Retail Pharmacy Profitability on 90 Days’ Supply Prescriptions

IndustryRetail Pharmacy
ProblemA retail pharmacy chain was concerned whether aggressive third party 90 day reimbursement rates were profitable and if third party contracts should be continued for 90 days’ supply. The retail pharmacy chain feared they were losing money overall on 90 day prescriptions, particularly with brand medications.
PHSI SolutionPHSI first collected and analyzed the claims of the largest third party plans served by the pharmacy chain. The prescriptions were categorized into four prescription types: 30 day generic, 30 day brand, 90 day generic, and 90 day brand. These segmented claims allowed PHSI to evaluate the profitability of each group independently.
ResultsAfter reviewing the claims data, PHSI was able to demonstrate the value of the 90 day contracts with the client. PHSI explained that while there was some loss on selected 90 day brand prescriptions, they are marginally profitable. However, 90 day generic prescriptions are the most profitable of the four segments analyzed. The ratio of profitable 90 generic prescriptions more than made up for the few unprofitable brand prescriptions. The resulting analysis supported the overall profitability of 90 day at retail contracts and provided insight for the client on the various profit margins for each subgroup of prescriptions.