The Business of Community Pharmacy

Nonprescription Retail Sales

Over the Counter Drugs

• Increased rate of OTC sales due to

  • Rising cost of prescription medications

  • High deductibles

Role of the Pharmacist

• Counsel patients on OTC use

• Only pharmacists can legally address questions about OTC drugs

Role of the Pharmacy Technician

• Help customers find the brand and types of medications

• Help customers understand the OTC product labels

• Cite FDA recommendations

  • No OTC cough and cold products <6 years old

  • Do not take for more than 7 days without consulting your doctor

  • No OTC drug is completely safe or without side effects

Restricted Sale of Certain OTC Products

• Pseudoephedrine

  • 3.6 g/day or 9 g/month

  • Smurfing

  • Logbook

• Schedule V drug sales must be documented (Robitussin with codeine)

  • 4 oz in 48 hours

• Purchases must be 18 years old and have an ID

Schedule V and Pseudoephedrine Logbook (Records kept for 2 years)

• The name and address of purchaser

• Date of birth of the purchaser

• Date of purchase

• Name and quantity of the drug sold

• And initials of the pharmacist handling or approving the sale

• Purchaser must sign for product

Complementary and Alternative Medicine

Complementary Medicine

A nonconventional treatment that is used together with conventional medicine

Alternative Medicine

A nonconventional treatment that is used in place of conventional medicine

Integrative Health

Practice of coordinating conventional and complementary approaches in a holistic manner that can include mental, emotional, spiritual, social, and functional aspects of a patient’s life.

• Nonconventional treatments

  • Natural products (homeopathic remedies, vitamins, minerals, dietary supplements)

  • Specialized diets

  • Acupuncture

  • Meditation

  • Massage Therapy

  • Yoga and pilates

  • Chiropractic manipulations

Dietary Supplements

• Vitamin, mineral, or herb considered useful for healthy nutrition, prevention of illness or alleviation or reduction of the symptoms of an illness

• Not regulated by the FDA, however, The FDA can remove a dietary supplement from the market for false advertising and if the supplement is deemed dangerous

• DSHEA (Dietary Supplement Health and Education Act) states that supplements must be safe and accurately labeled

• USP Verified means manufacturers have voluntarily submitted products to USP testing criteria for quality, purity, and potency

Vitamins and Minerals

• The portion of active substance is compared to the Daily Value (DV), which is the recommended level of intake of a certain vitamin or mineral

• International Unit (IU) is used to measure the amount of a substance and can vary from substance to substance

  • ex) 1 mg of Vit E = 1.21 IU

Herbal Medicinal Plants

• Regulated as dietary supplements rather than as drugs by the FDA

• Herbal medications are metabolized by the liver and therefore can cause side effects, allergic reactions, drug interactions, affecting the absorption, distribution, and elimination of drugs

• Ginger, garlic, and gingko can interfere with blood thinners. Should be discontinued a week prior to surgery.

• St. John’s Wort has many drug interactions; should not be used with antidepressants, birth control medications, anti-seizure meds, digoxin, warfarin, cyclosporine

• American Herbal Pharmacopeia (AHP) is a non-profit organization dedicated to researching, collating, and distribution information on herbals

• Echinacea: Boosts immune system

• Ginger: Relieves nausea, motion sickness

• Garlic: Antibacterial and antiviral effects; healthy cholesterol

• Gingko: Increases memory

Probiotics

• Works to build up the “GOOD’ microorganisms in the body, especially the good bacteria in the digestive system

• Ex) Culturelle, Align, Lactinex: strains of Lactobacillus and Bifidobacterium

• Can be used to help with diarrhea and vaginal yeast infections while on antibiotics; abdominal pain, cramping and bloating from IBS; may also help with skin conditions like eczema

Protein Shakes and Nutritional Supplements

• Who benefits?

