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Cancer Specialty Pharmacy Startups

Cancer Specialty Pharmacy Startups

cancer pharmacyCancer and oncology pharmacies have become a major factor in the rise of specialty pharmacy startups nationwide. Because cancer and chemotherapy medications are typically extremely expensive and complex to both manufacture and compound, it is easy to see why oncology pharmacies have become a cornerstone in the specialty pharmacy industry. Oncology drugs necessitate special storage, handling and administration procedures that must be taken into consideration when starting up a specialty pharmacy or expanding an existing pharmacy operation. Additionally, out of all the specialty pharmacy models, oncology start-ups must consider that this type of specialty pharmacy requires the most clinical communication and interaction with other healthcare professionals, patients and insurance providers. However, the opportunities to create a successful startup pharmacy operation in this specialty pharmacy area are in place and there are numerous success stories. A survey by Zitter Health Insights showed that around 31% of oncology and cancer IV therapies were fulfilled in 2013 by cancer specialty pharmacies. Additionally it was reported that almost 28% of oncology medications were distributed to physicians’ offices or directly to patients to bring to their clinic by oncology specialty pharmacies in 2015.

The Onset of the Cancer Specialty Pharmacy

Historically the oncology medication treatments were administered to cancer patients in a hospital, but this changed dramatically in the early 1990’s. Cancer treatments increasingly moved to the clinic or physician’s office settings, with an estimated 80 – 90% of patients receiving their oncology drugs intravenously outside of the traditional hospital setting. This resulted in thousands of cancer clinics being set up across the nation who were being supplied by several major drug suppliers. The primary oncology drug suppliers were divisions of major wholesalers who dominated the marketplace. The largest of these providers that eventually became known in the industry as Specialty Distributors (SD) included:
– McKesson Specialty Care Solutions
– Cardinal Specialty Pharmaceutical Distribution
– Oncology Supply (owned and operated by the Amerisource Bergen Corporation)
– CuraScript (a division of ExpressScripts)
Then arrived “the age” of oral oncology medications. With the dramatic explosion in the number of oral cancer medications available for oncology treatment during the first decade of the new millennia, oral drugs accounted for a little over 35% of the marketplace by 2011 as reported in Pharmacy Times.
Physicians were focused on their patients who received intravenous medications and oncolytics at their offices and clinics, thus sending patients to their local pharmacies who were really unprepared to dispense the oral cancer medicines. Not only did the retail chains and independent community pharmacies not wish to stock the expensive medications, but there was a definite lack of patient counseling and education regarding the dispensing of these prescriptions. Specialty cancer and oncology pharmacies quickly emerged in the marketplace as a viable solution.

Additional Challenges for Oncology and Cancer Specialty Pharmacy Startups

Along with all the usual considerations involved in the planning and execution of a pharmacy startup operation to become a successful business, an oncology or cancer pharmacy has two additional challenges that must be taken into consideration. The first is the counseling and education involved with the dispensing of these medications. In many instances the specialty pharmacist is at the communication center and the key to a patient’s treatment regimen being a success. In the instance of “brown bagging” (where the cancer specialty pharmacy ships the medications directly to the patient), many pharmacists admitted that they underestimated the amount of time required to counsel and educate patients. It definitely requires the right personality and a pharmacist who is patient and enjoys extensive patient interaction. For “white bagging” (where the cancer specialty pharmacy ships the medications directly to the physician or clinic for the patient’s treatment when they arrive), the same is true. The physician or clinic’s staff members depend on frequent communication with the specialty pharmacist and once again the time required for this essentially vital task being performed well is significantly underestimated in many situations. The cancer regimens presented a challenge to all the healthcare professionals involved in the patient’s oncology treatment by the necessity of the ongoing clinical support that the specialty pharmacist now fills the role of providing.

The second additional challenge faced by the specialty pharmacy business owner that must be considered is the reimbursement from third-party providers. Many third-party providers embraced the cancer specialty pharmacies as a means to controlling costs, while the drug companies saw them as a good way to manage the expensive inventories associated with their products. However, the issues surrounding reimbursement have become extremely complex. It is important to keep in mind that about half of all specialty drug spending falls under the patients’ medical benefit coverage. Add into the scenario the Federal 340B Drug Pricing Program which requires that the drug manufacturers provide the medications at significantly reduced prices and you can start to see the complicated landscape and the “cloudy” issues involved. The drug manufactures embrace the specialty pharmacies, as they have proven effective as an additional outlet to dispense and ship their products to patients and providers. The manufacturers realize that the traditional channel strategy of wholesale distribution of their products will lead to a diminished return on investment for them. The distributor channels obviously are opposed to the cancer specialty pharmacies. They see a significant decrease in their distribution volume, plus decreased profits. If they can get the specialty pharmacy to order through them, then they get to keep the volume, but earn far less profit.
Faced with the dilemma of extremely expensive drugs used for a small proportion of patients, payers have attempted various new strategies designed to control costs. To participate, the specialty cancer pharmacy is faced with the complexity of the reimbursement system. These attempts at controlling costs include such strategies as:
– Formulary specialty tiers.
– “Split-Fill” programs.
In this scenario only half of the first 30 days of a patient’s therapy is covered for payer reimbursement until the patient is proven to be tolerating the drug and positively responding to the drug before treatment can be continued.
– Prior authorization requirements.
– Mandated use of designated specialty pharmacy providers.
To become a designated specialty pharmacy provider in many instances requires certification by the manufacturer of the pharmacy, the pharmacists and the technicians involved in the drug’s storage, handling, compounding and shipping. It must also be noted that trying to become accepted by a manufacturer into their distribution network usually requires a “tremendous” amount of data generation, collection and storage.

The Upside to Opening a New Cancer/Oncology Pharmacy

The upside of these challenges is the fact that in 2018 approximately 85% of Managed Care Plans (MCP’s) had entered into contracting with specialty pharmacy providers in regards to the supply of their oncology drugs. Although as noted above it can be a difficult task, the manufacturers also are embracing the specialty pharmacy business to help increase their market share. The fact that 51.4% of the Managed Care Plans reported using a single, preferred specialty provider is a challenging fact, but many organizations are now taking a very close look at this. One such group known as The Community Oncology Alliance (COA) is a forerunner whose mission “is to ensure that cancer patients receive quality, affordable, and accessible cancer care in their own communities”. They have become a major voice in being “dedicated to advocating for community oncology practices and, most importantly, the patients they serve”.

Find an Experienced and Reputable Pharmacy Consulting Firm to Partner With 

The cancer specialty pharmacy startup is a business and needs to make a profit. Yet the complex challenges discussed present risks that can affect the bottom line (plus result in a cash flow problem that is known in the entrepreneurial world as “the killer of new business enterprises”). Since the oncology specialty pharmacy usually takes on the assignment of benefits from their patients, they bear the burden of obtaining reimbursement by billing the payer. Thus the specialty pharmacy is at risk for incurring the pharmacy costs, and when dealing with such expensive drugs cannot afford to make mistakes or miss opportunities. The point is that as with any pharmacy operation, there are numerous factors to consider in the planning, execution and long term success of starting up, opening and maintaining a new oncology or cancer specialty pharmacy business. The planning and execution are key to a smooth pharmacy operation being opened and becoming a successful business. Just a few of the considerations and tasks that are required for any successful pharmacy start-up operation include:
– The creation and review of a business plan
– Guidance regarding type of corporation to form – Limited Liability or LLC, C-Corporation, S-Corporation, Sole Proprietorship or a General partnership
– Startup cost estimates
– Obtaining financing
– Work flow design
– Assistance and guidance with the DEA & State Board of Pharmacy application process
– Creating Policy and Procedure manuals and Continuance Quality Improvement (CQI) manual
– Purchasing the equipment and supplies
– Obtaining legal support
Staffing (not only the pharmacist, but technicians and ancillary support staff personnel)
As always, please contact us here at HCC if you have questions regarding establishing or running an oncology or cancer specialty pharmacy. With over 30+ years in the Pharmacy Consulting business, HCC can assist your business with expert advice in any area of your pharmacy operation or practice. We urge you to contact us today to see how our Pharmacy Consulting services can help. With a full-time staff of in-house Pharmacy Consultant specialists, HCC can answer any questions that you may have in all areas of your business. Contact us online or call us at 800-642-1652.

