E
ELEMENTS PRIVATE PROFIT Unlock your pharmacy’s front-end potential with private label products
PHARMACY LOANS 101 Learn the basics of getting a loan from the experts who lend them out
CBD: A Budding Opportunity Independent pharmacy’s complete guide to the profitable plant product sweeping the nation
VOL. 7 ISS. 4 | DEC 2018 | PBAHEALTH.COM/ELEMENTS
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CONTENTS ON THE COVER
18
FEATURE | CBD: A Budding Opportunity Cannabidiol (CBD) is producing prolific profits for retailers across the country. Discover everything your pharmacy needs to know about the profitable natural product.
DEPARTMENTS
07
NEWS | Digesting Pharmacy’s Future The 2018 Digest from the National Community Pharmacists Association (NCPA) reveals the struggles and success shaping independent pharmacy.
08
TRENDS | Scam Artists Rogue online pharmacies are taking advantage of vulnerable patients. Learn how your pharmacy can protect patients from dangerous scams.
10 FEATURE | CBD: A Budding Opportunity
RETAIL | The Fab Five Brick-and-mortar pharmacies can differentiate themselves from online pharmacies by engaging all five senses. Use these creative strategies to set your front end apart.
26
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SOLUTIONS | Pharmacy Loans 101 Taking out a loan can be risky and intimidating. Learn the basics of getting a pharmacy loan from the experts who lend them out.
26
SPOTLIGHT | Partner in Care Discover how one independent pharmacy thrives through unique partnerships with nonprofit organizations in the local community.
28
MONEY | Private Profit NCPA’s front-end specialist Gabe Trahan explains the key to making more money from your front end.
32
OUTLOOK | New Path to Purity USP 795 is getting a makeover. The new version will create more stringent requirements for water purity in reconstitution.
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
SOLUTIONS | Pharmacy Loans 101
3
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ELEMENTS
The business magazine for independent pharmacy
ON THE WEB Find more strategies, tips, and expert advice to improve your business at pbahealth.com/elements
VOLUME 7, ISSUE 4 DECEMBER 2018 PUBLISHER & EDITORIAL DIRECTOR Matthew Shamet EDITOR Greyson Honaker ART DIRECTOR
Here’s What Every Patient Wants in a Pharmacy Learn what a national pharmacy satisfaction survey reveals about what every patient wants most—and how your pharmacy can provide it. Read more at pbahealth.com/what-everypatient-wants.
Lauren Ruiz CONTRIBUTING WRITER Sarah Kelly
Is Owning a Pharmacy Profitable? Owning an independent community pharmacy requires a large investment—financially,
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physically, and emotionally. But is owning a
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pharmacy profitable? We’re here to help you find out. Read more at pbahealth.com/isowning-a-pharmacy-profitable.
7 Foolproof Methods to Maximize Medication Adherence Adherence improves patient health and independent pharmacy revenue. Discover the only methods you need to know to maximize medication adherence at your pharmacy. Read more at pbahealth.com/ maximize-medication-adherence/.
Follow Elements magazine on Facebook and Twitter for pharmacy business tips and advice, news announcements, industry Elements magazine is published quarterly by PBA Health. Copyright© 2018 PBA Health. All rights reserved. Neither this publication nor any part of it may be reproduced without written permission by PBA Health.
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NEWS
DIGESTING PHARMACY’S FUTURE The main takeaways from the 2018 NCPA Digest Check your pharmacy’s heartbeat against the pulse of the industry
BY THE NUMBERS Here’s a breakdown of the niche services independent community pharmacies provide to diversify their services today.
with the 2018 Digest from the National Community Pharmacists Association (NCPA). The yearly publication, compiled from surveys
SERVICES
2017
2016
Medication adherence/synchronization
88%
90%
Medication therapy management
79%
86%
America,” said NCPA CEO B. Douglas Hoey, Pharmacist, MBA.
Immunizations
70%
74%
“The Digest shows what makes community pharmacies
Home or worksite delivery
71%
71%
Blood pressure monitoring
57%
61%
Compounding
60%
62%
continue to find ways to thrive year after year. “Independent
Long-term care
45%
44%
community pharmacists have repeatedly demonstrated their
Diabetes training
35%
41%
of independent pharmacy owners, breaks down the struggles and successes shaping the profession. “The NCPA Digest is an annual barometer for independent community pharmacy owners to benchmark their pharmacy business against their peers and their competitors across
successful and distinctive.” Data from this year’s Digest tells of the endurance of independent pharmacy. Through thick and thin, independents
resilience and ability to modify and reinvent their practices,” Hoey said. “They zig when everyone else zags, and they will have to continue to do so.”
Source: 2018 and 2017 NCPA Digest
One of the trending “zigs” includes diversifying revenue with services like compounding, long-term care, immunizations, medication therapy management, and others. These additions come amid stagnant year-over-year revenue for independent
their value as providers. The local networks “reduce costs, drive
pharmacy, due to pressures that by now have become
improved health outcomes for patients, and provide a high level
commonplace: declining reimbursements, unpredictable
of care,” Hoey said.
DIR fees, generic deflation, and growing consolidations among
With or without a network, independent pharmacies need to
payers. These pressures have caused a slight drop in annual
continue offering services that set them apart and compete with
prescriptions and the number of independent pharmacies, which
the national players, including pharmacist-provided care, home
extends the downward slope from the past several years.
delivery, adherence packaging, and medication synchronization,
In light of stagnant revenue and increasing payer expectations for value-driven care, NCPA has been promoting pharmacy networks as the next adaptation to keep independents
Hoey said. “Staying behind the counter and waiting for business to walk into the pharmacy just doesn’t work anymore.” But improving business won’t be enough on its own. Advocacy
afloat. Community Pharmacy Enhanced Services Networks (CPESN)
efforts will need to pave a viable path to the future. And progress
are local networks of pharmacies that partner with health plan
on the political front depends on you. “Independents have to keep
sponsors to provide enhanced services to improve their quality
up the pressure, tell their stories, and make sure their voices are
of care and lower healthcare costs. “Parlaying their unique patient
heard,” Hoey said.
services into a network recognized by payers is not only the right
The future looks as bright as independent pharmacies make it.
thing to do,” Hoey said. “Based on the financials it’s the necessary
If they continue with their characteristic grit and ingenuity, they’ll
thing to do.”
keep on keepin’ on. “Independent community pharmacies continue
Enhanced networks that lower healthcare costs help propel pharmacies forward by appealing to payers and by proving
to lead the way in innovations that define the future of pharmacy practice—something community pharmacy owners already know.”
