Compounding Pharmacy Start-Up Costs

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Sparda29

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One of my friends told me he'd finance me for opening a pharmacy. I don't want to get involved in sterile compounding. Just creams, ointments, HRT, capsules, suspensions, suppositories. No eye drops or IVs. Do I have to join PCCA or Medisca or can I get the supplies on my own? Can it be done for under $150k?

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Wow, I take it your 2nd new job in the past month isn't working out?

But, to answer your questions, yes you can get suppliers on your own, it just easier and sometimes cheaper (considering you are inexperienced) to go with a group. Startup costs depend on so many things, but assuming you are in New York, I think you will need more than $150,000 to get started. And remember that the adage for small businesses is to expect not to turn a profit for 2 years (and remember for pharmacies, you probably won't be getting even your at-cost reimbursements for 6 - 9 months after submission.) Owning a pharmacy is really, really not something you just up and decide to do. Take 6 months to do some research, and you will have a better idea if pharmacy ownership is a direction you want to pursue.
 
Wow, I take it your 2nd new job in the past month isn't working out?

But, to answer your questions, yes you can get suppliers on your own, it just easier and sometimes cheaper (considering you are inexperienced) to go with a group. Startup costs depend on so many things, but assuming you are in New York, I think you will need more than $150,000 to get started. And remember that the adage for small businesses is to expect not to turn a profit for 2 years (and remember for pharmacies, you probably won't be getting even your at-cost reimbursements for 6 - 9 months after submission.) Owning a pharmacy is really, really not something you just up and decide to do. Take 6 months to do some research, and you will have a better idea if pharmacy ownership is a direction you want to pursue.

It's actually going well at the independent. The owner has been asking me if I'm interested ever owning my own store so I started thinking, and then my friend started talking to me about it and would be willing to finance the operation.

I know about the whole no profit for 2 years thing. I was actually thinking about not accepting third party at all. Just cash/credit and if the patient wants they can submit the paperwork themselves for reimbursement.

Location, do I really need to be in a busy area where the real estate value is high? Open door vs closed door pharmacy.

I'd have to find the doctors who like prescribing compounds.
 
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I can answer you this question regarding the location. I had compounding pharmacy rotation before at very isolated area in Brooklyn, almost end of the orange line. Pretty much a closed door pharmacy, coz I couldn't it on my first day of rotation. :p The main door is located behind the warehouse. -.-

They heavily depend on Fedex, UPS and/or USPS for delivery. So, we had to get stuff done before 4, then, they can pack and normally, these pick-up trucks will come around 5pm. Some pts live nearby can pick up by themselves. Also, they ship out-of-state like NV, TX, NJ, etc.

So, compounding pharmacy to me is like, a "closed-door" business. You won't see pts a lot. The sales teams will get business for you. Just pick up the orders and custom-made the products.
 
I can answer you this question regarding the location. I had compounding pharmacy rotation before at very isolated area in Brooklyn, almost end of the orange line. Pretty much a closed door pharmacy, coz I couldn't it on my first day of rotation. :p The main door is located behind the warehouse. -.-

They heavily depend on Fedex, UPS and/or USPS for delivery. So, we had to get stuff done before 4, then, they can pack and normally, these pick-up trucks will come around 5pm. Some pts live nearby can pick up by themselves. Also, they ship out-of-state like NV, TX, NJ, etc.

So, compounding pharmacy to me is like, a "closed-door" business. You won't see pts a lot. The sales teams will get business for you. Just pick up the orders and custom-made the products.

Already know about the delivery aspect of the business. I did a compounding rotation at a spot way out in Long Island, Exit 49 on the LIE. Pretty cool place, they had 10-15 delivery drivers go out to deliver (on top of the compounding business, they also had an LTC business).

I'm not hiring a sales/marketing team. I'd rather just cold call doctors or show up at their offices, drop off information pamphlets, etc.
 
I think $150k might be spreading yourself a little thin, unless you don't plan on drawing a salary while you wait for the business to build itself up. Sparda did you rotate through Joe Navarra's store? I've always felt the services offered through pcca are pretty invaluable and are well worth the money, but they have pricier chemicals compared to medisca, and being in NY you should be able to get overnight deliveries from Plattsburgh paying a ground shipping fee. $150k should definitely cover your chemicals, buildout, and equipment but wont leave you with much working capital.
 
I think $150k might be spreading yourself a little thin, unless you don't plan on drawing a salary while you wait for the business to build itself up. Sparda did you rotate through Joe Navarra's store? I've always felt the services offered through pcca are pretty invaluable and are well worth the money, but they have pricier chemicals compared to medisca, and being in NY you should be able to get overnight deliveries from Plattsburgh paying a ground shipping fee. $150k should definitely cover your chemicals, buildout, and equipment but wont leave you with much working capital.