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Mail-Order Pharmacy Startups

Mail-Order Pharmacy Startup Consulting Opening Up New Mail Order Pharmacy The startup of mail order pharmacies is on the rise and the opening up of a mail-order pharmacy is becoming an extremely lucrative business model and investment. This specific market segment of the specialty pharmacy “arena” is undergoing rapid growth, rapid expansion, and equally rapid change. Independent mail-order pharmacies are now thriving by specializing in a specific niche or focusing on a particular disease. This means that the the large mail-order pharmacy operations can no longer dominate the marketplace.

The major mail-order pharmacies are associated with various large insurance providers and large retail chains such as Walgreens, Humana, Aetna and Caremark. The three largest are Express Scripts (Cigna), OptumRx (UnitedHealthcare) and CVS Health (CVS Caremark). Historically the majority of specialty pharmacies have contracts with Pharmacy Benefit Managers (PBM), but the number of independent mail order pharmacies specializing in specific niches or diseases is increasing at a rapid pace and thus these independent pharmacies are exponentially increasing in both volume and market share.

What’s Causing the Rise of the Mail-order Pharmacy?

To answer this question, let’s step back a moment first and cite some statistics from our most recent blog post earlier last week regarding the economic forecasts for specialty pharmacies. As was discussed, with a projected annual growth rate of about 20% per year according to the AMCP (American Society of Managed Care), many industry experts state that the specialty Rx industry is still in its infancy.  Spending on specialty pharmacy and services was almost $87 billion in 2012. However, Drug Channels estimated that in 2014 alone, “retail, mail, and specialty pharmacies dispensed about $78 billion in specialty pharmaceuticals.”

To then better focus in on the cause for this spike in the startups of independent mail-order pharmacies across the USA, one will first need to take a quick look at the topics of both Pharmacy Benefit Managers and the repackaging of medications.

Pharmacy Benefit Managers(PBM)

Pharmacy Benefit Managers (PBM) are third party administrators (TPA) of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans. According to the American Pharmacists Association (APhA), “PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims”. Their role is to work with government programs and self-insured companies to help reduce drug costs and pharmacy expenses covered by the insurance plan. The problem that has arisen regarding Pharmacy Benefit Managers is that many feel that the PBMs prevent competition. As noted by the National Community Pharmacists Association (NCPA), the pharmacy benefit managers actually have multiple incentives and monetary reasons to prevent their mail-order pharmacy operations from having to compete with the local community pharmacies. As stated in a recent NCPA publication, “pharmacy benefit managers are the only companies that are allowed to process transactions for their rivals, set prices for their rivals, and determine how their rivals will compete”. It is clear that because the pharmacy benefit managers are able to establish both the billing rates and the copayment rates that the retail pharmacies charge their patients, the PBM is able to manipulate the contracts to direct the prescriptions to their own mail-order pharmacy operations for fulfillment. This puts the community pharmacy at a distinct disadvantage.


The repackaging of medications therefore has become a key factor in the emergence of independent mail-order pharmacies. To better understand this, one must note that by repackaging drugs the mail-order pharmacy operation can basically set up their own pricing. This is based on the following facts:
–  Private insurance plans most often use AWP (Average Wholesale Price) for establishing the payment rates.
– The AWP is determined and associated with an NDC (National Dispensing Code) and there typically are multiple AWPs for every drug and medication.
– By repackaging drugs and medications the mail-order pharmacy can create new NDC numbers and then select any AWP they want to use when it comes to billing.

One other factor to consider is that the PBMs control the formulary and the Maximum Allowable Cost (MAC) lists for the health plan provider. The MAC list is basically the pricing ceiling for a drug, or the maximum that a pharmacy can get reimbursed for. The PBMs commonly establish MAC lists for the community pharmacies for generic prescription drugs, but rarely use a MAC list at their own mail -order pharmacies. Once again the community pharmacy must operate at a clear competitive disadvantage and competition is stifled.

So How Does an Independent Mail Order Pharmacy Win?

Many independent mail-order pharmacies have now turned these factors to their advantage and are thriving. Many have become extremely profitable business enterprises by specializing in a specific niche or disease. Examples include cystic fibrosis, hospice, nuclear, COPD and respiratory medications, plus oncology and cancer medications. This specialization has led to increased efficiency, decreased waste, improvements in production and shipping, and ultimately increases in profitability and market share. Additionally, many independent mail-order pharmacies have embraced customer service, thus leading to significant customer satisfaction and patient loyalty. Medication Therapy Management (MTM) programs have also been embraced by many independent mail-order pharmacies to help patients improve in regards to their drug compliance, which obviously results in better medication outcomes.

Who Can Help Me Start Up a Specialty Pharmacy?

All agree that the mail-order pharmacy business model has become a lucrative business venture for many entrepreneurs. Yet there are numerous extremely complex challenges and issues that must be addressed. As with any new pharmacy start-up, the planning and execution are the absolute key to a smooth pharmacy operation being opened and becoming a successful business. Just a few of the considerations and tasks that are required for any successful pharmacy start-up operation include:
– The creation and review of a business plan
– Guidance regarding type of corporation to form – Limited Liability or LLC, C-Corporation, S-Corporation, Sole Proprietorship or a General partnership
– Startup cost estimates
– Obtaining financing
– Work flow design
– Assistance and guidance with the DEA & State Board of Pharmacy application process
– Creating Policy and Procedure manuals and Continuance Quality Improvement (CQI) manual
– Purchasing the equipment and supplies
– Obtaining legal support
Staffing (not only the pharmacist, but technicians and ancillary support staff personnel)
As always, please contact us here at HCC if you have questions regarding establishing or running a mail-order pharmacy. With over 30+ years in the Pharmacy Consulting business, HCC can assist with expert advice in any area of your pharmacy business or practice. We urge you to contact us today to see how our Pharmacy Consulting services can help YOU. With a full-time staff of in-house Pharmacy Consultant specialists, HCC can answer any questions that you may have in all areas of your business. Contact us online now or call us today at 800-642-1652.

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Specialty Pharmacies

Specialty Pharmacy Consultation specialty pharmacy startupSpecialty pharmacies have been designated by numerous industry experts as the fastest growing segment of the pharmacy industry. This is based on the number of new specialty pharmacies opening up nationally, plus the rise in the number of existing pharmacies expanding their operations via the addition of specialty pharmacy services. With a projected annual growth rate of about 20% per year according to the AMCP (American Society of Managed Care), many entrepreneurs are investing in the continued success of specialty pharmacies as a lucrative business model. Yet the industry is still in its infancy according to several experts. Spending on specialty pharmacy and services was almost $87 billion in 2012. However, Drug Channels estimated that in 2014 alone, “retail, mail, and specialty pharmacies dispensed about $78 billion in specialty pharmaceuticals.”

Although we must all keep in mind that it is virtually impossible to come up with an exact number for pharmacies dispensing specialty medications, estimates project that this will quadruple by the end of next year (2020), with spending reaching around $400 billion (or slightly less than 10% of the US health spending in total). Add in the fact that of the 27 new drugs approved in 2013 by  alone by the FDA, 14 were specialty pharmaceutical medications, and just such statistics are reminding many of the famous California Gold Rush of 1848. Perhaps we should call it the “Specialty Pharmacy Gold Rush”? It is clear that the prospect of success regarding starting up a specialty pharmacy is there, but remember that it is directly proportional to the number of specialty pharmacies “panning for the gold” that is rapidly expanding.

