Every independent community pharmacy owner is looking for ways to save time, offset reimbursement pressures and maximize profitability.
And that starts with your primary wholesaler contract. The deal you get determines how well you can buy, and ultimately how profitable you can be.
But negotiating with primary wholesalers, monitoring your contract and managing purchasing takes time, which most pharmacy owners don’t have enough of.
And, when you don’t have the time to ensure you’re getting a good deal, your pharmacy isn’t going to be as profitable.
ProfitGuard by PBA Health manages primary wholesaler contract negotiations to secure independent pharmacies with the best overall cost of inventory possible. The service also includes data analytics tools to help pharmacies regularly monitor and improve their purchasing. ProfitGuard aligns with primary wholesalers to improve pharmacies’ purchasing arrangements and the wholesalers get opportunities to win larger volumes of business.
ProfitGuard leverages buying power by forming regional groups of pharmacies. And, multiple national wholesalers bid on the group’s business, which promotes fair and balanced competition, and earns everyone a better deal.
Take a look at how three independent pharmacy owners use ProfitGuard to buy better.
Expert contract negotiation
ProfitGuard’s experts negotiate contracts for pharmacies to secure them with better pricing, rebates and payment terms on their primary wholesaler contracts.
Victor Law, R.Ph., chief pharmacist and president of Alpha Medical Pharmacy, Inc., which has three locations in Southern California, said it’s beneficial to have an expert who understands how a retail pharmacy functions negotiate on his behalf, as opposed to working with the wholesaler directly. “It’s easier for a third party to negotiate with wholesalers than to have the pharmacists directly involved,” he said.
Ron Jung, Pharm.D., CEO of Fox Drug Stores Inc., which has four locations in rural California, also stressed the importance of having an expert on his team. “The wholesaler could tell us it’s a good deal and have us sign, and we wouldn’t know the difference,” he said. “Now, someone is on your side negotiating and verifying versus you just taking what they offer.”
Jason Jung, CFO and COO of Fox Drug Stores, agreed and compared the wholesaler telling you it’s offering a good contract to the fox guarding the henhouse. “I could take your word for it, but now I’ve got somebody who’s objectively telling me it’s a good contract and comparing it with what they’ve seen elsewhere,” he said.
Selecting the right wholesaler
Once ProfitGuard forms a regional group of pharmacies, contract negotiations begin and multiple national wholesalers bid on the group’s business. After a thorough review and analysis of all negotiated offers, the group selects a wholesaler.
Law said he likes the negotiation process with ProfitGuard, particularly when the negotiators meet with all the individual owners in the group after receiving bids from the wholesalers. The experts give recommendations, and all of the owners discuss the terms to decide if they see any other grounds for negotiation or areas to improve.
Before signing the contract, each individual owner in the group gets to vote. “I think it’s a fair process, and it saves me the headache of dealing with so many different people myself,” Law said. “We don’t have the time to handle all of that, and ProfitGuard has done a good job on our behalf.”
Jason said he appreciates that ProfitGuard’s negotiators leverage their experience to get everyone a better deal.
For example, they know about features other independent pharmacies have asked for in their wholesaler contracts that may also benefit his pharmacies. “They can bring the idea to us and say, ‘Hey, do you want us to ask for this as well?’ and we can say, ‘Yeah, we’ve never thought about that; that is a good feature!’” he said.
Better pricing with ProfitGuard
Before switching to ProfitGuard, Ron said discounts and rebates were confusing and often hard to track. “It was the one thing missing in all the wholesalers we talked to,” he said. “Their individual contracts were nothing like what ProfitGuard offered, and that really piqued our interest.”
Jason said with drug prices changing so frequently, it’s difficult to find the time or resources to keep an eye on them. “Unless you sit there and review them every single time, you’re going to miss some potential cost savings,” he said. “That’s one of the problems ProfitGuard has helped solve for us. We can feel more confident now that we’re not going to miss that price change and blindly keep paying a higher price if we don’t need to.”
ProfitGuard also gives pharmacies access to the PBA Health warehouse as a quality secondary source of product, and uses that market knowledge to the pharmacies’ advantage.
“They’ve negotiated with the manufacturers and have gotten the price of the drug, so they can tell the prices being offered from the wholesaler are legitimate prices,” Jason said. “Now, we can validate these prices we’re being offered as fair prices.”
A time-saving solution
Independent pharmacy owners have a lot on their plates, and they shouldn’t have to sacrifice valuable time that could be spent caring for patients.
Ron recommends other independent pharmacies use ProfitGuard to gain a beneficial contract—and save time.“The owner is always too busy and has his hand in too many other fires,” he said. “It’s the last thing he takes
“The owner is always too busy and has his hand in too many other fires,” he said. “It’s the last thing he takes time to look at.”
Law said using ProfitGuard has helped save him the hassle of checking on pricing and product availability, and handling contract negotiations and bidding wars with wholesalers.
“They saved me all this time, so I can focus on patient care,” he said.
Law also has experience negotiating contracts, so he understands the benefits of using a service like ProfitGuard.
“You have a lot of problems to solve when you have a group of pharmacies buying together,” he said. “ProfitGuard solves these problems for me, so I can be available full time to fill prescriptions and network with doctors.”
Money-saving tools
After the group signs the primary wholesaler contract, the group gains access to ProfitGuard’s data analytics tools, which help pharmacies manage their purchasing.
Pharmacies can verify pricing by line item to ensure the wholesaler is paying the correct rebate amounts. They can also see how much they purchase on- and off-contract with the easy-to-read metrics. And, they’ll get money-saving recommendations on the products they purchase regularly.
Ron and Jason said they find the data analytics tools valuable, and they check them on a weekly basis.
“They’re giving us a good history of our data now, showing us our actual purchase patterns and purchase history,” Jason said. “They’re really starting to shine and show value.”
The tools allow pharmacies to optimize their rebates and make sure they’re purchasing correctly.
“Before, it was hard to calculate whether we were getting the right rebates and whether the prices were even correct before the rebate discount was applied,” Ron said.
He said that within the first two months of using ProfitGuard, they saved money by taking advantage of ProfitGuard’s recommendations. ProfitGuard also caught an accounting error, which resulted in a $1,800 additional rebate that the wholesaler had calculated incorrectly. “So, it already paid for itself for us,” he said.
Group power
Law’s favorite aspect of ProfitGuard is being part of a group.
“When you have a group, it’s easier to be more compliant, and you can all work toward the same goal together,” he said.
With ProfitGuard, wholesalers bid on the group’s business, which Law said results in a better contract.
“There’s no way you can negotiate a better contract by yourself than with a group,” he said. “The wholesalers are all very eager to sign with us because we stand for a lot of business to them. Before we were nobody, but now we are somebody.”
Law hopes to get the message across to other pharmacy owners that they should consider using ProfitGuard and gain the benefits of joining a group.
“The problem with independent pharmacists today is that we are not united,” he said. “Anytime you’re not united, you’re on your own, and you’re not as strong as with a group of people.”
By the numbers
You don’t have to just take it or leave it. ProfitGuard by PBA Health ensures independent community pharmacies get a better deal on their primary wholesaler contract. Here are the numbers to back it up.
$3.5 million – Average savings over the term of the negotiated agreement
27 percent – Average pharmacy profit margin with ProfitGuard
Source: PBA Health
Discover how ProfitGuard can improve the buy-side of your pharmacy business.
