zoster can cause significant long-term secondary complications including post-herpetic neuralgia, loss of sight, bacterial super-infection, and disfiguring scarring. CDC recommends routine vaccination of all persons 60 years of age or older with a single subcutaneous dose of 0.65 mL of the herpes zoster vaccine (ZOS).2 Although this vaccine has been available since 2006, only 20.1% of the eligible population reported having received it as of 2012.3 Pharmacists are in a unique position to provide ZOS because of their ease of accessibility and ability to bill prescription plans for administration of the vaccine. However, pharmacists often overlook their role in promoting vaccinations, perhaps because of time constraints, a focus on patient counseling, or unfamiliarity with vaccine recommendations.4 One strategy for vaccination promotion is personal selling, a process by which the pharmacist proactively
At a Glance Synopsis: This analysis of the economic impact of implementing a herpes zoster vaccine (ZOS) program compared the amount of expenses involved in supplies, labor, and promotion with postimplementation profits. Pharmacists and technicians from the 19 affiliated supermarket pharmacies involved in the study also self-reported the amount of time spent processing, preparing, and administering vaccines, and proactively discussing the program with patients. Net financial gains or losses were calculated for each vaccine administered using “broad” and “localized” perspective pharmacoeconomic models. Analysis: Declining third-party reimbursements, increasing drug costs, and the growing influence of government health care programs are driving community pharmacists to find new methods of generating revenue. A ZOS program provides a supplemental revenue stream while also meeting the public health needs of patients. The ZOS program was profitable overall. We propose using both broad and localized perspective economic models for comparisons of program success. Using a localized approach for internal comparisons provides a sense of actual cash flows and profits, while the broad perspective model allows for comparisons with other pharmacies.
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engages a patient in conversation about a desired intervention,5.6 removing any barriers the patient might have to receiving the intervention. A recent study reported that, when compared with a control pharmacy, patient commitment to receiving ZOS was 10 times greater in a pharmacy where personal selling was used.6 Beyond the public health benefits of an immunization program, it is important to analyze the associated economic benefits. Shrinking third-party reimbursements, increased drug costs, and the growing influence of government health care programs are all driving community pharmacists to seek new revenue sources.7 Wood et al. analyzed the financial implications of a ZOS program from the perspective of an independent pharmacy, reporting a net profit of $15.02 (8.15%) per dose administered.8 A study conducted in 2001 by Kamal et al. found that pharmacists in chain community settings were more willing to promote adult immunizations than were pharmacists in independent settings; however, chain pharmacists were also more concerned about liability and internal support.4 These factors may contribute to different rates of immunization delivery and profitability in independent versus chain community pharmacy settings.
Objectives Our first objective was to examine the economic impact (net profit or loss) of providing and administering ZOS in 19 affiliated supermarket pharmacies. Our second objective was to identify factors associated with increased rates of vaccine delivery. Analyzing these factors may help community pharmacists decide where to focus their efforts when implementing a vaccination program. Setting Ball’s Food Stores is a family-owned supermarket chain in the Kansas City metropolitan area comprising 28 grocery stores, 19 of which have pharmacies. Ball’s Food Stores is a self-insured company that provides diseasemanagement programs for its employees with diabetes mellitus and cardiovascular conditions. Other programs offered by the company include smoking cessation; immunizations, including a travel vaccine clinic; medication therapy management services; and health screenings. Influenza vaccines were first administered at one of the Ball’s Food Stores pharmacies in 2008, with expansion to all of the chain’s other pharmacies in 2010. That same year, two of the company pharmacies began offering ZOS, with the remaining 17 offering the vaccine in 2011.
Methods In all, 19 affiliated Ball’s Food Stores pharmacies in the Kansas City metropolitan area participated in this research from September 1, 2011, through January 31, j apha.org
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2012. The analysis was performed from the perspective of the pharmacy. The University of Missouri–Kansas City’s Social and Behavioral Sciences Institutional Review Board approved the study. For each pharmacy, we used the pharmacy dispensing database to determine the number of patients potentially eligible to receive ZOS and the number of vaccines ultimately administered during the study period. To be included in the study, patients had to have filled a prescription in the previous 90 days (June 1–August 31, 2011), be aged 60 years or older, and not have already received ZOS from a Ball’s Food Stores pharmacy. We also considered pharmacist and technician demographics, prescription volume, availability of freezers suitable for storing ZOS, and whether vaccines were administered as part of the pharmacy workflow or as a clinic offering. Because ZOS must be stored at specific freezer temperatures and is one of the only frozen medications used in Ball’s Food Stores outpatient pharmacies, not all locations had yet purchased appropriate storage equipment. Revenues and expenses were used to determine profitability, which was reported as net profit or loss for each ZOS administered—for each pharmacy and across the entire chain. Revenues were determined using the pharmacy dispensing database and included thirdparty payments as well as copayments and cash payments for provision and administration of ZOS. Direct pharmacy, direct nonpharmacy, and indirect costs were all considered.9 Expenses for vaccine and supplies were collected from the pharmacy wholesaler’s online ordering system; salary and benefits costs for pharmacists and technicians were obtained from the company’s payroll department; and overhead and selected marketing costs were obtained from the accounting department. Direct pharmacy costs Vaccine. ZOS (Zostavax—Merck) is a lyophilized powder in a single-dose vial that must be stored in a freezer at or below 5° F (-15° C) until reconstituted.10 The cost to the pharmacy of purchasing ZOS from its wholesale provider was included in determining direct costs. Labor. The median time reported by pharmacists and technicians to enter a prescription and bill for ZOS, as well as to prepare and administer the vaccine, was used to calculate labor costs. Pharmacists and technicians recorded the times spent per task on a log in their respective pharmacy, with average times for each individual reported to the study authors. Because of the wide variability in times reported, we decided to use median times for this analysis. Supplies. Supplies included gloves, cotton balls, alcohol swabs, bandages, syringes, sharps containers, and photocopies. Overhead. Store overhead was calculated as the percentage of total prescriptions dispensed that were ZOS 392 JAPhA | 5 4:4 | JUL /AUG 2 0 1 4
