Expanding Your Practice to Include a Dispensing Pharmacy

Cheryl Alkon
Published: Tuesday, Mar 25, 2014
Tatiana Melnik

Tatiana Melnik

When she first heard about the idea of an onsite dispensing pharmacy, Diane Gerards-Benage wondered if the venture could be successful, given the change in cancer treatments from intravenous to oral methods, and the promise of an automated system to track prescriptions and other procedures. Happily, she was right: the senior director of medical oncology service supported and oversaw the establishment of a successful pharmacy at Quincy Medical Group in Quincy, Illinois, in 2011.

“We chose to do it primarily because it was convenient for patients,” she said. “We had numerous examples of when the patient would get to [another] pharmacy or when their mailorder plan contacted them, and when they found out what their portion of the cost was going to be, they didn’t get the medication. We would not know this until their next visit, often interrupting or undermining, if in conjunction with radiation, the treatment plan. Dispensing here, we are actively involved from the get-go.”

Establishing a dispensing pharmacy can be a way to make things easier for patients as they coordinate the medication aspect of their cancer care. It can also be a financial win, with potentially significant profit margins. Yet Gerards- Benage’s concerns about profits, who will do the actual dispensing, and where such a facility will be located, are common questions among those considering the pros and cons of setting up a dispensing pharmacy. What does it all entail?

Where to Begin?

Regulations for dispensing pharmacies are complicated and vary from state to state, so knowing exactly what is allowed where you are is critical. “Pharmacy laws change pretty regularly,” said Tatiana Melnik, a health care attorney with Melnik Legal PLLC, based in Tampa, Florida. “It’s a contentious issue between pharmacies and prescribers, because pharmacists can’t prescribe and doctors who put in their own pharmacies affect market share. This is something your attorneys should look at—the most recent laws and regulations. Include court case law and attorney general opinions, and pharmacy board decisions and commentary that have reviewed existing laws,” she said.

Some states require fees to have a dispensing license, while others don’t require a license at all (see http://bit.ly/1kBWHvB). “In-house dispensing run by physicians within oncology practices is allowed in some form in nearly all states,” but not in New York, Texas, and Utah, said Cyrus A. Chowdhury, CEO and managing partner of CBPartners, a New York City-based firm that specializes in oncology pricing and market access issues.

“About half of states have ‘any willing provider’ laws that specify that if an in-house pharmacy meets the requirements for a specialty pharmacy in that state, payers cannot prevent the in-house pharmacy from filling prescriptions,” he added. At the same time, there’s no need to go it alone.

“We would advise that the practice thoroughly research the process and stakeholders involved,” said Chowdhury. “It’s a lot more complicated than simply hiring staff and ordering inventory. We recommend getting support from ION (International Oncology Network) Solutions or U.S. Oncology [a network of community-based oncology physicians] to review considerations for best practices in the setup of dispensing pharmacies.”

Another resource is Metro Medical Supply, a private company based in Nashville, Tennessee, which caters directly to community-based oncologists, that offers a new pharmacy model for those considering this direction.

Determining (and Paying For) the Right Product Mix

Figuring out exactly what to dispense will help determine what is profitable and who will reimburse (ie, commercial insurers and Medicare) for their use. “We took a look at the medications we commonly dispense to our patients, and decided to carry those,” said George Kovach, MD, the president of Iowa Cancer Specialists PC in Davenport, Iowa, and a past president of the Association of Community Cancer Centers.

These included antiemetics such as Zofran and Reglan and oral oncolytics such as Gleevec and Sutent. “We also carry some of the support drugs, vitamins. We also carry things like Tylenol and Prilosec, and one of our biggest revenues is a cream used for radiation therapy.”

Drug reimbursement is a key factor in establishing a pharmacy, as it determines what kind of revenue the pharmacy will bring in. “Contract with your payers,” said Gerards-Benage. “Sell them on the convenience to the patient and the potential for increased adherence. Negotiate to be the same price as their mail order pharmacy. This was easier and more profitable than we thought.”

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