For many pharmacy professionals, primary vendor compliance often comes down to one of two assumptions. Some pharmacy purchasers may follow both:
- “Compliance is easy because I only purchase through my primary!”
- “I can’t focus on compliance since I have so much else on my plate.”
This makes compliance seem either very straightforward or incredibly difficult. In both cases, pharmacies are losing out.
Successful pharmacies choose another approach. They view compliance as part of a smarter purchasing strategy. They use it to increase savings and drive business intelligence without adding to their workload.
This blog post will show you how insights from compliance can optimize pharmacy purchasing. With the right strategy and solution to implement it, you’ll stop leaving money on the table and work smarter along the way.
Missed Opportunities With Compliance
How do pharmacies lose out with inefficient compliance practices? That depends on how they approach compliance. Some pharmacy purchasing managers admit they don’t have time to understand their contract and track compliance. That’s understandable. Pharmacy teams are more strapped for time than ever (and shrinking staff, drug shortages, more stringent DSCSA requirements and other challenges are adding even more work to their day).
Pharmacies think they’re saving time by not analyzing and tracking compliance. But they’re just losing money. If you’re not staying on top of compliance, you’re not maximizing rebates and end up paying fines while losing incentives.
Many pharmacies will simply shop around for the lowest price. Again, that makes sense—on paper. You may save upfront but miss out on better savings through rebates. If you have to pay penalties for not meeting targets, that’s more money lost.
Purchasing all items through your primary vendor can also seem like an easy fix when it comes to compliance. But that actually limits your pharmacy’s purchasing power and access to better options. A primary vendor’s pricing may not align with the market, yet that pharmacy is stuck paying those prices. Sticking to a single vendor means missing out on additional ways to save through secondary vendors, GPOs and buying groups.
Many pharmacies also lose money because they don’t manage their primary vendor compliance effectively. For example, vendors can make honest but costly miscalculations on rebates. If your pharmacy isn’t tracking purchasing volume and rebate tiers, you must wait for the vendor to send their reports at the end of the quarter. You’re losing money and left scrambling to address the issue months later.
Leverage SureCost Purchase Manager Compliance Insights™
Coming soon Q3 2024, leverage Purchase Manager Compliance Insights to capture the terms of your contracts and track compliance performance to overcome these challenges without overhauling existing processes. This should be part of a unified, smarter purchasing solution that enables you and your team to compare purchasing options and submit purchase orders for multiple vendors through a single interface.
With the terms of your primary vendor agreement built into how you make purchases, you can see the impact of each purchasing decision on compliance (such as rebate tiers and purchasing volume). You also gain the flexibility to purchase outside your primary while consistently achieving compliance; the system monitors how those decisions may affect compliance with your primary.
Pharmacies now have a sophisticated set of purchasing and compliance data at their fingertips. Instead of relying on the vendor to report what they choose to disclose once a quarter, pharmacies can see concise and accurate metrics based on their needs at any time. Best-in-class purchasing solutions will already have dashboard reporting on data that includes:
- Generic compliance ratio: spending on vendor generic source as a percentage of total agreement spend
- Primary vendor ratio: vendor source share as a percentage of the pharmacy’s total spend
- Rebate analysis, including expected reimbursement and current spend toward targeted tiers
- Generics ratio based on the primary vendor’s terms
- Minimum/maximum spend
Be sure the solution works with all of your vendors and integrates with your existing systems and processes. That way, you and your team can work smarter (not add more steps to how you do things).
Optimal Compliance Outcomes
In addition to maximizing their savings potential, smarter purchasing allows pharmacies to understand the metrics of their compliance performance in real time. It starts with true visibility into the terms of your agreement.
You can now see if you’re not meeting all of those terms and understand how to reach them. Based on your current compliance performance, what rebate tier will your pharmacy hit? Should you adjust your purchases if your vendor source spend percentage is low? If your vendor source generic spend isn’t sufficient, what can you buy more of through a vendor source program?
You can also determine how to make the most of your primary vendor agreement. For example, design your purchasing strategy to hit higher rebate tiers and then review your performance each month.
Compliance isn’t just a box to check. As we’ve seen, pharmacies can’t afford (literally) to treat it as an afterthought. For successful pharmacies, compliance means opportunity. You can save more and make strategic purchasing decisions, but you have to leverage smarter purchasing to make compliance work for your pharmacy.