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multiplied by the store charge to the pharmacy for space and utilities. Direct nonpharmacy costs Marketing. All pharmacies employed brochures, window clings, overhead announcements, and comarketing with influenza vaccine to raise awareness of the availability of ZOS. Some pharmacies also used 22- by 28-inch floor signs located next to the dispensing window, listings in weekly grocery store advertisements (circular ads), and personal selling strategies. Marketing expenses are reported as either printing/advertising costs or the value of pharmacist and technician time dedicated to personal selling (factored as self-reported median time multiplied by salary plus benefits). Merck provided brochures, posters, and window clings at no charge. The costs associated with training in personal selling were not included in this analysis, as such training would have occurred regardless of our study. Indirect costs There were no indirect costs associated with the provision and administration of ZOS. We will refer to the economic model described above as the “broad” perspective model. This model considers all direct pharmacy and nonpharmacy costs, and is widely used in the pharmacoeconomics literature.11 However, because not all expenses were actually charged to the pharmacy, we propose use of an alternative “localized” perspective model that can provide a more realistic analysis for internal use. This model does not include the costs of circular ads, which were placed in store circulars on a space-available basis at no charge to the pharmacy; personnel time, as no extra personnel were hired to provide the vaccine; and pharmacy overhead, which was charged to the pharmacy regardless of ZOS administration. The breakeven point for each model was calculated as marketing costs divided by revenue per vaccine minus associated expense per vaccine. Bivariate correlations were used to explore the relationships between: (1) the rate of vaccine delivery (calculated as the number of vaccines given divided by the number of eligible patients at each pharmacy location) and circular ads, signage, personal selling, freezer availability, or clinic availability; (2) the profits as determined using the broad perspective model and circular ads, signage, personal selling, freezer availability, or clinic availability; and (3) the profits as determined using the localized perspective model and circular ads, signage, personal selling, freezer availability, or clinic availability. Only three marketing activities (circular ads, signage, and personal selling) were included because there was no variation in usage of other techniques across Journal of the American Pharmacists Association
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pharmacies. Descriptive statistics were reported for pharmacists’ and technicians’ characteristics.
Results In total, 662 vaccines were administered over the course of the study, resulting in 6.7% of all eligible patients receiving ZOS. Vaccination rates among the 19 Ball’s Food Stores pharmacies ranged from 0% to 75.7%. Table 1 displays the combinations of vaccine administration rates, marketing expenses, and profitability for each pharmacy. The ZOS program netted $6,354 using the broad perspective model and $18,783 using the localized perspective model. In the broad perspective model, the average profit per pharmacy was $335, and the average profit per vaccine was $9.60. In the localized perspective model, the average profit per pharmacy was $989, or $28.37 per vaccine (Table 2). Figure 1 displays the specific profit/loss per vaccine for each pharmacy using the broad perspective and localized perspective models. The breakeven point for the broad perspective model was 320 vaccines administered, while that for the localized perspective model was 14. Of the 49 pharmacists involved in the study, 59% had a PharmD degree, 96% were certified immunizers, and 57% had previous immunizing experience. Overall, immunizing pharmacists had an average of 2.4 years’
experience administering vaccines, and worked an average of 31 hours per week. Of the 41 technicians involved in the study, 12% had completed a pharmacy technician program and 24% were board certified. Technicians had worked at a pharmacy with vaccine services for an average of 2.4 years and worked an average of 30 hours per week. In addition to brochures, window clings, overhead announcements, and comarketing with influenza vaccine, 6 pharmacies employed circular ads, 13 used signage, and 5 employed personal selling (Table 3). The use of circular ads was significantly correlated with the rate of vaccine delivery (Pearson’s r = 0.5; P <0.05) and profits in the localized perspective model (Pearson’s r = 0.6; P <0.05). Additionally, personal selling and availability of a freezer suitable for storing ZOS correlated significantly with profits in the localized perspective model (Pearson’s r = 0.6; P <0.01 and Pearson’s r = 0.5; P <0.05, respectively). No factors demonstrated significant correlation with the profits seen in the broad perspective model.
Discussion Variability in the rates of administration and profitability across pharmacies can be attributed to pharmacist performance, marketing activities, and the presence of a freezer for storing the vaccine. The pharmacy with a 0% vaccination rate had a pharmacist-in-charge who was not willing to promote
Table 1. Profitability of providing zoster vaccine (ZOS) for broad perspective model Pharmacy no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Total
No. ZOS given 17 5 30 6 8 15 0 49 27 45 37 17 31 69 68 17 140 47 34 662
Revenues ($) 3,091 916 5,462 1,057 1,422 2,654 0 8,604 4,950 7,848 6,507 2,916 5,311 12,268 11,879 3,126 25,695 8,268 6,056 118,030
Expenses ($) Vaccine 2,525 743 4,457 891 1,188 2,228 0 7,279 4,011 6,685 5,496 2,525 4,605 10,250 10,101 2,525 20,797 6,982 5,051 98,339
Labor 150 44 264 53 70 132 0 431 238 396 325 150 273 607 598 150 1,232 413 299 5,825
Supplies 13 4 24 5 6 12 0 39 21 35 29 13 24 54 54 13 110 37 27 520
Overhead 22 6 42 7 13 21 0 79 38 62 56 28 50 88 112 25 242 94 60 1045
Marketing 35 0 0 0 0 0 0 35 281 35 35 0 217 1,452 752 559 1,424 559 559 5,943
Total expenses ($)
Profit (loss) ($)
2,745 797 4,787 956 1,277 2,393 0 7,863 4,589 7,213 5,941 2,716 5,169 12,451 11,617 3,272 23,805 8,085 5,996 111,672
345 119 675 101 143 262 0 741 363 635 562 200 142 (185) 262 (146) 1,889 183 61 6,354
Abbreviation used: ZOS, herpes zoster (shingles) vaccine. Journal of the American Pharmacists Association
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Figure 1. Profit/loss per vaccine by pharmacy: Broad v. localized perspective modelsf Table 2. Profits for broad and localized perspective models Broad perspective model ($) Mean (Range) Total Revenues 6,212 (0–25,695) 118,030 Expenses Vaccine 5,176 (0–20,797) 98,339 Supplies 27 (0–107) 520 Labor Pharmacist 295 (0–1,186) 5,610 Technician 11 (0–46) 215 Overhead 55 (0–242) 1,045 Marketing Store signage 20 (0–35) 385 Marketing with influenza 0.14 (0–1) 3 Circular ads 239 (0–1,224) 4,544 Personal selling 53 (0–280) 1,011 Total expenses 5,878 (0–23,805) 111,672 Profit (loss) 335 (–185 to 1,889) 6,354 Profit/vaccine 9.60 (5.7%)a Breakeven point (no. vaccines administered)
320
Localized perspective model ($) Mean (Range) Total 6,212 (0–25,695) 118,030 5,176 (0–20,797) 27 (0-107)
20 (0–35) 0.14 (0–1)
5,224 (0–20,943) 989 (0–4,572) 28.37 (18.9%)a
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The percentage was calculated as 100 ´ (total revenue − total expenses)/(total expenses).
