St. Louis College of Pharmacy
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Missouri Pharmacy Cost of Dispensing Rises to $13.00

Published on 12 October 2015

(St. Louis)- It cost the average Missouri community pharmacy $12.99 to dispense a prescription in 2014, according to a recent study conducted by researchers at the University of Missouri-Kansas City and St. Louis College of Pharmacy. Currently, Missouri Medicaid pays pharmacies a dispensing fee of $4.09 per prescription.

“This is vital data to both pharmacists and policymakers as the future of Medicaid is debated,” said lead author Scott K. Griggs, Pharm.D., Ph.D., assistant professor of pharmacy administration at St. Louis College of Pharmacy. “As important decisions are being made about costs and reimbursement, it is necessary to have an accurate assessment of the pharmacies’ actual cost to provide services to Medicaid patients.”

The current Medicaid reimbursement system is based on an estimate of the pharmacy’s cost for the drug ingredients plus a dispensing fee. The Medicaid payment methodology may change, however, and is likely to be designed to cover pharmacies’ actual drug acquisition cost, plus a dispensing fee covering the cost of dispensing and a small profit. On average, Medicaid prescriptions make up about 10 to 15 percent of a pharmacy’s business.

Researchers invited all community pharmacies in the state to participate. They received valid answers from 335. The results show about half of the cost of dispensing (COD) was for personnel costs. Another 8 percent was for a provider tax, which is paid to the state for each prescription dispensed.

Study authors also found the average independent pharmacy had a COD that was slightly higher than the average chain pharmacy ($13.16 vs. $12.93), and rural pharmacies had a higher COD than urban pharmacies ($14.50 vs. $12.67).

“The lower COD for chain pharmacies reflects the economy of scale with larger-volume pharmacies, and the higher COD for rural pharmacies reflects both the higher costs to attract pharmacy personnel and the lower average volumes for rural pharmacies,” Griggs said.

The study focused purely on dispensing and did not factor in variables like the cost of the medication or the pharmacy’s profit margin. The pharmacy’s COD would be the same whether it was a prescription for a patient with Medicaid, private insurance, or paying cash.

“The study demonstrates that Missouri pharmacies need an average gross margin of $12.99 to break even on prescription sales,” says Ken Schafermeyer, Ph.D., professor of pharmacy administration at St. Louis College of Pharmacy. “If the dispensing fee is designed to cover all overhead costs plus a reasonable net profit of 3 percent of the average prescription price, it would need to be about $14.91 per prescription. This is based on costs as of October 2014; a dispensing fee set at some time in the future should take any future inflationary pressures into account.”

The complete report can be found in the fall 2015 issue of Missouri Pharmacist Magazine.

About St. Louis College of Pharmacy: For more than 150 years, St. Louis College of Pharmacy has been committed to educating the best pharmacists in the United States. The region’s only independent college of pharmacy, St. Louis College of Pharmacy is the third oldest continuously operating and 10th largest college of pharmacy in America. The student body is comprised of 1,400 students, 40 percent of which are minority or multicultural. The students come to the College from 31 states and 10 countries. The College admits students directly from high school and accepts transfer students and graduates from other colleges and universities in the sophomore and junior years of the undergraduate program and the first year of the professional program. Students earn a Doctor of Pharmacy (Pharm.D.) with an integrated Bachelor of Science degree in a seven-year curriculum. An education at the College opens up the world to graduates for a career in a wide range of practice settings. Graduates have a 100 percent job placement rate. The campus is transforming to better fit the needs of students, faculty, and staff. This summer, a new six-story, 213,000-square-foot, state-of-the-art academic and research building opened. Construction is underway for a seven-story student center, residence hall, and recreation facility scheduled for completion in December 2016. When not in class, students can participate in more than 60 organizations, fraternities, intramurals, and sports. The College competes in 12 NAIA Division I sports. College alumni practice throughout the nation and in 13 different countries, providing a strong network to assist students with their goals. Additional information is available at stlcop.edu.

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