Can Pharmacies Be Wholesalers?

Prescription medications are distributed through pharmaceutical distributors, also known as wholesalers. These wholesalers act like the grocery stores of the pharmaceutical world, providing pharmacies with all the medicines and over-the-counter items they need to maintain a full inventory. The FDA has proposed a Rule to codify their existing informal recognition of the 5 percent “minimum quantity” rule. This rule states that pharmacies can sell up to 5 percent of their total annual prescription drug sales volume to professionals licensed for office use, and not be considered wholesalers based on those sales.

However, many pharmacies don't understand the complexities of the wholesale pricing model, according to Balcom. When choosing a major wholesaler, pharmacies need to be willing to break down all elements of that business relationship. McKesson's franchise network of independent pharmacies, known as Health Mart, is one example of how a wholesaler can differentiate itself. Pharmacies should also make sure that what they negotiated in advance is what they will get after the fact.

The FDA has stated that while some states have expanded the exemption to include pharmacy sales to entities other than licensed practitioners for office use, they are prohibited from adopting the same expansion. Smith offers everything you would expect from a major wholesaler, and also provides pharmacies with the tools and resources needed to improve their businesses and drive quality results. Balcom recommends looking for a reliable contract structure that works for both the pharmacy and the wholesaler. Independent pharmacies face increased competition from domestic pharmacy chains and reduced margins due to declining reimbursements.

Therefore, it is important for them to choose a wholesaler with accreditation of drug distributors who is licensed, up to date with the NABP, and trusted to safely distribute prescription drugs from manufacturers to pharmacies. Co-located pharmacies and wholesale distributors may require additional documentation to demonstrate compliance with state and federal laws and drug distributor accreditation criteria. PBA Health is dedicated to helping independent pharmacies achieve their full potential on the purchasing side of their business. Pharmacies can relieve some of the pressure by maximizing their primary agreement with a wholesaler. If they commit to shorter payment terms and pay their bills on time, the wholesaler can provide them with a better inventory cost.

Rachel Celli
Rachel Celli

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