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
7
TRENDS show no regard for providing consumers with legitimate products with therapeutic value,” said Libby Baney, principal at Faegre Baker Daniels Consulting and senior advisor to Alliance for Safe Online Pharmacies (ASOP Global), a non-profit dedicated to protecting consumers around the world, ensuring safe access to medications, and combating illegal online drug sellers. “Demand for convenient, lower-cost medications has created a new economic incentive for criminals to manufacture and sell counterfeit drugs and prey on vulnerable populations.” Most patients don’t realize that 96 percent of online pharmacies operate illegally. Even more, most of them don’t suspect that their medication could come without the active ingredient. Or worse, that it could be tainted with acetone and mercury, among other dangerous ingredients. Patients who buy from online pharmacies also expose themselves to financial risk. While some scams profit from providing substandard or fake drugs, other scams profit from defrauding patients, selling personal information, or stealing identities, according to ASOP. “Partners throughout the healthcare delivery system, including independent retail pharmacies, should be aware of these risks and ready to direct patients to appropriate online resources and websites,” Baney said. As many patients’ most accessible healthcare provider, you can educate patients on the risks of buying medicine online and how to spot scams before it’s too late. SPOTTING RED FLAGS “Independent pharmacies should be aware of both the telltale signs of an illegal online pharmacy as well as prepared to discuss
SCAM ARTISTS How to protect your patients from online pharmacy scams
the risks of purchasing from these sites,” Baney said. Baney specifically warned against phony “Canadian” online pharmacies. These rogue pharmacies brand their websites with the red maple leaf but actually source their drugs from places like India, Turkey, and Southeast Asia. When patients buy from them, they often get nothing in return. Patients should also avoid pharmacies that don’t require a prescription, offer unbelievable prices, don’t have a licensed pharmacist available, or don’t have a physical address.
As drug prices continue to soar, patients are scrambling for
But patients don’t have to simply rely on red flags. “Thankfully,
affordable solutions. And they don’t have to look far to find
there are many ways for patients to check that they are buying
scintillating prices.
medicine from a legitimate source and ensure that they are staying
Tens of thousands of online pharmacies, which exist outside regulatory authority, lure patients with promises of quality
safe,” Baney said. Baney suggested checking domain names through LegitScript
medication for unbeatable prices. But these pharmacies’
or www.safe.pharmacy from the National Association of Boards of
low price tags may ultimately cost patients more than they
Pharmacy (NABP) and verifying that the domain name ends with
bargained for.
.pharmacy.
“Illegal online drug sellers place profits ahead of patients and
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ASOP provides several tools—including infographics, brochures,
BY THE NUMBERS and videos—that further outline the risks of illegal online pharmacies and provide patients with ways to stay safe. HELPING PATIENTS WITH COST Besides education, you can help your patients avoid online scams by addressing the source of the issue. Because low prices drive patients to online pharmacies, helping them financially will increase their chances of sticking with your pharmacy. A few ways you can help patients afford their medication include suggesting generic alternatives, offering payment plans, directing patients to helpful tools, or pointing patients to assistance services.
35,000+ ONLINE PHARMACIES OPERATING
Numerous programs exist to offer savings on prescription purchases, but many patients don’t know about them. NeedyMeds, a national nonprofit information resource, helps patients locate both private and state assistance programs. Blink Health offers patients discounted prices on thousands of medications that patients pay for online and then fill at the pharmacy. And most manufacturers offer some form of assistance programs to patients who qualify, including instant discounts and mail-in rebates. ASOP also offers money-saving resources. “Advocacy groups like the Alliance for Safe Online Pharmacies are a great resource for patient information and links to cost-saving coupons and discount programs that can help patients protect themselves from scams,
96% ONLINE PHARMACIES THAT ARE ILLEGAL AND UNSAFE
save money, and stay safe,” Baney said.
TELLTALE SIGNS OF PHARMACY FRAUD
1M DEATHS EACH YEAR WORLDWIDE FROM FAKE MEDICINE
Avoid online pharmacies if you spot these signs. • Does not require a valid prescription from a healthcare provider • Offers “too good to be true” prices or “buy more, save more” deals • Does not have a licensed pharmacist available on staff for consultation • Ships prescription drugs from other countries into the United States • Does not have a physical street address Source: Alliance for Safe Online Pharmacies
<5% PEOPLE KNOW HOW TO FIND SAFE PHARMACY SITES ONLINE
Source: Alliance for Safe Online Pharmacies
RETAIL
THE FAB FIVE How to set your front end apart by engaging all five senses
What keeps customers coming to your front end? Is your price lower than your online and mail-order competition? Do you have a broader product selection? Do you take orders in the late evening and weekends? Most independent pharmacies don’t have the resources to compete with online retailers and pharmacies in convenience and price. But your brick-and-mortar locations enable you to
as assortment planning and placement, retail execution strategy, fixture coordination, item database management, brand marketing, and analytics. “The front of the store is really where the five senses can become a value-add to the shopping experience and a definite continuation of differentiation.” Many independent pharmacies, and retailers generally, struggle
engage patients in ways impossible for retailers who only exist
to engage more than sight and sound in their front end. But
in cyberspace.
Wendland said there are numerous ways to stimulate all the senses
“One of the greatest differentiators between internet-based purchases and in-store selection is the ability for brick-and-mortar
to make your pharmacy more successful. “I’m convinced there’s unrealized opportunity in every retail
retailers to engage shoppers in a more emotional way by tapping
operation. Specifically, every pharmacy I visit has untapped
into the five senses,” said Dave Wendland, Vice President, Strategic
potential,” Wendland said. “Looking for ways to appeal to the
Relations and a member of the owners group at Hamacher
shopper through one or all of the senses will keep them engaged,
Resource Group (HRG), a firm that focuses on improving results
create a more memorable experience, and enhance their
across the retail supply chain by addressing dynamic needs such
perception of the pharmacy well into the future.”
10
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TOUCH
Stick to sounds and songs with consistent volume levels. Avoid
Touch is the most-neglected sense by independent pharmacies,
offending or turning away customers with profanity, politically
Wendland said. But items whose quality depends on texture and
charged rhetoric, or talk radio. Also, make sure you don’t play
thickness, like hosiery and incontinence products, really need to
a radio station repeatedly advertising one of your competitors.
be felt by patients before a purchase. “You can’t sell those without
As far as which type of music or ambient noise to play, that
letting the customer touch them,” Wendland said. “I strongly dislike
varies. “I think it’s up to the individual pharmacy and the kind of
signs that say ‘do not touch.’ If I can’t pick an item up, I’m not
mood they want to set,” Wendland said. “It really depends on what
going to buy it.”
kind of an expression of the store you’re trying to portray.”
To engage customers tactilely, leave a “test” version product
Also consider the privacy of patients near the prescription
out for patients to feel. Make sure to label it as a test product.
counter and in the waiting area. Are there enough barriers to
Categories that make for good touch testers include bath,
prevent sound from carrying? Would the waiting area benefit
home safety, and skin care. High-end lotions do double work
from a soothing water feature?
by promoting both touch and smell. And they can be especially convincing products. “Not only will the guests be enthralled with
SMELL
the idea of putting something on that’s both free and theoretically
When patients walk into a pharmacy, the first thing they notice
they hadn’t considered buying, but it also gives a soothing
is the smell. “The often overlooked fact is that the olfactory nerve is
sensation to the skin and it may lead to a sale,” Wendland said.
one of the most sensitive senses we have,” Wendland said.
Wendland also suggests placing hand sanitizer stations throughout the store to reinforce your dedication to cleanliness.
