GPOs Keep Community Pharmacists Afloat Amid Wave of Expiring Drug Patents

Stephen J. Clement, RPh

With several major drug patents such as Lipitor having recently expired and others set to expire soon, generics are going to flood the market, competition will heat up, prices will go down, and independent pharmacists who do not yet belong to a Group Purchasing Organization (GPO) will try to keep up with the pricing mayhem. My advice to colleagues faced with the decision of whether or not to join a GPO is to imagine attempting to swim the English Channel without a life vest. During the last 5 years, my GPO has proved vital to ensuring my business’s survival.

I opened Copper Bend Pharmacy in Belleville, Illinois, just outside St. Louis, in 1984 after working under another pharmacist for a decade. I wanted to create an environment geared toward the emerging trend of patient care. In the beginning, I filled about 100 scripts a day, and we placed our orders through a wholesaler by phone. At the time, I was located in a business park within a mile of 6 pharmacy chains and 2 independents. I knew I needed help to survive in a rapidly changing marketplace so in 1985 I joined a GPO that provided better prices through group volume discounts in exchange for what I considered to be a reasonable membership fee.

We currently handle roughly 5000 prescriptions per month, a combination of generic and brand names. As the Pharmacy Benefit Managers (PBMs) continue to decrease reimbursements, it’s imperative to have some method to ensure the best pricing. Our GPO (ProfitGuard/PBA Health) handles all our needs, and makes automatic purchase adjustments to make sure we receive the best deals. PBA Health is a purchasing and pharmacy services organization (PSO) that offers a multiple-choice menu of service options to help community pharmacies buy, operate, and sell more effectively. Among its offerings is a regional negotiation and buying service called ProfitGuard.

Whenever a patent expires, generic equivalents flood the market. Already we receive too many calls from generic drug houses pushing the best deal of the month. To search out all of the bargains would require a full time employee. The increasingly frequent introduction of new generics could cause many independents without a GPO to shy away from a potential new revenue stream to help remain profitable.

By utilizing ProfitGuard, Copper Bend can help patients who have been unable to pay for their brand name prescriptions such as Lipitor. ProfitGuard automatically seeks out the new generics to provide the best deals for patients; in fact, I just received a generic version of Seroquel. We all have patients that are not taking medications properly due to the high costs of brand name prescriptions. Many hoard their pills for the rough times when feeling good, taking a daily only every third day. Generics will enable them to take their medications as prescribed. Brand names are expiring in every field on a constant basis. ProfitGuard makes medications more affordable, helping our patients to get better, stay better, and remain healthier.

With group purchasing, small businesses such as Copper Bend—some would characterize us as the “real” American businesses—can maintain independence and personalized service while at the same time taking advantage of guaranteed wholesale prices and quality that are as good as, or in some cases better than, what the big boys routinely get.

GPOs are not new, but they have become absolutely essential for the independent pharmacist to survive. As PBMs continue to cut reimbursements and as competition from big chains and mail order business increases, the onus is solely on the pharmacist to find the best price. If you’re an independent and have not joined a GPO, I’m surprised you’re still in business. Since I joined my GPO in 1985, I have recognized the daunting challenge associated with constantly securing the best prices in an ever fluctuating and extremely volatile market place.

Stephen J. Clement, RPh, has been a local pharmacist in Belleville, Illinois, since the early 1970’s. He opened Copper Bend Pharmacy in 1984 to create an environment geared toward patient care. Clement earned his degree at the St. Louis College of Pharmacy, where he also teaches classes.