Choosing to open your own pharmacy is the first step toward building your business. The decisions made during the initial phases will influence how well it grows, how profitable it is, how efficiently it can be managed, and how successful it will be.
Select an easy-to-say, read and type name. It may be different from the official corporate name. If it is
different, it is called a DBA (doing business as) name and requires a separate filing in the state of the
business.
Google the name and check for competition. It is lawful to reuse a name from a different state, and even
the same state if use and geography are not confusing. See your attorney for details.
Work with an attorney or accountant to select the corporation structure, such as an LLC, S-Corp, or other.
These are IRS-set entities that each have different tax consequences and processes.
Avoid common pharmacy names, or trying to be overly clever.
General steps
Register business
Apply for an Employer Identification Number (EIN)
Get federal and state tax IDs
Apply for a business license and permits, if applicable
Open a business bank account
Apply for appropriate trademarks, copyrights or patents
Purchase insurance policies
Obtain a Facility or Location
Leasing is difficult to start because landlords usually want 3-5 years to start. For a starting business,
it is emotionally difficult to commit. But, when your business does well, you will appreciate the stability
of a lease. It is not uncommon for a landlord to evict and rent at a higher rate to a new pharmacy once the
site is built up and the business is established.
Location is critical.
Research demographics.
Locating near writing physicians is still important as it aids in establishing relationships.
Don't underestimate the size required; determine the professional and retail space required.
Target more than the lawful minimum, but a professional pharmacy may exist well on 300-400sqft to start.
Normally a pharmacy can run smoothly under 1000 sqft for years.
Try to obtain a lease extension option and have an option to sublease, in case a small clinic, testing
service, or another office service may need space.
Licensing - Board of Pharmacy License
Pharmacy and pharmacist licensing is required.
State and Federal (DEA) licensing required
Research all the requirements and carefully complete the forms.
Recognize that certain facility systems may need to be operational before State licensing, such as
facility insurance, water, counseling area, pharmacy systems, and similar.
Certificate of Occupancy and Fire Evacuation Plans are almost always needed prior to State inspection.
Apply for the DEA Certificate as soon Board of Pharmacy Licensing is obtained.
Select Software, Phone, Texting, and Alarm Systems
Technology has become more complicated and more integrated.
Modern pharmacy technology package has to manage key technologies so that the pharmacist and staff may
function efficiently. Inefficiency creates both clinical and financial stress.
Key technologies should include:
Pharmacy management of all lawful retail pharmacy actions.
Point of Sale with workflow integration, savings cards, PCI compliance, and good credit card rates.
Audits by the Feds, States, and PBMs is common. Having a pharmacy system that reliably tracks and
documents all key areas is a lifesaver, and can be worth 10x its cost in audit protection.
Some states require pharmacy system installation before the inspection.
Pharmacy system vendors should provide transparency in their monthly pricing breakdowns.
Apply for PBM/insurance Contacts
Many pharmacies choose to jump-start their insurance contracting with a PSAO.
Wholesalers and some independent groups may provide these.
However, certain PBM/Insurance contracting must be done directly regardless of PSAO status, such as state
Medicaids and some Blue Crosses.
Pharmacy owners may choose to be part of a PSAO, or manage all contracting independently.
Beware. Contracting takes time! A modern pharmacy has to have PBM/Insurance contracting to operate. Be
sure that the PBM/Insurance contracting paperwork is a top priority.
When selecting your opening date, check your local Prescriber schedules first.
Choose your opening date based on when Prescriber are not going to be too busy for a quick conversation.
Weekends are not the best option, unless you plan on combining with free food and activities.
Engage in Marketing
Post Marketing is your best area to go "all-in" with the Prescriber, LTC, Hospice Care, Assisted living,
and every other source of obtaining new prescriptions.
Build a relationship first, and show why you will be a good partner for their business.
In your first year of business, dedicate 4 hours every week towards Post Marketing.
Prescribers' will only give you one chance to prove yourself. Be certain that you accept all insurances,
carry specific drugs, and provide the services necessary to fulfill their patient's needs.
If payroll is to be issues, apply for an unemployment insurance license (number).
Find a business insurance agent:
Purchase building (or rental) insurance.
Purchase workman's compensation insurance.
Purchase business facility (liability insurance).
Purchase business auto insurance.
Michigan LLC Creation
Attorneys can manage all the paperwork for the State and IRS, but the process for an LLC is relatively simple and can be done on its own. Below are the basic steps for filing in Michigan to assist in understanding the process.
Information needed in advance:
Choose your favorite attorney to use as Resident Agent. If there is any official correspondence to the corporation, it will go to the Resident Agent.
To apply for a state business license (EIN-employer identification number), one needs the business and attorney information, along with the Articles of Organization.
With the above information, a bank account should be allowed to be opened.
State Requirements
Sales tax license.
Unemployment insurance.
Location Security
Locate security/alarm company:
This is required for most pharmacies to have an active alarm that is monitored.
Video cameras:
Wise to invest in video surveillance systems for drug shelving, pharmacy counter, and retail area.
Internet security with IT management:
Most pharmacies forget this is important need and think that the Cable router's firewall is sufficient or the computer company's server is sufficient.
Most pharmacy software vendors specifically do not monitor networks, have retreated to just supplying the data server, and don't set up security. It is the responsibility of the pharmacy. Find a pharmacy vendor that not only provides pharmacy software but also provides network and system security.
Reports
IMS/IQVIA reporting as many pharmacies use this for doctor rating.
PDMP control reporting:
Opioid reporting, wholesaler know your pharmacy.
Policy book for key staff functions and duties pertaining to 5 Star program, Track & Trace (DSCSA), among others.
Tips
Be aware of additional contracts and integration requirements.