Which Specialty Model Is a Lucrative Startup Now?

An analysis in 2012 by UnitedHealthcare reveals that about 51 percent of spending on specialty drugs is for cancer, rheumatoid arthritis, and multiple sclerosis. These are followed by HIV, hepatitis C, respiratory conditions, anticoagulants, growth deficiency, and transplants. Originally, the pharmacies that were classified with the “Specialty Pharmacy” designation were primarily dealing with the preparation of IV and injectable medications. This however rapidly expanded into many other types and models of specialty pharmacies that have proven to be successful business models. A quick look at several lucrative “winners” currently in the specialty pharmacy game are listed below for your review.

Compounding Pharmacies
Dermatologicals were a perfect prescription type for specialty pharmacies to embrace. Any pharmacist can tell you that each dermatologist has their own “secret sauce” that most chain drug stores always turned away. Add in the explosion of compounding opportunities (examples such as penile implant solutions, veterinary medications, the delivery of medications in alternative strengths, dosage forms and flavors for infants are just a few) and the number of compounding pharmacies has increased exponentially in the last decade alone. Compounding pharmacies additionally must meet the 503B FDA facility requirements established in the Quality Compounding Act of 2013, plus meet USP 797 compliance guidelines.

Mail-Order Pharmacies 
This market segment of specialty pharmacies is undergoing rapid growth and equally rapid change. Most of the specialty pharmacies have contracts with Pharmacy Benefit Managers (PBM), but some are independent mail order pharmacies specializing in a specific niche or disease such as cystic fibrosis, hospice, nuclear, COPD and respiratory medications, plus oncology and cancer. The major mail order pharmacies are associated with many insurance providers and large retail chains such as Walgreens, Humana, Aetna and Caremark. The three largest are Express Scripts, OptumRx (UnitedHealthcare) and CVS Health.

IV and Infusion Pharmacies –
Special permits are required for the operation of this type of specialty pharmacy practice. One specific application for a permit requires a detailed written response to a list of 21 clinical and operational questions which are based on your Policies and Procedures. Additional  equipment, supplies, logs and records are necessary. Sterile compounding equipment is a must (such as Laminar Flow Hoods), plus storage and handling requirements pertaining to both the ingredients and the specialty drugs prepared must be strictly adhered to.  As with other types of compounding pharmacies, IV and infusion pharmacies additionally must meet the 503B FDA facility requirements established in the Quality Compounding Act of 2013, plus meet USP 797 compliance guidelines.

Specialty pharmacy startups were again at the forefront of discussions earlier this year after the release of an article by HealthLeaders Magazine (a division of Simplify Compliance). The study stated that the commercial pharmacy spending rate in the USA had risen to a new high that greatly exceeded the previous five year average of a 14% increase. The spending rate increased by over 18%, far exceeding the already optimistic economic projections that analysts were expecting. What’s important to note from the study for our current discussion regarding a specialty pharmacy startup’s viability is the fact that oncology and immunotherapy drugs were cited in the report as the most significant drivers of the higher spending rate seen. One can then extrapolate that data to predict that investments made in the startup of a pharmacy dealing with both oncology and immunotherapy drugs will most likely yield a lucrative return or result. That’s obviously dependent in the end on how well the business startup is planned and executed, plus the proper management of the business and operation afterwards.

How Do I Start Up a Specialty Pharmacy?

Opening and starting up a specialty pharmacy requires both expertise and experience to result in a successful business operation. Yes, it is similar in many respects to starting up a “traditional” retail pharmacy. However, in addition to the list of steps followed in the planning and execution of more “traditional” pharmacies, there are numerous equipment, policies, procedures and operational considerations. How a business owner chooses to get into the specialty pharmacy market is an investment decision. While more and more pharmacies are entering the specialty pharmacy market, the market is not without its challenges. Let a nationally renowned pharmacy consulting firm like Healthcare Consultants help you get the most out of your investment and guide you through the entire process.

Who Can Help Me Start Up a Specialty Pharmacy?

If you’re considering opening or starting a Specialty Pharmacy, or perhaps expanding or turning a portion of your existing pharmacy business into a specialty pharmacy, then Healthcare Consultants can help you! HCC has helped plan and open more specialty pharmacies nationally than perhaps any other Pharmacy Consulting firm in the industry. Plus HCC offers the additional advantage of Pharmacy Staffing and Pharmacy Management, being in the pharmacy recruitment and staffing business for over 30+ years now, as well as being recognized as one of the premier Pharmacy Consulting agencies in the nation. With a proven track record and a history of success, HCC can plan and execute a strategy so you can win in the Specialty Pharmacy arena. Contact us online now or call us today at 800-642-1652 to discuss how we can help you startup, grow and/or expand your pharmacy business.


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Customized Policy and Procedures

Pharmacy Policies and ProceduresA customized Policy and Procedures (P & P) manual is no longer an option, it is truly a requirement. As we’ve previously discussed, every pharmacy is required to have and maintain a written Policy and Procedures manual on its premises. As noted by the NABP (the National Association of Boards of Pharmacy) each state has their own specified policy requirements, laws and regulations that every pharmacy is required to incorporate into their manuals and update as needed that operates in that particular state. Note that this is also true for the majority of third party PBMs. Perhaps even more importantly, the pharmacy is required to actually implement and follow their policies and procedures and must also be able to show proof through documentation that they are indeed doing this. Another relevant issue that also “comes into play” is the updating required to every P & P manual (whether custom written or not) that the inspectors want to see. Creating your P & P manual is not the end, but an ongoing and never-ending task that must be done in order to maintain your manual to be as up to date as is possible.

Recently while discussing State Board of Pharmacy inspections with a client, the discussion centered on how much the inspection process has changed over the past several decades. Instead of going directly to the pharmacy’s prescription records as was commonly seen in years past, the State Board of Pharmacy inspectors now immediately ask to see the pharmacy’s Policy and Procedure manual. Perhaps taking a good look at two recent events concerning pharmacies that are getting a lot of national media attention will help us all to better understand what this change really means.

Ohio Board of Pharmacy Pursuing Disciplinary Action Against 3 Pharmacists

Earlier last week (on October 17th) The Ohio Board of Pharmacy announced that it will be actively pursuing disciplinary actions against three pharmacists and the Mount Carmel Health System (The Mount Carmel West Hospital in Columbus, Ohio employed the three pharmacists) based on the dispensing of “excessive”amounts of painkillers. Dr. William Husel, the physician who ordered the painkillers for his patients, worked as an intensive care practitioner at The Mount Carmel West Hospital and is currently charged with twenty-five counts of murder.

Two of the pharmacists were cited for verifying unusually large doses of fentanyl, while the third R. Ph. was cited for his “supervisory failures in reference to 28 cases in which nurses overrode controls on automated dispensers in non-emergencies to access drugs ordered by Dr. William Husel for patients who then died”.

Mount Carmel has publicly apologized, terminated over twenty pharmacists, nurses and managers, plus stated that they have thoroughly reviewed and improved their Drug-safety Policies and Procedures. Mount Carmel has additionally agreed to pay over $13 million in settlements to patients’ families so far.

Why this particular case is a great example of a pharmacy’s need for a well written, customized, and up-to-date written P & P manual is the fact that the three pharmacists and Mount Carmel West were cited by the Ohio Board of Pharmacy for their “failure to create or enforce policies that provided for the safe and efficient distribution of drugs in all areas of the institution”. Both the hospital and pharmacists were additionally cited for their “failure to provide appropriate supervision and control of automated dispensing units (which allowed nurses to override controlled substances for non-emergency cases) due to the lack of the appropriate and adequate policies and procedures in place”.

