Independent Pharmacy profitability

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Rakeless-rph

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SDN Pharmacy members, wondering anyone has any thoughts on independent pharmacy profitability. I came across a Inde whose gross profit is around 50% ? Is it possible ? This Inde offers compounding, LTC and retail to name some few, located in a good neighborhood 6 to 8% of their rx is compounding and average rx gross profit is $17. I believe when reimbursement was on AWP profit margin was handsome ; not these days. NCPA data suggests that average gross profit per rx is $11-12 (if i am not wrong). NCPA data also suggests average gross profit nationwide is in the range of 21-27%. Is this inde an outlier?

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Is it an outlier? Possibly. Like any other independent business, they have to have a niche market or they will fail quickly.

My BFF works at an independent in a small rural city that is doing quite well, but they also have a few LTC contracts and also sell, among other things, t-shirts and other memorabilia for schools in the region.
 
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Does "doing quite well" mean around 50% gross profit ?
 
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I have no idea, and don't think he does either. However, they do bring in enough money to pay their suppliers and employees.
 
I was dinking around, looking at a region where I have vacationed, and found a webpage for a small-town independent that, in addition to filling prescriptions, sold handmade jewelry on consignment; was the local Verizon dealer; and (are you ready for this?) had the local Radio Shack franchise. All this in a hole in the wall in the "business district"! You do what you have to.
 
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I thought radio shack went bankrupt.
 
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An independent in my hometown was kinda like that. She sold lots of 'local' merchandise on consignment (jewelry, local honey, handmade soaps, blown glass, you get the idea) in addition to medical supplies, custom orthotic shoes, oxygen tanks, all kinds of semi-random stuff (no radio shack license though, that is pretty wild).
 
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Yes, that's what i was questioning, especially now a days when PBM makes the money not the Pharmacist. According to the owner Compounding really can make the difference. Your other niche brings the traffic i.e. compounding, Ulta lab, 340 B, notary public etc. which eventually brings business. This owner's pharmacy is located in a very affluent neighborhood with a nearby Dermatologist (i.e. skin care items like anti-aging, anti-wrinkle stuffs); you know all the dermatologist believes available commercial products can't serve the purpose rather specially compounded dermatological creams, gel etc. will do the job. Moreover working form chain i know what horrible service they provide; i work in a 24 hour store, corporate do not provide adequate help; you know the drama; i feel bad for the patients; there is always a big line in my drive through. I don't understand why these patient come to chain rather they can go to the next door Indy where they get excellent service which Chains never can provide.
Anyway selling pills i.e. hctz or atenolol will not generate profit (reimbursement 2-5 cents more than acquisition cost) rather Pharmacists have to find other ways to generate business. These PBMs not saving money for the patients, some case study shows that these PBM's charge the insurance according to AWP but reimburse the pharmacy according to average acquisition cost; these frauds needs to be stopped; legally by legislation. Being a middle man without any professional input/expertise these chains/chain owned PBM's are making billions of dollars.
 
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Is it an outlier? Possibly. Like any other independent business, they have to have a niche market or they will fail quickly.
My BFF works at an independent in a small rural city that is doing quite well, but they also have a few LTC contracts and also sell, among other things, t-shirts and other memorabilia for schools in the region.
It all comes down to how dedicated the owner is.

Are you willing to attend every community event and show your face literally everywhere while still finding the time to build and keep relationships with doctors, nursing homes, hospice, rehab?
Are you willing to be on school boards, get a position with the chamber of commerce?
That's what the guy that signs my checks does.
They work around 70 hours a week.

I doubt they'd be able to do it if they had kids <18 years of age.

Also, compounding is going to come to an end.

The FDA is already moving to greatly restrict which drugs are available as bulk powders
 
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It all comes down to how dedicated the owner is.

Are you willing to attend every community event and show your face literally everywhere while still finding the time to build and keep relationships with doctors, nursing homes, hospice, rehab?
Are you willing to be on school boards, get a position with the chamber of commerce?
That's what the guy that signs my checks does.
They work around 70 hours a week.

