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5 Purchasing Tips That Could Save Pharmacies Thousands 

5 Purchasing Tips That Could Save Pharmacies Thousands 


March 30, 2021


As an independent pharmacy, everything revolves around inventory. As your biggest business expense, it’s also your best opportunity for the biggest savings. If you keep a few rules of thumb in mind, you can make smart purchasing decisions every time for the lowest possible cost of inventory. Use these five tips for strategic purchasing to save thousands a month and become a more profitable operation.

1. Master your inventory management

When it comes to ordering your pharmacy inventory, too much or too little can end up costing you. You should approach your inventory with a Goldilocks attitude and try to get things just right.

The drugs on your shelf are the costliest part of running your pharmacy, and if you buy too much at once, what you’re actually doing is tying up cash. Instead of sitting in your bank account, ready to be used when you need it, your money is sitting in pill bottles on your pharmacy shelves.

Drugs also have a limited shelf life, so when you order too much, you run the risk of them expiring, which prevents you from recouping your investment.

On the other hand, ordering too few drugs introduces a different kind of risk. When you understock, patients who normally come to you will have to go to a different pharmacy to get their prescription filled. It might cost you a sale that one time, or it could prompt patients to transfer all their prescriptions to a more reliable pharmacy.

You’ll also be placing orders more often when you buy too little, meaning you will incur more ordering and shipping costs.

To make sure you’re practicing the most profitable inventory control methods, ensure you have an accurate measure of your inventory and keep track of metrics like your inventory turnover rate.

2. Check credentials

When you fail to do your due diligence on suppliers, you could end up dispensing counterfeit or substandard drugs to your patients. Even if you’re saving money in the short term, in the long term, you’re putting your patients’ health and safety at risk.

A reputation for recklessness can certainly damage your business. And you also have a responsibility under the Drug Supply Chain Security Act to keep records and verify licensure, and if you fail to do so, you can face steep penalties.

To ensure you’re working with a reputable supplier, you should check to see if your supplier has Drug Distributor Accreditation, which means they’ve gone through a compliance review process conducted by the NABP.

Another sign a distributor is legitimate is if it is a member of the Healthcare Distribution Alliance (HDA), which ensures that suppliers are part of a direct supply chain that buys drugs directly from a manufacturer.

3. Find a reliable secondary

Don’t just measure your savings in money. Every hour you spend looking at catalogs of a dozen secondary suppliers trying to find the absolute best price, you’re losing money. And if a pharmacist does the ordering, you’re taking them away from patient-facing care. Plus, when you are searching for bargain-barrel prices, you may end up buying from a company that has a legitimate-looking website but is actually passing off substandard drugs. If a deal seems too good to be true, it probably is.

Instead of searching far and wide for the absolute best deals, keep your secondary purchasing limited to one or two reliable suppliers. If you choose your supplier wisely, you will be able to find everything you need online, get fast and convenient shipping options, and choose from a full line of generic, brands, and over-the-counter products.

BuyLine has all those perks and more. Their consistently low-priced full line of drugs come from a warehouse with Drug Distributor Accreditation, all with no contracts or commitments.

Like your primary wholesaler, BuyLine also rewards purchases with cash rebates and competitive discounts on brands. The more you spend, the more you get back.

4. Join a buying group

The terms of your pharmacy contract have a big impact on your overall cost of inventory. But as an individual independent pharmacy, you don’t have the same negotiating power that chain pharmacies do to get preferable terms.

That’s where a buying group comes in. When independent pharmacies join forces, the larger prescription volume at stake prompts wholesalers to court you with better incentives rather than taking your business for granted.

ProfitGuard®, an innovative group purchasing organization, has seasoned negotiators on staff to make sure independent pharmacies are getting contracts that suit their needs, whether that means negotiating a new deal or joining a buying group that’s already established a lucrative deal. They bid your pharmacy’s business out to multiple wholesalers, meaning they have to compete with each other to win over your business.

Many ProfitGuard pharmacies have achieved an average savings of 6 percent on their total prescription volume. For a pharmacy that has the NCPA-average cost of goods of $2,768,280, that’s a savings of $166,096 straight into your pocket.

5. Maximize your contract incentives

Wholesalers make a big profit when pharmacies buy generics, so they’ve built terms into your contract to incentivize you to buy them. When you take full advantage of those contract incentives, you can save thousands.

The most consequential incentive in your contract is likely your generic purchase volume. Most wholesaler contracts include tiered system that rewards rebates for generic purchases. The more generics you buy, the more money you get back. When pharmacies max out their generic compliance ratio every month, they could net average monthly rebates of around $17,500, for example.

Read Next: How to Maximize Rebates and Profitability on Pharmacy Inventory

To make the most of your contract incentives, you have to look at the big picture of your monthly purchasing. You may save money here and there buying cheaper drugs from secondary suppliers, but if those purchases cause you to miss out on a higher rebate tier, they’ll cost you in the long run.

The best way to make an informed decision about purchasing is to use a service like ProfitGuard, which provides a tool that optimizes your inventory purchasing. Using advanced proprietary technology, it continuously calculates your purchasing information, including every incentive and commitment in your wholesaler contract, and advises you on which NDCs to purchase from which suppliers so you can maximize your wholesaler rebates and take advantage of low prices.


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