• Use caution in diabetics due to high sugar content

• Protein sources include animal based (casein, milk, and whey) and plant based (pea, rice, and soy)

• Ensure

• Thick-It: Added to water, juices, tea, milk or protein shakes-assists in swallowing and digestion

Medical and Home Health Supplies and Equipment

• Durable Medical Equipment (DME): Reusable and long-lasting for ongoing needs; often prescribed by a doctor

  • Canes/wheelchairs/walkers

  • Blood pressure monitors

  • Glucose monitors

  • Nebulizers

  • Oxygen equipment

NOT DIABETIC TEST STRIPS

Test Kits

Help people diagnose conditions but they will need to confirm test results with a doctor

• Pregnancy

• Ovulation Cycle

• Covid

• Bladder Infection

• High Cholesterol

• Illegal Drug Use

• HIV (Human Immunodeficiency Virus)- OraQuick

Blood Pressure Monitors

• Sphygmomanometer” Blood pressure gauge and cuff similar to the ones used in the doctor’s office

• Also have digital monitors available which are often more user friendly

Respiratory Management Supplies

• Spacer Device - Delivers medication more effectively, esp. for elderly and young

• Peak Flow Meter - Measures one’s lung/breath capacity (breathing expirations) to assess the severity of their respiratory disease symptoms

• Nebulizer - Battery or electric-powered machine that turns asthma medicine into fine mist that is inhaled deep into the lungs to ease breathing; home nebulizers and medications can be billed to insurance and require prescriptions and diagnosis codes (ICD-10) for insurance coverage

Diabetic Supplies

• Glucometers - Blood sugar measuring device, will determine the level of glucose in one’s body, and therefore, how much insulin is needed for injection by the patient

• Test strips (disposable): Needed with each glucometer and are machine specific

• Lancets: Mini blades used to make sterile pinpricks in the finger to access blood to use with the test strips/glucometer

• Alcohol wipes

• Insulin syringes and needles (higher the gauge the smaller the width of the needle)

  • Pen needles: the least painful is the nano (4mm (1/6 inch), 32-gauge needle)

    Original 12.7 mm ½ inch; short 8mm 1/3 inch; mini 6mm ¼ inch and mini

Technicians can complete a special diabetes training, pass an examination, and become certified in patient education for patients with diabetes. This could lead to an increase in pay. Ex) Trained in special therapeutic footwear

Cash Register Management

• To collect payment from customers the price of every prescription, medical supply, OTC drug, supplement, and retail item is either scanned with a barcode to pull the price into the point-of-sale cash register system

• When a prescription code is scanned the system may automatically prompt the technician to offer the patient counseling by the pharmacist or identify that the pharmacist needs to speak with the patient regarding a prescription

• POS can also electronically keep record of the pseudoephedrine sales and purchases of Schedule V cough syrups; it will prompt you to get the additional information needed for these sales (proof of age, address, identification, and signature)

Taxable vs Nontaxable

State laws determine sales taxes

Taxable

• Generally, common retail merchandise are taxable

  • Common first aid items, OTC drugs, dietary supplements

Nontaxable

• FDA-approved prescription drugs for humans (not animals) and certain medically necessary supplies are federally exempt for states adding sales tax

• Tax-exempt medical supplies include disposable or consumable medical items (glucose test strips, nutritional drinks for diabetic pts), DME (canes, walkers, crutches, but not hospital beds), and prescribed devices (neck collars, ankle braces, slings, and wrist/arm braces)

Payment Options: Online

• Verified with a card-swiping monitor or chip reader for online transaction approval

• Expressed Pay Option: The customer puts their credit card on file to be processed automatically at the time of prescription filling

• Credit Card: Card acts as a loan; EMV chip (embedded computer chip)

• Debit Card: Instantly deducts the purchase cost from the customer’s bank account; pin number required; may process as a credit card with no pin number required

• Flex Card: A medical card for out-of-pocket medical expenses (according to the IRS)

  • Ex) Prescriptions, insulins, and OTC items written as prescriptions

Payment Options

• Cash

• Personal Checks

• Personal Charge Accounts and Delayed Billing

Accounting, Pricing, and Retail Math

• A community pharmacy must operate to make a profit in order to survive. They must have more income than expenses to continue to provide services.