Recent FDA Inspections – FDA 483 Forms and Warning Letters

A tremendous amount of national media attention regarding 503A compounding pharmacies and 503B outsourcing facilities has centered for the past year or more on The FDA (U.S. Food and Drug Administration) taking such unprecedented aggressive actions that were previously non-existent. These actions have included numerous on-site inspections, the issuing of observation based warning letters, instituting recalls, and other various actions such as the issuing of Compounding Risk alerts.

What makes this so relevant is that in our ongoing blog posts discussing all the recent FDA actions including new FDA 483 Forms and Warning Letters, there is always the same “common thread” seen in every one! The meticulously detailed observations documented by the FDA inspectors always centers around one of two issues:
1. The pharmacy or facility simply had no policies and procedures, or the ones that they did have were inadequate.
2. Even if adequate written policies and procedures were in place, there was neither compliance with those in place, and/or a lack of documented accountability that the policies & procedures were being followed or adhered to. This was pointed out over and over in the inspectors detailed observations that are included in each and every Warning Letter that we’ve reviewed so far.

Who Can Create a Customized P & P Manual for You?

Healthcare Consultants Pharmacy Staffing can! Our experienced consultants can help you and your staff develop a new P & P manual and/or customize your existing one. We will also define and document a process that will allow your pharmacy manager to update and modify the manual as required. HCC has over 30+ years of experience in both  Policy and Procedure development, (including Custom 503A and 503B Policies & Procedure manuals) and operational evaluation and can provide your pharmacy team with valuable insights and recommendations.

Healthcare Consultants is a leading national Pharmacy Consulting company offering expertise in all areas of pharmacy consulting. Known nationally as one of the industry leaders in providing a full range of professional pharmacy consultation services to its vast array of clients, HCC is owned and operated by pharmacists. Healthcare Consultants can provide proven expertise and experience in all facets of pharmacy operations, including retail, hospital and all specialty pharmacy venues. Contact us online or call us today for a Free Consultation at 800-642-1652 to discuss how we can help you.

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Recent FDA 483 Actions

recent FDA warningAfter discussing the FDA’s ongoing inspections of compounding pharmacies and cGMP, it seems logical to review some of the latest actions that have recently taken place (including new FDA 483 Forms and Warning Letters). Although the FDA has only published recent Warning Letters that were sent by August 31, 2019 (so any issued in September of 2019 or after have not yet been published on the FDA website), two examples from August of this year are perhaps worth taking a more detailed look at. They help to demonstrate how aggressively the FDA is still currently proceeding with their efforts focused directly on these facility inspections.

Office of Unapproved Drugs and Labeling Compliance Warning Letters

Before taking a closer look at the FDA’s most recent actions, it’s important to note that the 483 Forms and Warning Letters were issued by the FDA’s Office of Unapproved Drugs and Labeling Compliance. Other FDA offices that also issue Warning Letters include:
– Office of Prescription Drug Promotion Letters
– Office of Compliance/Immediate Office
– Office of Manufacturing Quality Letters
– Office of Scientific Investigations Letters
– Office of Drug Security, Integrity and Recalls

Please note that we recommend that you should probably take a much closer look at each of the Warning Letter examples used below when time permits. We’ve included a link for each individual Warning Letter from the FDA’s website. In both of the examples, one can see very quickly that the FDA inspectors were quite thorough in their inspection of the facility and their documentation of their observations. In both examples you are able to get a good look at how specific the FDA is in their requirements to address each individual observation, plus how extremely complicated these requirements actually can be. Comprehensive independent reviews by third parties, risk assessments, and detailed plans to alleviate the facility’s issues as quickly as possible are now the norm instead of the exception.

Action #1 –

On 8/19/2019, Haw Par Healthcare Limited received a Warning Letter delivered via UPS from the FDA’s Office of Unapproved Drugs and Labeling Compliance. The warning letter cited numerous significant violations of current good manufacturing practice (CGMP) regulations for finished pharmaceuticals. The FDA summary basically stated that the facilities’ manufacturing methods and processes did not conform to CGMP. The FDA’s conclusion was that the drug products were therefore considered adulterated as defined in section 501 of the Federal Food, Drug, and Cosmetic Act (FD&C Act).
Additionally, the FDA stated that a product that Haw Par Healthcare Limited manufactured was misbranded under section 502 of the FD&C Act, and that the “Introduction or delivery for introduction of such products into interstate commerce is prohibited under section 301(a) of the FD&C Act, 21 U.S.C. 331(a)”.

Click here to view the entire warning letter that Haw Par Healthcare Limited received from the FDA:

Action #2 –

On August 22, 2019 Polimeros y Servicios S.A. also received a warning letter from the FDA’s Office of Unapproved Drugs and Labeling Compliance that essentially was almost identical to the warning letter that Haw Par Healthcare Limited had already received a few days prior.

An actual discussion of each noted observation for each individual warning letter would take several hours, but we strongly recommend that you actually take a very close look at at least one of these warning letters to get an accurate idea of of the the detail  and complexity that’s involved. The warning letter that Haw Par Healthcare Limited received was incredibly almost 2,500 words in total!

Click here to view the entire warning letter that Polimeros y Servicios S.A. received from the FDA:

CGMP Consultant Recommended

In both warning letters, the FDA “strongly” recommended that the facility hire a CGMP consultant. As the Warning Letters actually stated: “Based upon the nature of the violations we identified at your firm, we strongly recommend engaging a consultant, qualified as set forth in 21 CFR 211.34, to assist your firm in meeting CGMP requirements”.

It’s important to note that the FDA is clear that the of a consultant does not relieve the facility or operation of the responsibility to comply with CGMP. It is the firm’s Executive Management that is still ultimately responsible for resolving all of the CGMP violations that exist.

Who Can Help You Prepare For the Inevitable FDA Inspection & Your Response?

Once again, these are just two recent examples of the detailed level of observation and documentation that the FDA inspectors are exhibiting. Keep in mind that the FDA will thoroughly review the facility’s response and revisit to see whether or not the operation is doing their utmost to be in compliance.

Take action now and be prepared! In other words, take a look now and don’t wait for the inevitable inspection that is certain to come! The FDA strongly recommends that you undertake a comprehensive assessment of your facility’s current operations, including facility design, procedures, personnel, processes, maintenance, materials, and systems. As the FDA actually states: “A third-party consultant with relevant sterile drug production expertise should assist you in conducting this comprehensive evaluation”. The FDA also points out very clearly that “It is YOUR responsibility to ensure that your firm complies with all requirements of federal law, including FDA regulations”.

Which Third-Party Pharmacy Consulting Firm Can Help Me?

Healthcare Consultants has been known as a national leader in pharmacy consulting for over 30+ years now. Since 1989, our network of experienced pharmacy consultants and in-house specialists have provided expert guidance across all sectors of the pharmacy industry. We work with pharmacies of every size – from the corner drug store to national corporations and organizations – with only one goal in mind: to improve your pharmacy’s business operations.

One of the services that HCC specializes in is the development and customization of both 503A and 503B Policies and Procedures. We have nationally renowned in-house experts and consultants with proven “track records” and successful results in responding to both FDA 483 Forms and Warning Letters.

We urge you to contact us today to see how our Pharmacy Consulting services can fit your needs and help you improve your business now, plus be ready for the future. With a full-time staff of experienced in-house Pharmacy Consulting specialists, HCC can answer any questions that you may have in all Pharmacy settings. Contact us online now or call us today at 800-642-1652 for a free consultation.