a
or provide the vaccine; therefore, the pharmacy had no expenses associated with ZOS provision. The pharmacy with the highest vaccination rate (75.7%) was the only one listed in the first two circular ads as a Ball’s Food Stores location where ZOS was available, which helped attract many individuals who were not regular patients. 394 JAPhA | 5 4:4 | JUL /AUG 2 0 1 4
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This pharmacy also had the smallest number of eligible patients at the beginning of the study. These two factors combined to skew the vaccination rate as high at this location. This study shows that a ZOS program can provide a profitable revenue stream for pharmacies. ImplementaJournal of the American Pharmacists Association
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Table 3. Details of herpes zoster vaccine marketing by pharmacya Personal Pharmacy Circular ads Store signage selling 1 ❚ 2 3 4 5 6 7 8 ❚ 9 ❚ 10 ❚ 11 ❚ 12 13 ❚ ❚ 14 ❚ ❚ ❚ 15 ❚ ❚ ❚ 16 ❚ ❚ 17 ❚ ❚ ❚ 18 ❚ ❚ 19 ❚ ❚ a All pharmacies used window clings, brochures, overhead announcements, and comarketing with influenza vaccine.
tion of such a program enables community pharmacists to identify patients who are candidates for vaccinations, educate patients, resolve any barriers, and, ultimately, provide immunizations. Previous studies have shown that patients’ uncertainty about insurance coverage as well as whether or not their physician wants them to get the vaccine are major reasons for not receiving ZOS.5,12 Pharmacists can resolve these barriers by processing insurance claims, educating patients about their out-of-pocket expenses, and contacting physicians on behalf of patients to verify they should receive the vaccine. Unlike many physicians’ offices, community pharmacies often have suitable freezers for ZOS storage and are able to bill prescription plans for administration of the vaccine. In an earlier study, two of this paper’s authors reported success in implementing personal selling in one pharmacy.6 However, expanding this behavior change to pharmacists at four more pharmacies was not without challenges. This expansion required initial training, retraining, and consistent attention. It was also necessary to remind pharmacists and technicians of the process to follow, reinforce their vaccine decisions, recognize their successes, and provide weekly performance reports. Success of the ZOS program was demonstrated using both the broad perspective and localized perspective models, with the profit per vaccine averaging $9.60 (5.7%) and $28.37 (18.9%), respectively. With the broad perspective model, a profit was realized once 320 vaccines were administered; however, when expenses that were not actually charged to the pharmacy were reJournal of the American Pharmacists Association
moved to create the localized perspective, only 14 vaccines were required to make a profit. Compared with the study by Wood et al.,8 which reported a net profit of $15.02 (8.15%) per ZOS using the broad perspective model, the lower profit in our study was attributable to use of circular ads and their associated cost. An independent pharmacy such as the one described by Wood et al. may have had different dynamics than other community pharmacy settings, with patients and pharmacists living in the same community and having known each other for years. Additionally, the service innovator is often present in such a setting and thus available to continually motivate those around him or her to perform the new service. Comparatively, in a multisite setting, such as that of a grocery store pharmacy chain, the patient–pharmacist relationships may not be as strong and the service innovator cannot always be present. Achieving service success in a multisite setting requires buy-in from personnel at each site. While a broad perspective model that includes all direct and indirect costs allows results to be compared among different pharmacy types, a localized perspective model is more meaningful in this study, as it excludes expenses not charged to the pharmacy and therefore reflects actual cash flow. Pharmacy managers can use a localized approach to internally monitor the performance of a store for a specific health intervention (e.g., ZOS vaccination). By considering only the costs actually charged to the pharmacy, such an approach may result in a lower breakeven point, making a new service appear more feasible to initiate. Future studies should compare the two models across a range of pharmacy services to further assess the validity of the localized perspective model. For independent pharmacies and small chains, the number of vaccines needed to cover associated marketing expenses may exceed the needs of their patient population. Larger chains do not have this problem, as they have a larger patient base from which to draw. Our breakeven analysis shows how marketing costs can greatly increase the number of vaccines required to make a profit. Therefore, as the localized perspective model demonstrates, independent pharmacies and small chains can benefit by using marketing methods that do not incur extra costs and yet are correlated with increased vaccine administration, such as personal selling. In addition to freezer availability, the use of circular ads and personal selling both contributed to success of the ZOS program. As opposed to advertising’s nonpersonal presentation of products or services, personal selling focuses on one-on-one communication and is regarded as one of the most effective promotional methods.13 And, although personal selling took pharmacists’ time away from other activities, no extra personnel were needed. Accordingly, pharmacy managers may want to j apha.org
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consider supplementing the use of circular ads to generate patient awareness with personal selling during the actual patient encounter. Both personal selling and freezer availability were significantly correlated with profits using the localized perspective model, but not the broad perspective model. This suggests that the localized perspective model may recognize efficiencies within an organization, including the fact that the cost of one department can be covered by another. As pharmacy services and prescription volume grow, it may become necessary to add personnel. At that time, the costs of new personnel should be included, regardless of model used. Over time, the dynamics of the service provided in this study may change. Patients currently eligible for ZOS may receive the vaccine or die, shrinking the eligibility pool. At the same time, new patients become eligible for ZOS each year as they reach the recommended age for vaccination. Promotional efforts will need to continue, but their importance may diminish as patients become more aware of the immunizing capabilities of their pharmacists. Given the modest increase in number of patients nationwide who have received ZOS (from 14.4% in 2010 to 20.1% in 2012),3 it will likely be several years before the majority of eligible patients receive the vaccine.
