Lecture 7: Business of Pharmacy Flashcards
What percentage profit does a pharmaceutical company make on prescription medications?
9-15% profit (majority of money is going to pharmaceutical companies)
What percentage profit does a wholesaler make on prescription medications?
0.5% (for every $100, they make 50 cents, so it is all about volume of prescriptions for wholesaler)
What percentage profit does a community pharmacy make on prescription medications?
2-4% profit (they have to have alot of prescriptions to make money, for every $100, they make $2-4)
What percentage of our health care costs are spent on pharmaceuticals (drugs)?
10% of healthcare costs are spent on drugs
What is average gross margin a pharmacy makes on prescription medication?
22-24%
price of drug-actual cost of the drug
What percentage of prescriptions are filled with generic drugs?
90% (9 out 10 prescriptions are generics)
Do pharmacies have more negotiating power with wholesalers and manufacturers on brand-name or generic drugs?
generic drugs (10-15 companies make 1 generic drug, so more competition)
In general, do pharmacies make more money on generic or brand-name prescriptions?
generic
How many prescriptions per day does a pharmacy have to filled to break-even (cover all their costs)?
200 prescriptions per day
In general, how much does it cost a pharmacy to fill a prescription (excluding the cost of the drug)?
$10-12
What percentage of patients pay cash (the entire cost) for their prescriptions?
10% by patients
Do pharmacies make more money from cash prescriptions or ones paid for by insurance companies?
cash prescriptions
Do pharmaceutical manufacturers price their products based on how much it costs to make the drug?
No (they are going off of what will the market allow)
How much money do pharmacies have in prescription inventory?
260k (mostly brand name)
What is the biggest problems community pharmacies face?
- reimbursement below cost
- cash flow: bills are coming in faster than receiving money
