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Mandeep Mudhar, Numark's director of marketing, explains how to maximise profit and efficiency from your generics purchasing

The UK is one of the leading countries in generics prescribing and dispensing. Indeed, many European countries continue to adopt major elements of the UK funding model for generics, though it may surprise contractors to hear that many of their overseas colleagues have to cope with a system even more penal and unfair than ours.

The net effect of this is that generics suppliers do not always find the UK a very attractive market; in addition to having to sell products at a loss due to the tariff reimbursement price, rigid licensing procedures are in place for the registration of a new product for patient use in the UK.

The larger generics companies have to try to ensure purchasing across the portfolio of their products to generate profit and offset loss-making molecules. This in the main is why we have successful generic schemes operated by major manufacturers like Teva and Actavis.

Short-liners

These manufacturers operate schemes that reward loyalty, encourage pharmacists to buy across their whole range, and purchase those molecules where they have a unique product. In addition, manufacturers will promote a brand continuity message as a way of enhancing patient loyalty. This will be relevant in some communities that pharmacy serves.

However, conversely, the impact of Category M means that pharmacists still continue to try to get the best possible price on a molecule-by-molecule basis in the belief that this level of detailed focus is the only way to maximise profit on generics. The truth is that not even the best buyer in the world could maximise total profit across the whole 1,800 or so generics available in the UK.

With constant fluctuations in stock availability, NCSO, concessionary pricing and other factors affecting commodities like generics, it is impossible for any individual to have accurate pricing information on a day-to-day basis. So while pharmacists will retain pricing information on the fast-moving and well-known molecules, they just do not have at their fingertips the daily price on a long tail of products and often believe that short-line wholesalers are giving them the best price on every molecule.

Recent solutions

More recently, electronic solutions have come into the marketplace, such as PharmAssist, that offer a system-based tendering and fulfilment system. These solution providers are integrated into some PMR systems and tender generic molecules across a number of suppliers and wholesalers who have agreed to take part in their scheme.

Supply is still the bread and butter of pharmacy business

 The system picks out the cheapest provider for each molecule and that supplier delivers the molecule into the pharmacy engaged with this electronic solution provider. Think of this as an electronically driven bidding solution with the guarantee of the pharmacist receiving the cheapest supplier's product.

Not all wholesalers or suppliers take part in this bidding solution and the engaged pharmacy has to be prepared to receive supplies from a range of different suppliers.

In many ways, the electronic solution replaces the need for a pharmacist to pore over every supplier's price list to try to obtain the cheapest product. And then there are the schemes like Numark's new generics offer, called Numerics, which have been set up to drive an all-encompassing generics purchasing solution that saves pharmacists time and effort. Numerics is a complete solution across the whole range of generics with no affiliation to any brand or manufacturer.

The objective is to get the best price for every molecule through Numark's buying power and at the same time encouraging and incentivising pharmacy to buy all of their generics through Numark rather than shopping around. With net pricing, live stock availability and loyalty benefits, Numerics offers a novel solution to purchasing generics.

Whichever option you choose to purchase your generics, make sure that:

• It's right for you and that it frees up
  your time to spend with patients and deliver services
• It is transparent and does what it says on the tin
• Aspects such as delivery, invoicing and availability are consistent and not overtly time consuming
• You examine your monthly statements and check what you are paying against what you are expecting to get paid and against what is actually listed
• You keep up-to-date with all products coming off patent and NCSO information, and reduce your brand stockholding accordingly €“ Numark advises its members via NumarkNet, email and Scripts of any new generic launches
• You are endorsing prescriptions correctly €“ this will reduce dispensing at a loss when dispensing a product above tariff price
• Don't overstock €“ twice daily delivery from many wholesalers means you don't need to keep everything on your shelves

Supply is still the bread and butter of pharmacy business and, with continued downward pressure on margins, the reality is that contractors need to protect their supply profits.

Pharmacists should think about their approach to all generic products, not just the top 100-200 that many concentrate on. But in a patient-centric NHS, it is vital that contractors use their time appropriately and concentrate on developing, commissioning and delivering both private and NHS services to suit their local customer demographic.