Self-pay pricing varies a great deal from pharmacy to pharmacy. It can be based on a huge number of different factors, from cost, to likeliness of driving future business, to expiration dating, to normally reimbursement rates of insurance companies.
It is important to know that, in many cases, a patient can even be better off not using their insurance and instead use a self-pay program at a pharmacy. This is especially true in dermatology, where many medications are categorized as a cosmetic need and not an actual medical need.
This is why a patient needs to better understand the options that are available to them so that they know what pharmacy to go to for their medication.
Our Pricing System
Here at Big Country Dermatology Pharmacy, we use a straightforward cost plus pricing system. It is our cost of the medication plus the margin we need for our business to function. This is the most standard pricing model that you see in general retail businesses where the customer has a strong sense that they are getting a good deal consistently. Some good examples include Walmart or Amazon who both use the cost-plus pricing model.
A major alternative model is the loss leader model, which is what you see being used at most pharmacies. This model is similar to a smoke and mirrors type of approach because, while the patient thinks they are getting a great deal, the business has to make up those dollars somewhere, and it usually hits the patient hard in their wallet and they are not even aware that they overpaid in a huge way.
Let’s compare the cost-plus model with the loss leader model in this example of two different medications.
In a cost-plus model, the pharmacy pays $2 for a medication adds their cost to dispense each prescription of $14 and sells the medication for $16 to the cash pay patient. On a second prescription, the pharmacy pays $25 for the medication adds $14 for their cost to dispense the medication and sells it to the patient for $39. The result is both of these medications are purchased for $55.
Loss Leader Model
In a loss leader model, the pharmacy pays $2 for the medication, and offers it at a price of $5 to the patient. This looks awesome to the patient at first glance since they appreciate the low cost. The business, though, spends a minimum of $14 of labor to dispense that 1 prescription. Which means the pharmacy ends up losing $11 on the prescription.
Overtime, the low prices on the medications build loyalty with their patients and they think to themselves, “Well, this huge reliable pharmacy is always going to give me the best price possible on my medication, so I’ll go to them for all of my prescriptions.” In reality though, when you have a prescription that the pharmacy pays $25 for instead of the $2 medication example where the pharmacy increased the cost by only $3 more than what it cost them as they previously did, they up the cost by $100, which means the patient ends up paying $125. This is due to the pharmacy advertising these medications with super low prices, which leads to them dispensing more of those medications, and they end up losing money on each of them. In turn they have to make up the margin so they do it on mid range price prescriptions where they feel patients will pay the price without asking to many questions. So here the patient pays $130 for the two prescriptions.
Why You Should Go With claRx
In the dermatology world, $5 medications are not part of the show. Since dermatology medications make up about 5% or less of most pharmacies’ business, this results in patients overpaying in the loss leader model for most of these dermatology medications when they could have been using our pharmacy, which uses a cost-plus model, to often save over one hundred dollars per prescription.
Many patients will pay the higher cost in the loss leader model and never know the difference but, if I am in the patient’s shoes, I would prefer to pay $55 for the two prescriptions instead of paying $130 for those same two prescriptions.
Providers make sure your patients know Big Country Dermatology Pharmacy is ready to assist them. Help us save your patients literally, hundreds of dollars while also receiving a top of the line professional service from a pharmacy staff specializing in dermatology.