How One Pharmacy Saves Thousands on Its Cost of Goods

pharmacy cost of goods sold cost of inventory

When Huy Duong, owner of Dale’s Pharmacy in Fort Lupton, Colorado, discovered ProfitGuard, he couldn’t believe how long his business had gone without it. “What have we been doing all these years?” he asked. “It’s like it opened our eyes.”

ProfitGuard catapulted Huy’s pharmacy business by securing him a lower cost of inventory and optimizing his purchasing on the back end. “It really boosted our profit margins substantially, right out of the gate,” he said. “It was much more than I ever thought possible when enrolling in the program.”

Whether representing individual independent pharmacies or forming groups to leverage buying power, ProfitGuard® manages primary wholesaler negotiations to get pharmacies the best overall cost of goods. It also includes a proprietary purchasing optimization tool that maximizes rebates and profitability every day to ensure pharmacies are getting the full benefits from their contract.

In a market plagued by decreasing reimbursements and growing consolidations, Huy said ProfitGuard is the best solution for sustainability and success. “It’s the industry game changer for the independent pharmacy owner or operator,” he said. “There’s nothing out there like it on the market.”

Unprecedented negotiating power

With experience negotiating more than $12.8 billion in contracts for independent pharmacies, the experts at PBA Health guarantee contracts with better terms, rebates, and pricing. Besides bringing more than 30 years of pharmacy contract experience to the table, they also bid the pharmacies’ business across multiple national wholesalers to get a true market-competitive contract.

Huy said that for his group, ProfitGuard negotiators worked intensively with several wholesalers and through several revisions to secure a vastly improved contract for his pharmacy. “They went back and forth multiple times with competing wholesalers and listened to the wants and the needs of the ProfitGuard members in the group along the way,” he said. “They made sure we received the best deal possible, leaving nothing on the table.”

Without ProfitGuard’s group purchasing power, Huy said he wouldn’t have the leverage with wholesalers to get the cost of inventory he requires to remain competitive. “There’s no way I can stand alone, or for any member of our group to stand alone and get the deal we have collectively, together,” he said.

Tools to optimize inventory purchasing

With ProfitGuard, securing a better contract is only the beginning. Its purchasing optimization solution ensures pharmacies get the most out of their contract every single day. The pharmacy receives a daily purchasing report to guide inventory decisions based on all of its contract terms and incentives, as well as numerous other factors that can only be measured by ProfitGuard’s proprietary technology. The report identifies when a product should be purchased through the primary or secondary wholesaler or through a different manufacturer in order to get the lowest net cost of goods by the end of the month.

After using ProfitGuard for almost a year, Duong said he saw a substantial increase in cash flow. “Before ProfitGuard, I spent a lot of my time trying to keep an eye on changing drug prices, especially the ones where I was reimbursed below my cost,” he said. “ProfitGuard has given me a substantial pay raise for a minimal effort.”

With the daily Navigation report, Huy rests easy knowing he’s getting the best net cost of goods possible. “It gives me peace of mind and lets me know how well my staff is performing on the buy side,” he said.

If the pharmacy prefers to have the entire process automated, PBA Health can do that as well. Instead of receiving a report and manually inputting the recommended changes, PBA Health will make the switches and the pharmacy will simply receive the benefits.

Full-service warehouse

When members join ProfitGuard, they receive access to its NABP-accredited warehouse with a full line of pharmaceuticals. This additional option at Huy’s fingertips enables him to ensure he is getting the lowest prices and always has access to the products he needs during shortages. “I think between the two warehouses I can probably supply 99.9 percent of my inventory,” he said.

And it keeps his wholesalers accountable and competitive, he said. “It keeps both sides honest, makes both vendors compete each  and every day for my business. I don’t know anybody else who has that capability.”

And with the Navigation report, owners don’t have to figure out which supplier to purchase from because it calculates that for them automatically, ensuring they always get the lowest price.

Giving you complete control

From negotiations to purchasing, ProfitGuard gives owners complete control during every step of the process. Whether they want to be involved in every detail or don’t want to lift a finger, ProfitGuard allows them to choose their level of participation.

“I love the freedom that PBA Health gives pharmacy owners. They can be as highly involved as they want to be,” Huy said. “It’s up to every business owner to decide what business model is best for them.”

Continual innovation

ProfitGuard provides innovative solutions that pave the future to profitability, starting with its singular approach to competitive bidding and its unique in-house purchasing software. Huy believes that no matter what changes come to the industry, he’ll always remain ahead of the game with ProfitGuard.

“I like that my buying group continues to innovate and bring new products to market that benefit pharmacy owners,” he said. “If they can think of something they can do to better serve their members and pharmacy owners, they’re going to go for it. It’s a drive to never stop innovating and to keep moving forward.”

Even as it continues to develop solutions to tomorrow’s problems, Huy believes ProfitGuard has already set the standard in the market for independent pharmacies.

“This is a product that clearly gives me a distinct competitive advantage,” he said. “I don’t know anybody who offers what PBA Health is doing right now. Eventually people will see this and think, ‘Wow, why didn’t I use this before?'”


 

From the Magazine

This article was published in our quarterly print magazine, which covers relevant topics in greater depth featuring leading experts in the industry. Subscribe to receive the quarterly print issue in your mailbox. All registered independent pharmacies in the U.S. are eligible to receive a free subscription.

Read more articles from the December 2020 issue:

 


 

A Member-Owned Company Serving Independent Pharmacies

PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy-side of their business. Founded and run 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 warehouse 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.

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