I doubt they'd be able to do it if they had kids <18 years of age.

Also, compounding is going to come to an end.

The FDA is already moving to greatly restrict which drugs are available as bulk powders

I don't have much exposure to compounding, don't know/ have much updates, so are you telling FDA will restrict Estrogen, Progesterone, Testosterone, Sildenafil, veterinary products ?

I am planning to attend a PCCA compounding boot camp. Do you have any idea or resources where i can get updates on these regulations, i mean FDA ?
 
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It all comes down to how dedicated the owner is.

Are you willing to attend every community event and show your face literally everywhere while still finding the time to build and keep relationships with doctors, nursing homes, hospice, rehab?
Are you willing to be on school boards, get a position with the chamber of commerce?
That's what the guy that signs my checks does.
They work around 70 hours a week.

I doubt they'd be able to do it if they had kids <18 years of age.

Also, compounding is going to come to an end.

The FDA is already moving to greatly restrict which drugs are available as bulk powders

If the owner works 70s, is it worth it?
Is it better to be independent staff like you and make 140/yr at 40hr?
Or chain staff float 100/yr at 32hr?
Even 40 hrs feels like too much time working
 
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If the owner works 70s, is it worth it?
Is it better to be independent staff like you and make 140/yr at 40hr?
Or chain staff float 100/yr at 32hr?
Even 40 hrs feels like too much time working
"Even 40 hrs feels like too much time working"

You would like it working in Europe
 
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If the owner works 70s, is it worth it?
Is it better to be independent staff like you and make 140/yr at 40hr?
Or chain staff float 100/yr at 32hr?
Even 40 hrs feels like too much time working
I used to plan on owning a pharmacy until I got this job
 
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Why even bother with the pharmacy?

Gotta have a side of the business where I can process credit card payments and have a bank account. I'd set it up with two different corporations in the same building. Plus, I'd also want this pharmacy to have a legit old-school grill + soda fountain.

Potheads + Visine + homemade burgers/fries/soda ice-cream floats = $$$$



This is pretty close to what my dream business would look like.
 
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Once recreational marijuana becomes legal in NY, I'm opening a combo dispensary/pharmacy.

I live in Colorado and you never see the two combined. I imagine the regs for marijuana prohibit it. I imagine you might be able to get away with the grill but usually see food trucks outside the dispensaries.
 
lol, independent pharmacy is a joke. They will not exist unless there is a very unique niche they engage in. I'm going to exit the independent pharmacy world by 2025, if I can even make it that far. **** PBMs.
 
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Independent pharmacy can make it. But you need to buy from 2 buying groups; API (rxaap.com) or CPA(with AmeriourceBergen).

You're not going to sell much outside of traditional pharmacy(Benadryl and Motrin), Candy, Water, and Pop on the front end. If you're in an area that can sell tobacco, alcohol, and lottery tickets I would look into it.

In the pharmacy your breakeven will be 50-60 scripts per pharmacist. Only count on taking 10-15% of the local market.
 
"Even 40 hrs feels like too much time working"

You would like it working in Europe

Yeah i hear people work less there but have less excess. I do like me some excess sometimes.

I used to plan on owning a pharmacy until I got this job

If pharmacies dont make enough money for the effort what other hustles are ya looking into?

Independent pharmacy can make it. But you need to buy from 2 buying groups; API (rxaap.com) or CPA(with AmeriourceBergen).

You're not going to sell much outside of traditional pharmacy(Benadryl and Motrin), Candy, Water, and Pop on the front end. If you're in an area that can sell tobacco, alcohol, and lottery tickets I would look into it.

In the pharmacy your breakeven will be 50-60 scripts per pharmacist. Only count on taking 10-15% of the local market.

Are you proposing selling 300-360 weekly for a one pharmacist show is enough to breakeven while paying a rph with no help? I'm sure most one pharmacist independents do much more than this?
 