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FDA Inspections of Compounding Pharmacies

FDAThe vast majority of compounding pharmacies that are currently operating within the United States are actually state licensed facilities that are classified as such under section 503A of the the United States Federal Food, Drug, and Cosmetic Act (sometimes referred to as either the FFDCA, FDCA, or FD&C). The FD&C is a group of federal laws that were first enacted by the US Congress in 1938 and granted authority to the U.S. Food and Drug Administration (FDA) to oversee the safety of all foods, drugs and medications, medical devices, plus cosmetics that are sold within the USA. Although initially replacing the previous Pure Food and Drug Act of 1906 after more than one-hundred deaths were caused by a sulfanilamide preparation where diethylene glycol was used to dissolve the drug and make a liquid form (sometimes referred to as the “Elixir Sulfanilamide Disaster”), the FD&C has been amended numerous times, most recently the requirements being added regarding bioterrorism preparations.

What Defines a 503a Compounding Pharmacy?

A 503a pharmacy is allowed to compound drugs that are not FDA-approved, are not subject to the requirement that labeling bear adequate directions for use, and are not subject to CGMP requirements, plus are dispensed to a patient only based on the individual patient’s needs (and thus require a valid Rx or prescription). These pharmacies are primarily under the jurisdiction of their domicile State’s Board of Pharmacy (BoP), or equivalent, and held to that individual State’s rules and statutes regarding compounding. Most States have adopted in part or in full the United States Pharmacopeia (USP) published guidelines (chapters 71, 85, 795, 797, and 1116) as their rules regarding compounding. Additionally, chapter 800 has just recently been published and is now being evaluated by every BoP for possible adoption and incorporation.

Is a Compounding Pharmacy’s Adherence Sufficient?

Most pharmacists believe that adherence to State rules, statutes and all applicable USP guidelines is the extent of their regulatory responsibility. They would be wrong!

The FDA has jurisdiction anywhere drug products are prepared, packed, or held regarding “Insanitary Conditions”, which also includes all 503a pharmacies. The FDA has recently been utilizing this narrow provision to gain entry to all 503a pharmacies, often accompanied by local State BoP inspectors, to “evaluate operating conditions currently being demonstrated” by compounding pharmacies. So far they have “observed” the operations of many dozens of 503a’s every year and the numbers, frequency and pace of these inspections are rapidly escalating and increasing. The FDA inspectors will spend several days reviewing and observing the pharmacy’s compounding operations. However, it’s critical to know that the FDA inspectors will evaluate the pharmacy NOT based on either the individual State rules or the USP guidance, but instead on the far more stringent Current Good Manufacturing Practices (cGMP).

What are the Current Good Manufacturing Practices (cGMP)?

The Current Good Manufacturing Practices (cGMP) are the Food and Drug Administration’s formal rules and regulations that basically cover all of the the design, monitoring, control, and maintenance of manufacturing processes and facilities operating in the US. Note that the actual compliance by the facility is regulated by the FDA and are the exact same regulations that all drug manufacturers must follow. When an actual inspection is completed, any concerns by the inspectors and any observed deviations are listed on the FDA form 483 (Observations) and published on the FDA website. Depending on the nature of the observations, pharmacies are then required to submit a corrective action plan and undergo a follow up inspection, usually in about twelve to eighteen months after the initial inspection had taken place. If the observations initially observed are deemed as “Significant”, or the 503a does not adequately respond and produce a viable plan to address the initial observations that were documented, the FDA has several  options available that may result in a Warning Letter, a drug recall, and / or a Consent Decree for the pharmacy found deficient and in violation. Please note that a Consent Decree is also known commonly as the “Death Penalty” for the pharmacy!

How Do I Get Prepared For an FDA Inspection?

An increased tempo of FDA inspections of compounding (503a) pharmacies over the last three years has made understanding and meeting their expectations vitally important for the continued viability and operation of any compounding pharmacy. All Pharmacy managers and owners of compounding pharmacies, especially those compounding “High Risk” medications and / or shipping into other states, must be aware of the likelihood of an unannounced FDA inspection and what they can do to best “get ready” and be prepared for it.

Preparation by a 503a pharmacy for a potential FDA inspection actually must begin with a complete understanding of how an FDA inspector actually evaluates a compounding pharmacy. A guidance document published by the FDA regarding insanitary conditions in compounding facilities can be found here: Another extremely valuable reference is a free newsletter, produced by an HCC affiliated consultant, that documents and evaluates each and every FDA form 483 that’s issued to any 503a or 503b facility. This newsletter analyzes and discusses each observation that the FDA inspector identifies for a particular pharmacy, thus providing the reader with a deeper understanding of what the FDA expectations actually are. The free newsletter can be obtained thru this sign up link: After signing up, you will receive all new newsletters generated via an email.

The next step, once the pharmacy manager is familiar with the actual FDA inspection process and the FDA’s expectations, is to conduct a thorough assessment of the situation that currently exists at the pharmacy: including the business’s physical facility, operations, Policy & Procedures, training, and quality management. Remember, the FDA does not use USP guidance as a reference! The FDA uses cGMP as the gold standard. Becoming conversant in cGMP is now critically important to understanding that these practices are more than just “USP On Steroids”, as is frequently stated.

Who Can Help My Compounding Pharmacy Get Prepared for an FDA Inspection?

Healthcare Consultants (HCC) can provide you with experienced pharmacy consultants that have extensive knowledge of both the USP and the cGMP requirements, as well as the FDA inspection actual expectations. From assessing every single 483 that’s ever been issued to both 503a pharmacies and 503b outsourcing facilities, our material expert consultants are keenly aware of the FDA expectations and know the “routine”, plus will help you to be prepared. They will identify the specific areas of risk for compounding pharmacies such as yours, plus assist your managers in both the corrective action planning that’s required and its implementation, thereby lessening the risk of  possible “observations” by FDA inspectors should they “visit” your pharmacy.

Here at HCC, we recommend this “enhanced” survey for all medium to large sterile compounding pharmacies as a means of minimizing the impact of an unexpected FDA inspection. We personally have seen far too many 503a pharmacies caught by surprise when the FDA showed up in their lobby demanding immediate access to the pharmacy.

Healthcare Consultants (HCC) provides compounding (503a) pharmacies and outsourcing (503b) facilities with scalable and client defined comprehensive assessments. Our expert consultants, experienced pharmacists and cGMP experts, can evaluate the business globally or focused on specific areas such as pharmacy operations, regulatory compliance, workflow, facility suitability, inventory management, financial performance, quality assurance, and risk evaluation.

About HealthCare Consultants

From major hospitals and healthcare systems to individual community pharmacies, HCC has been the nationally renowned pharmacy consultant firm of choice for over 30+ years now. We work with businesses of every size – from the corner drug store to national corporations and organizations – with only one goal in mind: to improve your pharmacy’s business operations. We can assist with expert advice in any area of your pharmacy business or practice.

We urge you to contact us today to see how our Pharmacy Consulting services can help you improve your business now, plus be ready for the future. With a full-time staff of in-house Pharmacy Consultant specialists, HCC can answer any questions that you may have in all pharmacy settings. Contact us online or call us today at 800-642-1652 for a free consultation.

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Pharmacy Security

Pharmacy SecurityPharmacy security has recently been a dominating topic in the news. As everyone already knows, pharmacies have always been a prime target for burglaries, theft, drug diversion and robberies.With an estimated 7,000 pharmacy break-ins occurring annually in the US, this is a possibility and a risk that everyone in our profession must face. Yet sometimes we think that although the possibility exists, this is something that happens frequently, but NOT to us! Plus it’s important to keep in mind a recent statistic that sheds significant light on the matter: pharmacies actually have a 14% probability of being the victim of a burglary, robbery or of an employee drug theft in 2019 and 2020.

