DrugBuyers.Com: pharmacy aquisition cost

While there are scenarios in which these costs are relatively in-line with the general medication cost, the actual acquisition cost for a given prescription is going to vary from pharmacy to pharmacy, often from order to order, as package size, terms, manufacturer, and a score of other factors.

Individual operators tend to use AC (acquisition cost) in determining COG (cost of goods) on a prescription by prescription single-case scenario basis only, but most reimbursment from insurers and other statistic pertaining to outwardly-facing statistics most often use a different factor, AWP (average wholesale price), as it gives a much closer estimate of what the overal cost of goods is for a particular medication.

Actually, for those who are interested in such things, it is possible to determine the specific cost of a given prescription from many chain pharmacies and independent operators who use systems that include printed cost codes on their shelf tag and prescription labels (which once consisted of only what appears on a vial, but now can occupy an entire 8 1/2 x 14 inch form. Pharmacy has a lot in common with wallpaper hanging.

Anyway, to facilitate manual inventories and audits, retailers often include the cost of their goods somewhere on the prescription package, usually a stapled bag. For example, Walgreens uses a substitution formula based on BRUSH KLEAN, where B = 1 R = 2 and so forth until N = 0. Longs Drugs, and Albertson's sister companies Osco Drug and Sav-On Drugs use CHARLESTON for the same purpose. (Be careful though, as P is substituted as a dummy digit and X indicates a repeat of the previous character. Certain pharmaceutical wholesalers use PHARMOCIST, and others like CUSTARDPIE are commonly used as well. If you can locate a series of these seemingly-nonsensical letters on your printed label (or receipt, bag insert or other documentation specific to your prescription), you may be able to determine what the pharmacy considers to be its specific cost for the prescription inside.

The reason they may appear on the prescription bag is to provide an assignable inventory value for prescriptions in the will-call bins for which customers have not yet paid. Be careful in your assumptions, however. For pre-packaged general merchandise, the cost is straightforward. However, pharmacies use a variety of formulas to arrive at their ultimate cost basis and retail price. This tends to be based on AWP instead of AC, as it averages out across the entire inventory and gives a more accurate picture overall. Second, pharmacies typically derive most prescription prices by charging a dispensing fee, and adding a multiple of the unit cost.

For example, with a dispensing fee of $9.00, a 30-count prescription for an item whose ingredient price is $.05 would total $10.50. For 60, the price would be $10.80. It's important to understand that these are mostly for determining retail and inventory price bases. More than 90% of prescription are insured, for which each contract permits its own reimbursement and price factors. For example, a cash customer may pay a $9.00 dispensing fee, and a price based on full AWP, but state Medicaid prescriptions may only receive a $2.00 dispensing fee reimbursement, and only 90% of AWP. That is why cost averaging and using AWP is so important, as it must be applied across the broad spectrum of prescriptions dispensed.

I hope you (collectively) find this interesting and useful.