Brannon shares a similar outlook. He said it comes down to confidence and trust in the wholesaler’s team. When you think of the wholesaler as a trusted advisor, he said, it can help pharmacy owners improve gross margin, income and cash flow, as well as grow their business. But Balcom stressed that pharmacies should assess what’s at the heart of the relationship: a contract that’s designed around trust. “When you have a balanced contract, it usually leads to transparency, appropriate sharing of data, and a trusted business relationship where you can sit down and improve and advance it,” he said. “When you have an improperly structured contract, it leads to an adversarial-type interaction, causing a break down—and potentially a loss of—that relationship.” GET A BETTER COST OF GOODS When it comes to a primary wholesaler contract, pulling a number of levers can get a better cost of goods, but the number one way is for a pharmacy to maximize its generic purchases from its primary wholesaler, said Chris Lanctot, Vice President of Independent Sales at Cardinal Health. Meriweather also noted the importance of compliance. “The more compliant you are to the wholesaler source program, the more profit you drive to the wholesaler and the more profit they have to share back to you in terms of discounts,” he said. Nightengale said pharmacies should have confidence that being loyal to their purchasing agreement will maximize their discounts, and he recommends taking full advantage of the rebates in their contract. “The best partnership between an independent pharmacy and their wholesaler will drive the highest profitability for the pharmacy,” he said. Additionally, Meriweather said while volume itself isn’t a driving factor, volume per site matters because wholesalers will consider their cost to serve. “If I’m paying the same cost to deliver to your pharmacy whether you’re buying $50,000 or $500,000, my cost to serve you goes down as your volume goes up,” he said. “If I can reduce the overhead burden I have servicing your business, I have more margin to share back with you.” Pharmacies also need to be conscious of their payment terms. Lanctot said if pharmacies can commit to shorter payment terms and pay their invoices on time, the wholesaler can provide them with a better cost of inventory. It’s a win-win. “If you have a true wholesaler partner,
Questions to Ask Choosing a primary wholesaler is a big decision for your independent community pharmacy. Here are the top questions you need to ask. Is the wholesaler equipped to provide all of my product needs? Does the wholesaler understand my business goals and objectives? Does the wholesaler share my commitment to my patients, their health and their experience? How can the wholesaler help me maintain margins and grow my business? What can the wholesaler do to help my pharmacy compete and thrive in today’s marketplace besides providing better pricing? What does the wholesaler see for the future of retail pharmacy? What is it investing in to help advance that cause? How will I know what the wholesaler promised me is what I’m getting? Does the wholesaler have any conflicts of interest that would make it difficult to service my business or provide what was promised?
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