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The Hidden Costs of Cheap Drugs (And a Better Way to Save Money on Pharmaceuticals)

The Hidden Costs of Cheap Drugs (And a Better Way to Spend Less on Pharmaceuticals) by Elements magazine | pbahealth.com


September 10, 2019


Inside: Don’t sacrifice quality and potential rebates during your search for cheap drugs. There’s a better and more lucrative way.

As the adage goes, “You get what you pay for.” Because your prescription inventory is the biggest expense your pharmacy faces, it’s easy to go down the rabbit hole in your search for cheap drugs.

But even though searching for the lowest price might seem like the financially prudent decision in the moment, you’ll inevitably face some trade-offs on your quest.

Read on to learn which pitfalls you need to watch out for and how you can really save money on your inventory.

What You Risk

When you prioritize acquiring cheap drugs over everything else, you are putting both your patients’ health and your pharmacy’s reputation at risk.

Even if they have the right names and labels, these medications could be contaminated.

Imported pharmaceuticals are especially risky. The international supply chain is rife with drugs that could be counterfeit, stolen, unapproved, or substandard in other ways. Since the U.S. doesn’t have the power to regulate drugs from other countries, it can be difficult or impossible to trace where they came from or how many hands they’ve passed through.

To combat these counterfeits, in 2013 Congress passed the Drug Supply Chain Security Act. These measures safeguard the integrity of the drug supply chain in the United States and protect your patients from substandard drugs.

However, because the supply chain is so complex, it’s important that you stay vigilant during your search for cheap drugs.

Credentials Matter 

Even if a pharmaceutical wholesaler has a state license, it doesn’t mean the drugs they are providing are legitimate. In 2012, counterfeit versions of Avastin and Altuzan were distributed by licensed wholesalers, adding up to $1 billion in fraud.

Because of this, you need to dig into wholesaler’s accreditation beyond just their state license.

Every pharmaceutical wholesaler you buy from should be certified as a Verified-Accredited Wholesale Distributor (VAWD). While criteria state licenses vary across the country, to be VAWD-certified, wholesalers need to pass the same stringent review process conducted by the National Association of Boards of Pharmacy (NABP).

To obtain VAWD certification, wholesalers will submit to a review of their operating procedures and policies, licensure verification, a survey of their facility, and screening through the NABP Clearinghouse.

In addition to VAWD certification, you can also look for wholesalers that are members of the Healthcare Distribution Alliance (HDA). HDA members buy pharmaceuticals directly from manufacturers, ensuring that the supply chain is secure. That means the drugs are safe for your patients.

To make sure you’re getting exactly what you’re paying for when you purchase cheap drugs, keep these things in mind:

 

What You Lose 

When you jump from one secondary supplier to another searching for the best deals, you may feel like you’re saving money. But you’re losing something else: time.

With patients to see, staff to train, books to manage, and a pharmacy to promote, your time is valuable. Don’t waste it trying to save a buck or two on every prescription you purchase.

Instead, buy consistently from one or two secondaries that you trust to give you consistently cheap drugs.

Consider these factors when deciding which secondary suppliers to work with:

 

Don’t Wreck Your Rebate

Hopping around secondary to secondary to find the best prices has more consequences beyond just wasting your time.

In your primary contract, there are all sorts of conditions and requirements that, if followed, result in rebates for your pharmacy. That means more money in your pocket at the end of the month.

The most notable of these rebates is the one rewarded for meeting a certain generic compliance ratio.

This is a tiered system. So, if 23 percent of your purchases from your primary are generics, you might get a rebate of 33 percent at the end of the month. But if your generic compliance ratio drops down to 20 percent, your rebate will drop to only 30 percent.

When you purchase outside your primary contract to save $50, you risk dropping down a tier on this rebate structure. That could mean a loss of thousands of dollars, and suddenly that $50 savings doesn’t seem like a good deal.

There are still reasons to purchase prescriptions from a secondary supplier, like if your primary is out of stock. And if your pharmacy is sitting comfortably in the top tier of the rebate structure, you can afford to occasionally buy discounted drugs from your secondary.

How to Actually Save Money 

In your search for quality medications, you don’t necessarily have to shell out for the highest prices. And you don’t have to shop around dozens of secondary suppliers to get the lowest price, either.

With a service like PBA Health’s ProfitGuard, you can get cheap drugs that you can trust, increasing your profit margins and ensuring your patients’ health.

ProfitGuard works to negotiate a better primary wholesaler contract than the one you have now–guaranteed. That means better prices on brand name drugs and specialty items and better rebates for hitting your generic compliance ratio.

Plus, when you need to buy something outside of your primary contract, ProfitGuard gives you access to PBA Health’s VAWD-certified warehouse. You won’t have to check every secondary wholesaler for the best price, because drugs from the PBA Health warehouse are always priced competitively, and you’ll know that they are safe for your patients.

You also get the perk of receiving ProfitGuard’s Navigation Report in your inbox. This daily email serves as a sort of GPS for your purchasing: it tells you where you’re at with generic compliance, all your other contract incentives, and when you can save money by buying from a secondary wholesaler–maximizing your profit and saving tens of thousands of dollars every month.

 


An Independently Owned Organization Serving Independent Pharmacies

PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy side of their business. The company is an independently owned pharmacy services organization based in Kansas City, Mo., that serves independent pharmacies with group purchasing services, expert contract negotiations, distribution services, and more.

PBA Health, an HDA member, operates its own VAWD-certified warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products.


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