That sensitivity makes finding the right balance of scent difficult. The smell of rubbing alcohol or bleach makes Wendland suspect a cover-up. Mustiness makes him leery. Too much of any scent
SOUND What your pharmacy chooses to play over the speakers forms
makes him concerned about allergic reactions. The pharmacy owner or manager should test out different
part of your identity, Wendland said. The volume, genre, and
smells and figure out what’s right for them. “It really depends on
quality all matter.
what you’re trying to do,” he said. “But it shouldn’t smell like an
12
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operating room and it better not smell like an attic.” He’s seen pharmacies succeed by using diffusers in the store with pleasant, subtle scents like vanilla or eucalyptus. Some advanced retailers even use motion-activated diffusers throughout the store with specific scents appropriate to that section of product. TASTE Taste is likely the last sense you think of in a pharmacy. “I think it’s perhaps one of the more difficult to achieve,” Wendland said. Focus on food and drink items, such as herbal teas, healthy smoothies, nutrition bars, or baked treats. Get creative. But make sure the snacks align with your image. Also, take advantage of your consulting room, Wendland suggested. For example, when you’re consulting patients with diabetes, offer them a sample of a nutritional drink or bar that fits their needs. “Having them take a small piece doesn’t cost a lot of money but it can lead to loyalty,” Wendland said. SIGHT Of all the senses, sight is the most important. “Because impressions are formed first by what is seen, that impression is established right away,” Wendland said. Keep everything in your front end bright, crisp, clean, and colorful. Use natural light if possible. “I’m a fan of lifestyle photographs and colorful banners that attract attention,” Wendland said. Make sure your signs are easy to read and displays artistically set up. Only use chalkboard signs if the handwriting looks good. “If it looks like one your physician’s prescriptions, then I would say stay away from it,” Wendland joked. SUMMING UP THE SENSES As you look to spice up the individual senses, don’t forget to think collectively. “You have to consider how the interaction of all these different senses work with and against each other,” Wendland said. Fully engaging your patients’ senses isn’t a set-it-and-forget-it task. Don’t let yourself get comfortable and complacent. “Approach every single day as if it’s the grand opening,” Wendland emphasized. He mentioned checking every detail of the pharmacy to make sure it’s shipshape. You wouldn’t leave a dead plant in the window or sour odor in the store on a grand opening, for example. “Those are things that you would never allow on an opening, nor should you allow the first-time a visitor who comes through the door. Imagine the difference that makes if the pharmacy was approached with that kind of vigor each day, and spruced on the appearance, appealing to all five senses.”
TOP TIPS FOR SPICING UP THE SENSES Check out these tips for engaging all five senses in your pharmacy from Dave Wendland, Vice President, Strategic Relations and a member of the owners group at Hamacher Resource Group (HRG). Sound • Avoid anything controversial or harsh • Don’t play music with loud or volatile volume • Know your patients’ taste • Use quality speakers • Avoid advertisements of competitors • Arrange speakers for optimal acoustics Sight • Brighten the interior, with natural light if possible • Use colors to set the mood • Make signs clean, crisp, and easy to read • Make end caps sharp • Set up displays artistically Smell • Find a good balance—not too strong, not too weak • No “operating room” smells • Avoid musty and stale smells • Muted floral or herb scents work well • Use well-placed diffusers Taste Offer samples of food and drink products, such as: • Natural fruit smoothies • Nutritional bars or drinks • Caffeine-free herbal tea • Gluten-free baked treats • Condition-specific products for patients you consult Touch Open and display products for patients to test. Prime categories for touch include: • Hosiery • Bath • Home safety • Incontinence • Skin care • Cosmetics
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
13 13
SOLUTIONS
PHARMACY LOANS 101 Independent pharmacy’s guide to getting a loan
As the adage goes, it takes money to make money. And when you
for the loans will look similar, Garmon said.
run a business, it often takes somebody else’s money—whether
Most independent pharmacies require a Small Business
your goal is as grand as acquiring a pharmacy or as mundane as
Administration (SBA) loan rather than a conventional loan. For
upgrading your equipment.
various reasons, acquiring a conventional loan is more difficult. But
But the idea of borrowing money can overwhelm even the best
SBA loans work better for both the pharmacy and the lender. For
pharmacy owners or potential owners. How much can you afford
the lender, SBA loans offer a guarantee on part of the loan, which
to borrow? How can you qualify for the amount you need? What
doesn’t come with a conventional loan. For pharmacies, SBA loans
rate should you be looking for? Is it worth the financial risk?
require significantly less for a down payment, usually 10 percent
Pharmacy loan guru Bo Garmon, loan officer at First Financial Bank, is here to help. First Financial Bank’s lending team has over 75 years of pharmacy experience and includes current and past pharmacy owners—and it has originated almost $200 million in pharmacy loans over the last few years. “Oftentimes, people see the potential to buy a pharmacy as unattainable because of the daunting purchase price of pharmacy,”
instead of 25 percent. Qualifying for an SBA loan involves a variety of criteria, and every lender uses its own approach. Garmon said lenders typically look at three factors: cash flow; the value of the business, including all the collateral; and the financial strength of the individual guaranteeing the loan. “The bank will want to ensure the acquisition is not only good
Garmon said. “However, qualifying for a loan, particularly to
for the buyer, but good for the bank as well,” Garmon said. “The
acquire a pharmacy, is not as difficult as it may seem.”
strongest factor the bank will consider will be the cash flow of the business. If the borrower has a good credit history and the
HOW TO GET A LOAN
business shows enough cash flow to make the loan payments and
You might take out a loan for several purposes—to acquire
pay the owner, chances are you can qualify for a loan.”
a pharmacy, start a new pharmacy, invest in new opportunities, remodel your store, and so on. No matter the purpose, the process
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With your pharmacy’s financial information, the lender will evaluate your cash flow ability to service the required debt
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payments. The lender will typically employ a formula using Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) to perform the cash flow analysis. Other considerations often include gross profit margin, price per script, and total expense ratios. All those numbers, of course, are decided by your business practices long before you ever apply for the loan. Which means the better you run your business, the better your chance of qualifying for a loan. Because your financials determine the strength of your application, your accounting practices matter. “The main thing the pharmacy owner will want to do is make sure their books are in good order,” Garmon said. Garmon often encounters pharmacies that reduce their net income during their accounting process to help reduce their tax liability. For a loan qualification, that’s not a good idea. “That can be beneficial for them in the short term, but it can also be a detriment if they decide to sell the business or apply for a loan,” Garmon said. “While that business might be viable, banks have to rely on income and tax returns when underwriting that business.” If you’re looking to launch your first pharmacy, your application will look different. Without historical financial data, you’ll need to find other ways to demonstrate your viability. First Financial Bank, for example, requires the loan applicant to inject $50,000 into the business. In addition, it requires a detailed business plan with projected earnings.
Terms to Know Don’t get lost in lender jargon. Here are the most important terms to know. Tangible collateral These assets are physical and measurable, such as cash, accounts receivable, inventory, property, and equipment. Intangible collateral These assets aren’t physical or quantifiable. They include the pharmacy’s brand name, customer base (or goodwill), and any patents or proprietary technology. EBITDA This formula calculates net income after all interest, taxes, depreciation, and amortization have been accounted for. This formula is the most widely used method when determining the value of a pharmacy and the cash flow ability of the business. Working capital Working capital is essential for independent pharmacies. Working capital refers to cash on hand to manage day-today operations and inventory purchases.
