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Three Strategies to Recapture Lost Pharmacy Revenue

November 2015 - Vol.12 No. 11 - Page #58

In today’s hospital pharmacy, focusing on financial opportunities to drive operational improvements must be a continuous pursuit. Concentrating energies on untapped cost savings, including recouping lost revenue via returning expired drugs, increasing indigent reimbursement, and expanding product replacement efforts, can generate significant savings. In fact, few other clinical interventions can consistently reap readily calculable financial dividends with such a limited time investment. The return on investment (ROI) is far easier to quantify than that on more esoteric clinical patient interventions, and recapturing lost revenue enables funding for other projects, including the acquisition of technology and automation, as well as educational seminars for staff, for which funding may not previously have existed.

West Florida Hospital (WFH) is a 515-bed, for-profit health care facility located in Pensacola, Florida. The hospital provides a full range of services, including acute care, inpatient psychiatric, and inpatient and outpatient rehabilitation. The organization also operates an outpatient infusion center. In 2014, WFH embarked on a campaign to recapture lost revenue utilizing a three-pronged approach: establishing a program to return expired medications, seeking and obtaining full reimbursement for treating indigent patients, and facilitating product replacement. Within one year of implementing these efforts, WFH reaped $123,000 (see FIGURE 1).

Expired Medications
It is common for pharmacies to deem expired medications a nuisance and relegate them to an obscure, forgotten area of the pharmacy. However, returning these medications to the manufacturer often can provide a significant boost to the pharmacy budget. While some pharmacies opt to use medication return services to handle their expired drugs, WFH chose to manage the process

By harvesting the low-hanging fruit, one can evaluate which past-dated medications are worth pursuing. Expired medications that WFH targets include:

  • Brand name injectables
  • Expensive chemotherapeutic agents
  • Unopened bottles or boxes of high-cost, brand-name oral medications
  • Large quantities of injectable generics to which a high probability of credit is afforded (typically from larger manufacturers)

Based on experience, our hospital avoids returning the following expired medications:

  • Controlled substances
  • Generic oral medications
  • Generic injectables from obscure manufacturers (unless large quantities)
  • Low-cost and low-quantity medications
  • Medications from the smaller pharmaceutical start-ups, with limited, expensive, one-shot product lines
  • Blood and plasma-based products (eg, albumin, IVIG)

In many cases, low acquisition cost equates with low or no credit for returns, so if there is any doubt as to whether the manufacturer will accept the returns for credit or reimbursement, inquire directly with the manufacturer before embarking on the returns process. Also, the ROI for returning a low-cost drug often does not justify the time required to do so; therefore, WFH only returns expired agents that exceed $300 to $400 per return. Returns may be provided in the form of credit applied through the wholesaler or via check mailed directly to the hospital. Although it may seem that a check would be the most practical, it also can be the most difficult to track, as it could be sent to financial services, accounts payable, pharmacy, or elsewhere. Therefore, choosing a credit issued through the wholesaler may be preferable.

There are three generally accepted methods pharmacies can employ to return expired medications for credit. The first is returning the medication directly to the manufacturer, although not all pharmaceutical manufacturers offer such programs.1 Second, a third-party intermediary may be helpful in facilitating returns. Third, expired medications may be allowed for return via your wholesaler (see SIDEBAR on page 62).

Typically, pharmacy awaits authorization from the manufacturer for the return of an expired medication, and then arranges the packaging and mailing of the expired medication. We rely on the shipping and receiving department, so pharmacy is not required to handle those details internally. WFH simply places the outdated medications in a box with an address label, and the shipping and receiving department manages the rest of the process. Keep in mind, it is important to assign an insurance value to the package in case it is lost. For example, loss of a box of uninsured pertuzumab can cost an organization $25,000; however, shipping and insurance charges average only about $25 per parcel. The shipping and receiving department also maintains tracking records of every shipment, which simplifies documentation. (See FIGURE 2 for expired drug replacement revenue.)