Conclusion
Limitations
5. McDonough RP, Doucette WR. Using personal selling skills to promote pharmacy services. J Am Pharm Assoc. 2003;43:363– 374.
Several limitations of this analysis should be noted. Pharmacists did not consistently charge a cash administration fee when the service was not covered by insurance; therefore, some revenues were lost. Additionally, we used self-reported times for pharmacists and technicians to process, prepare, and administer vaccines and to perform personal selling. More accurate information could have been reported if researchers had timed these processes. This study was conducted in the Kansas City metropolitan area and involves costs, patient populations, and market factors that may not be applicable to other regions of the United States. We also may have overestimated the number of patients needing ZOS, as we were unaware of which patients had already received the vaccine elsewhere. However, if the number of potentially eligible patients had been smaller, the percentage of patients reached at each location would be higher. Programs seeking to replicate our success should remember that this analysis does not include the costs associated with training pharmacists and technicians to perform personal selling.
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The ZOS program was profitable overall for these affiliated pharmacies; however, there was wide variability in the number of vaccines administered and profits. We propose use of both broad and localized perspective economic models for external and internal comparisons. Use of the localized perspective model for internal comparisons provides a sense of actual cash flows and profits and may result in a lower breakeven point, making initiation of a new program more attractive. Finally, certain factors were identified that correlated with greater profits when using the limited perspective model. References 1. Centers for Disease Control and Prevention. Shingles (herpes zoster): clinical overview. www.cdc.gov/shingles/hcp/clinicaloverview.html. Accessed May 31, 2014. 2. Centers for Disease Control and Prevention. Prevention of herpes zoster: recommendations of the Advisory Committee on Immunization Practices (ACIP). MMWR Morb Mortal Wkly Rep. 2008;57(RR-5):1–30. 3. Centers for Disease Control and Prevention. Noninfluenza vaccination coverage among adults-United States, 2012. MMWR Morb Mortal Wkly Rep. 2014;63:95–102. 4. Kamal KM, Madhavan SS, Maine LL. Pharmacy and immunization services: pharmacists’ participation and impact. J Am Pharm Assoc. 2003;43(4):470–482.
6. Bryan AR, Liu Y, Kuehl PG. Advocating zoster vaccination in a community pharmacy through use of personal selling. J Am Pharm Assoc. 2013;53(1):70–77. 7. National Community Pharmacists Association. 2012 NCPA digest in-brief. www.ncpanet.org/pdf/digest/2012/2012_digest_ inbrief.pdf. Accessed May 31, 2014. 8. Wood HM, McDonough RP, Doucette WR. Retrospective financial analysis of a herpes zoster vaccination program from an independent community pharmacy perspective. J Am Pharm Assoc. 2009;49(1):12–17. 9. Meltzer, MI. Introduction to health economics for physicians. Lancet. 2001;358(9286):993–998. 10. Zostavax [package insert]. Whitehouse Station, NJ: Merck & Co., Inc.;2007. 11. Rascati KL. Essentials of pharmacoeconomics. Philadelphia, PA: Lippincott Williams & Wilkins; 2009. 12. Anonymous. The shingles vaccine: why hasn’t it caught on? The cost and other factors are to blame. Harv Health Lett. 2007;32(10):1–2. 13. Holdford DA. Marketing for pharmacists. 2nd ed. Washington, DC: American Pharmacists Association; 2007.
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Economic analysis of a herpes zoster vaccination program in 19 affiliated supermarket pharmacies Megan A. Hedden, Peggy G. Kuehl, and Yifei Liu
Abstract Objectives: To examine the economic impact of providing herpes zoster vaccine (ZOS) in 19 affiliated supermarket pharmacies in a midwestern metropolitan area from the perspective of the pharmacy and to identify factors associated with greater rates of vaccine delivery and profitability. Setting: 19 affiliated supermarket pharmacies in the Kansas City metropolitan area. Practice description: Immunizations with ZOS were expanded from 2 pharmacies to all 19 affiliated pharmacies. Various methods to promote the vaccine were used, including personal selling, store signage, and circular ads. Practice innovation: In addition to a broad perspective pharmacoeconomic model, a localized perspective model is proposed to determine profitability for the service. Factors associated with greater success in vaccine delivery and profitability were identified. Main outcomes measure: Net financial gains or losses were calculated for each vaccine administered for each of the 19 pharmacies and for the entire supermarket chain. Results: 662 vaccines were given during the study period, accounting for 6.7% of all eligible patients. The profit per vaccine averaged $9.60 (5.7%) and $28.37 (18.9%) using the broad and localized perspective models, respectively.