WHERE TO GET YOUR LOAN When it comes to choosing a lender, Garmon said rates aren’t the only factor to consider. “The most important thing is to choose a lender or bank that you’re comfortable dealing with. Find a lender that understands your business and can be a partner for you in the future as you grow and have additional needs.” More specifically, choose a lender that specializes in independent pharmacy. “Banks that don’t specialize in pharmacy lending often don’t understand the nuances of this business,” Garmon said. “They don’t understand things such as reimbursements, rebates, wholesaler contracts, and most importantly, the need for working capital.” If you’re pursuing an SBA loan, a preferred SBA lender will expedite the loan process. Preferred lender status allows banks to issue their own approvals instead of having to wait for SBA approval.
Decisive Documents Lenders will pore over your financial records and other business documents before agreeing to lend to you. Make sure these documents are in good order before going to the bank. • Last three years’ tax returns on the business • Most recent income statement and balance sheet on the business • Last three years’ personal tax returns • Personal financial statement • Credit report (ordered by the bank once application is received)
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
17
FEATURE
CBD: A BUDDING OPPORTUNITY Independent pharmacyâ&#x20AC;&#x2122;s complete guide to the profitable plant product sweeping the nation By Greyson Honaker
Have you heard of independent pharmacy’s latest cash cow? Or more appropriately, cash crop? Cannabidiol (CBD), a non-psychoactive compound of cannabis, is growing profits at a prolific pace among retailers across the
Top 5 CBD Formulations
country. The natural product purports a bevy of therapeutic
1. Sublingual: tinctures, drops, sprays
benefits without the requirement of a prescription or the risk
2. Capsules
of addiction. And consumers are all in.
3. Liquids
This year, the CBD market reached $500 million, according to Statistica. An optimistic estimate by the Brightfield Group,
4. Edibles 5. Topicals
a cannabis industry analyst, places the market at $22 billion by 2022—presuming legalization of hemp from a pending farm bill.
Source: Corroon J, Phillips JA (2018) A cross-sectional study
A more conservative estimate predicts the market to reach nearly
of cannabidiol users, Cannabis and Cannabinoid Research
$2 billion, still an enormous number considering it was just over
3:1, 152–161, DOI: 10.1089/can.2018.0006.
$100 million in 2014. Right now the market is populated by shops of every sort— head shops, nutrition stores, local grocers, dispensaries, farmers’ markets, online stores. None of those retailers carry the clout of a Doctor of Pharmacy. Pharmacies are perfectly positioned to dominate sales of this novel natural product that comes with so many question marks. “Pharmacies have a distinct advantage over other retail or
front-end profit generator for independent pharmacies than CBD.” These products come with a 40–50 percent margin on average, all cash. And unlike the cents-to-dollars profit your pharmacy
online sites selling CBD,” said Danny Bannister, co-owner of Natural
makes on most OTC products like acetaminophen, CBD offers a
Native, a supplier of CBD products. “People have learned to trust
hefty profit with products ranging from $50 to $300, Bellesine said.
in their pharmacist. They expect him or her to have vetted and researched the products they carry and recommend.” This is true for Jesica Mills, who’s been selling CBD at her community pharmacy for just over a year. “People want to get it from a pharmacy and from a pharmacist,” said Mills, PharmD, MBA,
More than that, many of the patients purchasing CBD are highneeds patients managing chronic conditions such as cancer and autoimmune disease. Offering CBD can attract those patients to your pharmacy, potentially earning their prescriptions as well. After a marketing push in the first few weeks of selling CBD,
RPh, CNHP, owner of Owensboro Family Pharmacy in Kentucky.
Bellesine earned around 70 prescription transfers in a matter
“Because everyone takes some sort of prescription medicine, they
of days. And he’s been rolling out the products slowly to ensure
want to know what the side effects are going to be, how to take it,
he’s doing it right.
how to dose it.” Even more, independents have the CBD pharmacy market
Although CBD draws in high-needs patients, the people buying CBD come from every corner and with every condition, even from
cornered for the time being. National chains are unlikely to take the
those you’d least expect. “There are people who have Medicaid,
plunge until the legality is crystal clear at the federal and state level
who have issues with one or two dollars on their copays, and they
and they’re able to sell the products nationally.
will spend 70 dollars on CBD oil without blinking an eye,” Mills said.
Current CBD revenue reports from independent pharmacies
More and more, patients are looking to get away from
are off the charts, even for those who’ve just begun selling the
traditional medication and get into natural remedies like CBD.
products. Mike Bellesine, owner of TrueCare Pharmacy in El
“There’s such an increase of people wanting natural products over
Dorado, Kansas, collected $10,000 in six days selling the plant
prescriptions now,” said Mills, who also has a doctorate in natural
product. He anticipates $10K–$15K per month at a minimum.
medicine. “We’re able to counsel on natural products, and that’s
Mills’s pharmacy makes $15K per month in sales. Natural Native
attracted quite a few new natural-minded patients. It’s opened the
and Ananda Professional, two major CBD suppliers, have had
door for a whole different set of clients to come in, and leads to
clients earn up to $30K in a single month.
more fulfillment as a pharmacist.”
“The most compelling reason for getting on board with CBD
Bellesine, who’s owned TrueCare Pharmacy for 36 years, has
comes from pharmacy owners who have been in the business
never seen more promise from a product. “If your state allows it,
a long time,” said Chuck Schneider, chief revenue officer of Ananda
I recommend getting this product on your shelf,” he said. “It is a
Professional. “These owners state they have never seen a better
high-dollar, high-margin product and it really works.”
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
19
Schneider believes independent pharmacies could easily and drastically boost profits even if they want to move slowly. “With
at Thomas Jefferson University. The system contains receptors for cannabinoids throughout the
so many people that it can apply to, there’s no reason why they
body, including the brain, digestive system, and lymphatic system.
shouldn’t easily be able to start a patient a day on CBD,” he said.
Our bodies already naturally produce two cannabinoids, but “we
“If they start a patient a day, that pharmacy will improve their
can harness the potential of the endocannabinoid system through
profitability by $60,000 per year.”
these plant-derived cannabinoids,” Capano said.
