Crafting an RFP to Select a Repackaging Vendor


March 2011 - Vol. 8 No. 3 - Page #22

At some point, most pharmacy managers are faced with establishing an efficient and cost effective solution to meet their facility’s bar coded unit dose medication requirements, and for many hospitals, outsourcing some portion of their repackaging needs is an effective, financially sound approach. After determining which products should be outsourced, then comes the decision of which vendor to use for this service. Whether embarking on an outsourced repackaging venture for the first time or evaluating options before renewing an existing contract, crafting a request for proposal (RFP) that captures the necessary information to evaluate each provider is critical to choosing a vendor that best fits the needs of your pharmacy operation.

Addressing Costs
When addressing pricing in the RFP, all costs quoted should be transparent. To this end, inquire about special packaging circumstances that could impact the cost per dose; while some vendors might not impose additional fees for options such as tamper-resistant caps or light-resistant packaging, others may impose a minimal charge depending on the circumstance. This charge might translate only into a few cents per dose, nonetheless, extra fees can add up quickly. Costs for customized packaging needs should be addressed in the RFP as well. We recently decided to combine a drug and diluent in a single light-resistant, robot-ready package. Some vendors might charge this as an overwrap job, while others might charge this as a special circumstance. By addressing costs for current and future packaging needs upfront, surprises down the line can be avoided.

The RFP also should ask the vendor to spell out the terms of delivery, including who is responsible for the freight charges and under what circumstances this is subject to change. For example, it is important to know who will be responsible for expedited delivery charges if needed.

Also, be sure to check GPO and affiliation contracts to determine if the vendors being considered qualify for preferred or discounted pricing.



Turnaround Time
Depending on a hospital’s needs and capabilities, a quick turnaround time may not outweigh other factors. For us, turnaround time is critical because we want to maximize inventory turns; so, we selected the vendor that could accommodate the quickest turnaround time. As this vendor is located within a two-hour drive of our facility, they were able to commit to a 48-hour turnaround time. We place our order via the bill to/ship to account every Monday, with an expected delivery day of Thursday.

To ensure the agreed-on delivery time is met, it is advisable to build a performance clause into the contract. While this was not outlined in our first contract, it was included with the renewal. The performance clause states that the vendor is responsible for making the delivery to us within 48 hours from receipt of order, and that any additional costs incurred to ensure this turnaround time is met will be covered by the vendor.

Bar Code and Labeling Considerations
It is important to make sure that vendors being considered can provide a package that will accommodate the bar coding equipment used by your hospital. In our case, we needed all bar codes in a linear, 10-digit format.

In addition, it is helpful to review the vendor’s label approval process. We wanted to make sure that all new labels would be sent to us for approval. Any time a product is added or packaging changes, a draft label is generated by the vendor, and then sent via email in PDF format for approval by the pharmacy manager prior to any repackaging. This helps ensure that the label and bar code meet our requirements.

Establishing a process to ensure the vendor manages the resolution of any unscannable bar codes saves a lot of frustration. We now require our vendor to credit us for any items that do not scan. Initially our process was to return items with unscannable bar codes; the vendor would remove the drug, repackage, and then ship the repackaged medications back to us. However, this process was inefficient. Too often it would be time to reorder and the repackaged items had yet to arrive. Remember to specify in the contract that credits will be issued for both the packaging and the products being billed for by the wholesaler in this circumstance.

Dating Documentation
Request documentation from the vendor that supports dating assigned to the medications they are repackaging. Per the FDA, the expiration date for repackaged items is one year from the date of repackaging—or the manufacturer’s date if it is less than a year. We encountered a situation where a vendor was cited by the FDA and was forced to offer shorter dating until the issue was resolved. So, make sure to ask if the vendor has ever received a citation from the FDA and find out the reason for the citation. In addition, the documentation for the dating should be accessible in case it is requested during a regulatory inspection.

Recall Process
TJC requires that pharmacies have a process to manage recalls, so it is crucial to determine how the vendors under consideration address this. On top of establishing that the vendor indeed tracks recalls, review their notification process as well as their process for quarantined drugs. In the event of a recall, our vendor notifies the pharmacy manager, charge pharmacist, and buyer via an email that includes the affected manufacturer lot and the affected internal lot that they assigned. After receipt of this email, we take the necessary steps to quarantine the affected medication, and then it is a case-by-case decision as to whether we deal with the manufacturer directly or send the quarantined medications back to the vendor.

Payment Terms
An RFP should request information on the vendor’s processes for payment, invoicing, and crediting. For example, establish payment terms and late payment penalties, and determine if the vendor offers discounts for a more frequent payment schedule. Also, it is important to know if the vendor invoices the hospital directly or if invoicing through your wholesaler is available. This approach not only translates into managing one less payment, but it also could propel your hospital into a different tier of discounts via the wholesaler. The final contract should include a schedule of all negotiated payment, invoicing, and crediting clauses.

Meet the Vendors
After receipt and review of the RFP, a face-to-face meeting with the vendors should be conducted. The meeting should include the pharmacy manager, operations manager (if applicable), and the pharmacy buyer, since they will be working closely with the vendor. It is not necessary to involve administration unless finance is needed to help with negotiation of payment terms. Ask the vendor to come with samples of their packaging. This way packaging can be seen and tested for compatibility with the facility’s equipment. If a robot is used in the pharmacy, these samples should include shelf packaging. Our vendor provides all robot-ready packages on cardboard rods, which helps save time restocking the robot.

During the meeting, request customer references. When contacting references we include questions about customer service and meeting delivery times. Most important, ask if they would use the vendor again. It is important for us to work with a company that will respond to our needs quickly and amicably. One time, after a delivery delay left us with insufficient inventory for a long weekend, the vice president of the company personally delivered the order to us. The value from committed customer service is difficult to overstate.

Pharmacy management also should conduct a site visit to the vendor’s repackaging facility to view operations and meet the staff. On this visit, verify that repackaging occurs under the supervision of a licensed pharmacist at all times.

Conclusion
Choosing the outsourced repackaging vendor that best fits your facility’s needs means carefully assessing those needs and then crafting an RFP that will accurately capture the information needed to best evaluate vendors. While this process is time consuming, it can help ensure satisfaction with the chosen vendor as well as help avoid unexpected issues that need to be managed down the road.

Keep in mind, even after the contract is signed, this is not a life-time commitment, and the RFP process can always be employed again to assess if another vendor can better meet the needs of your facility.


John L. Feucht, II, RPh, is the director of pharmacy services at Mercy Medical Center in Canton, Ohio. He received his bachelor of science in pharmacy from Butler University. John is currently pursuing an MBA with a concentration in health care administration at Walsh University. He also is a clinical assistant professor of pharmacy practice at the Northeastern Ohio University College of Medicine and Pharmacy.


Maximize Savings with Outsourced Repackaging
Once we determined the vendor’s reliability and were assured of the quality of their packaging, we reassessed our formulary and identified several items that were being purchased in commercial unit dose but were less expensive to purchase in bulk and send to the repackager. In order to capture potential savings, the buyer and pharmacy manager should conduct this type of review at least quarterly or upon contract pricing changes.

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