Patient Assistance
Recouping revenue through improved patient assistance in the form of reimbursement for services rendered to indigent patients can significantly impact the pharmacy’s bottom line. Although the percentage of uninsured Americans continues to decline, according to a study by the CDC using Census data, 29 million Americans (9.2%) were uninsured in the first quarter of 2015.2 Although pharmaceutical companies offer programs to help shift the burden of drug costs for patients that are indigent or uninsured, such patients often represent a large segment of the hospital’s patient population, and often hospitals routinely must bear the costs.3 As a for-profit institution, WFH may see fewer unfunded patients than a not-for-profit or 340B-eligible facility; those facilities may have greater potential for loss and restitution. Many manufacturers have specific guidelines (eg, approved indication, income eligibility, and outpatient use), so verify with the manufacturer directly and follow up with your local professional sales representative.

To recoup the costs of treating uninsured patients, begin by identifying indigent patients, in order to focus assistance efforts. The hospital’s business office can provide a daily list of those who are uninsured; if in doubt, verify with the head of patient access. Citizenship also should be considered, as pharma-sponsored patient assistance programs typically cover US citizens only. Most patient assistance programs require patient-pharmacist-physician interaction, so it behooves the pharmacist to act expeditiously, as an onsite patient is far easier to interview versus one that is no longer in the hospital.

Experience shows that generics manufacturers rarely offer significant patient assistance, so WFH tends to exclude generics when attempting to recoup drug costs through patient assistance programs. Moreover, WFH focuses on costly drugs (ie, drugs that are priced above $300 per unit). Nevertheless, certain less expensive products may be worthwhile to pursue if the process for obtaining funds is streamlined and simple. For example, WFH applies for patient assistance with Lexiscan, as the manufacturer (Astellas) does not require patient or physician signatures, so the pharmacist-patient interview can be performed remotely.

For new medications, contact the manufacturer directly to inquire if a patient assistance program is available. Income verification can be onerous, as patients may be unable or unwilling to reproduce 1040 income tax returns or W-2 wage statements, so it is more convenient if manufacturers accept verbal attestation. Sometimes the screening completed by business office personnel and representatives who interview the patients will suffice. Below is a list of manufacturers WFH works with that offer patient assistance programs; note that their documentation forms and requirements differ.

  • Amgen
  • Astellas
  • Cubist
  • Genentech
  • Merck
  • The Medicines Company

FIGURE 3 (on page 62) details WFH’s indigent replacement revenue for 2014.

Product Replacement Programs
A third method of reclaiming revenue involves wasted product, which takes many forms. If a high-cost, branded medication is compromised, it behooves the hospital to contact the manufacturer to see if they have a program in place to facilitate replacement of the product. WFH has found that although there are subtle differences among manufacturer policies, none have proved excessively burdensome. As a result, it is possible to enjoy a high level of success with recouping waste from most manufacturers, with the exception of blood and plasma-product producers (eg, albumin, IVIG).

In an outpatient infusion center, patients may miss their appointments or become ill, or physicians may change patient orders after a medication has been mixed, and efforts to reuse the medication prior to the beyond-use date may be unsuccessful. In these situations, the medication is usually wasted. Likewise, inpatient orders may change secondary to abnormal lab results, or a patient may decline a medication after it has been mixed. WFH has had IV vial closure devices (stoppers) involute, resulting in contamination and loss of the product.

In the cleanroom, some of the new biological chemotherapy agents require complicated compounding steps, and deviations may occur, despite the best intentions. If a compounding error results in an unusable dose, it is important that the incident be reported. It is not uncommon for a pharmacist or technician to fear punitive action when a costly compounding error occurs; nevertheless, reporting can help identify trends with a particular drug and should be encouraged. For example, identifying a repeating problem with a specific product may indicate that the reconstitution directions or procedures require modification by the manufacturer, or that additional training of pharmacy personnel is required.