WHAT IS CBD?
is a lack of conclusive clinical evidence. CBD is still in its early stages
CBD is a natural constituent of the cannabis
of study, although research is increasing rapidly. Many of the
plant, typically hemp. CBD sold commercially can’t
common health claims come from animal or preclinical studies,
The reason CBD’s therapeutic properties remain controversial
contain more than .03 percent THC
some of which have shown CBD’s promise to reduce pain
(tetrahydrocannabinol), the chemical
and inflammation.
responsible for the psychoactive
The strongest evidence, according to
effects induced by marijuana.
a comprehensive review of cannabinoid
Manufacturers distill CBD
studies from the National Academies of
into an isolate or as
“Pharmacies have a distinct
the primary active ingredient among other cannabinoids.
advantage over other retail
It’s formulated into several variations including oil, water, edibles, and more. There are cannabinoids in cannabis. CBD and THC
in their pharmacist.”
are the most prevalent. All the cannabinoids are said to contribute health benefits. Using them all together, referred to as “full spectrum,” creates what’s called an entourage effect, compounding the therapeutic effectiveness. CBD doesn’t come with the same risks as its sibling cannabinoid THC. According to the World Health Organization, “In humans, CBD exhibits no effects indicative of any abuse or dependence
effective in improving two conditions: patient-reported multiple sclerosis spasticity symptoms and short-term sleep outcomes in individuals with obstructive sleep apnea syndrome,
People have learned to trust
more than 100
shows that cannabinoids can be
sleep disturbance associated with
or online sites selling CBD.
ointments, balms,
Sciences, Engineering, and Medicine,
fibromyalgia, chronic pain, and multiple sclerosis. The demand for CBD is driven mainly by anecdotal evidence. But the word-of-mouth success stories are plentiful. “Although I was skeptical at first about its benefits and possibly the psychological perception of our patients
relating us to hemp sales, we kept hearing story after story of how our patients are able to reduce their pain meds, how much better they are sleeping, and how much less stress and anxiety they are feeling,” Bellesine said. “When you have patients on fixed income coming back and sometimes paying over $100 per bottle for CBD, you know it’s working.” In a survey from the Brightfield Group and HelloMD, a digital
potential. To date, there is no evidence of recreational use of CBD
healthcare platform for the cannabis industry, 82 percent of users
or any public health related problems associated with the use
claimed CBD was a “very effective” treatment. In another survey by
of pure CBD.”
Consumer Reports, 90 percent of people who took CBD claimed it helped treat their medical condition.
HEALTH BENEFITS OF CBD
Many patients are even tapering off prescription and OTC
The science behind CBD’s therapeutic benefits revolves around
pain medicine once they start taking CBD. In the HelloMD survey,
the endocannabinoid system. This system in humans regulates all
nearly half of the CBD users said they had stopped using traditional
sorts of homeostatic activities, said Dr. Alex Capano, DNP, CRNP,
medications after starting on CBD. One of Bellesine’s patients with
FNP-BC, medical director for Ananda Professional and faculty at
crushing lumbar discs was able to cut his Percocet dose in half. One
The Lambert Center for the Study of Medicinal Cannabis and Hemp
of Mills’s patients was able to switch from Oxycontin 30mg daily to
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Users of CBD (cannabidiol) attest to its ability to reduce pain, inflammation, and sleep problems, among other ailments. Derived from hemp, CBD is made into many forms, such as oils, capsules, sprays, and balms.
Oxycodone 5mg daily. Another had been taking Clonazepam 2mg
a state-approved agricultural pilot program or other agricultural
four times a day and has completely discontinued the medication.
or academic research. The state agencies or universities in these
“I’ve realized that pharmacists are dispensing pills to people
programs can license third parties to grow hemp and sell products
that really don’t want to take any of them,” Mills said. “Every single
derived from it, which is how suppliers like Ananda and Natural
person that I’ve talked to doesn’t want to take any pills. Patients
Native can legally manufacture CBD and sell it to your pharmacy.
are wanting to stop taking their narcotic medicines like Xanax and Percocet, actively looking for something healthier for them.”
In addition, a 2016 law explicitly prohibits enforcement agencies, most notably the DEA, from using federal funds to “prohibit the transportation, processing, sale, or use of industrial
LEGALITY OF CBD If the Hemp Farming Act of 2018 becomes law, hemp-derived
hemp” that is grown in accordance with the 2014 Farm Bill. Lastly, a court ruling between the DEA and Hemp Industries
CBD will effectively be legal federally. The bill removes hemp
Association determined that imported, non-psychoactive hemp
from the controlled substances list and legalizes cultivation of the
does not fall under the purview of the Controlled Substances Act.
crop nationally. Hemp products would be considered agricultural
“Taken together, the Ninth Circuit’s order in Hemps Industries
commodities, and regulatory authority would fall to the USDA and
Ass’n v. Drug Enforcement Administration and the Farm Bill and
state departments of agriculture.
Omnibus Law appropriations riders constitute an expansive,
Until then, the 2014 Farm Bill, per section 7606, allows hemp
permissive federal regime for industrial hemp,” wrote two
with less than .03 percent THC to be legally grown and sold under
attorneys from the office of Frost Brown Todd in a legal analysis.
specific circumstances in certain states that allow it. The crop must
“These authorities legitimize industrial hemp and derivative
be grown or cultivated for purposes of research conducted under
products and immobilize federal agencies that might otherwise
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
21
Currently, the 2014 Farm Bill allows hemp to be legally grown and sold under specific circumstances in certain states that allow it. The pending Hemp Farming Act of 2018 would legalize the cultivation of hemp outright at the federal level.
“Pharmacy owners state they have never seen a better front-end profit generator for independent pharmacies than CBD.”
pursue enforcement.” Although CBD has been allowed federally under specific circumstances, each state has the right to allow or disallow it. The analysis from Frost Brown Todd did not find explicit prohibitions in any state nor explicit permissions in most states. Even if CBD can legally be sold in your state, it can’t come with any health claims, no matter how minor. At TrueCare Pharmacy, Bellesine said he’s very careful not to promise patients anything. Instead, he simply offers testimony from his patients who’ve experienced benefits. “When I talk to people, I say, ‘This is just what other people are telling us. They are coming back and telling us the same things.’” The bottom line for your pharmacy: Purchase only from suppliers who’ve obtained CBD from hemp cultivated in accordance to the 2014 Farm Bill; make sure your state allows it; and don’t make any health claims. PURCHASING CBD PRODUCTS With little-to-no regulation, CBD products are easily susceptible to fraud. Without proper vetting, your pharmacy could end up
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with products that don’t contain CBD at all, contain less CBD than claimed, contain too much THC, or contain contaminants, among other risks. “So much of this is really the wild west,” Schneider said. “You can buy a product, and seven out of ten times what’s in the bottle doesn’t match what’s on the label.” A 2017 study published in JAMA found that 69 percent of CBD
Most Common Conditions Treated by CBD Pain
products purchased online were mislabeled, containing more or
Anxiety
less ingredients than claimed. Twenty percent had THC levels high
Depression
enough to potentially result in intoxication or impairment. Over the
Sleep disorders
last three years, the FDA has sent more than 40 warning letters to
Chronic headaches
CBD sellers who’ve falsified the content in their products. Bannister and Schneider both said to make sure your supplier
Source: Corroon J, Phillips JA (2018) A cross-sectional study
can provide a certificate of analysis for each batch of products to
of cannabidiol users, Cannabis and Cannabinoid Research
verify its purity and its THC level. Bannister suggested going a step
3:1, 152–161, DOI: 10.1089/can.2018.0006.
further by tracing the products to the original farm. Schneider emphasized the importance of seeing the supplier’s license with the state agriculture department or university operating under a pilot program. Another important factor to consider is the amount of resources and education the supplier can provide. “Everything starts with education,” Schneider said. “Most pharmacists never studied the endocannabinoid system and are not familiar with how
understand the possible side effects, we understand how they’re
CBD works in the body. A reputable company will provide training
taken out of the body. The head shop down the street doesn’t
for the pharmacy owner and staff.”
have a clue.”