Now that you dropped the name, yeah I had a couple of rotations at his store. I waited to take his rotation till the last month before graduation being that I'd be taking the compounding exam literally 5 weeks later.

I'm taking an offer from the independent pharmacy owner that I work for to be the supervising pharmacist at his new store. They do only 25/day right now, I guess I can use this as a chance to learn the independent pharmacy business as much as possible before possibly going for my own. It's in a nice area in NYC with a lot of foot traffic. The closest CVS is .6 miles away, closest Walgreens/Duane Reade is .75 miles away, closest Rite Aid is .39 miles away. No other independents in the area. In NYC, those are long distances.

I'm thinking about adding immunizations and compounding as services that this pharmacy would do, but I want to negotiate with the owner that I would take a 50% of the profit from those parts of the business and 50% profit for any growth that happens while I'm in charge there.
 
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I'd hold off until Congress passes/doesn't pass that new compounding bill.
 
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Now that you dropped the name, yeah I had a couple of rotations at his store. I waited to take his rotation till the last month before graduation being that I'd be taking the compounding exam literally 5 weeks later.

I'm taking an offer from the independent pharmacy owner that I work for to be the supervising pharmacist at his new store. They do only 25/day right now, I guess I can use this as a chance to learn the independent pharmacy business as much as possible before possibly going for my own. It's in a nice area in NYC with a lot of foot traffic. The closest CVS is .6 miles away, closest Walgreens/Duane Reade is .75 miles away, closest Rite Aid is .39 miles away. No other independents in the area. In NYC, those are long distances.

I'm thinking about adding immunizations and compounding as services that this pharmacy would do, but I want to negotiate with the owner that I would take a 50% of the profit from those parts of the business and 50% profit for any growth that happens while I'm in charge there.

Good for you, sounds like a great opportunity. I've always felt its best to learn mistakes on someone else's dime rather than your own.
 
I wish you the best of luck! I thought about this thread when I was reading drug topics the other day.

http://drugtopics.modernmedicine.co...ding-pharmacists-protest-express-scripts-cuts

Compounding pharmacists are concerned about Express Scripts’ decision to stop covering around 1,000 active compounded drug ingredients used by compounding pharmacies to create topical treatments.

Starting this week, Express Scripts is blocking coverage for the ingredients, citing rising costs. Over the past two years, the pharmacy benefits manager (PBM) has seen the number and cost of prescriptions for compounded medicines used for treating scars, wrinkles, and pain rise dramatically, The Wall Street Journal reported.

In fact, the average cost for each prescription rose from $90 to $1,100, and for around 12 medications, the actual cost soared more than 1,000%. As a result, Express Scripts said the amount spent by its clients for compounded drugs increased to roughly $171 million in this year’s first quarter, up from $28 million during the comparable period in 2012.

“We are taking a bold step to eliminate compounds that either have many less-expensive, clinically-equivalent, FDA-approved options, or compounds that have no clinical evidence for their use whatsoever,” David Whitrap, director of corporate communications for Express Scripts, told Drug Topics.

“We will take these actions while ensuring there is a pathway for patients who clinically need specific compounds to get these compounds as covered by their plan. Our approach to compounds will lower the treatment costs for employers by 95%, affecting just 0.6% of our member population,” Whitrap added.

Read more at
http://drugtopics.modernmedicine.co...ding-pharmacists-protest-express-scripts-cuts
 
I wish you the best of luck! I thought about this thread when I was reading drug topics the other day.

http://drugtopics.modernmedicine.co...ding-pharmacists-protest-express-scripts-cuts

Compounding pharmacists are concerned about Express Scripts’ decision to stop covering around 1,000 active compounded drug ingredients used by compounding pharmacies to create topical treatments.

Starting this week, Express Scripts is blocking coverage for the ingredients, citing rising costs. Over the past two years, the pharmacy benefits manager (PBM) has seen the number and cost of prescriptions for compounded medicines used for treating scars, wrinkles, and pain rise dramatically, The Wall Street Journal reported.

In fact, the average cost for each prescription rose from $90 to $1,100, and for around 12 medications, the actual cost soared more than 1,000%. As a result, Express Scripts said the amount spent by its clients for compounded drugs increased to roughly $171 million in this year’s first quarter, up from $28 million during the comparable period in 2012.

