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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

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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

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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.

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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.

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SPOTLIGHT | Partner in Care Discover how one independent pharmacy thrives through unique partnerships with nonprofit organizations in the local community.

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MONEY | Private Profit NCPA’s front-end specialist Gabe Trahan explains the key to making more money from your front end.

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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

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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

elements@pbahealth.com

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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pbahealth.com/elements

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.”

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pbahealth.com/elements


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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

pbahealth.com/elements


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

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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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pbahealth.com/elements

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

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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

32

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

34

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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Elements Magazine - Vol.7 Iss.4 Dec 2018  

Elements Magazine - Vol.7 Iss.4 Dec 2018  

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