Some suppliers offer an initial training session on the
Bellesine began by researching the only FDA-approved drug
endocannabinoid system and the fundamentals of CBD. That’s how
containing CBD, Epidiolex. That provided some insight on possible
Mills gained the majority of her knowledge initially, mostly from
interactions, as well as the possible side effects. “If you’re going
Ananda Professional. “When you’re first getting started, a lot of
to be a good pharmacist, you better understand your drugs or
your information will come from the company you’re buying from,”
nutraceuticals that you’re going to be dispensing,” he said.
Mills said.
Deciding dosing is tricky because CBD isn’t a well-researched or tested product. “We don’t have evidence where we can give
CBD EDUCATION
you definite dosing guidelines for specific conditions,” said Dr.
CBD is a novel product with little clinical evidence, lots of anecdotal
Capano. “But we do know the safety profile of these CBD hemp
proclamations, stigma associated with marijuana, and confusing
oils is fantastic. “
legality that make many consumers hesitant. The majority of CBD users learn about it from friends, family, and the internet. Your pharmacy may be patients’ only reputable source on CBD information, and you’re likely their most reputable source. The best
Most suppliers will provide dosing recommendations. Capano suggests starting with 10mg–15mg and titrating up slowly every three days until finding the right dose for the patient. Lastly, your pharmacy should inform every patient about CBD’s
way to know how to counsel patients on CBD is to learn the science
effect on drug tests. This has been a significant issue for Mills in
for yourself, said Mills. “Take a look at the reason why it works,
the year she’s been offering CBD. Even though legal CBD products
because once you understand why it works then you understand
contain no more than .03 percent THC, that can be enough to show
why it works for so many different things.”
up on a drug test, Mills said.
Some sellers and suppliers claim that because CBD is a natural
“Identifying those people and asking if they’re drug tested
product, it won’t interact with any other drugs. Pharmacist Bellesine
was one of the things we had to learn the hard way. We had a few
knows better. “It does have a lot of interactions,” he said. “Just as
people who were not able to get a job because of the CBD oil,”
you would with any drug, you want to learn CBD’s interactions
Mills said. “We always tell people, if you can’t risk it, THC-free is
and be able to counsel patients on the product. That’s where the
the way to go.”
pharmacy really shines because we understand the drugs, we
However, Capano said even THC-free products won’t always
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
23
FAQs Here are some answers to consumers’ most frequently asked CBD questions.
Will CBD get me high?
Will CBD cause drug interactions?
CBD containing less than .03% THC (tetrahydrocannabinol)
CBD does interact with other drugs. Pharmacists should review
doesn’t cause psychoactive effects.
patients’ medication profiles before they start taking CBD.
Will CBD make me fail a drug test?
Are there side effects to CBD?
If any amount of THC is present in the CBD product, THC
More research is needed to conclusively determine CBD’s side
could potentially show up on a drug test. Even products
effects. The FDA-approved cannabidiol oral solution Epidiolex®
with zero THC are no guarantee, as some tests confuse
(100mg) can cause liver problems as well as the following
CBD for THC.
common side effects: sleepiness, decreased appetite, diarrhea, increase in liver enzymes, feeling very tired and weak, rash,
How much CBD should I take?
sleep problems, and infections.
There is no standard dosing, but CBD has been shown to have a strong safety profile. A common recommendation
What’s the difference between CBD isolate and
is to begin at 10mg and double the dose every three days
full-spectrum CBD?
until finding the right dosage.
CBD isolate contains only cannabidiol. Full-spectrum CBD contains additional cannabinoids that work in tandem with cannabidiol and may provide additional benefits.
put patients in the clear. “They can cause a false positive with the
over other retailers. “We have the edge of being the experts in
most commonly used immunoassay tests, because they have low
drugs,” Bellesine said. “Knowledge along with your good pharmacist
specificity and can confuse CBD for THC,” she said. “A hair or serum
reputation will draw patients to you.”
test will confirm a true negative in these cases, but a false positive is certainly possible.”
For the moment, the bandwagon is barreling forward. Will your pharmacy hop on? “The time is perfect for independent pharmacies to get involved with CBD and do so before the chain pharmacies
FORECASTING THE FUTURE
and mass merchandisers,” Schneider said. “There is no better retail
We’re in the budding stages of the CBD rush. With so many
location for patients to turn to than an independent pharmacy.”
variables lurking legally and scientifically, no one can predict how long the market will stay this hot. If the 2018 Farm Bill is passed, there will likely be an influx of suppliers, driving prices, and therefore profits, down. Once national pharmacies and retailers get involved, competition will be steep. In addition, new scientific research could contradict many of the current claims and consumers may begin to abandon CBD altogether. On the other hand, studies could corroborate the therapeutic benefits or discover even more. The market could continue to cruise and even expand. Either way, pharmacies should always keep their advantage
24
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SPOTLIGHT
PARTNER IN CARE How one independent pharmacy thrives through nonprofit partnerships By Sarah Kelly At Pike’s Pharmacy in Charlotte, North Carolina, serving the community means more than just selling medicine to the patients who walk into their store. Since 2007, the pharmacy has partnered with homeless shelters and other nonprofits to help those most in need fill their prescriptions. Since then, the partnerships have become essential to the pharmacy’s business and beloved by its local communities. “We have developed really close relationships with members out in the community and have been able to establish reputations with our PharmDs,” said Jesse Pike Jr., owner of the nearly 100-year-old, family-founded pharmacy. “We depend on all of them to maintain a portion of our business that gives us a platform here in the community.” Pike’s Pharmacy’s first partnership was with Shelter Health Services, which provides free healthcare and health education to residents of Salvation Army’s Center of Hope
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shelter for women and children. It serves 1,000 unique patients each year. Shelter Health Services and Pike’s Pharmacy came together in 2007 with a need and a misconception. The need: Employees of the understaffed shelter were sometimes waiting more than an hour at a national chain pharmacy to fill a prescription for a single patient without insurance. When another independent pharmacy in the area abruptly closed, Shelter Health Services approached Pike to take over prescriptions for clients who had insurance. That’s when he learned the charity held a common misconception. “For their indigent patients who had no safety net, no insurance, they had been going to the chain thinking that was the least
“We depend on all of [our partnerships] to maintain a portion of our business that gives us a platform here in the community.”
expensive alternative,” Pike said. “We kind of turned that around by showing them how, if we could obtain all of the facility’s prescription business, taking care of all their needs, that we could afford to give them prices that were comparable to the least expensive of the chain pharmacies—actually, less expensive in many cases.” MEETING THE NEED Instead of letting shelter employees languish in line at the chain pharmacy, Pike’s began obtaining the prescriptions from the shelter’s nurse practitioner, filling the prescriptions, and delivering the medications five days per week. The shelter saved money and time, and Pike’s Pharmacy gained regular business from patients with a mix of insurance providers and out-of-pocket payments. “Frequently, the cash prescriptions don’t bring the margins
LOOKING FORWARD
in that you necessarily need to operate your business and you are
Even though the idea sprang from altruism, Pike’s Pharmacy’s
dependent on the insurance wherever it’s possible to avail yourself
partnership with nonprofit organizations isn’t charity—they
of it,” Pike said. “The nonprofits will have a mixture, and it varies,
contribute meaningfully to the bottom line. But the effort to reduce
but it is definitely adding to our base. It definitely contributes to
costs for these groups does occasionally result in a small loss.
our staying in the community.”