The theft of narcotics and drugs from pharmacies initially received a vast amount of media and news coverage way back in 2010 when the CDC (Centers for Disease Control and Prevention) came forth and declared that prescription drug abuse had reached “epidemic levels” nationally. Following the CDC’s lead, the DEA (US Drug Enforcement Agency) released their findings that in the first decade of the new millennium (2000 through 2010) the number of citizens that were abusing prescription drugs in the United States had nearly doubled (going from an estimated 3.8 million to well over 7 million individuals across the nation). Narcotics led the way with documented theft and diversion occurring at all industry levels, from the manufacturers to the distributors to the pharmacies who all have to deal “head-on” with pharmacy security. Pharmacy burglaries, robberies and break-ins reached new highs every single year since and are continuing still to do so. Adding to the problem is the ever increasing theft and diversion seen by internal pharmacy employees, and one can see easily why perhaps the chances of facing this risk are increasingly becoming more likely than not.

Pharmacy Robberies, Burglaries and Thefts Dominate the News

Recently it seems that all the pharmacy news we read is filled with an increasing number of stories regarding the burglaries and robberies of pharmacies. Every day news stories presented by Google Alerts regarding pharmacy topics are dominated with stories about a pharmacy break-in, burglary, robbery or theft by a pharmacy employee. Some examples include:
– Robber strikes Walgreens pharmacy in Collier County:
In Naples, Florida a man robbed a convenience store and then went into the Walgreens Pharmacy and demanded pills from a pharmacy employee. The suspect fled the scene and there were no reported injuries. He is still at large.
– Media cops probe armed heist at Boro Pharmacy:
In Media, Pennsylvania a suspect robbed the Murray Overhill Pharmacy at gunpoint. The suspect displayed a gun, demanded prescription pain killers and then fled with an undetermined amount of narcotics.
– Thieves Steal Unknown Amount of Pharmaceuticals from Huntington Beach Pharmacy:
In Huntington Beach, California  two thieves broke into the Bella Terra Pharmacy and stole an unspecified amount of pharmaceuticals. According to police, two men entered the pharmacy by prying open the back door. A detailed description of the thieves and of what was stolen was not immediately available.
– Pharmacy tech pleads guilty to fraud in obtaining pain medicine:
In Dothan, Alabama a former pharmacy technician at Lyster Army Health Clinic Pharmacy at Fort Rucker pleaded guilty to the diversion of narcotics by fraudulently obtaining controlled pain medications and other drugs while being employed by the pharmacy.

The Estimated Costs are Staggering

The costs associated with pharmacy burglaries, robberies, break-ins and employee drug diversion are staggering. The DEA alone estimates that over 50% of its annual budget is spent on prescription narcotics. The costs associated with the prevention and security for pharmacies alone is estimated at over a billion dollars annually. This includes insurance premiums, on-site physical security equipment such as cameras and monitoring systems, employee education, drug take-back programs and the increased reporting that’s required, plus generating and storing all of the documentation and paperwork that’s required by the DEA, State Boards of Pharmacy, suppliers and insurance companies. Perhaps the most important costs are the intangible feelings of violation, vulnerability, trauma and fear that often occurs to a pharmacist or pharmacy employee following an armed robbery.

Prevention and Being Prepared are the Solutions

Although there are no ways to totally ensure that a robbery, burglary or theft by an employee never happens at your pharmacy, there are certain steps that every pharmacy owner should consider taking:
1. It’s imperative that you have your Policies and Procedures Manual in place for employees to know what to do. Plus make sure that every employee has read it and understands what is expected of them if such a situation does occur (and be sure to document this!).
2. Update and improve your current alarm system and implement new surveillance and monitoring systems. Additionally, consider installing a narcotic safe in your pharmacy.
3. Educate and train your employees and staff. Encourage them to be aware, alert and to know what’s happening in the local area. Studies have proven that employee “awareness” is the greatest deterrent available to a pharmacy operation, and the results are that the robbers, thieves, shoplifters and burglars will choose to simply go elsewhere where the security is more lax and the employees less likely to be prepared.

What Security Does Your Pharmacy Lack or Need?

Are both you and your pharmacy staff prepared to deal with security problems, flaws and issues like these? As stated earlier, no-one thinks that these situations will happen to their pharmacy business, but these are real-life examples of the old cliche “an ounce of prevention is worth a pound of cure” being applicable. Do you have Customized Policies and Procedures written specifically for your business and employees to act on if such a crisis arises? Do you have the inventory policies in place to help determine what was taken during a burglary? Do you have ongoing training in place to help your employees in these situations that will also minimize your possible potential liabilities? If the answers are no, then contact HCC Pharmacy Staffing to see how we can help you.

About Healthcare Consultants

Healthcare Consultants is a nationally renowned full service Pharmacy staffing and consulting firm that has been in business for over 30+ years now. HCC has been helping pharmacies plan, prepare and deal with such crisis situations since being founded in 1989. Just a few examples of our services include:

Development of Policies and Procedures
– Employee Crisis Training
– Inventory Management
Pharmacy Business Performance and Efficiency
Pharmacy Management Consultation
Pharmacy Inspection and Audit Preparation and Response

Although everyone truly hopes that they will never have to deal with such horrific and potentially dangerous situations at their drugstore or pharmacy operation, HCC strongly urges you to be prepared. Don’t wait until your pharmacy is the one in the News reports and leaving you regretting that you hadn’t done enough in the security area. Known nationally as one of the industry leaders in providing a full range of professional pharmacy consultation services to its vast array of clients, HCC is owned and operated by pharmacists. Healthcare Consultants can provide proven expertise and experience in all facets of pharmacy operations, including retail, hospital and all specialty pharmacy venues. Contact us online now or call us today for a Free Consultation at 800-642-1652 to discuss how we can help your  business run more efficiently and profitably.

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Pharmacy Audits

Pharmacy AuditsOver a year ago a pharmacy audit in Colorado resulted in a payment of almost $64 million in a settlement by DaVita, Inc. DaVita is known for being a major provider in the dialysis field and in the treatment of patients with severe and chronic renal diseases. The company additionally owns a division that supplies numerous pharmaceuticals to both patients and providers. Following an audit of their pharmacy division, DaVita was accused of numerous billing improprieties in regards to several federal government health care programs. The pharmacy division also was cited for paying what are considered illegal financial inducements to DaVita’s patients. As reported then by the Kansas City Star, the United States Justice Department accepted a settlement of $63,700,000 from the company after the pharmacy division’s audits resulted in the criminal activities coming to their attention.

DaVita’s pharmacy division was alleged to have billed Medicaid, Medicare and several other federal programs for prescriptions and drugs that never actually were dispensed or delivered to any patients. Additionally, they were cited for billing improprieties regarding medications that were returned unused and also  for prescriptions that didn’t satisfy program requirements. DaVita also was cited for its pharmacy being in violation of federal “anti-kickback” laws for paying illegal financial incitements to patients.

New DEA Audit Data From a Tennessee Pharmacy

Just a few days ago the Wall Street Journal (WSJ) announced that the US Drug Enforcement Agency (DEA) has released their audit data that was collected during an agency audit of a grocery store pharmacy located in Knoxville, Tennessee. According to the Wall Street Journal article just released on September 19th of 2019, the Food City Pharmacy purchased almost a million tablets OxyContin in 2008 alone. This is the third-largest annual amount of OxyContin purchased anywhere in the entire United States. It’s interesting to note that the DEA’s audit data was actually obtained by the NY Times from the lawyers that were representing several local municipalities in their lawsuits against Purdue Pharma and several other pharmaceutical “players” in allegedly maintaining the supply of opioids that has lead to the CDC’s declaration of the opioid crisis in the USA.

Residents and business owners located near the Food City Pharmacy had actually started to complain to the local police and authorities all the way back in July of 2008. The focus of the local residents’ complaint was that the drugstore’s parking lot was actually a center for drug dealers and crime ever since the store had began to fill prescriptions for a nearby pain clinic. The story even appeared in a local newspaper article.

