Six Strategies to Help Pharmacies Stay Ahead of Inflation
December 12, 2023
Price inflation is a persistent challenge in the pharmacy industry, posing significant financial pressures on pharmacies and impacting patient access to affordable medications. As the cost of pharmaceuticals continues to rise, it is crucial for pharmacy professionals to proactively address this issue in order to ensure the sustainability of their businesses and the well-being of their patients. In this article, we will discuss strategies and best practices to help pharmacies get in front of price inflation and navigate this complex landscape.
1. Monitor and Evaluate Drug Pricing Trends: To effectively combat price inflation, pharmacies must closely monitor drug pricing trends. Stay updated with industry news, market reports, and regulatory changes that may impact pharmaceutical costs. Consider subscribing to pricing databases or utilizing technology solutions that provide real-time information on drug prices, including wholesale acquisition costs (WAC) and average wholesale prices (AWP). This knowledge will enable pharmacies to identify price increases early on and adjust their pricing strategies accordingly.
2. Optimize Purchasing and Inventory Management:
Efficient purchasing and inventory management practices can help pharmacies mitigate the impact of price inflation. Develop relationships with multiple pharmaceutical wholesalers and suppliers to access competitive pricing options. Negotiate favorable terms, such as volume discounts or extended payment terms, whenever possible. Implement inventory management systems that track medication usage, expiration dates, and demand patterns to optimize stock levels and minimize waste. By reducing excess inventory and avoiding overstocking, pharmacies can minimize the financial burden of price fluctuations.
Collaborating with influential partners in the pharmacy industry can significantly aid in your efforts to optimize reimbursement. Consider joining a Group Purchasing Organization (GPO) like Managed Health Care Associates, Inc. (MHA), which can provide access to negotiated discounts on pharmaceuticals as well as business and medical products and services vendors. These alliances can help pharmacies secure competitive pricing and cost-saving opportunities that directly counteract the effects of price inflation – up to a 3-5% COGs savings.1
Read more about the benefits of having The Right LTC Partner
3. Explore Generic and Therapeutic Substitution Opportunities: Generic medications and therapeutic substitution can offer cost-saving alternatives for both pharmacies and patients. Stay informed about the availability of generic equivalents for branded drugs and work closely with healthcare providers to identify opportunities for therapeutic substitution when appropriate. Educate patients about the benefits of generic medications, emphasizing their cost-effectiveness and equivalent efficacy. By actively promoting generic options, pharmacies can help mitigate the impact of price inflation and make healthcare more affordable for their patients. Net-Rx’s Brand/Generic Reimbursement Utilization report can help identify generic substitution opportunities, generic rate payments on Branded drugs, and evaluation of the appropriateness of DAW code usage. In a Net-Rx study it was identified that 65% of brands billed with a DAW 5 were paid at a generic rate. Utilizing a pharmacy technology partner like Net-Rx can provide resources and tools to help optimize financial performance.
4. Enhance Medication Adherence and Clinical Outcomes:
Improving medication adherence and clinical outcomes can positively impact pharmacy finances amidst price inflation. Participate in comprehensive medication therapy management (MTM) programs to ensure optimal use of medications and minimize wastage. Provide patient counseling services that focus on medication adherence, proper use, and potential cost-saving strategies. Implement refill reminder programs and explore automated prescription refill options to enhance patient compliance and reduce the risk of medication waste. Look for partners that offer performance-based solutions. As part of MHA’s Reimbursement Network, the only exclusive LTC Medicare Part D network in the country, the Comprehensive Medication Review Program provides industry-leading tiered compensation for medication reviews completed at admission, in-stay and/or during transitions of care for covered beneficiaries.
5. Advocate for Policy Changes and Collaborate: Pharmacy professionals can make a difference by advocating for policy changes that address price inflation in the industry. Join industry associations and organizations that advocate for fair pricing and improved access to affordable medications. Engage in grassroots efforts to influence legislative and regulatory decisions related to drug pricing. Collaborate with other healthcare stakeholders, including insurers, prescribers, and patient advocacy groups, to develop innovative solutions that address the underlying causes of price inflation. Check with your GPO or industry associations about their advocacy efforts and grass roots opportunities to educate your legislators.
6. Implement Revenue Cycle Management and Maximize Reimbursement:
To further strengthen your pharmacy’s financial resilience against inflation, it’s essential to focus on optimizing reimbursement and protecting cash flow. Implement a robust revenue cycle management (RCM) partner to enhance efficiency, maximize revenue, and ensure financial stability through their specialized knowledge and services. This partner should also proactively identify opportunities for optimizing reimbursement, such as exploring underutilized codes or identifying potential billing errors that could lead to under reimbursement. Furthermore, working with healthcare technology providers like Net-Rx can enhance your ability to maximize reimbursement. Net-Rx’s advanced solutions, can offer valuable insights into billing and reimbursement processes, helping you identify income leaks and areas where revenue can be optimized and protected. Such partnerships can be instrumental in navigating the complexities of price inflation and ensuring the financial sustainability of your pharmacy business. In 2022 Net-Rx helped recover $15.3 million with $73 million projected revenue increase for their customers.2
Price inflation poses significant challenges to the pharmacy industry, but proactive measures and a multifaceted approach can help pharmacies stay ahead of this issue. By monitoring drug pricing trends, optimizing purchasing and inventory management practices, exploring generic and therapeutic substitution opportunities, enhancing medication adherence, advocating for policy changes, and optimizing reimbursement, pharmacies can mitigate the impact of price inflation on their businesses and better serve their patients. Embrace a patient-centered approach, prioritize financial sustainability, and remain adaptable to the evolving landscape of pharmaceutical practice. With diligence and strategic decision-making, and leveraging expertise of industry partners, pharmacies can navigate the complexities of price inflation and continue to provide quality care while managing costs effectively.
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1 Based on 1Q23 MHA data
2 Jan-Dec 2022 analysis of Net-Rx EditRx customers
Joined Net-Rx in 2009
With over 20 years of pharmacy experience, Wanda’s extensive industry knowledge includes retail and long-term care pharmacy pricing, contracting, billing, reimbursement, analytics, and structuring technology platforms. As Product Lead, her skills play an essential role in her daily responsibilities to enhance and grow the Net-Rx portfolio of services and solutions. Wanda is passionate about helping pharmacies maximize their business growth, allowing the pharmacy to focus on patient care. She supports various positions from dedicated analysts, developers, product owners, and operations managers to ensure customer satisfaction and build trusting relationships with our customers, partners, and associates. Wanda lives in Central Washington and enjoys the region’s snow in the winter and heat in the summer. She is an avid animal lover, and enjoys watching football, camping, and spending time with family.