Picture this, you are walking down a pharmacy to purchase medicines only to see a huge bill. You are compelled to choose between your health and saving money. This grim reality affects many people worldwide. According to a study by WHO, medicine prices are 2-6 times higher in low and middle-income countries compared to international markets. What if there was a way to treat your health concerns while saving your pocket? Pharmacy collective comes as a glimmer of hope. This blog will dive into what pharmacy collectives are and how they can remodel healthcare accessibility and affordability.
What are Pharmacy collectives?
Pharmacies team up to form a collaborative network and achieve a common goal. These groups of pharmacies known as pharmacy collectives come forward with a shared interest and use their negotiation power to pool resources collectively allowing them to purchase medicines from manufacturing companies at a reasonable price.
These collectives concentrate on:
- Increasing buying power by purchasing medicines in bulk
- Utilizing shared resources from expertise to technology to logistics
- Eliminating the middlemen to cut out unwanted medicine cost
Types of pharmacy collectives:
- Independent pharmacy cooperatives, where several pharmacies group together to compete with bigger industries.
- Nonprofit collectives: Unlike profit-oriented organisations, they aim to provide cost-saving benefits to their community in making medicines more affordable which is especially advantageous for areas where accessibility to medicines is hindered with high cost.
- Group Purchasing Organisations (GPO), which serve as a specific entity on behalf of healthcare providers or pharmacists to fulfil their medicine supply demand. They act as intermediaries who negotiate pricing with the manufacturers and suppliers directly and streamline the procurement process.
How does group buying reduce medicine costs?
- Direct purchasing: The collectives negotiate with manufacturers directly skipping the potential markup added by wholesalers and distributors and hence secure medicines at lower prices.
- Bulk buying: Pooling orders from multiple pharmacies helps the collectives deal even better with the manufacturers which individual pharmacies would fail to achieve alone. This collective bargaining power ultimately results in savings to customers.
- Shared resources: Sharing operational resources like warehousing, distribution and administrative services reduces the overhead cost and allows more competitive pricing.
- Transparency and advocacy: Pharmacy collectives advocate for transparency when it comes to pricing. They work for the removal of opaque pricing practices that benefit the middlemen but harm the customers.
Real-life impact
- National Community Pharmacists Association: This organisation gives voice to the independent smaller pharmacies across the US which are dominated by big chains and Prescription Based Middlemen (PBMs). They work tirelessly to represent these community pharmacists and through collective efforts, have worked to improve transparency and lower medication costs. Their mission has led to important policy changes benefiting both pharmacists and consumers.
- Independent Pharmacy Cooperative: One of the leading examples of pharmacy collectives in the US, IPC has successfully brought independent pharmacies together and provided them with cost-saving options by helping its members secure bulk discounts on medications, cutting down operational costs and streamlining operations. This has helped pharmacies to compete with big names and also put the best interest of their patients first by providing competitive price models.
Bulk drug purchasing benefits
- For patients
When pharmacies buy bulk drugs through collectives, they secure good discount rates which are often passed on to customers reducing the out-of-pocket expenses and improving accessibility to medication, especially for those who require chronic prescription or expensive medicines. - For pharmacies
Bulk purchasing by leveraging the bargaining skills of collectives helps the pharmacies stay competitive and obtain better profit margins. It also helps them manage their inventory better by eliminating the need for frequent orders.
Facing the challenges
While the pharmacy collectives offer many benefits, the journey still isn’t free from hurdles
- Coordination and communication: Managing a collective requires significant collaboration of all its members to work towards a common goal. This can be especially challenging when running diverse independent businesses and ensuring that everyone is on the same page
- Regulatory hurdles: The pharmacy collectives must comply with the laws and regulations depending on the region. This can be troublesome but with the right legal framework and support, many collectives have managed to navigate these complex regulations and thrive.
The bottom line: Why pharmacy collective matters?
In the long run, pharmacy collectives seem like a good deal to everyone, both pharmacies and patients. They help reduce medicine costs by increasing negotiation power, cutting out the intermediaries and utilizing shared resources. Moreover, they create a more transparent environment where small-scale pharmacies can compete with big players.
As more pharmacies and patients benefit from these collectives, we may see them become an even more common solution in tackling rising healthcare costs. If you’re a pharmacist, it may be time to consider joining a collective. And if you’re a patient, supporting independent pharmacies in your community may mean better prices and better service for everyone.
