With the future of independent pharmacies under threat, some companies are trying to help ease their financial burdens by selling drugs without huge markups.
Small pharmacies across the nation have been struggling with high costs for prescription drugs, coupled with low reimbursements from pharmacy benefits managers (PBMs), which often pay pharmacies less than the original cost of the drugs. The issue has reached Congress, with lawmakers grilling executives of major pharmaceutical companies on their “morally repugnant” pricing practices at a recent hearing, but many of the companies refused to take the blame for the high prices.
Seeing this problem firsthand at his pharmacy in Oakland Gardens, Queens, Yuriy Davydov closed his business in 2015 after three years and sought to find a cheaper way for pharmacists to buy drugs.
“Drugs are not expensive. It’s the people that are in charge that make it expensive,” he said.
Markups of prescription drugs also aren’t consistent from one sale to the next, he said. “Why is one pharmacy buying something for $20 and … another pharmacy, across the street, could be buying that drug for $40, $50, $60?”
Knowing this, Davydov launched the company, DermSource, in November 2018. The online platform has contracts with more than 100 manufacturers and sells prescription drugs to pharmacists at just a 3 percent markup, he said. It currently only offers products in the dermatology field.
Since its launch, at least 140 independent pharmacies in 30 states have used the platform, buying about $1.6 to $1.7 million of prescription drugs.
“They probably would have spent $2.5 to $3 million,” buying the drugs from primary wholesalers, Davydov said.
Queens pharmacist Isaak Pinkhasov started using DermSource shortly after its launch and has so far saved at least $1,500, he said. As DermSource’s offerings are limited, the products he buys make up a small percentage of the drugs in his store, Heal the World Pharmacy in South Jamaica, but he is thankful for what the company offers.
“DermSource, right now for me, is that light in the tunnel,” Pinkhasov said. “The best thing about it is I don’t have to call (wholesalers) and negotiate on the phone all day, I don’t have to bargain or beg.”
DermSource isn’t the only company trying to give small pharmacies another buying option. DS Medical Holdings, based in Michigan, takes orders from pharmacies across the country and purchases the drugs in bulk, making the price lower than if each pharmacy bought separately.
“If we get 100 pharmacists buying the same (drug), we get a volume discount,” founder and president Dave Bandyk said, adding that the prices are typically at least 25 percent cheaper than other sellers.
For Davydov, companies like his are just the start of the solution to keeping independent pharmacies in business.
“To fix this issue, there has to be a group of companies out there,” he said. “Maybe it’s Amazon, maybe it’s Walmart, maybe it’s both of them … we need big names out there to stand together.
“I don’t have a total solution, but the total solution will come from a group of companies.”