“We are taking a bold step to eliminate compounds that either have many less-expensive, clinically-equivalent, FDA-approved options, or compounds that have no clinical evidence for their use whatsoever,” David Whitrap, director of corporate communications for Express Scripts, told Drug Topics.

“We will take these actions while ensuring there is a pathway for patients who clinically need specific compounds to get these compounds as covered by their plan. Our approach to compounds will lower the treatment costs for employers by 95%, affecting just 0.6% of our member population,” Whitrap added.

Read more at
http://drugtopics.modernmedicine.co...ding-pharmacists-protest-express-scripts-cuts

Don't really plan on taking insurance though. From what I've seen at the other compounding pharmacies, plenty of the patients are willing to pay 100% out of pocket. That's the market I'm gearing towards, not the Medicare/Medicaid patients.
 
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One of my friends told me he'd finance me for opening a pharmacy. I don't want to get involved in sterile compounding. Just creams, ointments, HRT, capsules, suspensions, suppositories. No eye drops or IVs. Do I have to join PCCA or Medisca or can I get the supplies on my own? Can it be done for under $150k?
No, it's not enough. Initial inventory is already $20 k not including equipment and software license and membership dues..the bill racks up. You need at least $300 k
 
Already know about the delivery aspect of the business. I did a compounding rotation at a spot way out in Long Island, Exit 49 on the LIE. Pretty cool place, they had 10-15 delivery drivers go out to deliver (on top of the compounding business, they also had an LTC business).

I'm not hiring a sales/marketing team. I'd rather just cold call doctors or show up at their offices, drop off information pamphlets, etc.
It ain't that easy, pal. Trust me you'll crash and burn. Not everyone can do sales. You are a pharmacist. Stick to what you know best.
 
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No, it's not enough. Initial inventory is already $20 k not including equipment and software license and membership dues..the bill racks up. You need at least $300 k

Lab equipment I calculated to be around $7k.

Membership dues for what? Can't I just buy the drugs from the wholesaler?

Software license can't be much. Computers I can build myself for around $400 each, I can build the network connections too. Just have to have TimeWarner come in and give me the internet which is $15/month.
 
Lab equipment I calculated to be around $7k.

Membership dues for what? Can't I just buy the drugs from the wholesaler?

Software license can't be much. Computers I can build myself for around $400 each, I can build the network connections too. Just have to have TimeWarner come in and give me the internet which is $15/month.

We spent:

$50k on a clean room

25K on equipment

PCCA membership 13k

software needed : 10K

initial inventory: 50k

Our rolling inventory for compounding today: $200k and climbing

If you think you are gonna just walk into a doctors office be like, here are my phamplets blah blah blah...good luck. there are 20 other pharmacys doing that. If you hire a marketing company, you will get business.

The express scripts compounding management program affects all of us in the compounding business. It just got harder to find business but its out there. I would not take this compounding business lightly. It is expensive and you have a lot of competition. Cash or ins, there are tons of pharmacies doing it. You will crash and burn if you dont have enough capital and a marketing scheme to go with it.
 
my expenses do not include rent payroll and other expenses. just the bare minimum.
 
No, it's not enough. Initial inventory is already $20 k not including equipment and software license and membership dues..the bill racks up. You need at least $300 k

Lab equipment I calculated to be around $7k.

Membership dues for what? Can't I just buy the drugs from the wholesaler?

Software license can't be much. Computers I can build myself for around $400 each, I can build the network connections too. Just have to have TimeWarner come in and give me the internet which is $15/month.
We spent:

$50k on a clean room

25K on equipment

PCCA membership 13k

software needed : 10K

initial inventory: 50k

Our rolling inventory for compounding today: $200k and climbing

If you think you are gonna just walk into a doctors office be like, here are my phamplets blah blah blah...good luck. there are 20 other pharmacys doing that. If you hire a marketing company, you will get business.

The express scripts compounding management program affects all of us in the compounding business. It just got harder to find business but its out there. I would not take this compounding business lightly. It is expensive and you have a lot of competition. Cash or ins, there are tons of pharmacies doing it. You will crash and burn if you dont have enough capital and a marketing scheme to go with it.

I can take that out right away. I have no plans to do sterile compounding. No need for a clean room. The equipment I calculated out to 7k and that was being generous multiples of equipment.

Do I NEED that PCCA membership? Why can't I just go on Kinray or Cardinal or Belco and just order from them? Software, we already have multiple Micromerchant licenses.
 
Lab equipment I calculated to be around $7k.

Membership dues for what? Can't I just buy the drugs from the wholesaler?

