I mentioned in my first blog that it was a surprise to me that some owners of independent pharmacies didn’t know what a GPO was. I think it’s worth explaining – literally ($).
GPO stands for a Group Purchasing Organization. There are all kinds of GPOs. Some represent groups that purchase hospital supplies, building and maintenance supplies, and medication, to name a few. Some do all of the aforementioned, and others specialize. GPOs use the buying power of their membership to negotiate with wholesalers for the bulk purchase of merchandise. It’s members then purchase at a discounted price directly from the wholesale agent. The GPO collects a 3% fee (governed by law) of the acquisition price. The customer gets the negotiated price for the goods, and everyone is happy.
The question is, which differentiates one GPO from another. Think about it this way. If a GPO negotiates the price of a drug to be $100/per, the GPO’s fee is $3. If the GPO negotiates the price of a drug to be $150/per, the GPO’s fee is $4.50.
Buyers beware. Just because a company says they are a GPO doesn’t mean they are negotiating the best price for your business. They may be negotiating the best price for their business. Shop around. Look at prices. Then we’ll meet you on DermSource.com.
Yuriy Davydov, Pharm D.
Founder & CEO
DermSource.com
Your Dermatology GPO.
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Definitely worth understanding!