• Technician responsibilities

  • Help ensure that inventory turns over and that insurance reimbursements and sales are greater than the expenses

  • Be aware of a drug’s AWP, the negotiated acquisition price, and the pharmacy markup percentage

Acquisition Costs and Pharmacy Reimbursements

• Acquisition Cost: The lower-than-retail price that a pharmacy purchases products from a wholesaler or supplier

• Average Wholesale Price (AWP): The average wholesale price that wholesalers charge pharmacies for a given drug, dose, and package size; AWP does not include discounts for the pharmacy’s volume purchasing, prompt payment, or rebates from pharmaceutical manufacturer’s for brand name drugs

• Dispensing Fee: Covers the pharmacy’s personal costs ($2.50 to $4.00 per prescription)

Estimating Insurance Reimbursements

AWP x reimbursement percentage rate + dispensing fee = reimbursement amount

• The lower the acquisition cost for a pharmacy the better the profit. Pharmacies need to purchase drugs at a price far below AWP as possible.

Markup and Profits

Markup is the difference between the store acquisition cost and the customer price. Pharmacy acquisition cost + markup = retail selling price

Retail selling price - acquisition cost = markup

• Gross Profit: Accumulation of sales markups; must cover the overhead expenses, or operating costs

• Net Profit: Money left after all expenses are paid

• Markup Percentage: The determined percentage of each sale that must go toward the operation costs and profit

• Markup Rate: Markup percentage divided by 100

• Markup % / 100 = Markup Rate

• Markup Rate x Acquisition Cost = Markup Price

• Acquisition cost + Markup price = Cash Price

Profitability and Productivity Reports

End-of-the-Day Report: Also known as the audit log provides an overview of the profitability of the pharmacy based on that day’s productivity. It documents the prescriptions filled, cost accrued, and payments made. List productivity of all staff, the AWPs, acquisition costs, selling prices, and profit for each prescription sold. The report is signed and dated by the pharmacist to be kept on file for future audits and as proof that the bullied drugs were dispensed to the patients.

Inventory Management

Inventory and Technicians

• Locate stock and label shelves

• Restock and rotate stock

• Document reorder levels

  • Periodic automatic replenishment (PAR)

  • Check expiration dates

  • Stocking prescription supplies

  • Check for recalls

Inventory

• The entire stock of pharmaceutical and retail products on hand

• Inventory Value is the total cost of the entire stock on a given day

• Periodic Automatic Replenishment Levels (PAR) is the minimum level when each stock item needs to be automatically reordered

• Excessive inventory ties up capital in the inventory so inventory levels must be adequate but not excessive, with a rapid turnover of drug stock on the shelf

Inventory Management

Inventory and Technicians

• Locate stock and label shelves

• Restock and rotate stock

• Document reorder levels

  • Periodic automatic replenishment (PAR)

• Check expiration dates

• Stocking prescription supplies

• Check for recalls

Purchasing: Acquiring products for use or sale

• Primary Wholesaler Purchasing: When pharmacies secure a contract with a wholesaler to be their primary supplier to receive the fastest moving products from a single source for the best negotiated price

• Prime Vendor Purchasing: An exclusive agreement made by a pharmacy with a wholesaler or warehouse for a specified percentage or dollar amount of purchases

• Just in Time Purchasing: Frequent purchasing in quantities that just meet supply needs until the next ordering time

Ordering

• Daily Orders: Assesses out-of-stock items, partial fills, and stock replenishment

• Special Orders: Usually seldom-stocked high-cost drug products

• “Pattern” ordering: Often seasonal ordering (summer- sunscreen, winter- flu/cough and cold)

Pharmacies usually have an inventory range - a maximum and a minimum number of units to have on hand

Minimum inventory - present inventory = minimum order amount

Processing an Order

• - Set of procedures to legally check in and accept the order

  • Verifying the correct number of totes have been received then sign the invoice from the wholesale representative

