Reduce the Chaos Behind Your Purchasing Decisions

Nick Secrest (00:08):

All right. Welcome everybody to IPC’s, how strategic brand purchasing reduces cost and chaos. We’ve got a lot of great knowledge here we’re going to share today, and we’ll start with the introductions. My name’s Nick Secrest. I’m the Vice President of Member Performance at IPC, spent over the last 15 years in the industry in varying capacities, but all in the retail pharmacy space. With me is Scott Wittnebel, Senior Member Advisor on the Member Performance team, as well as the great Peter Saad, who owns 13 stores across a myriad of states and just has a wealth of knowledge. And we’re going to go through brand strategies and how to really maximize the value of your deals.

So this is probably nothing new here to the majority of you, but the real challenges that independent pharmacy owners are facing today are obviously rising costs, whether it’s operational costs, drug pricing costs, and because of that, the margins are obviously shrinking.

(01:08):

I think understanding or predicting what your rebates are going to look like relative to your deal, with all of the chaos within the market and how we’re buying, isn’t making it easier. I think the decisions and how we’re making them—Peter, you say it best—the most important decisions people are making in their stores are happening in the last five minutes of the day as they’re trying to leave and thinking about something else. So how we’re making those decisions under pressure probably aren’t great.

I think we’re seeing this because of the chaos. People are really reliant on more wholesalers than they ever have been before, and there are challenges with that. And then on top of all of that is understanding your compliance ratios, what it means to your primary deal, what happens when you buy outside, and how all of this works together. It’s chaotic, to say the least.

So with all that being said, Peter, I don’t know if I missed anything from your experience, but what are you seeing and how are you dealing with some of these challenges?

Peter Saad (02:17):

So let me begin by saying it’s awesome to be with you guys. Nick’s a dear friend and someone who taught me a lot of this. I picked up a lot of industry knowledge, and I think it’s important for people to know the importance of IPC in the marketplace, both as a buying group and as a wholesaler. And it’s the wholesale division where I’ve benefited from working with IPC.

So I use McKesson as my primary and rely on IPC to strike that balance in my purchasing. Ultimately what’s happening is this: if you think about your profit and loss statement, we can’t do much on reimbursement. We all wish we could. We can’t do very much on SG&A, we can’t change comp, we can’t deal with landlords. Those costs are what they are. So really the only band where we can actually add value is 85% of our revenue. It’s the one line, and it’s the line that I actually think people least understand.

(03:32):

As you see more technology come up and more platforms, I actually think it’s not more solutions—it’s causing more chaos. My hope today, if I were to share one takeaway, is understanding where those levers are and what you need to do with them.

Often we’re all generic drug shopping. You’ll find deals of the day everywhere, but then you have shipping costs, brand compliance issues, and questions like whether items are VD or NADP. All of these factors play into the decision.

My hope today is moving away from the deal of the day and winning every transaction to more global thinking about purchasing and making purchasing the number one activity. You put in the planning, and you’ll see why IPC fills a huge and needed market gap that can play a major role in your strategy.

Scott Wittnebel (04:58):

So I have a question for you, Peter, and thanks for having me. I’ve worked with members for a decade, from single-store owner-operators to owners with multiple locations. From your experience managing multiple locations, what made purchasing feel unpredictable or chaotic at times?

Peter Saad (05:27):

Well, I think the historical approach has been, “I need to get my GCR to X percent.” If you over-purchase the first 27 days of the month, you’re not going to correct it in the last three or four days. That’s where strategic thinking has been missing.

You’re not going to find perfect equilibrium. Every cart isn’t going to be a 16% GCR. Some days are brand-heavy, some days are generic-heavy—that’s just the nature of the business.

So we simplified it. McKesson Connect has reports in the ERA portal where you can identify your top movers. Unless you’re intentional about brand spend, your strategy isn’t going to work.

We identify one or two brand NDCs per store that we do enough volume with, and every store is different. We say we’re going to buy that brand from IPC. That’s the default.

(06:53):

You move away from winning every purchase to winning the month. By committing to that brand spend, you create balance. You hit generic compliance, your primary is happy, and IPC is happy because you’ve removed some brand from the equation.

Why is that important? Wholesalers don’t make money on brand. Brand purchases are subsidized by generics. You have to create win-wins. By selecting that item up front, you de-stress the month and avoid last-minute scrambling to fix ratios.

