When expired products go unreturned, you leave money on the shelf. In an independent community pharmacy where every dollar counts, those expired drugs can add up fast.
That’s where a returns company comes in. Returns companies can help navigate the challenges of returning drugs for credit, and partnering with one will help you get the most out of your pharmacy’s expired products.
Some pharmacies don’t participate in a returns program because they don’t think it’s worthwhile, said Adrienne Vandergriff, director of sales at Return Solutions, a pharmaceutical reverse distributor. But expired products are worth money, and pharmacies are often surprised by the amount of credit they can get from manufacturers.
“Our average customer receives about $20,000 a year in credit from their returns,” Vandergriff said.
Easy returns, more money
Pharmacies that attempt to handle returns on their own will likely find that it’s not an easy process.
“It’s extremely difficult for pharmacies to return items themselves and get any kind of credit for it,” Vandergriff said.
An average return will include between 50 and 75 different manufacturers, she said. A pharmacy that does returns on its own would need extensive knowledge about manufacturers’ strict and widely varying return policies. These policies often differ from one manufacturer to another, and even from one drug to another. Not to mention many manufacturers won’t accept returns directly from pharmacies at all.
“Most pharmacies don’t have someone who can just sit and do nothing but returns all the time,” said Michael Ayres, president of Return Solutions. A returns company, on the other hand, has the expertise, infrastructure and manpower to accomplish returns more efficiently. “What we do in a few hours would take days, if not weeks, for somebody in a store to do,” he said.
Pharmacies that do try to ship expired drugs directly to manufacturers often run into logistical problems, such as shipping to the wrong manufacturer or even the wrong address. When this happens, the pharmacy loses out on the chance to receive credit, but Ayres said if a pharmacy uses a returns company and a mistake like this happens, the returns company will reimburse the pharmacy for lost credit.
Tracking credit is another challenge for pharmacies that try to handle returns on their own. Often pharmacies develop what Ayres calls an “out-of-sight, out-of-mind” mentality.
Ayres explained that this mindset occurs when pharmacies send in their expired products and get reimbursements from various manufacturers a little bit at a time. If they’re not carefully tracking the credits, then the pharmacy might not be getting all of the credit it’s due.
Returns companies help track these credits, and make sure your pharmacy receives the full amount manufacturers owe you.
Without a returns company, your pharmacy also runs the risk of violating environmental regulations by improperly disposing of expired drugs. “There are numerous environmental issues associated with doing returns and that risk is transferred to the returns company instead of the pharmacy,” Ayres said.
A returns company can also protect you legally. If the Drug Enforcement Administration or your state board of pharmacy audits your pharmacy, your returns company can provide documentation to show how your pharmacy legally and safely disposes of expired drugs.
Options for you
Typically, pharmacies have two methods for returning expired drugs when working with a returns company: mail-in or in-person consultation.
With a mail-in service, the pharmacy removes the expired drugs from the shelves every few weeks, inventories them online and ships them to the returns company themselves. An in-person consultation is when a representative from the returns company visits the pharmacy, goes through the shelves, removes expired products, inventories them and takes them away.
Both options have pros and cons. A mail-in service is usually less expensive, but you have to pull the expired drugs from your stock yourself.
“If you’re going to do a mail-in, you have to do a great job scanning the shelves,” Ayres said. This isn’t always an easy job, and often, when pharmacies try to pull items themselves, they miss expired items.
“It’s such a difficult and time-consuming task to actually look at every single bottle, look at the expiration date, and pull it off the shelves,” Ayres said. “A lot of times product is left on the shelves and it goes too far past the expiration date, so when pharmacies do eventually find it and send it to us, it’s too old to return for credit.”
With a returns company representative scanning the shelves, pharmacies get the benefit of a trained professional who knows manufacturers’ specific rules. The representative knows when to pull product to get you the most for your returns. This option also saves you the time of sorting through your inventory.
While the in-person service is typically more expensive, it’s also more helpful for pharmacies in states that require you to take an inventory of all of your expired drugs before you return them. Many states just require an inventory of controls. In both cases, the representative will complete the inventory of the expired products for you.
Returns companies also offer a less obvious, but valuable advantage—their advice.
You’ll get tips on how to get the most out of your returns, and how to improve your inventory management practices.
For example, Ayres recommends purchasing smaller quantity bottles. Manufacturers don’t accept partial returns, so when you only use some of the pills from a large bottle, the rest of the bottle is ineligible to receive credit. “If it’s a 500 count bottle and you use 50 tablets, and then it goes out of date, you just lost money on 450 tablets,” he said.
Also, wait to put prescription labels on products until the last possible minute. Manufacturers won’t issue credit for a product with a label on it, so if a product expires without a patient picking it up, you lose credit you could have gotten from the return.
Ayres also recommends not stocking large quantities of slow-moving products, and taking advantage of next-day delivery options to keep your inventory as efficient as possible. “You don’t need to stock a dozen bottles of one particular slow-moving item,” Ayres said.
With the expert advice and knowledge of a trusted returns company, you can improve your business by getting the most credit from your returnable drugs.
“It’s a significant financial way to add money back into the pharmacy,” Vandergriff said. “If you’re not doing returns, then you’re missing out.”
Questions to ask
When searching for a returns company for your pharmacy, here are eight questions to ask.
1. Is the returns company reputable?
2. Does the company have recommendations or partnerships with industry leaders that I trust?
3. Does the company require me to sign a contract, or am I free to end the service whenever I am unsatisfied?
4. Has the company been around long enough to understand the environmental, legal and economic complexities of drug returns?
5. Does the company innovate new solutions to improve the returns process?
6. Is the company trustworthy?
7. Does the company have the industry relationships necessary to get me the most for my returns?
8. Will the service get me the value I deserve for the price I want to pay?
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PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy-side of their business. Founded and owned by pharmacists, PBA Health serves independent pharmacies with group purchasing services, wholesaler contract negotiations, proprietary purchasing tools, and more.
An HDA member, PBA Health operates its own NABP-accredited secondary wholesaler with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products — offering the lowest prices in the secondary market.