Yeah i hear people work less there but have less excess. I do like me some excess sometimes.



If pharmacies dont make enough money for the effort what other hustles are ya looking into?



Are you proposing selling 300-360 weekly for a one pharmacist show is enough to breakeven while paying a rph with no help? I'm sure most one pharmacist independents do much more than this?

No. Im saying that with the confidence you'll be working yourself.
 
I should say Independent pharmacy business is not dead; it might not be as good as before but still hope is there. As i mentioned as was working with the owner closely i noticed some tricks, like changing NDC to get better reimbursement, serving LTC, nursing home etc. Front end actually do not provide anything unless you are in a affluent neighborhood; high end vitamin is reasonable profit driver and on top of all compounding. As Ceti alpha said, FDA down the road will restrict compounding ( so far i know FDA is restricting " copy or essentially a copy" of a commercially available product; but changing strength i.e. viagra is a viable option, i think if you find a prescriber who will do this for you can help).
Anyway bottom line is indy is not gone if you can avoid PBM......actually i'm thinking seriously to have my own but finding a better location is the key.
 
I should say Independent pharmacy business is not dead; it might not be as good as before but still hope is there. As i mentioned as was working with the owner closely i noticed some tricks, like changing NDC to get better reimbursement, serving LTC, nursing home etc. Front end actually do not provide anything unless you are in a affluent neighborhood; high end vitamin is reasonable profit driver and on top of all compounding. As Ceti alpha said, FDA down the road will restrict compounding ( so far i know FDA is restricting " copy or essentially a copy" of a commercially available product; but changing strength i.e. viagra is a viable option, i think if you find a prescriber who will do this for you can help).
Anyway bottom line is indy is not gone if you can avoid PBM......actually i'm thinking seriously to have my own but finding a better location is the key.

Changing NDC to get better reimbursement... so yeah, that's called fraud and there's about 20 different attestations to different entities saying you won't do that. If OIG or payor requests an audit, start looking for a new job.

Serving LTC? It's possible but unlikely. Large players in that space AND if you want accounts, the owners almost always ask for kickbacks. Nursing homes are extremely picky and many of them want free "house supply" meds.

Front end sales can be more profitable than actual prescriptions. A single loser deal prescription from a 10-15 rx patient can wipe out all profit.
 
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I used to plan on owning a pharmacy until I got this job
cmon don’t be scared you’re a know
Changing NDC to get better reimbursement... so yeah, that's called fraud and there's about 20 different attestations to different entities saying you won't do that. If OIG or payor requests an audit, start looking for a new job.

Serving LTC? It's possible but unlikely. Large players in that space AND if you want accounts, the owners almost always ask for kickbacks. Nursing homes are extremely picky and many of them want free "house supply" meds.

Front end sales can be more profitable than actual prescriptions. A single loser deal prescription from a 10-15 rx patient can wipe out all profit.

lol change NDC and what may I ask are you dispensing? the new ndc or just collecting on the price difference. enjoy your inventory audit.

Yea LTC good luck hope you have deep pockets to get that going.
 
cmon don’t be scared you’re a know


lol change NDC and what may I ask are you dispensing? the new ndc or just collecting on the price difference. enjoy your inventory audit.

Yea LTC good luck hope you have deep pockets to get that going.

I don't understand what your post means
 
Guys I'm pretty sure he isn't saying "dispense the cheap NDC, but bill the expensive NDC" - there are still plenty of products out there (looking at you, Lovenox) that aren't MAC priced out and they still pay you at AWP - whatever%, so your spread is different on different NDCs. I actually had a desoximetasone recently that had one NDC with a copay of $20, and another A/B rated NDC with a copay for $240.
 
