Pharmacies often face a silent challenge: vendors substituting products that differ from what was originally ordered. The real kicker? Vendors don’t always notify pharmacies about these changes. As a result, many pharmacies remain unaware of the substitutions until they receive the deliveries. Even then, the substitutions might go unnoticed, leading to significant operational and financial impacts.
Vendor substitutions might appear to be a minor issue, but our customer data from the 2024 Pharmacy Smarter Purchasing Report tells a different story. Here’s a snapshot of how these substitutions affect pharmacies:
When pharmacies receive products they didn’t order, the consequences ripple through their operations. Here’s what typically happens:
SureCost flags discrepancies between received items and purchase orders, calculating the cost difference and allowing pharmacies to address issues with their vendors immediately. Some pharmacies even use SureCost to prevent suppliers from substituting items altogether.
Vendor reorders are another challenge for pharmacies, often caused by spikes in demand or late inventory replenishment. In 2023, pharmacies reordered an average of 1.67% of their items, with LTC pharmacies experiencing slightly higher reorder rates than retail pharmacies.
Retail pharmacies had to reorder an average of 3,941 line items when the original vendor couldn’t fulfill their drug orders, while LTC pharmacies averaged 2,738. Reorders not only disrupt operations but also increase COGS. Some pharmacies saw their COGS rise by almost $5M due to reorders, with an average increase of 0.19%.
Monitoring vendor substitutions and reorders is crucial for pharmacies aiming to maintain consistency and better manage drug shortages. Solutions like SureCost empower pharmacies to detect and address these issues promptly, ensuring they get what they pay for and maintain operational efficiency.