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Market Watch: A new model: Look for opportunity
It may be time to rethink your practice's pharmaceutical product pricing


Reconsider your pharmaceutical pricing

Well, the news may not be all bad. But we will have to make some changes. Flea and tick control product sales have been hard hit, but the worst may be over. In a recent survey of more than 2,000 dog and cat owners, only 32 percent of respondents said they would likely purchase from a source other than veterinarians. About the same number will definitely continue to purchase from veterinarians, and roughly a third will likely purchase from their veterinarians. Of course that is "all things as they are."

A change in how we price and pre-sent these products could well swing the numbers back our way. Continuing to market and price product as we have in recent years, however, will drive more people to consider the commodity price rather than the value of these products. I do not think our pharmacies will disappear—at least not in the immediate future—but I do think we need to revisit the intent and structure of our dispensing approach. Markups such as "2.2 times cost plus a packaging fee" will no longer float in a time when some pharmacies are charging a flat $5 or even $10 fee for prescriptions, and, in fact, some supermarket pharmacies will fill prescriptions for common drugs for no charge at all.

The same truth likely holds true in the rest of our pharmacy. We simply cannot continue to mark up drugs at 2.5 to 3 times our cost. Heartworm and flea and tick super product prices are no longer in a black box. Pet owners have access to information and prices as close as their smart phone. So do you. Don't price match when challenged. Set your price in the range of what discounters charge.

Your payoff

A recent survey of pet owners reports that veterinarians who made available lower-cost products or source options demonstrated a concern for their patients and clients and consequently were held in higher esteem for the commitment. Further, less costly products may free up money earmarked "for the dog" for services and healthcare—$50 less spent on products may well translate into $50 more spent on healthcare other than products.

Pet care expenses are generally discretionary spending, and often pet owners have a budgeted amount when they go to the veterinarian. Reducing the cost of certain products that have become commodities will free money for other indicated services. So we have to learn a new way of thinking about pharmacies, and we have to stop relying on dispensed products to buoy our financial flow.

Dr. Paul is a veterinary consultant and a founding member and former executive director/CEO of the Companion Animal Parasite Council. He has served as president of the American Animal Hospital Association. He lives in Anguilla in the British West Indies.


Source: DVM360 MAGAZINE,
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