Finally in 2016, the grocery store pharmacy was cited from the DEA audit by the Tennessee State Board of Pharmacy for the dispensing of opioids “in a manner inconsistent with Tennessee’s laws and regulations, including the dispensing of Opioids to patients who’d driven long distances to get to the pharmacy, accepting postdated prescriptions, and failing to check the state Rx and prescription monitoring database before actually dispensing any controlled substances”.

Be Prepared For A Pharmacy Audit

In the first case cited above, DaVita’s management team admitted to ignorance in regards to the practices that the audit of the pharmacy division revealed. Yet according to the US Department of Justice, DaVita was “guilty as charged and responsible for the actions of all of their employees and staff”. Don’t let this happen to you.

In the second case cited above regarding the DEA audit performed on the Tennessee grocery store pharmacy, it’s pretty easy to see that a pharmacy audit by the DEA that took place “all the way back” in 2008 can still be making headlines almost eleven (11) years afterwards.

Pharmacy audits are being seen more frequently than ever before and many experts state that it’s a safe assumption that your pharmacy will be audited every two years at a minimum. In today’s world of Big Data and Social Media, an audit that reveals improprieties in your pharmacy is public information and can literally cost you tens of thousands of dollars, even if you are able to combat any allegations that are made and prove your innocence. The bad publicity alone that we have seen many pharmacies experience leads to both the loss of customers and revenue that could easily have been avoided. The key to avoiding a bad inspection or audit? Get prepared NOW!

Types Of Pharmacy Audits

Pharmacy compliance audits assess a pharmacy’s level of compliance in regards to procedures stipulated by regulatory or contractual arrangements. Basically pharmacy compliance audits can be placed into two categories:

  1. Third Party Provider Audits – A pharmacy that operates as a contract provider of prescription services for a third party is subject to a clause in its provider agreement that allows an audit of the pharmacy’s prescription records. This is inclusive of “hard” copy Rx’es, patient signature logs, computerized records of refills, plus all of the pharmacy’s invoicing records.
  2. Regulatory Agency Audits – Pharmacies are subject to audits by both state or federal licensing agencies such as their geographical State Board of Pharmacy and federal agencies such as the FDA and DEA.

Be Proactive and Get Prepared Now

HCC’s is a nationally renowned Pharmacy Consulting firm that has been helping pharmacy owners be prepared for audits since 1989. With 30+ years in the business, our in-house consultants have the experience required to assess your business and make recommendations in regards to any improprieties in your pharmacy operations. Our regulatory experts can perform mock inspections and identify areas of potential violations, weaknesses and concern. Our consultants will, upon completion of the audit, prepare both a Gap Analysis and a Corrective Actions Plan and then discuss these in detail with you and your team. If significant issues are found, our consultants are available to assist in the implementation of the corrective actions and perform a re-inspection to confirm compliance has been achieved. HCC will also make sure that your pharmacy’s Policies and Procedures are current and up to date as required by all inspectors.

Our experts are also available to review your prescription filling and billing processes to identify areas that may put you at risk of a payer audit and recoupment demands. HCC’s consultants will work with you and your team to correct areas of concern and develop risk mitigation strategies to prepare your pharmacy for the unexpected, but inevitable, audit.

Don’t wait until you get the audit notice or find the auditor at your doors. Known nationally as one of the industry leaders in providing a full range of professional pharmacy consultation services to its vast array of clients, HCC is owned and operated by pharmacists. Healthcare Consultants can provide proven expertise and experience in all facets of pharmacy operations, including retail, hospital and all specialty pharmacy venues. Contact us online or call us today for a Free Consultation at 800-642-1652 to discuss how we can help you.

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Pharmacy Business Plans

Pharmacy Business Plan Review ServicesAny new business venture, whether it may be the actual startup of an entirely new pharmacy operation, or simply the addition of a new service line to an already existing business, must begin with a well thought-out business plan. The plan is best developed through a process of careful and thorough consideration of the business’s potential strengths, weaknesses and chances of successfully capturing enough market share to sustain both growth and profitability. To get the most optimal operating results from the very start, plus generate the largest possible return from their investment, the business plan requires both time and effort from the pharmacy owner, who must answer numerous detailed and sometimes difficult questions that will ultimately “frame” the viability and feasibility of the plan. The business plan serves not only as an assessment of the new venture’s feasibility, but additionally serves as both an accounting of the various resources that may be required for the success of the new startup or expansion, and as a tool for measuring the progress along the way. Basically, the business plan is your road map on how best to quickly and efficiently achieve your business’s objectives and ultimately attain your goals.

How Do I Develop My Business Plan?

When initially starting out and “mapping out” your business plan, you must first describe who you are and exactly what it is that you plan on doing. As part of this initial step, the owner should also specify exactly what their business’s USP is (Unique Selling Proposition). In other words, what exactly does your business offer to potential customers that differs from your competition and sets your business apart from the rest of your competitors, resulting in both an increased volume of business, plus ensure customer loyalty and satisfaction.

The next step of the business plan “development process” requires that the owner both identify and quantify several sectors of the local business environment currently existing in each of the possible physical locations that are under consideration for “housing” the business. Some examples of the specific questions that every business owner should be asking include:

  • Who are my potential customers and exactly who is my “Target Audience“?
  • Did I properly assess the proposed location to determine if it’s the very best possible location that’s available?
  • Where do my new customers and clients actually originate? Some examples may include individuals who live &/or work in the local community, referrals, health plans, partnerships, etc. (to list just a few of the numerous possible sources of new customers available to a new business startup).
  • Where are your potential new customers currently receiving their care, services and products from?
  • Who are my competitors and which ones  are more successful than the others? Why are they seeing more success and what exactly are they doing or offering that’s different from the rest of your competition?
  • What advantages do my competitors have (services, pricing, convenience, etc.) that I must meet or beat?
  • What advantages do I have that perhaps my competitors don’t possess or currently know about?
  • What are the potential barriers to “market entry” that may be encountered?Restricted payer plans, access to referral sources, affiliations with hospitals or clinics, represent just a few of the potential barriers that your new venture may be facing.
  • How will I encourage my competitor’s customers to switch over to my business?  (marketing plan)?For those who have ever participated in a SWOT analysis in the past, the process will resemble that exercise and result in a similar outcome. The goal of both strategic planning techniques is to help a business owner or an organization to identifying their existing Strengths, Weaknesses, Opportunities, and Threats (hence SWOT) that are relevant to their business.

Once the business owner thoroughly describes and/or defines the local market and customer profile, a financial assessment is then necessary to project the total anticipated amount of money that will be required in order to achieve the initiation or launch of the plan. Both the optimistic and the pessimistic projections that are received should be thoroughly assessed to determine the financial reserves that are necessary to have on hand (or have access to) in case there’s any deviation from the anticipated performance, projections and/or initial estimates. A comprehensive financial assessment will also provide the business owner with a realistic view of the viability of the plan, the resources needed, plus provide the metrics to measure the business’s performance by.

A summary of the plan and findings is the last step of the process. This summary provides the pharmacy owner with a detailed timeline, including both expenditures (both those already encountered and those still anticipated) and the  dates of the major milestones or event completion dates that can be expected during a pharmacy startup or expansion project. HCC can also present you with details regarding possible exit strategies that may be available to you when you are ready, plus help you to define your future plan for the business.

What are the Basic Considerations for a Pharmacy Startup?

The basic considerations that you will need to focus your attention on when planning to start up a new pharmacy business or expanding your existing pharmacy operation by adding new service lines are listed below. They’re broken down into three (3) categories: Startup Costs, Operating Costs and Cash Flow.

Start Up Costs –
– Facility build out or renovations
– New equipment
– Personnel
– Inventory
– Licensing
– Permitting
– Accreditation

Operating Costs –
– Monthly recurring overhead costs
– Staff salaries and benefits
– Marketing
– Professional fees (legal, consulting, accounting, etc.)