That’s okay with Pike.
Using that model, Pike’s has added more nonprofit
“You just have to do the very best you can in providing a service
organizations to its customer profile. Pike offered the service
at a very reasonable expense,” Pike said. “Sometimes it’s not one
to the Men’s Shelter and later partnered with Charlotte Urban
that’s profitable at all, but it creates a relationship where future
Ministries to deliver to several more shelters in the area. He’s
profits can certainly be generated through the spread of goodwill.”
even branched out to commercial facilities, including several drug treatment centers. Expanding to serve so many organizations in the community
Pike’s advice to other independent pharmacists: Look for a need in your community you can help meet—which starts with simply being involved with your community. In the case of nonprofit
isn’t without its challenges. The biggest one, Pike said, is keeping
organizations, you can bet they’re always looking for ways to do
records straight from one facility to another. Many clients use one
more good with less money.
or more of the services, and the facilities don’t share records. Pike’s solution to that problem is simple, but certainly not easy.
“These kinds of organizations really need the services we provide,” Pike said. “They are always, I find, willing to listen if you
He developed his own system to maintain information for each
say you have an idea that may help them to take care of their
service provider, and the pharmacy carefully trains its technicians
participants. It gives you a terrific feeling, as well, to be able to work
with this in mind. “It takes a lot of careful monitoring, a lot of
with these companies and organizations.”
attention to detail,” Pike said.
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
27
MONEY
PRIVATE PROFIT Unlock your pharmacy’s front-end potential with private label products
Is your independent pharmacy still stuck behind the counter? Even amid paltry reimbursements and unpredictable clawbacks, prescription sales still make up 95 percent of independent pharmacy business on average. That leaves a measly 5 percent for the front end. Pharmacies
to know that there’s a lot more you can do with your front end,” Trahan said. Another major front-end benefit, which Trahan said is often overlooked, is customer attraction and retention. Building up your front end ensures you always have what patients need so
with such a significant imbalance are leaving a lot of profit on the
they won’t go looking for it somewhere else. If they have to trek to
table. If pharmacies devoted more time and money to their front
another pharmacy to get an OTC, they’ll likely get their prescription
end, they could get a nice return on investment that they aren’t
there as well.
getting behind the counter.
“Why would you risk someone getting their omeprazole or eye
“The OTC for the most part is cash sales,” said Gabe Trahan,
patch from the other store up the road and coming on back to get
Senior Director of Store Operations and Marketing at the National
their prescription?” Trahan said. “You never want to risk that. You
Community Pharmacists Association (NCPA). “And cash sales means
need a full OTC department.”
no one’s going to ask you for money at the end of the quarter. There are no clawbacks. Cash sales go into your bank.” The fact that cash sales not only provide greater margins but also instantly contribute to your cash flow gives OTCs a dual benefit that prescription sales simply can’t provide. While margins pad
PRIORITIZE THE PRIVATE LABEL You can’t have a truly full OTC department without one of the most lucrative front-end categories: private label products. Private labels give you better margins than the national or
your bottom line, cash flow frees your pharmacy to invest in new
wholesaler brands. Some private labels boast up to 70 percent
opportunities to grow your business.
margins in certain categories. Plus, because they cost less to
Trahan said independent pharmacies should be pushing to get
purchase, you can earn those margins while selling the products
at least 10 percent of their revenue from the front end, a number
at a lower price tag than their brand-name counterparts. “It’s going
he’s rarely seen in his long career. Although that’s an ambitious
to bring in a lot of customers and keep them in,” Trahan said.
goal, many independent pharmacies can achieve it. “It’s important
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Most importantly, Trahan said, private labels will set you apart.
“Why would you risk someone getting their omeprazole or eye patch from the other store up the road and coming on back to get their prescription? You never want to risk that. You
Top Four Product Categories That Always Stay Hot Make sure your private label has a full line of products in these categories that are always in demand. 1. Anti-aging 2. Weight control 3. Energy 4. Stress relief
need a full OTC department.”
“The biggest advantage is it’s yours. It’s your label. Your label that you share with a few friends that are independents,” he said. “You’re probably not going to find it in the dollar store. unless someone’s breaking all the rules, not going to find it
Margin Maximizers
on Amazon.”
These product categories generally offer the best margins.
You’re not going to find it in the chain store. You’re probably,
If better margins, attractive prices, and a unique offering convince you to adopt a private label line, next you’ll need to
Selling private label versions of these products earns you even more.
decide which private label to use. Not all private labels are created equal. For Trahan, there
• Family planning
are two deal breakers. “If they can’t help me with point-of-sale
• Food care
purchase material and if the packaging isn’t straight across the
• First aid
board, I’m walking away,” he said. Trahan also said to look for
• Wound care
a 100-percent guarantee and a great package that builds brand.
• Compression stockings
Ideally, the private label manufacturer will provide additional services such as signage, merchandising support, and rebates. HOW TO SELL YOUR PRIVATE LABEL Once you’ve decided to adopt a private label, how do you move those items off the shelf? Start with prices. If you’re pricing the products yourself, use Trahan’s suggested method for finding the perfect price. Simply take the brand price and reduce it by 20 to 25 percent. Customers
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
29
More Than Professional Grade Dietary Supplements Dietary Supplements
Business Sense
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Nutrient Depletion Evaluation Pad and Bag Stuffer
The Pharmace Replete Program is the solution for pharmacists addressing drug-induced nutrient depletion.
Start the conversation about drug-induced nutrient depletion Engage patients Boost front-end sales
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Build Your Brand Differentiate from the Competition Thrive in Pharmacy Practice
Top 10 Ways to Get More Money From Your Front End Independent pharmacies could be earning more from their
5. No bare shelves
front end. Ramp up your pharmacy’s front-end revenue with
Bare spots on your shelves give the impression of a dying
these 10 strategies from Gabe Trahan, Senior Director of
business. Or one that doesn’t care about its front end. If you
Store Operations and Marketing at the National Community
don’t know what to put there, fill it with your private label.
Pharmacists Association (NCPA). 6. Double-faced products 1. Private label sales
Products should be two-wide and three-deep at least. Which
Private label products provide greater margins and
means a minimum of six.
differentiate your pharmacy from your competitors. Call them your “Preferred” products.
7. Niche items Seek out niche items to differentiate your offerings. You may
2. Companion sales
have to search a bit to find them, such as at tradeshows.
Pair similar items together to encourage more purchases. For example, put tissues next to cough and cold products.