Scott Wittnebel (08:57):

That last-minute call—“What do I do now?”—still reflects chasing today instead of planning ahead. You’ve talked about taking a 90-day or quarterly approach. What reports or processes do you rely on to make sure the strategy is followed?

Peter Saad (09:51):

Our drug mix doesn’t fluctuate much, so there’s predictability. You don’t want to pick 20 NDCs—it’s harder to manage. That’s why you pick a few.

With IPC, I appreciate that there are no controls. You don’t want to buy controls outside your primary. We look at our deal and aim to create a win-win. Sometimes the cheapest generics are at your primary, and that’s okay.

By moving even 5% of brand spend, you make a dent. McKesson Connect lets you see this by manufacturer and brand, or you can pull your top 100 items from your pharmacy system.

(11:04):

Pick the easiest item. Everyone in the store knows to buy that drug from IPC by default. Once you do that, the rest of the strategy falls into place.

Scott Wittnebel (11:59):

You just answered a question I get a lot—how do I know which items to choose? Another benefit is fewer NDC changes. Staff stress goes down, and patients notice consistency.

Peter Saad (12:47):

Brands are the easiest place to start. You already know your volume. That simplifies things.

People misunderstand how GCR is calculated. It’s based on generic purchases at your primary wholesaler price, not just total spend. The fastest way to create flexibility is to reduce total drug spend by taking brands off the table.

(13:55):

You may lose a few basis points on a brand, but improved compliance can increase your overall rebate tier. In many cases, you don’t lose at all—you gain.

Scott Wittnebel (14:57):

My grandpa used to say, “Don’t step over a dollar to save a nickel.” Many pharmacies buy from too many suppliers and don’t know if they actually saved money after rebates. How do you train staff to manage this consistently?

Peter Saad (15:52):

For single-store owners, buying from eight or nine places creates confusion. You’re not winning. The strategy is the same: commit to brand spend with IPC, then optimize generics.

Generic pricing has too many moving variables. The first step is committing 5–10% of brand purchases to IPC. Once you do that, your deal stabilizes. Then you optimize generics to unlock the wallet.

(18:23):

For multi-store owners, we centralize purchasing. Stores upload needs, and one purchaser builds the carts strategically. Again, fix the brand strategy first, then optimize generics.

Nick Secrest (20:07):

The root issue is chasing transactions instead of understanding your deal. Small ratio shifts can move rebate tiers significantly. Pulling one or two brand items away gives you room to breathe.

Peter Saad (21:02):

We confuse volume with dollars. Brands may be fewer in number, but they represent meaningful spend. Shifting even $5,000 to $10,000 can immediately de-stress ratios.

The takeaway is brand-focused strategy, not generic-focused. Everyone competes on generics. Brands are where strategy matters.

Scott Wittnebel (22:57):

Ask yourself: is the brand price you see your final price after rebates? If you don’t know, ask your wholesaler or buying group. As we head into a new quarter, now is the time to assess where you stand and set goals.

Peter Saad (24:36):

You don’t have to wait. Identify fast-moving brand NDCs today and start. This is a powerful tool for the entire marketplace.

Every deal has a sweet spot. Chasing the top tier isn’t always optimal. Find the point where everyone wins and aim there.

Nick Secrest (26:08):

Finding that sweet spot is critical. Let us help you understand your deal and maximize both sides of the house.

Peter Saad (26:40):

If you’re disciplined, you can move gross margin 1–2% through purchasing alone. We’ve seen it.

Nick Secrest (27:12):

As a takeaway: review your wholesaler agreement, identify top brand items, and stabilize your ratios. Peter, any final words?

Peter Saad (27:42):

Three action items:

1. Identify your brand sweet spot and move 5–10% immediately.

2. Optimize IPC wallet spend on generics to unlock better brand economics.

3. Review your grid, find the sweet spot, and commit from day one—not day 27.

Scott Wittnebel (29:11):

Also consider how brand spend affects cash flow and terms throughout the month.

Peter Saad (29:36):

Exactly. Commit to the NDC, buy as needed, and make it obvious to staff where it comes from.

Nick Secrest (30:15):

This has been great. If you have questions, reach out to [email protected]. Thank you.

Scott Wittnebel (30:31):

Thank you.