Software license can't be much. Computers I can build myself for around $400 each, I can build the network connections too. Just have to have TimeWarner come in and give me the internet which is $15/month.


I can take that out right away. I have no plans to do sterile compounding. No need for a clean room. The equipment I calculated out to 7k and that was being generous multiples of equipment.

Do I NEED that PCCA membership? Why can't I just go on Kinray or Cardinal or Belco and just order from them? Software, we already have multiple Micromerchant licenses.

How are the laws in NY anyway? I know in OK you have to have a clean room to do any kind of compounding.
 
How are the laws in NY anyway? I know in OK you have to have a clean room to do any kind of compounding.

So you need a clean room for Magic Mouthwash? I assume most pharmacies do no compounding then?
 
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How are the laws in NY anyway? I know in OK you have to have a clean room to do any kind of compounding.

You only need a clean room to compound sterile compounds like IVs, chemo, and eye drops.

Capsules, suspensions, creams, suppositories can be prepared on a basic pharmacy bench.
 
You guys need to do more research. I'm operating a few and I can tell you that it's not that simple when it comes to determining the capital needed. Talk to a local compounding pharmacy and you will know. Don't sit behind a desk and crunch numbers. Just saying.
 
I thought you needed a laminar flow hood to make caps, those are a grand or more on their own. Plus the capsule machines, milling machines, suppository equipment, fridge/freezer, protective equipment, general lab equipment (scales, hot plates, beakers, etc), sanitizing equipment, I think it might add up to more than 7K

It also depends on how big you are trying to go. The compounding pharmacy I worked at has 5 hoods, 5 cap machines, and 2 milling machines. They do about 50 scripts a day that deals with caps and creams, 70-80 if they are busy.
 
I thought you needed a laminar flow hood to make caps, those are a grand or more on their own. Plus the capsule machines, milling machines, suppository equipment, fridge/freezer, protective equipment, general lab equipment (scales, hot plates, beakers, etc), sanitizing equipment, I think it might add up to more than 7K

It also depends on how big you are trying to go. The compounding pharmacy I worked at has 5 hoods, 5 cap machines, and 2 milling machines. They do about 50 scripts a day that deals with caps and creams, 70-80 if they are busy.
I might not be up to date on this, but I think you only need a hood for capsules if they are hazardous drugs.
 
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We spent:

$50k on a clean room

25K on equipment

PCCA membership 13k

software needed : 10K

initial inventory: 50k

Our rolling inventory for compounding today: $200k and climbing

If you think you are gonna just walk into a doctors office be like, here are my phamplets blah blah blah...good luck. there are 20 other pharmacys doing that. If you hire a marketing company, you will get business.

The express scripts compounding management program affects all of us in the compounding business. It just got harder to find business but its out there. I would not take this compounding business lightly. It is expensive and you have a lot of competition. Cash or ins, there are tons of pharmacies doing it. You will crash and burn if you dont have enough capital and a marketing scheme to go with it.
DO NOT FOLLOW THIS GUY'S ADVICE.

Hiring a marketing company and paying kickbacks to sales reps, doctors and patients for compounding prescriptions is illegal.

Pharmacist Pleads Guilty To Conspiracy To Pay Healthcare Kickbacks


Pharmacist Pleads Guilty To Conspiracy To Pay Healthcare Kickbacks
Tampa, FL – Acting United States Attorney W. Stephen Muldrow announces that Carlos Mazariegos (40, St. Petersburg) has pleaded guilty to conspiracy to commit healthcare fraud. He faces a maximum penalty of five years in federal prison.

According to court documents, Mazariegos was a licensed pharmacist who co-owned Lifecare Pharmacy in Pinellas County with his business partner, Benjamin Nundy. In 2014, Mazariegos, Nundy, and Dr. Anthony Baldizzi, a licensed physician, agreed that Lifecare would pay Baldizzi illegal kickbacks for prescriptions of compounded medications written by Baldizzi and filled at Lifecare. In May 2014, Mazariegos, acting on behalf of Lifecare, entered into a marketing agreement with Centurion Compounding Inc., a marketing firm located in Pasco County that employed sales representatives to market compounded medications, specifically creams for pain and scars, to beneficiaries of health care plans, especially TRICARE. These compounded creams typically ranged in price from approximately $900 to $21,000 for a one-month supply.