8. Blind items Blind items are items customers will often buy without worrying
3. Smart pricing
about the price. They typically offer a higher margin. Don’t
Pricing price-sensitive items too high will give you a reputation
worry as much about undercutting your competition’s pricing
for being expensive. Pricing them too low hurts your bottom
on these items.
line. Trahan suggests starting with the brand price and cutting back 20%–25%.
9. Spy your competition Visit your competitor’s store to see what they’re offering.
4. The right items
Evaluate whether it makes sense to add it to your front end.
Don’t extend line items unless you know the new items will sell. Stick to stocking high-demand products rather than fringe
10. Use a “want book”
specialty items.
Keep a book under the counter to record what your patients want you to stock. Always ask patients if they found what they were looking for.
will appreciate those savings, and your pharmacy will still earn
Chances are they’ll take it. “If you ask the pharmacist, ‘Hey I got
a healthy profit because the products cost you less than the brand.
a bad cough, what should I take,’ and he says go drink some diesel
Even though you should prioritize your private label in your merchandising, don’t relegate brands to the no-mans-land of
fuel, I’ll say, ‘I’m on that,’” Trahan said. More difficult decisions involve your choice of inventory. Many
your front end. Trahan is adamant that your private label should
private labels offer more than a thousand products across every
sit next to the brand on the shelf. Customers need to see them
category. You can’t successfully stock all of them. Trahan suggests
side-by-side.
focusing on popular and niche items, gathering intel from the chain
“You need the private label to compare to something. A private label or preferred brand that stands on its own will not sell as
pharmacies, and seeking feedback from your customers. If you really want to get your front-end revenue up to 10 percent
quickly as it would if it’s standing next to the brand,” Trahan said.
of your sales, Trahan said you’ll need to hire a manager exclusively
“The more popular the brand becomes, the more your private label
for the front end. But with these strategies, you’ll be
is going to be looking as a great alternative, as long as you don’t
on your way to making more money from your front end than
give up on the brand.”
you ever have before.
To really make your private label shine, place the products on
“Once you know where the money is, where the niches are,
a shelf behind the pickup or drop-off counter beneath a sign that
how important your private label is,” Trahan said, “you can start to
reads, “Our Pharmacists Recommend.” When patients ask where
make more money up front and start to move that needle, maybe
to find a brand name product, grab your private label from the
reach that 10 percent.”
shelf and tell them it’s what the pharmacist recommends.
ELEMENTS | The business magazine for independent pharmacy | DEC 2018
31
OUTLOOK
NEW PATH TO PURITY Revisions to USP 795 set more stringent water requirements for reconstitution
One minor change coming to USP 795 could make a major
all reconstitutions, which “has never been as boldly and directly
difference in the way pharmacies perform reconstitution.
stated,” Chizhik said.
USP is in the process of revising parts of USP 795, the general
The revision reads: “Purified water, or an equivalent quality of
chapter on compounding non-sterile medications. Among other
water, must be used to reconstitute conventionally manufactured
changes, the revisions clarify one of the most highly debated and
nonsterile products when water quality is not stated in the
important issues in the compounding world.
manufacturer’s labeling.”
“Considering safety and standardization is at the forefront
The new requirement aims to improve quality, consistency,
of compounding discussions, water quality is a hot topic right
and safety for all compounding purposes. Without these revisions,
now in the world of pharmacy,” said Dr. Ursula Chizhik, PharmD,
it’s nearly impossible to ensure consistent water use across all
VP of quality and regulatory affairs at FLAVORx, a company
pharmacies.
that provides a flavoring system for pharmacies to personalize
“Since source water or influent water varies from state to state
medication for patients. “While water quality and its specifications
or even sometimes from county to county and region to region, it
have always been more stringent and of greater concern in the
is very difficult to say that water from one location is comparable to
sterile compounding space, we are seeing this focus trickle into the
water from another location,” Chizhik said. “Varying water quality
nonsterile compounding world as well.”
can ultimately vary the final product. For this reason, USP 795
USP has always required the use of purified water for non-
wants to ensure that proper water is being used across the industry
sterile compounding but not necessarily for reconstitution. The
and to emphasize the importance of promoting consistent product
water requirements for reconstitution depended on whether it was
from pharmacy to pharmacy and from dispenser to dispenser.”
considered non-sterile compounding, which until now has been unclear and left to the decision of each state’s board of pharmacy. But the new revisions erase the distinction between the two. In addition, the new rules explicitly require purified water for
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pbahealth.com/elements
WHAT THIS MEANS FOR PHARMACY With this new focus on water quality, pharmacies might start facing stricter water inspections. It’s become more common for FDA and
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boards of pharmacy inspectors to scrutinize water quality
reconstitution, is not able to maintain conductivity levels below
more closely, including checking for routine maintenance of
1.3 micro siemens per centimeter once the bottle has been opened
filtration systems and testing conductivity of effluent water,
and exposed to air over time,” Chizhik said.
according to Chizhik. HOW TO ENSURE WATER PURITY
“Considering the increased emphasis on compounding safety, USP, FDA, states, and accreditation organizations are coming down
Methods for purifying water come a dime a dozen. But not all
on pharmacies, pharmacists, and pharmacy technicians to make
of them are up to par. “If you’re currently using bottled water or
sure they are complying with current best practices,” she said.
anything less than a six-stage reverse osmosis system, you’re
And chances are, many pharmacies aren’t complying—whether
probably not meeting USP standards,” Chizhik said. “While six
they realize it or not. Chizhik said pharmacies commonly fail
stages of filtration may seem excessive, it has been our experience
to verify the purity of their water. Instead, they simply rely on
that to maintain designated specifications over time, this is a
distilled water jugs, purified boxed water, or “acceptable” purifying
reliable method.”
processes like in-line filtration or reverse osmosis filters.
The six-stage reverse osmosis system not only ensures water
“We are assuming the water that we are using is safe and meets
meets specification, but it’s also more cost-effective and easier
the parameters, rather than testing to be sure the water is safe and
to maintain than the other popular methods. One of the national
meeting parameters,” she said. “Part of standardization and the
chain pharmacies recently committed to using this system to
focus on standardization is having metrics and measurements and
ensure it meets USP standards, Chizhik said.
criteria that can be checked and verified over time.”
“Pharmacies all across the country, from national chains to
USP outlines specific chemical quantities required for water
independents, are taking water quality more seriously and taking
to be pure, specifically for conductivity, total organic carbon, and
proactive steps to ensure USP standards are met for all of their
bacteria. And those numbers take discipline to meet and maintain.
non-sterile compounding and reconstitution needs.”
“Even a distilled jug of water, that is a commonly used method for
The final revision of USP 795 will publish in 2019.
USP PURIFIED WATER STANDARD Purified Water (PW) v Highly Purified Water (HPW) PARAMETER
Total Organic Carbon (TOC)
Conductivity
Endotoxin (EU/ml)
Aerobic Bacteria
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pbahealth.com/elements
UNIT
PW
HPW
< 500
< 500
≤ 1.3
≤ 1.3
ppm
n/a
≤ 0.25 EU/ml
CFU/ml
≤ 100 cfu/100ml
≤ 10 cfu/100ml
ppb
µS/cm @ 25°C
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