Received June 27, 2013, and in revised form December 24, 2013. Accepted for publication February 8, 2014. Published online June 22, 2014. Megan A. Hedden, PharmD, is Pharmacist-in-Charge, AuBurn Pharmacy, Eudora, KS; at the time of the research, she was Community Pharmacy Resident, University of Missouri–Kansas City (UMKC)/Ball’s Food Stores Price Chopper Pharmacy. Peggy G. Kuehl, PharmD, FCCP, is Clinical Associate Professor and Community Pharmacy Coordinator, UMKC School of Pharmacy, and Director, Community Pharmacy Residency Program, UMKC. Yifei Liu, PhD, is Associate Professor, UMKC School of Pharmacy. Correspondence: Peggy G. Kuehl, PharmD, FCCP, UMKC School of Pharmacy, 2464 Charlotte Street, Kansas City, MO 64108. Fax 816-235-6008. E-mail [email protected] Disclosure: The authors declare no conflicts of interest or financial interest in any product or service mentioned in this article, including grants, employment, gifts, stock holdings, or honoraria. Previous presentations: American Pharmacists Association Annual Meeting and Exposition, New Orleans, LA, March 9-12, 2012, and Midwest Pharmacy Residents Conference, Omaha, NE, May 11, 2012.
Conclusion: Success of the ZOS program was demonstrated using both models. Certain factors correlated with greater profits when using the localized perspective model. Keywords: Herpes zoster, vaccination, pharmacist, community pharmacy, economic analysis. J Am Pharm Assoc. 2014;54:390–396. doi: 10.1331/JAPhA.2014.13140
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H
erpes zoster, commonly known as shingles, is a vaccine-preventable disease caused by reactivation of latent varicella zoster virus. According to the Centers for Disease Control and Prevention (CDC), approximately 50% of those who live to age 85 years will experience an episode of herpes zoster. This is equivalent to approximately 10 cases per 1,000 of the U.S. population older than 60 years, or an estimated 1 million cases, annually.1 Herpes zoster can cause significant long-term secondary complications including post-herpetic neuralgia, loss of sight, bacterial super-infection, and disfiguring scarring. CDC recommends routine vaccination of all persons 60 years of age or older with a single subcutaneous dose of 0.65 mL of the herpes zoster vaccine (ZOS).2 Although this vaccine has been available since 2006, only 20.1% of the eligible population reported having received it as of 2012.3 Pharmacists are in a unique position to provide ZOS because of their ease of accessibility and ability to bill prescription plans for administration of the vaccine. However, pharmacists often overlook their role in promoting vaccinations, perhaps because of time constraints, a focus on patient counseling, or unfamiliarity with vaccine recommendations.4 One strategy for vaccination promotion is personal selling, a process by which the pharmacist proactively
At a Glance Synopsis: This analysis of the economic impact of implementing a herpes zoster vaccine (ZOS) program compared the amount of expenses involved in supplies, labor, and promotion with postimplementation profits. Pharmacists and technicians from the 19 affiliated supermarket pharmacies involved in the study also self-reported the amount of time spent processing, preparing, and administering vaccines, and proactively discussing the program with patients. Net financial gains or losses were calculated for each vaccine administered using “broad” and “localized” perspective pharmacoeconomic models. Analysis: Declining third-party reimbursements, increasing drug costs, and the growing influence of government health care programs are driving community pharmacists to find new methods of generating revenue. A ZOS program provides a supplemental revenue stream while also meeting the public health needs of patients. The ZOS program was profitable overall. We propose using both broad and localized perspective economic models for comparisons of program success. Using a localized approach for internal comparisons provides a sense of actual cash flows and profits, while the broad perspective model allows for comparisons with other pharmacies.
Journal of the American Pharmacists Association
engages a patient in conversation about a desired intervention,5.6 removing any barriers the patient might have to receiving the intervention. A recent study reported that, when compared with a control pharmacy, patient commitment to receiving ZOS was 10 times greater in a pharmacy where personal selling was used.6 Beyond the public health benefits of an immunization program, it is important to analyze the associated economic benefits. Shrinking third-party reimbursements, increased drug costs, and the growing influence of government health care programs are all driving community pharmacists to seek new revenue sources.7 Wood et al. analyzed the financial implications of a ZOS program from the perspective of an independent pharmacy, reporting a net profit of $15.02 (8.15%) per dose administered.8 A study conducted in 2001 by Kamal et al. found that pharmacists in chain community settings were more willing to promote adult immunizations than were pharmacists in independent settings; however, chain pharmacists were also more concerned about liability and internal support.4 These factors may contribute to different rates of immunization delivery and profitability in independent versus chain community pharmacy settings.
Objectives Our first objective was to examine the economic impact (net profit or loss) of providing and administering ZOS in 19 affiliated supermarket pharmacies. Our second objective was to identify factors associated with increased rates of vaccine delivery. Analyzing these factors may help community pharmacists decide where to focus their efforts when implementing a vaccination program. Setting Ball’s Food Stores is a family-owned supermarket chain in the Kansas City metropolitan area comprising 28 grocery stores, 19 of which have pharmacies. Ball’s Food Stores is a self-insured company that provides diseasemanagement programs for its employees with diabetes mellitus and cardiovascular conditions. Other programs offered by the company include smoking cessation; immunizations, including a travel vaccine clinic; medication therapy management services; and health screenings. Influenza vaccines were first administered at one of the Ball’s Food Stores pharmacies in 2008, with expansion to all of the chain’s other pharmacies in 2010. That same year, two of the company pharmacies began offering ZOS, with the remaining 17 offering the vaccine in 2011.
