How many of your pharmacy customers have some sort of insurance? Ninety percent? In truth, it’s probably more than that with the adoption of the Affordable Health Care Act in 2010.
Since so many of your patients are insured, the pricing structure in your pharmacy doesn’t really matter, right? Many pharmacy owners believe this, but it’s not entirely true.
Yes, the PBMs do determine the maximum amount you will be paid for a prescription despite the price you’ve assigned to it. However, there are measures you can take when purchasing and pricing drugs that can increase your profit margins.
When purchasing from your pharmacy wholesaler:
Update your drug cost and average wholesale price (AWP) regularly
You can receive AWP price updates via two methods: automatic or manual.
If you’re receiving price updates manually, you will need to log in to your wholesaler websites, export their most recent price updates and upload them into your pharmacy software system. If you have the capability of EDI, updated pricing can be loaded directly to your system daily.
Either way you choose to receive it, it’s crucial to have the most recent price updates when purchasing inventory. Recent price updates allow you to compare wholesaler pricing and adjust to ensure that you’re getting the best deal on medications. The less you pay the better as long as your pricing is up to date.
Select a preferred source
You should be able to set up purchasing from more than one pharmacy wholesaler. Most pharmacies choose one of the big three -- McKesson, AmerisourceBergen, and Cardinal -- along with a one or more mid-major wholesalers or regional suppliers. Depending on your relationship with each wholesaler or your preferred buying group, you may get some medications from one source for much cheaper than another.
This is where a preferred source selection comes in handy. You select a preferred source in your pharmacy software system if you know that a certain wholesaler gives you a better deal on a certain medication every time. Perhaps your primary has excellent rebates on diabetic maintenance medications so you want to buy that medication from them each time.
This should speed up price checks on that particular drug, expediting your review of your purchase order before sending.
When pricing medications:
Start out with competitive prices
When starting fresh in a new pharmacy software system, setting up price codes can be a daunting task, especially if you’re unsure of what prices would be considered competitive for your area. Fortunately, there are companies like Net-Rx and Rx Net that offer services to get you competitive pricing.
Net-Rx, for example, will study your market and area to determine competitive pricing, discuss your business goals and desired profit margins, and work within your pharmacy software to develop price codes for your medications.
It may not seem worth it for the five or ten percent of customers that come into your pharmacy, but those customers have the option to take their business elsewhere. You don’t want to lose them to a big-box retailer because your prices are not competitive.
If you’re already an established pharmacy, it is critical that you take time and review your prices to ensure that you aren’t only priced too high but also that you are not priced below market value for a specific medication. Far too often we see pharmacies undervalue a prescription and the service that is provided with that medication.
Review U&C claims
We all know that payers don’t update their pricing as often as wholesalers or pharmacies do. (This is what makes the ability to reverse and resend claims so important to your bottom line.) Therefore, they may be paying based on an older price that is more than what you’re submitting.
Fortunately, your pharmacy software should be equipped with a way to show all payments that were paid at usual and customary. This means that you were reimbursed the exact amount of what you submitted.
When you review these claims you should check any medication paid at U&C for mistakes in your pricing. You might be undercharging or using the wrong pricing code. You don’t want to lose money because of a mistake that can be easily remedied.
When working on your pharmacy pricing strategy don’t forget that it’s important to evaluate how much you’re spending on your medication and well as how you’re pricing. Just by doing small things such as the tips given here, you can increase your profit on insured customers and make better connections with cash customers by offering them a competitive price on their prescription.