Pharmacy Requirements

Pharmacy Requirements

Pharmacies play a huge role in our lives. They’re constantly communicating with our physicians and safely dispensing life essential medication to us. 

But how did pharmacies in the U.S. come about, and what does it take to be a licensed pharmacy today?

Early pharmacy in the U.S. evolved from a combination of European innovation, Native American medicine, and new discoveries in plant medicine in the western world. However, it wasn’t until the 19th century that the American ‘’pharmacy as we know it’’ emerged. 

 

19th & 20th centuries

Before the rise of pharmacies, there were apothecaries, which anyone could run after a short apprenticeship. But in 1804, that changed when Louisiana became the first U.S. state to require pharmacists to have a license. By 1823, Louis Dufilho Jr. opened the first pharmacy as America’s first licensed pharmacist.  

By the mid-19th century, the American Pharmaceutical Association (APhA) “considered all the varied pharmaceutical practitioners ‘pharmacists’” to better “standardize the field”, making the role of a pharmacist a more distinct discipline, and well-defined profession. 

Throughout the 20th century, pharmacists played a vital role in the scientific discoveries and medical innovations which paved the way for the development of modern medicine as we know it today…

 

…..Today

Owning and operating a pharmacy today is no easy feat. These are the most common reasons individuals own pharmacies. 

  1. Individuals who inherit a family owned pharmacy.
  2. Entrepreneurs who have a unique value proposition or business model.
  3. Pharmacists struggling to find job openings in their location of residence. 

If you’re one of the last two, here are the requirements you’ll have to meet to run a licensed pharmacy.

 

1. Assemble a team of advisors to consult with.

It’s important to seek out wisdom and advice from those who’ve already started pharmacies in the past.

When assembling a team of thought partners, or a board of advisors, here are some of the experts to consider working with or hiring:

  • Legal counsel
  • Insurance agents
  • Financial advisors
  • Pharmacy owners
  • Industry experts

 

2. Research and planning.

Before building a successful pharmacy, understanding your market and financial projections is crucial. Below are some relevant questions to research and consider. 

  • Market research
    • Where are you building your pharmacy? Is that area heavily trafficked?
    • Which demographic will you be mostly serving? 
    • Who are your competitors?
    • What is a unique need that you’ve identified in the community you wish to serve? How will you fill that need?
  • Financial forecasts 
    • Building a pharmacy will cost (on average) around $500,000. There are several ways in which you can obtain this financial capital:
      • Personal investment 
      • Angel or venture capital investment
      • Financing
      • Partnerships
    • Understanding your pharmacy’s cash flow, revenue and expenses is crucial to projecting whether your business will be profitable and if so, when.

 

3. Know your legal and operational requirements.

Choosing what type of company your pharmacy will classify as is a very important decision. It affects many aspects of your company including it’s business structure, tax and legal liabilities. The four most common types of companies you can file as are the following:

  1. Limited Liability Company (LLC)
  2. “S” or “C” Corporation
  3. General Partnership
  4. Sole Proprietorship

Which type of company you incorporate your pharmacy as will shape the liability and tax structures of your business in relation to the owner(s).

Licenses 

Each pharmacy must obtain the following licenses before operations begin.

  1. State board of pharmacy permit

  1. Drug Enforcement Administration (DEA) Number
  2. National Provider Identifier (NPI) Number
  3. National Association of Boards of Pharmacy Number
  4. Employer Identification Number (EIN)

Taxes

As a pharmacy owner, you will have to set up the following accounts with your federal, state and local taxing authorities.

  1. Federal Tax ID Number
  2. State Tax ID Number
  3. Payroll Tax Account
  4. Property Tax Account
  5. Sales Tax Account

Insurance

Insurance will serve to protect your pharmacy in the case of property damage or lawsuits. In many cases, insurance is also required to engage in other contacts and practice agreements.

 

4. Obtain investments.

 Opening a pharmacy can come with a large financial risk. Getting investment from a bank could in some cases be difficult. Make sure you clearly communicate your unique value proposition and business model to potential investors, and seek advice from similar business owners who have opened pharmacies in the past.

 

5. Find the right location for your store. 

Whether you choose to rent, buy or build, the most important thing is finding a location that provides your pharmacy with both visibility and accessibility.

 

6. Hire and train employees.

Hiring the right employees is crucial to the success of your business. Invest time in establishing a great hiring and on-boarding process from the beginning. By being thoughtful and consistent about your hiring and training process, you can prevent a high turnover rate and create great company culture.

Be open and transparent with your company policies, values and procedures. Search for candidates who will thrive in your company culture, who are passionate about your mission, and share your values. 

Empower your employees by establishing trust, building open, two-way communication channels and providing extra training or courses as needed. Maintaining an encouraging work environment where your employees feel valued and safe is the first step in setting your team up for lasting success.

When thinking of recruiting the right number of employees, be mindful of the fact that you need at least one Licensed Pharmacist and Technician for your store to operate. 

 

7. Purchase inventory and supplies.

Two of the main things you will need to consider here are medication and technology.

Medication:
Connecting and building strong partnerships with the right wholesalers will affect your profitability. Some of the factors to consider when choosing a wholesaler are the following:
1) Proximity to wholesaler

2) Delivery schedule

3) Cost

4) Product availability

5) Customer service

Technology:

When thinking about which pharmacy management tool to incorporate, consider what will allow you to work most efficiently, be easy to learn and which system will grow best with your company. 

 

8. Market your business.

1) Build an online presence.

Think of the last time you searched for the closest pharmacy to you. You probably used your phone and did a Google search. Having an online presence can be the single most important step in getting new customers to discover your pharmacy.

2) Provide unique value.

Make sure your value proposition is always clear when marketing your pharmacy. It should be very clear to anyone who views your website, comes along an advertisement, or interacts with you staff, how your pharmacy is unique.

3) Get involved with your community

Your first customers are very likely to be your local community due to the pharmacy’s proximity to their residence. Get to know them! Whether that is by hosting community events regularly or building a friendly rapport with them. Those customers are your first supporters, and likely to be the people who spread the word about your pharmacy to neighbors and friends.

4) Offer incentives regularly 

Whether it’s getting to know your community better or incentivizing others to try your pharmacy – this is a great start to do both!

 

9. Do a test run (soft opening).

Before you open your doors to the general public, do a small test run with a few local customers. This is for your employees to identify any hiccups in your operations, and to allow staff to master their workflows and tackle any last minute road bumps. 

This allows for no surprises on your grand opening. You want the customer experience at your pharmacy to be smooth, and your team confident in their routines and prepared for what to expect!

 

10. Grand opening.

Congratulations! You made it. Opening your pharmacy is an exciting day for you and your staff!

Make sure you spread the word within your community and host fun events for you and your staff to get to know the people you will be serving better.

Some fun events you could plan are:

  1. Serving food from local bakeries and restaurants
  2. Music performances by local artists and bands
  3. Offering prizes or giveaways 
  4. Inviting the mayor to speak 
  5. Hosting local media coverage 

 

Conclusion 

Opening a pharmacy comes with a lot of responsibilities, but it can be very rewarding to help your community in a unique way. Pharmacies play a huge role in our life – directly or indirectly. It’s no surprise that a large amount of work goes into operating this business. Whether you are an avid reader or someone looking to start their own pharmacy, we hope this piece was educational and shed some light on the process!

 

 

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