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Some pharmacies assume that satisfying primary vendor compliance gets them the best deal. Others stick to a single vendor out of necessity. Even a supposedly basic vendor agreement is a complex set of requirements for total spend, percentages, rebate tiers and other purchasing variables. With everything else on their plate, pharmacy teams struggle to manage vendor compliance effectively.
Unfortunately, many pharmacies lack the time and insight to do more than just get by when it comes to compliance. But focusing on the bare minimum for vendor compliance means they’re losing money.
Many pharmacies assume that making all purchases solely through their primary vendor will make things easier and provide the best prices. Yet, overcommitting to a primary vendor means missing out on better purchasing options.
Shopping secondary vendors opens up a wider market and competitive pricing. Pharmacies can find better deals and avoid overpaying through their primary. They also have backup options when drug shortages hit. This saves them money otherwise lost to last-minute, high-cost purchases while easing the burden on teams trying to meet patient demand.
Pharmacies are also losing money because they don’t verify compliance calculations. To analyze their purchasing compliance metrics, pharmacies often rely on reports provided by their primary vendor. Assuming these external reports are accurate without validating them leads to costly errors. Everyone makes mistakes, including vendors. Vendor reporting errors may be unintentional, but they can be expensive.
For example, SureCost’s Smarter Purchasing Report examined adherence to GPO pricing among retail and LTC pharmacies and found that, on average annually, about 15% of GPO-qualified purchases were priced incorrectly. This led to an average annual overcharge of nearly $103K, with some pharmacies losing almost 55% of their GPO spend to incorrect pricing.
Beyond satisfying primary vendor compliance, the technology unlocks potential savings with that vendor for pharmacies to optimize the terms of their agreement. For example, looking at the product group level, there may be different source tiers in the same product group with different pricing based on different manufacturers. With a solution in place, the pharmacy can see their options through the same vendor and find the best one. Pharmacies can also quickly view each vendor’s unique rebate structures and definitions of compliance. Pharmacies can see if they’re meeting their targets and make purchases accordingly.
Once a pharmacy knows it’s meeting compliance and making the most of its primary vendor agreements, it can use the software to identify additional cost-saving opportunities outside primary vendor agreements. In other words, once they save as much as possible from their primary vendor and satisfy their contractual obligations, they can save even more.
Successful pharmacies view compliance as a strategic element of their larger purchasing strategy. They understand the need to optimize their primary vendor agreement, drive pharmacy savings from a competitive market and derive business intelligence to refine and improve their decisions continuously. However, they also understand the need to reach these goals without increasing their workload.
Pharmacies can save more and make strategic purchasing decisions, but they must leverage smarter purchasing to make vendor compliance work for their pharmacy. That starts with choosing the right solution and partners.
