Have you recently signed a new supply agreement?

There are several factors to consider when a new supply agreement is executed. The method used to determine Invoice discounts and rebates could change. You may not have had brand rebates before, and you may now. You may have generic specials that may need to be recognized. The way compliance is measured can change. With your largest portion of spend being brand medication, let’s start here.

The invoice discount is reflected in the price paid when ordering from the wholesaler. This is expressed in the Wholesale Acquisition Cost (WAC). It is common for the ordering platform and Pharmacy Management System (PMS) to stop here. This can have a drastic impact on your loss reports that your PMS generates. If you are now receiving a brand rebate, this may be paid a month or two after purchase. This rebate can vary from 0.1% to 2.5% per month depending on your supply agreement. An average pharmacy spending $300,000 per month on Brand name drugs can expect a $3,000 rebate if 1% is earned.

If you sign a new supply agreement, it is critically important to satisfy your generic compliance ratio (GCR) and make sure you know your GCR targets. To achieve this goal; and maximize every dollar spent, it’s important to purchase some of your Generic and Brand items from a secondary wholesaler. Before you start shopping around, take 15 minutes to complete these four easy steps:

1. Know your GCR Targets.
2. Know your monthly Brand & Generic Spend.
3. Calculate your primary wholesaler GCR. (Gx$ / Rx$ = GCR%)
4. Determine if you need to purchase from a secondary source to manage GCR.

This may be new for many owners; you are not alone, call IPC for assistance with terminology and creating a purchasing strategy. For a more in-depth and detailed road map to create a winning purchasing strategy, read the Purchasing 101: Creating a Purchasing Strategy Blog.