Community pharmacy contractors should focus on growing their patient base and the number of items dispensed rather than chasing the lowest price on drug costs, Avicenna sales and purchasing director Brij Valla told delegates at the Sigma conference last week.
He said that the value of the global sum – the amount of revenue from drug reimbursements that the community pharmacy sector is allowed to retain – had decreased in real terms, while the cost of drugs had increased.
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And since Category M clawbacks began in January 2021, the margin had become even narrower, with the most recent increase introduced in January based on price analysis from last summer. Mr Valla added that he had heard from several pharmacists that their supply bill now exceeded their income.
A recent NPA survey also found that 92% of pharmacy owners made a loss on dispensing for at least one month in the last year, with nearly half (48%) saying that they had lost money through dispensing for six months or more.
But Mr Valla told conference delegates that instead of spending hours trying to find the lowest priced drugs they should concentrate on maximising their patient base and ensuring that they had available products to meet patient demand.
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He said even though around 70% of the average community pharmacy’s revenue comes drug reimbursement, once costs were taken into account this made up just 30% of the gross profit, while 60% of the gross profit came from fees, such as dispensing fees.
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‘Regardless of all the barriers we are facing right now with workforce pressures and stuff like that, you have to grow your items. It just has to happen’, he said, adding that the additional footfall would also help contractors grow their retail sales and take advantages of increasing opportunities to provide services.
‘Stop chasing the pennies, there’s hardly any difference any more. The margin is going to come back – looking at that graph, if the April tariff doesn’t grow, there’s going to be a problem. So worry about increasing your items,’ he said.
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