Methods In all, 19 affiliated Ball’s Food Stores pharmacies in the Kansas City metropolitan area participated in this research from September 1, 2011, through January 31, j apha.org
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2012. The analysis was performed from the perspective of the pharmacy. The University of Missouri–Kansas City’s Social and Behavioral Sciences Institutional Review Board approved the study. For each pharmacy, we used the pharmacy dispensing database to determine the number of patients potentially eligible to receive ZOS and the number of vaccines ultimately administered during the study period. To be included in the study, patients had to have filled a prescription in the previous 90 days (June 1–August 31, 2011), be aged 60 years or older, and not have already received ZOS from a Ball’s Food Stores pharmacy. We also considered pharmacist and technician demographics, prescription volume, availability of freezers suitable for storing ZOS, and whether vaccines were administered as part of the pharmacy workflow or as a clinic offering. Because ZOS must be stored at specific freezer temperatures and is one of the only frozen medications used in Ball’s Food Stores outpatient pharmacies, not all locations had yet purchased appropriate storage equipment. Revenues and expenses were used to determine profitability, which was reported as net profit or loss for each ZOS administered—for each pharmacy and across the entire chain. Revenues were determined using the pharmacy dispensing database and included thirdparty payments as well as copayments and cash payments for provision and administration of ZOS. Direct pharmacy, direct nonpharmacy, and indirect costs were all considered.9 Expenses for vaccine and supplies were collected from the pharmacy wholesaler’s online ordering system; salary and benefits costs for pharmacists and technicians were obtained from the company’s payroll department; and overhead and selected marketing costs were obtained from the accounting department. Direct pharmacy costs Vaccine. ZOS (Zostavax—Merck) is a lyophilized powder in a single-dose vial that must be stored in a freezer at or below 5° F (-15° C) until reconstituted.10 The cost to the pharmacy of purchasing ZOS from its wholesale provider was included in determining direct costs. Labor. The median time reported by pharmacists and technicians to enter a prescription and bill for ZOS, as well as to prepare and administer the vaccine, was used to calculate labor costs. Pharmacists and technicians recorded the times spent per task on a log in their respective pharmacy, with average times for each individual reported to the study authors. Because of the wide variability in times reported, we decided to use median times for this analysis. Supplies. Supplies included gloves, cotton balls, alcohol swabs, bandages, syringes, sharps containers, and photocopies. Overhead. Store overhead was calculated as the percentage of total prescriptions dispensed that were ZOS 392 JAPhA | 5 4:4 | JUL /AUG 2 0 1 4
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multiplied by the store charge to the pharmacy for space and utilities. Direct nonpharmacy costs Marketing. All pharmacies employed brochures, window clings, overhead announcements, and comarketing with influenza vaccine to raise awareness of the availability of ZOS. Some pharmacies also used 22- by 28-inch floor signs located next to the dispensing window, listings in weekly grocery store advertisements (circular ads), and personal selling strategies. Marketing expenses are reported as either printing/advertising costs or the value of pharmacist and technician time dedicated to personal selling (factored as self-reported median time multiplied by salary plus benefits). Merck provided brochures, posters, and window clings at no charge. The costs associated with training in personal selling were not included in this analysis, as such training would have occurred regardless of our study. Indirect costs There were no indirect costs associated with the provision and administration of ZOS. We will refer to the economic model described above as the “broad” perspective model. This model considers all direct pharmacy and nonpharmacy costs, and is widely used in the pharmacoeconomics literature.11 However, because not all expenses were actually charged to the pharmacy, we propose use of an alternative “localized” perspective model that can provide a more realistic analysis for internal use. This model does not include the costs of circular ads, which were placed in store circulars on a space-available basis at no charge to the pharmacy; personnel time, as no extra personnel were hired to provide the vaccine; and pharmacy overhead, which was charged to the pharmacy regardless of ZOS administration. The breakeven point for each model was calculated as marketing costs divided by revenue per vaccine minus associated expense per vaccine. Bivariate correlations were used to explore the relationships between: (1) the rate of vaccine delivery (calculated as the number of vaccines given divided by the number of eligible patients at each pharmacy location) and circular ads, signage, personal selling, freezer availability, or clinic availability; (2) the profits as determined using the broad perspective model and circular ads, signage, personal selling, freezer availability, or clinic availability; and (3) the profits as determined using the localized perspective model and circular ads, signage, personal selling, freezer availability, or clinic availability. Only three marketing activities (circular ads, signage, and personal selling) were included because there was no variation in usage of other techniques across Journal of the American Pharmacists Association
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pharmacies. Descriptive statistics were reported for pharmacists’ and technicians’ characteristics.
Results In total, 662 vaccines were administered over the course of the study, resulting in 6.7% of all eligible patients receiving ZOS. Vaccination rates among the 19 Ball’s Food Stores pharmacies ranged from 0% to 75.7%. Table 1 displays the combinations of vaccine administration rates, marketing expenses, and profitability for each pharmacy. The ZOS program netted $6,354 using the broad perspective model and $18,783 using the localized perspective model. In the broad perspective model, the average profit per pharmacy was $335, and the average profit per vaccine was $9.60. In the localized perspective model, the average profit per pharmacy was $989, or $28.37 per vaccine (Table 2). Figure 1 displays the specific profit/loss per vaccine for each pharmacy using the broad perspective and localized perspective models. The breakeven point for the broad perspective model was 320 vaccines administered, while that for the localized perspective model was 14. Of the 49 pharmacists involved in the study, 59% had a PharmD degree, 96% were certified immunizers, and 57% had previous immunizing experience. Overall, immunizing pharmacists had an average of 2.4 years’
experience administering vaccines, and worked an average of 31 hours per week. Of the 41 technicians involved in the study, 12% had completed a pharmacy technician program and 24% were board certified. Technicians had worked at a pharmacy with vaccine services for an average of 2.4 years and worked an average of 30 hours per week. In addition to brochures, window clings, overhead announcements, and comarketing with influenza vaccine, 6 pharmacies employed circular ads, 13 used signage, and 5 employed personal selling (Table 3). The use of circular ads was significantly correlated with the rate of vaccine delivery (Pearson’s r = 0.5; P <0.05) and profits in the localized perspective model (Pearson’s r = 0.6; P <0.05). Additionally, personal selling and availability of a freezer suitable for storing ZOS correlated significantly with profits in the localized perspective model (Pearson’s r = 0.6; P <0.01 and Pearson’s r = 0.5; P <0.05, respectively). No factors demonstrated significant correlation with the profits seen in the broad perspective model.