Cash Flow –
– Projected revenue growth – includes both dispensing related and service related revenues (examples include MTM, vaccinations, etc.)
– Inventory levels versus availability – this includes the actual costs of maintaining an inventory of legend drugs, over-the-counters (OTC) goods and numerous other patient supplies
– Anticipated margins
– Costs of providing Outstanding Customer Service – this may include ongoing education for your staff, Rx deliveries, special packaging, plus the time for providing patient counseling and other clinical services
– Anticipated Fees – credit card processing, RX switch fees, anticipated DIR fees, etc.
– Projected or anticipated Break Even (BE) Point
– Total spend (start up plus cumulative burn rate) until BE Point

Although the development of a business plan requires significant time and effort, it’s a MUST DO for starting up any new business! It basically provides the “road map” to be followed in preparing for a successful launch of the business and for measuring the operation’s progress over time. If the business owner is seeking external funding such as banks, investors or partners, then a polished business plan is an absolute must!

Who Can Help With My Business Plan?

Healthcare Consultants has assisted scores of pharmacy business owners and managers like yourself in the planning and assessment of both new or expanded business opportunities. We have in-house experienced specialists and experts in all facets of pharmacy operations – retail, small chain, compounding, mail order, specialty, LTC, hospital, ACO, 340B, etc. – that can provide you with all the relevant details on a “granular level” that you need to be successful. We help our clients to “drill down” into the plan’s key aspects to help them get a better understanding of how to achieve their goals, maximize their ROI (return on investment) and reduce unwarranted expenditures during the implementation of the plan’s. In short, both our experience and expertise allows us to provide our clients meaningful insights and industry metrics, resulting in a more realistic and refined business plan.

If you are considering starting a new pharmacy or simply expanding with an additional service line, contact HCC online now or call us today at 800-642-1652 to discuss how we can assist you in both the planning and the implementation that are necessary in meeting your objectives and attaining your goals.

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Opening a Successful New Pharmacy Business – What You Need To Know

New Pharmacy ConsultationStarting up and opening a new pharmacy business is really not that much different from starting up any other type of retail operation or business enterprise. Aside from the regulations and laws inherently involved in a new pharmacy startup being planned, built and opened, the basic business startup principles still all apply. Having opened up hundreds of new pharmacies here at Healthcare Consultants, let’s discuss some of the general retail business guidelines that any entrepreneur MUST consider to be the very basics for your investment to become both a successful and profitable endeavor.

On average the owner of an independent retail community pharmacy makes an estimated two-hundred and fifty thousand dollars annually (~ $247,000). Keeping in mind that the independent community pharmacies still hold roughly a thirty percent (30%) share of the overall retail prescription market, one can easily see why so many new drugstores are constantly being opened up. Yet the entrepreneur must also take into consideration the most recent reports from the National Community Pharmacists Association (NCPA). The NCPA reported that there’s actually been approximately a ten percent (10%) decline since 2001 in the total number of independent pharmacies that are operating in the United States. According to the NCPA statistics released, there are currently an estimated 22,000 independent community pharmacies versus the 25,000 retail independents operating nationally in 2001. The point is, that while starting up a new pharmacy business can be very rewarding financially, like any other retail business it must be properly planned and executed correctly to wind up as a profitable business investment and venture in the end.

Start With a Written Business Plan

Any successful entrepreneur will tell you that a written business plan is the key to success when starting up a new business of any kind. Basically, your business plan should contain your business goals, the reasons that they are achievable and a detailed plan for reaching them within a certain time-frame. Most entrepreneurs look at a business as they would a map. Would you set out driving a long distance without a map or knowing the fastest and safest route to get to your ultimate destination? Of course not. The same is true for starting up a new pharmacy – outline the fastest and safest route to achieving a profitable,stable and well run pharmacy operation. Keep in mind that, like the example of the map we used, your business plan must be flexible and allow for changes and contingencies. As with driving, the roads may be under construction or blocked, so sometimes even the best laid plan needs some ongoing adjustments or modifications made to it. The same holds true with a new pharmacy start-up. Being flexible and prepared to make business adjustments or changes when certain conditions call for them is the key to achieving a profitable venture in the end. I think that most can agree on the fact that no businesses change as fast and as consistently as is seen in the pharmacy profession. Additionally, a solid business plan can greatly assist you in obtaining the support and funding from banks and other lenders that may be required to meet your goals and objectives.

Is a Pharmacy’s Location a Critical Consideration?

As with any retail business, the three most important factors that will need your consideration are: location, location and location! It is imperative that you first determine who your target market and audience is, and then select a location where they frequently shop for goods and services. Your new pharmacy startup may offer customers the very best of everything – great service, low prices, excellent product selection – but if your target market doesn’t frequent the location that you’ve chosen,  you will likely not be open for very long.

Most entrepreneurs view choosing their business’s retail location as they would fishing. To be successful while fishing you must throw your line and bait where the fish are. There’s no use fishing where the type of fish you’re trying to catch don’t swim and eat! The best fishermen put in the time and energy to research the best fishing spots. The same holds true for determining where to start your new pharmacy. Intensive research should be performed before choosing your pharmacy’s location. Economic data such as average family income in a specific zip-code or neighborhood is readily available these days. You may want to consider hiring a professional market research firm to provide you accurate data before you select a location. Additionally, look for retail outlets that are already thriving with business and shoppers. You may have to pay a higher rent, but the rewards and results will be worth it.

Design – Both the Outside and the Inside

Design of both the inside and outside of your new pharmacy can be a major key in the business becoming a successful venture. In order to determine what would be the best possible presentation and appeal for prospective customers, think about forming what the large advertising agencies and marketing companies refer to as “marketing focus groups” before making up your mind. Try and remember that you are not your own target audience and that it’s extremely hard to be objective about your own business. Consider hiring a professional store designer and then enlisting a sampling of people that represent your ideal customer base. You may be shocked to find out that what you had in mind may not be in alignment with the feedback you may receive. So be open minded and remember that becoming a profitable business is your goal, not satisfying your ego!

How Much Money Does It Take To Start a Pharmacy?

Your answer to this “dangerous” question will become much clearer after your business plan is written and finalized. Obviously, you will need to include all of the potential and possible initial startup costs, plus take into consideration such ongoing costs as staffing (if necessary) and marketing. Additionally, a brand new pharmacy takes time to start generating any profit, so a realistic operating budget is a must. Acquiring a credit line and researching how best to obtain additional funding should you need it are both highly suggested steps to execute at the very beginning of the start-up process.

Should Your Marketing Begin Before You’re Open For Business?

Don’t make the mistake of waiting until your pharmacy is ready to open up to initiate your marketing! Have your website and Google Business Listing already completed and fine tuned before you actually fill your first prescription. Explore the use of direct mail and social media prior to the “Grand Opening” to create a buzz. Additionally, consider some form of an initial promotion to get those curious shoppers to stop by and hopefully become customers of your business. We have seen some owners of new pharmacies experimenting and trying various different offers, but the “time tested” promotion that often times is seen to work the best is to offer a major incentive for each prescription that is transferred into your pharmacy by your customers.

Enlist the Experts!

You may have already talked with an attorney or accountant, BUT the most important expert of all is a seasoned Pharmacy Consultant on your team. Healthcare Consultants is known as the leader in helping pharmacy owners plan, purchase, setup and staff their pharmacies nationwide. Having opened hundreds of new pharmacies and pharmacy startups, HCC will ensure that all aspects of the business are covered and done right the first time.

If you are truly considering starting up a new pharmacy business, we strongly urge you to get in touch with us today for a free consultation. We offer you the support of an experienced staff who have been through the process numerous times and know the business inside and out!  With over 30+ years of experience, Healthcare Consultants Pharmacy Staffing has helped hundreds of business owners (both pharmacists and non-pharmacists alike) establish successful businesses over the years.  Contact us now online or call us today at (800) 642-1652 to discuss how we can help you.


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