Between May and November 2014, Centurion directed patients that it had recruited and the physicians within its network to send all of their compounded creams prescriptions to Centurion. Centurion then transmitted these prescriptions to Lifecare to be filled. Mazariegos, Nundy, and the principals of Centurion agreed to pay illegal kickbacks to Baldizzi equal to approximately 10% of the after-cost amount of each claim paid by TRICARE and other health care benefit programs as a result of compounded medications prescriptions written by Baldizzi and filled by Lifecare, for Centurion-recruited patients. For example, in December 2014, Mazariegos wrote a check to a car dealership for $71,900, funded with the proceeds from the operation of Lifecare, to pay for a BMW for Baldizzi in partial satisfaction of the kickbacks owed to him.

Lifecare received approximately $5.3 million from TRICARE for claims made for compounded medications prescribed by Baldizzi resulting from this illegal kickback relationship. Mazariegos and Nundy also billed Medicare $1,064,729 for compounded medications that Lifecare made with bulk powder ingredients when they knew that Medicare only reimbursed for such medications when they were made using crushed tablets.

Nundy is scheduled to plead guilty to engaging in a conspiracy to commit healthcare fraud at a hearing on April 26, 2017.

A grand jury returned an indictment charging Baldizzi with conspiracy, healthcare fraud, receiving health care kickbacks, and engaging in illegal monetary transactions. The case is currently set for trial in May 2017.

This case was investigated by the Federal Bureau of Investigation, the U.S. Department Health and Human Services - Office of Inspector General, the Defense Investigative Service, the U.S. Air Force Office of Special Investigation, and the Drug Enforcement Administration. It is being prosecuted by Assistant United States Attorneys Mandy Riedel and Megan Kistler.

 
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DO NOT FOLLOW THIS GUY'S ADVICE.

Hiring a marketing company and paying kickbacks to sales reps, doctors and patients for compounding prescriptions is illegal.

Pharmacist Pleads Guilty To Conspiracy To Pay Healthcare Kickbacks

I mean, yes and no. On the off chance that someone comes in 3 years after Sparda did, there's a pretty solid message there besides not to imitate the whole Doctor M compounding scam: Most pharmacists suck at being salespeople. And if there's something that you can do legitimately that is profitable, there are probably five other pharmacists who are already doing it and have established relationships. You should absolutely not pay someone to go into doctors offices offering kickbacks or trying to pitch your wonderful lido 4% diclof 4% bupivicaine 2 % homeopathic 72x arsenic pain cream. But you also can't expect to build a business by reducing the use of a marketing team to "handing out some pamphlets detailing what you can do" and hoping they'll give you a chance. That's probably not going to work unless you're in the top 0.5% of charming pharmacists in the world - and nobody I have ever met on this board qualifies for that (except of course SHC1984, patron saint of pharmacy)
 
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WHOOOAAAAAA,

I can't believe he pled guilty.
Damb.

EDIT:

There seems to be a lot of money missing from that article.
Didn't Doctor M say he made 4x what any of us would make in a lifetime?
 
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I mean, yes and no. On the off chance that someone comes in 3 years after Sparda did, there's a pretty solid message there besides not to imitate the whole Doctor M compounding scam: Most pharmacists suck at being salespeople. And if there's something that you can do legitimately that is profitable, there are probably five other pharmacists who are already doing it and have established relationships. You should absolutely not pay someone to go into doctors offices offering kickbacks or trying to pitch your wonderful lido 4% diclof 4% bupivicaine 2 % homeopathic 72x arsenic pain cream. But you also can't expect to build a business by reducing the use of a marketing team to "handing out some pamphlets detailing what you can do" and hoping they'll give you a chance. That's probably not going to work unless you're in the top 0.5% of charming pharmacists in the world - and nobody I have ever met on this board qualifies for that (except of course SHC1984, patron saint of pharmacy)

B r u h.

I've doubled this pharmacy's volume just by being good looking and charming. Get outta town.
 
But you also can't expect to build a business by reducing the use of a marketing team to "handing out some pamphlets detailing what you can do" and hoping they'll give you a chance. That's probably not going to work unless you're in the top 0.5% of charming pharmacists in the world - and nobody I have ever met on this board qualifies for that (except of course SHC1984, patron saint of pharmacy)

The takeaway is that Doctor M lied about how easy it is to start a pharmacy from scratch (the vast majority of businesses started from scratch fail, and pharmacy is no exception.) Nor is having a marketing team any panancea, businesses with good marketing also fail, and quite likely Dr M's business would have failed even with the same marketing team, if the marketing team had stuck to legitimate business practices.

WHOOOAAAAAA,

I can't believe he pled guilty.
Damb.

He probably took a plea bargain to reduce the sentence he woud have otherwise faced.
 
I hear Wells Fargo is a good place to borrow start up costs, don't even have to pay them back. Just set aside some cash for the taxes after they write it off.


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