Discussion Variability in the rates of administration and profitability across pharmacies can be attributed to pharmacist performance, marketing activities, and the presence of a freezer for storing the vaccine. The pharmacy with a 0% vaccination rate had a pharmacist-in-charge who was not willing to promote
Table 1. Profitability of providing zoster vaccine (ZOS) for broad perspective model Pharmacy no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Total
No. ZOS given 17 5 30 6 8 15 0 49 27 45 37 17 31 69 68 17 140 47 34 662
Revenues ($) 3,091 916 5,462 1,057 1,422 2,654 0 8,604 4,950 7,848 6,507 2,916 5,311 12,268 11,879 3,126 25,695 8,268 6,056 118,030
Expenses ($) Vaccine 2,525 743 4,457 891 1,188 2,228 0 7,279 4,011 6,685 5,496 2,525 4,605 10,250 10,101 2,525 20,797 6,982 5,051 98,339
Labor 150 44 264 53 70 132 0 431 238 396 325 150 273 607 598 150 1,232 413 299 5,825
Supplies 13 4 24 5 6 12 0 39 21 35 29 13 24 54 54 13 110 37 27 520
Overhead 22 6 42 7 13 21 0 79 38 62 56 28 50 88 112 25 242 94 60 1045
Marketing 35 0 0 0 0 0 0 35 281 35 35 0 217 1,452 752 559 1,424 559 559 5,943
Total expenses ($)
Profit (loss) ($)
2,745 797 4,787 956 1,277 2,393 0 7,863 4,589 7,213 5,941 2,716 5,169 12,451 11,617 3,272 23,805 8,085 5,996 111,672
345 119 675 101 143 262 0 741 363 635 562 200 142 (185) 262 (146) 1,889 183 61 6,354
Abbreviation used: ZOS, herpes zoster (shingles) vaccine. Journal of the American Pharmacists Association
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Figure 1. Profit/loss per vaccine by pharmacy: Broad v. localized perspective modelsf Table 2. Profits for broad and localized perspective models Broad perspective model ($) Mean (Range) Total Revenues 6,212 (0–25,695) 118,030 Expenses Vaccine 5,176 (0–20,797) 98,339 Supplies 27 (0–107) 520 Labor Pharmacist 295 (0–1,186) 5,610 Technician 11 (0–46) 215 Overhead 55 (0–242) 1,045 Marketing Store signage 20 (0–35) 385 Marketing with influenza 0.14 (0–1) 3 Circular ads 239 (0–1,224) 4,544 Personal selling 53 (0–280) 1,011 Total expenses 5,878 (0–23,805) 111,672 Profit (loss) 335 (–185 to 1,889) 6,354 Profit/vaccine 9.60 (5.7%)a Breakeven point (no. vaccines administered)
320
Localized perspective model ($) Mean (Range) Total 6,212 (0–25,695) 118,030 5,176 (0–20,797) 27 (0-107)
20 (0–35) 0.14 (0–1)
5,224 (0–20,943) 989 (0–4,572) 28.37 (18.9%)a
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The percentage was calculated as 100 ´ (total revenue − total expenses)/(total expenses).
a
or provide the vaccine; therefore, the pharmacy had no expenses associated with ZOS provision. The pharmacy with the highest vaccination rate (75.7%) was the only one listed in the first two circular ads as a Ball’s Food Stores location where ZOS was available, which helped attract many individuals who were not regular patients. 394 JAPhA | 5 4:4 | JUL /AUG 2 0 1 4
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This pharmacy also had the smallest number of eligible patients at the beginning of the study. These two factors combined to skew the vaccination rate as high at this location. This study shows that a ZOS program can provide a profitable revenue stream for pharmacies. ImplementaJournal of the American Pharmacists Association
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Table 3. Details of herpes zoster vaccine marketing by pharmacya Personal Pharmacy Circular ads Store signage selling 1 ❚ 2 3 4 5 6 7 8 ❚ 9 ❚ 10 ❚ 11 ❚ 12 13 ❚ ❚ 14 ❚ ❚ ❚ 15 ❚ ❚ ❚ 16 ❚ ❚ 17 ❚ ❚ ❚ 18 ❚ ❚ 19 ❚ ❚ a All pharmacies used window clings, brochures, overhead announcements, and comarketing with influenza vaccine.
tion of such a program enables community pharmacists to identify patients who are candidates for vaccinations, educate patients, resolve any barriers, and, ultimately, provide immunizations. Previous studies have shown that patients’ uncertainty about insurance coverage as well as whether or not their physician wants them to get the vaccine are major reasons for not receiving ZOS.5,12 Pharmacists can resolve these barriers by processing insurance claims, educating patients about their out-of-pocket expenses, and contacting physicians on behalf of patients to verify they should receive the vaccine. Unlike many physicians’ offices, community pharmacies often have suitable freezers for ZOS storage and are able to bill prescription plans for administration of the vaccine. In an earlier study, two of this paper’s authors reported success in implementing personal selling in one pharmacy.6 However, expanding this behavior change to pharmacists at four more pharmacies was not without challenges. This expansion required initial training, retraining, and consistent attention. It was also necessary to remind pharmacists and technicians of the process to follow, reinforce their vaccine decisions, recognize their successes, and provide weekly performance reports. Success of the ZOS program was demonstrated using both the broad perspective and localized perspective models, with the profit per vaccine averaging $9.60 (5.7%) and $28.37 (18.9%), respectively. With the broad perspective model, a profit was realized once 320 vaccines were administered; however, when expenses that were not actually charged to the pharmacy were reJournal of the American Pharmacists Association
moved to create the localized perspective, only 14 vaccines were required to make a profit. Compared with the study by Wood et al.,8 which reported a net profit of $15.02 (8.15%) per ZOS using the broad perspective model, the lower profit in our study was attributable to use of circular ads and their associated cost. An independent pharmacy such as the one described by Wood et al. may have had different dynamics than other community pharmacy settings, with patients and pharmacists living in the same community and having known each other for years. Additionally, the service innovator is often present in such a setting and thus available to continually motivate those around him or her to perform the new service. Comparatively, in a multisite setting, such as that of a grocery store pharmacy chain, the patient–pharmacist relationships may not be as strong and the service innovator cannot always be present. Achieving service success in a multisite setting requires buy-in from personnel at each site. While a broad perspective model that includes all direct and indirect costs allows results to be compared among different pharmacy types, a localized perspective model is more meaningful in this study, as it excludes expenses not charged to the pharmacy and therefore reflects actual cash flow. Pharmacy managers can use a