  • Totes arrived sealed and are separated into refrigerated items, CS and non-CS

  • RPH must verify CS and sign purchase invoice

  • Technician will match the pharmaceutical products received against the purchase invoice for the correct product items; must notify the wholesaler of any damaged or incorrectly shipped items

Drug Shortages occur if a drug is temporarily or permanently unavailable

This is usually due to:

1. Drug is on backorder

2. Being recalled by the manufacturer

3. Being discontinues

Let the pharmacist know and then he/she will determine the next steps to take

• Posting - process of updating inventory in the pharmacy software database and reconciling any differences between the new and current stock; checking NDC numbers, expiration dates and drug cost updates

• Stocking (shelving) - Make sure to rotate the stock (arrange so that the shortest exp date is in the front)

• Out of Stock (OOS) and partial fills - Pharmacist must verify and check all OOS and partial fill prescriptions

Out of Stock (OOS)

• Partial fill for non-controlled drugs

• Call prescriber to prescribe a therapeutic alternative you have in stock

• Find it for the patient at another pharmacy

• Completion fill ASAP

Drug Recalls, Returns, and Credits

• Recalls

• Return of declined medications

• Expired drugs

• Wrongly filled prescriptions

• Return of declined medications: must be in original condition to return

• Expired Medications: Partical credit given if returned before expiration date

• Wrongly filled prescriptions: Pharmacy must discard any drug returned in error; pharmacy cannot recover the financial loss

Drug Recalls

• Class I

  • Urgent, immediate danger

  • Patient notification required

• Class II and III

  • Moderate or no health risk

  • Pharmacist/retailer discretion

• FDA posts weekly reports

Controlled Substances

• Invoices kept separate

• CII ordered with 222 Form by a pharmacist either online or on paper

• Pharmacist must check in all CII orders

• Perpetual inventory record

• Biennial inventory: Occurs every 2 years

  • Must do en exact count on CIII, IV < V if the stock bottle is for a qty of 1000 or more

  • CII count must be within 4 days of the biennial date

  • A copy of inventory count must be sent online to the DEA, or original hard copy sent by mail

• Discrepancies reported to DEA

Return to Stock Report

• Prescriptions may not be billed, without patient receiving, for greater than 14 days

• At 14 days, prescriptions are returned to stock

• Kept in bottle with RTS label covering PHI

• NEVER pour pills back into stock bottle

Declined Medication and Returns

• Return of declined medications: Must be in the original condition to return to the wholesaler for credit

• Expired Medications: Partial credit given if returned before expiration

• Wrongly filled prescriptions: Pharmacy must discard any drug returned in error; pharmacy cannot recover the financial loss

Pharmacy Informatics and Computer System Health

Pharmacy Informatics: The use of computer systems and software, online processing, and technology for the integration of pharmacy-related data, information, expertise, and automation

Productivity Reports

• Compare staff time to prescriptions filled and other income-generating activities

  • Need to compare with safety reports

    • Do safety errors go up as productivity or softness of prescription filling goes up?

    • Does customer satisfaction go up as productivity increases?

Concerns of Security and Stability of Information Systems

• Data Security Issues: Viruses, data corruption, and hacking

• Backups (copies) of all data should be made by the main pharmacy computer at regular intervals; prescription records are usually backed up daily

  • Ex) Nightly backup on external hard drive that can be taken off site for safekeeping in an emergency

  • Electronic data storage and shared data information have offered great advantages in times of emergencies: fires, tornadoes, and floods

All pharmacy computer programs and automated technology must undergo software updates and upgrades.

• Software Update: Brings all information and programming of a currently installed program in line with the highest-functioning version available and the most current resource data

• Software Upgrade: New edition of the software product with improved and enhanced capabilities

Power and Data Backups for Emergencies

Pharmacies may need backup generators for power outages to keep prescription processing and billing going, lights on, computers going, cash registers operating, and refrigerators/freezers running. Drug stability also depends on temperature.