Do You Know How Generic Effective Rates Will Impact Your Pharmacy?

You’re on your way to a stronger and more profitable pharmacy despite the latest in GER and NER fees.

Generic Effective Rate (GER) contract clauses are the latest ploy by PBMs to undermine your pharmacy’s profit margins. While Effective Rates are not new, they are adding complexity to already unclear reimbursement formulas.

In 2018, devastating clawbacks from PSAOs hit independents nationwide. Pharmacy owners received bills for hundreds of thousands of dollars with 14 days to pay. If you haven’t felt the pain of a GER clawback, you undoubtedly know someone who has.

cash inside a prescription bottle

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How Will GER Impact My Pharmacy?

Effective Rates began to guarantee a minimum reimbursement on prescription claims. Today, the PBM contract clauses are more restrictive, turning rates into a maximum allowable amount, and adding fuel to the fire of declining profit margins for independent pharmacies.

Consider the potential impact on your profitability using the example numbers below. Let’s say that…

  • ACME PSAOs contract is currently at AWP -79 for generic reimbursements.
  • They sign an annual contract with XYZ PBM changing it to AWP -82.9.
  • The difference is a 15% reduction in reimbursement and your profit.
  • A $30 dollar Rx reimbursement becomes $25.50. 

Potential Lost Profit Due to Generic Effective Rate Clawback

REIMBURSEMENT DIFFERENCE$4.50
10 Prescriptions Per Day$45
6-Day Work Week$270
One Month$1,080
One Year$14,040

How Does PDS Solve the Problem of GER Contract Clauses?

There is no magic bullet to building a stronger and more profitable pharmacy. Two factors determine your success when dealing with these Net Effective Rate contract clauses, whether they are Generic ​Effective Rates, Brand Effective Rates, or Dispensing Fee Effective Rates.

  1. Knowing when these changes are coming – as early as possible.
  2. Having a plan.

Imagine running your business with confidence knowing you are connected to a network among the first to know about industry changes such as GER or NER clawbacks.

As a PDS Member, you have exclusive access to independent pharmacy professionals committed to your success. Within days of the first round of 2018 clawbacks our Member Success Team was working to understand what was happening, how we could help members with the latest PBM hurdle, and within days we published an industry alert to inform members.

What if you could maximize revenue streams that are untouchable by PBMs and unaffected by clawbacks?

PDS Members have access to a lineup of 30+ pharmacy programs, training courses, and knowledge articles with proven, actionable strategies that will keep your profits where they belong, in your pharmacy. Click the tabs below to learn more about these exclusive member benefits.

Included in the PDS Member Portal, PDSadvantage, are some incredibly valuable tools of membership. In order to stay in front of industry changes like GER you can engage, ask questions and share information with the extensive network of pharmacy owners, their staff, and industry professionals on the PDS Members-Only Discussion Boards.

In 2018, there were over 14,000 individual discussions that were laser-focused on helping independent pharmacies thrive.

PDS is so committed to making sure all of our members are audit-ready, we literally wrote the book on it. The PBM Audit Playbook is a members-only resource for owners and their staff to understand the audit process, know the common PBM traps and triggers, and have best practices on what to do before, during, and after an audit.

Expand your service mix beyond dispensing to include a Clinical Services Program. Generate additional revenue and drive new business by providing pharmacist billed or prescriber billed services. Members have free access to the resources and tools in PDSadvantage to begin these services right away, including building new relationships with providers. Want to accelerate the process? Attend our live regional training Clinical Services Profit Ignitor (CSPI) which will have you up and running even faster. The CSPI Alumni network keeps you on top of the latest improvements and evolutions to the program.

Audit, Billing and Compliance. The course, taught by former PBM auditors, will take you through the ins and outs of PBM billing. Educate yourself and your staff on the rules of the PBM game by taking a deep dive into CVS Caremark, ESI, OptumRx and Prime Therapeutics contractual and manual language.

Increase front-end sales by offering upsolutions such as nutrient depletion-supplements and highlighting products already in your store. Attendees will leave this 2-day live training with an action plan to implement and train your team keep the program running smoothly.

What do the results of a PDS membership look like?

“Pharmacy is constantly changing and the tools I have learned from PDS over the last eight years have been invaluable.”

“People get bogged down with the results of the contracts with PBMs. They should be focusing on total patient outcomes and therapies that are a win/win for the patient and pharmacy.”

“With PDS, we’re in control. We’re calling the shots. We’re being proactive instead of reactive.”

“You can get bored, frustrated and beat up. Because of PDS, it’s a whole paradigm shift. If you had told me that we’d be doing this well financially, morale would be so positive, and I’d be this invigorated as an owner, I would have said you’re crazy.”

Learn more about mitigation strategies.

Talk to one of our pharmacy experts today.