localized approach to internally monitor the performance of a store for a specific health intervention (e.g., ZOS vaccination). By considering only the costs actually charged to the pharmacy, such an approach may result in a lower breakeven point, making a new service appear more feasible to initiate. Future studies should compare the two models across a range of pharmacy services to further assess the validity of the localized perspective model. For independent pharmacies and small chains, the number of vaccines needed to cover associated marketing expenses may exceed the needs of their patient population. Larger chains do not have this problem, as they have a larger patient base from which to draw. Our breakeven analysis shows how marketing costs can greatly increase the number of vaccines required to make a profit. Therefore, as the localized perspective model demonstrates, independent pharmacies and small chains can benefit by using marketing methods that do not incur extra costs and yet are correlated with increased vaccine administration, such as personal selling. In addition to freezer availability, the use of circular ads and personal selling both contributed to success of the ZOS program. As opposed to advertising’s nonpersonal presentation of products or services, personal selling focuses on one-on-one communication and is regarded as one of the most effective promotional methods.13 And, although personal selling took pharmacists’ time away from other activities, no extra personnel were needed. Accordingly, pharmacy managers may want to j apha.org
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consider supplementing the use of circular ads to generate patient awareness with personal selling during the actual patient encounter. Both personal selling and freezer availability were significantly correlated with profits using the localized perspective model, but not the broad perspective model. This suggests that the localized perspective model may recognize efficiencies within an organization, including the fact that the cost of one department can be covered by another. As pharmacy services and prescription volume grow, it may become necessary to add personnel. At that time, the costs of new personnel should be included, regardless of model used. Over time, the dynamics of the service provided in this study may change. Patients currently eligible for ZOS may receive the vaccine or die, shrinking the eligibility pool. At the same time, new patients become eligible for ZOS each year as they reach the recommended age for vaccination. Promotional efforts will need to continue, but their importance may diminish as patients become more aware of the immunizing capabilities of their pharmacists. Given the modest increase in number of patients nationwide who have received ZOS (from 14.4% in 2010 to 20.1% in 2012),3 it will likely be several years before the majority of eligible patients receive the vaccine.
Conclusion
Limitations
5. McDonough RP, Doucette WR. Using personal selling skills to promote pharmacy services. J Am Pharm Assoc. 2003;43:363– 374.
Several limitations of this analysis should be noted. Pharmacists did not consistently charge a cash administration fee when the service was not covered by insurance; therefore, some revenues were lost. Additionally, we used self-reported times for pharmacists and technicians to process, prepare, and administer vaccines and to perform personal selling. More accurate information could have been reported if researchers had timed these processes. This study was conducted in the Kansas City metropolitan area and involves costs, patient populations, and market factors that may not be applicable to other regions of the United States. We also may have overestimated the number of patients needing ZOS, as we were unaware of which patients had already received the vaccine elsewhere. However, if the number of potentially eligible patients had been smaller, the percentage of patients reached at each location would be higher. Programs seeking to replicate our success should remember that this analysis does not include the costs associated with training pharmacists and technicians to perform personal selling.
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The ZOS program was profitable overall for these affiliated pharmacies; however, there was wide variability in the number of vaccines administered and profits. We propose use of both broad and localized perspective economic models for external and internal comparisons. Use of the localized perspective model for internal comparisons provides a sense of actual cash flows and profits and may result in a lower breakeven point, making initiation of a new program more attractive. Finally, certain factors were identified that correlated with greater profits when using the limited perspective model. References 1. Centers for Disease Control and Prevention. Shingles (herpes zoster): clinical overview. www.cdc.gov/shingles/hcp/clinicaloverview.html. Accessed May 31, 2014. 2. Centers for Disease Control and Prevention. Prevention of herpes zoster: recommendations of the Advisory Committee on Immunization Practices (ACIP). MMWR Morb Mortal Wkly Rep. 2008;57(RR-5):1–30. 3. Centers for Disease Control and Prevention. Noninfluenza vaccination coverage among adults-United States, 2012. MMWR Morb Mortal Wkly Rep. 2014;63:95–102. 4. Kamal KM, Madhavan SS, Maine LL. Pharmacy and immunization services: pharmacists’ participation and impact. J Am Pharm Assoc. 2003;43(4):470–482.
6. Bryan AR, Liu Y, Kuehl PG. Advocating zoster vaccination in a community pharmacy through use of personal selling. J Am Pharm Assoc. 2013;53(1):70–77. 7. National Community Pharmacists Association. 2012 NCPA digest in-brief. www.ncpanet.org/pdf/digest/2012/2012_digest_ inbrief.pdf. Accessed May 31, 2014. 8. Wood HM, McDonough RP, Doucette WR. Retrospective financial analysis of a herpes zoster vaccination program from an independent community pharmacy perspective. J Am Pharm Assoc. 2009;49(1):12–17. 9. Meltzer, MI. Introduction to health economics for physicians. Lancet. 2001;358(9286):993–998. 10. Zostavax [package insert]. Whitehouse Station, NJ: Merck & Co., Inc.;2007. 11. Rascati KL. Essentials of pharmacoeconomics. Philadelphia, PA: Lippincott Williams & Wilkins; 2009. 12. Anonymous. The shingles vaccine: why hasn’t it caught on? The cost and other factors are to blame. Harv Health Lett. 2007;32(10):1–2. 13. Holdford DA. Marketing for pharmacists. 2nd ed. Washington, DC: American Pharmacists Association; 2007.
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