Some manufacturers may request that organizations save a defective or wasted drug and provide the expiration date and lot number from the vial(s), so it is important to segregate the agent from the general inventory. Regardless of what documentation is required, few manufacturers request the actual return of these medications. WFH has at times taken digital photos of medications to be wasted, to serve as a record when saving the wasted dose proved impractical or unsafe.

As with expired medications and indigent patient assistance programs, generic injectable manufacturers rarely offer product replacement programs. If they do, the lower initial cost of these products likely renders financial remediation unsound. Some of the manufacturers with whom WFH has enjoyed success include Bayer, Bristol-Myers Squibb, Eli Lilly, Genentech, Novartis, and Onyx.

FIGURE 4 itemizes WFH’s product replacement revenue for 2014.

Campaign Results
As mentioned earlier, in 2014, the WFH pharmacy department garnered approximately $123,000 in credits and replacement products, which roughly translates into a pharmacist’s annual salary. This was accomplished by expending about 60 minutes (or an average of $57.50 per week) pursuing the aforementioned methods of recouping lost revenue. This approach requires dedication, effort, insight, and above all, persistence, as the related processes can be protracted and often require multiple communications with manufacturers (or their representatives) before the credit is awarded.

At WFH, the effort to recoup lost pharmacy revenue is directly managed by a clinical pharmacist, with pharmacy staff and prescribers providing leads. A pharmacy student assists in sorting through the daily list of uninsured patients, which is extremely helpful; in some situations, a pharmacy technician may be suitable to perform this task.

Every hospital pharmacy invariably experiences unavoidable financial and product losses in different areas, so concentrating remediation efforts on primary loss points is a wise strategy. In addition, it is wise to consider pharmacy-staffing levels when planning how much time and effort to expend on these pursuits. If pharmacy resources are stretched thin, you may have to be selective in pursuing patient assistance programs for indigent or unfunded patients. These programs typically require significant resources and often involve multiple parties, additional documentation, and a sense of urgency, given that the average patient length of stay is only 5 days, and physicians may be difficult to reach. As with any new endeavor, initiation often is intimidating, but with time comes proficiency and reward.


  1. Healthcare Distribution Management Association. Understanding the Drivers of Expired Pharmaceutical Returns. Accessed October 7, 2015.
  2. US Dept of Health and Human Services. Centers for Disease Control and Prevention. Health Insurance Coverage: Early Release of Estimate From the National Health Interview Survey, January-March 2015. Accessed September 24, 2015.
  3. Heller A. Two Illinois Hospitals Find Lost Drug Dollars Using Patient Assistance Programs. Accessed October 7, 2015.

Glenn Schulman, RPh, PharmD, MS, BCPS, BCACP, CGP, is a clinical pharmacist at West Florida Hospital in Pensacola, Florida. He received his BS in pharmacy from Auburn University and his doctor of pharmacy and MS in pharmacy medication therapy management degrees from the University of Florida. Glenn’s professional interests include antibiotic stewardship, medication therapy management, and pharmacy revenue recovery.

West Florida Hospital’s Useful Returns Resources
Direct to Manufacturer

  • Eli Lilly
  • Merck
  • UBC Pharma/Qualanex

Third-Party Intermediaries
Genco Supply Chain Solutions

  • Actavis, Amgen, Apotex, Astellas, Bayer, Biogen, Boehringer Ingelheim, Forest, Genentech, Mylan, Novartis, Novo Nordisk, Roxane, Sandoz, Sanofi, Winthrop

Inmar Healthcare Returns

  • Bausch & Lomb, Boehringer/Roxane, Covidien, Dr. Reddy’s, GSK, Pfizer/Wyeth/Monarch, Purdue, Qualitest, Ranbaxy, Teva, URL

JOM Pharmaceutical Services, Inc

  • Janssen, Johnson and Johnson, Ortho, Scios


  • Astra Zeneca, Baxter Critical Care, Eisai, Forest, Mylan, Ranbaxy, Shire


  • AmerisourceBergen
  • Cardinal
  • McKesson


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