Biometrics has the potential to save pharmacies billions of dollars per year, while increasing their earning potential with the ability to extend after-hours shopping. While the term biometrics may sound futuristic, the technologies already exist and should soon be seen in pharmacies nationwide. Biometric systems will benefit pharmacies like Walgreen Company (NYSE: WAG) and CVS Caremark Corporation (NYSE: CVS), as well as the technology providers like Medbox Inc. (OTCQB: MDBX) that develop and sell the technology.
Costs of Pharmacy Theft & Fraud
On May 15, 2012, New Jersey police responded to a call from the Rock Ridge Pharmacy at 6:45pm, where a man was attempting to fill a prescription for a narcotic drug. With the police having circulated information from similar incidents earlier, the pharmacist became suspicious, called the police, and the man was arrested after a short foot chase. After questioning, the man was charged with numerous felonies for using a stolen prescription pad and a stolen driver’s license to obtain prescriptions illegally.
All it took was a petty theft from a doctor’s office to set off a potential life threatening chain of events. The thief could have then turned around and sold prescription narcotics to individuals unaware of the drug’s side effects or potency. In 2010, there were 80,000 drug and alcohol related overdose deaths in the U.S., according to the Centers for Disease Control and Prevention’s WONDER database. Adding up all categories, the rate of reported overdoses in the U.S. more than doubled between 1999 and 2010, with about half of those coming from the “pharmaceutical” category. Of note is the fact that nearly three-fourths of the pharmaceutical deaths are opioid analgesics – that is, prescription painkillers like OxyContin and Vicodin.
Crimes like these have become commonplace in a world where the street price of prescription drugs like OxyContin can be as high as $65 to $80 per 80mg pill, making them more profitable for criminals to sell than many illegal drugs. In addition to outright fake prescriptions, many criminals also use “doctor shopping” techniques to acquire prescriptions by going to multiple doctors and pharmacies with the same prescriptions and ailments. Ultimately, frauds like these have added hundreds of billions of dollars each year to already rising healthcare costs.
Biometrics Offer Better Solutions
Biometrics solutions make it impossible for many types of prescription fraud to occur by verifying the identity of patients with fingerprints and digitally filling prescriptions. Some biometrics solutions, like Medbox’s suite of products, are also completely automated, removing the threat of pharmacists themselves being involved in the fraud. Reducing these types of frauds could not only help save pharmacies money, but also help them meet any existing or future regulatory requirements designed to reduce such illegal activity.
Interestingly, Medbox’s automated solutions can also help enhance revenues by enabling customers to access prescriptions or other retail products after normal pharmacy hours via an automated and secure dispensing machine. For example, pharmacy customers could upload their prescription to the pharmacy’s website, add products to the order, and then come and pick up the order at any time securely via the automated dispensing machine. The pharmacies have the added bonus of knowing their customer’s buying habits, and can cater coupons and promotions directly to the customer via this online ordering portal.
Looking at Medbox’s Product Line-Up
Medbox offers turnkey solutions to pharmacies that help control inventories, lower overhead costs, prevent fraud, guarantee compliance, and provide safe and easy access to patrons. The patented technology powers numerous products, including Medbox Machines, Safe Access Storage Lockers, Medbox Rx Lockboxes, Medbox OTC Machines, and Medbox “Sample-Safe” machines. These products target numerous end markets, including pharmacies, dispensaries, urgent care centers, drug rehab clinics, hospitals, prison systems, hospice facilities, and many others.
This exposure was enhanced in March when the company acquired a 50% stake in MedVend LLC, a Michigan-based biotechnology company that developed a patented, automated medicine-dispensing machine that is used for traditional prescription pharmaceutical dispensing. The remote pharmacy solution uses state-of-the-art video and e-scripting technologies to provide patients with remote, face-to-face consultation with a pharmacist to have their prescription medications filled in less than a minute.
Investors looking to capitalize on biometrics and its impact on the pharmacy industry have numerous options. Companies like Walgreen’s and CVS will certainly benefit from the long-term advantages of this automated technology, but with market caps of $47B and $72B respectively, their growth potential (and risk) is not as great as a smaller player like Medbox.
On April 10th, the company also announced that they have filed their Form 10 to become a fully reporting public company with the SEC. A licensing agreement with PVM International, Inc. that calls for exclusive rights to the issued patents was also mentioned in the press release, alongside four other pending patents at a cost of $1/year for the duration of the patent lives.
With Medbox setting record volume for any trading day in their history on April 23rd, it is apparent that investors are taking note of this company that has carved out a promising corner of this niche market.
For more information, please see the following resources:
Company Website (http://www.thedispensingsolution.com/)
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