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Changing NDC doesn't mean necessarily i'm changing medication, changing manufacturer (of the same drug), tab to cap or vice versa (of course documenting on hard copy). I never said bill one NDC but dispense other. This profession is dying; we all know, eventually Rph ( MD's too) will be replaced by artificial intelligence or AI driven mechanism ,anyway that's different topic; but what i'm saying still in this market if you find a nice neighborhood where you can do compounding it can make a difference; but this kind of opportunity is extremely limited. The example i gave above, this pharmacy's gross profit is around 40% or so unless the owner is lying. My original post was to ask the pharmacist community whether this kind of profitability is possible or not.
 
Bump..

I would like to know the status of current independent scene from people who own or work for one. While I am not personally looking for one, but some of my friends are.

Can you survive without doing compounding or LTC contracts? Is it still doable?
 
Bump..

I would like to know the status of current independent scene from people who own or work for one. While I am not personally looking for one, but some of my friends are.

Can you survive without doing compounding or LTC contracts? Is it still doable?

We got nursing homes, assisted living facility and rehab center. Located in small town but pharmacy has 30 year history so patients are very loyal and friendly. CBD sells pretty well and otc items are decent and helping.

Ive seen and heard of people doing hit and runs with pharmacies where they figure what high reimbursement drugs and lure doctors to prescribe them. Such as topical creams for pain management. Insurances eventually find out and drop them or state board gets involved. Apparently, you can make alot of money this way for a few months but once you get busted, consequences is that you cant work in the pharmacy world anymore since no suppliers or insurances will provide services with your name attached.

50% profit sounds too good to be true. We’re hitting 15-20% on average with about 150-200 scripts a day. Im starting to get reimbursed on MTMs we worked on as well. This may all work since we’re not in the heat zone. Indies in big cities cant compete.
 
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Yeah I read on reddit too that CBD oil makes you lot of money. And it should really help that chains aren’t selling it at the moment.
 
Yeah I read on reddit too that CBD oil makes you lot of money. And it should really help that chains aren’t selling it at the moment.

Honestly, independent pharmacies arent doing all that bad. As long as you have the right formula, i think its the best job you can have as a pharmacist. If you do about 150 scripts per day (700-800 per week) with a couple of good techs and a clerk or two, you can run it pretty comfortably. Would be most ideal if you own the pharmacy and work as a pic, with a part time or prn when you want to be off.
 
Changing NDC doesn't mean necessarily i'm changing medication, changing manufacturer (of the same drug), tab to cap or vice versa (of course documenting on hard copy). I never said bill one NDC but dispense other. This profession is dying; we all know, eventually Rph ( MD's too) will be replaced by artificial intelligence or AI driven mechanism ,anyway that's different topic; but what i'm saying still in this market if you find a nice neighborhood where you can do compounding it can make a difference; but this kind of opportunity is extremely limited. The example i gave above, this pharmacy's gross profit is around 40% or so unless the owner is lying. My original post was to ask the pharmacist community whether this kind of profitability is possible or not.

If you're hitting 25% gross profit doing traditional retail/not doing a lot of specialty compounds, you're doing really well. Anything above 25%, you're either getting extremely lucky with some high margin fills/reimbursement, or something shady is going on and/or the RPh is exaggerating, imo.

My pharmacy is often top of my district typically when it comes to profit %, and we typically are in the 20-25% GP range. I dunno how a traditional model could get up as high as you're describing, other than a few huge outliers driving it up.
 
Pbm or not, many independent pharmacies fail the same way many small businesses fail. The owners and investors want to have an automatic cash cow with minimal efforts. I know, I know, it is not like pharmacy is going downhill because people don't know what they are getting themselves into. If I have a dime for everytime someone tells me he/ she wants to open a pharmacy because they "heard" it is easy mega profit, I could have bought myself out of pharmacy by now.
 
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LoL at people thinking independent is profitable. There are always exceptions and there are many different scenarios to consider.
 
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5 and 1/2 years of independent ownership and still here. Got my FFL a year ago and started selling guns, ammo and other sporting goods on the front end of my store. Every year it’s gets harder with the PBMs coming up with new ways to steal money.
 
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