Historically speaking, the supply chain from drug manufacturer to plan sponsor has been full of unnecessary steps. This has created a complex drug pricing system that has, for many employers, driven up purchasing costs to a point where potential employee wellness programs can’t fully get off the ground.
But with their own on-site pharmacies, employers can quickly decrease their prescription coverage spending. How is this possible? On paper, it’s simple: The creation of the on-site pharmacy actually shortens the supply chain by several steps. Let’s take a closer look at each supply chain to examine their differences:
The Traditional Supply Chain
The path from drug manufacturer to plan sponsor is not quite straightforward in the traditional supply chain. While both chains have similar first steps—going from drug manufacturer to wholesaler—the traditional chain then involves mail order and retail pharmacies before getting to the pharmacy benefit manager (PBM). While the PBM plays an important role for the pharmacy with either system in place, as it is their responsibility to manage prescription drug benefits for their clients, it’s in the traditional supply chain that they can become a factor for incurring additional costs, along with the aforementioned mail order and retail pharmacies.
The On-Site Pharmacy Supply Chain
With an on-site pharmacy in place, employers can bypass several steps in the traditional supply chain and cut out a sizeable margin that contributes to high prescription drug costs. Without the mail order or retail pharmacies getting involved, and with the PBM playing a different role, the on-site pharmacy can instead be stocked directly from the wholesaler. With no middle men getting involved, plan sponsors will see cost savings soon after implementation and quickly reap the additional benefits of having a more streamlined model.
How the On-Site Pharmacy Supply Chain Impacts Employers
With a shortened supply chain and an on-site pharmacy in place, it won’t take long for employers to notice a positive impact and gain greater flexibility for the future. Below are some of the key monetary benefits that come with the on-site pharmacy model:
- Savings occur as the supply chain is shortened by removing the PBM, mail order pharmacy, and retail pharmacy.
- Average savings amount to $30 or more per 30-day prescription.
- The NNS buys inventory, a depreciable an overturning asset.
- Expenses become a flat monthly fee, and savings should exceed expenses by the end of the first year.
Additionally, these savings can help employers enrich their employee health benefits and expand wellness programming efforts.
Learn More About Creating an On-Site Pharmacy
At On-Site Rx, Inc., we act as employers’ guide to the world of on-site pharmacy services and provide nearly everything needed to get these pharmacies operational—and successful. We’ve partnered with large employers throughout the Eastern and Central time zones since 2008 and have developed a one-of-a-kind model with proven results.
Connect with us today to learn more about how shortening the supply chain with our on-site pharmacy services can yield significant savings for your organization.
