How to Set Up & Run an Effective Chinese Herbal Ready-Made Pharmacy
How to Set Up & Run an Effective Chinese Herbal Ready-Made Pharmacy
by Honora Lee Wolfe
Many new practitioners don’t set up a pharmacy because they’re not sure exactly what to do first. Some practitioners may never have had their own business before, and there’s a lot to think about when we are first starting out. Nontheless, it is very difficult to earn a really good living doing acupuncture without also selling your patients something else besides your time. If all we offer is acupuncture, then our income is limited by the number of patients we can see in the number of hours we can work. However, if we also sell our patients other goods and services (which they need and are good for them), then we make a profit on those items as well. In addition, herbal medicines are consumables. That means they are something that the patient must buy over and over again. They are usually not a one-time purchase like a book, tape, or CD (although it’s not a bad idea to sell some of those items as well). Setting up an in-house pharmacy or dispensary also has the benefit of providing one-stop shopping for your patients, and, depending upon what lines of products you carry, this may help distinguish you from your competitors.
Starting a ready-made formula dispensary
Unless you feel very confident about your skills writing customized prescriptions, it's easiest to start with a line of ready-made herbal medicines. Tea-pill style ready-mades are very low potency, but are cheap and easy to store. To be effective for serious remedial care, we must increase bottle dosages significantly from what is written on the bottle in most cases, but they are otherwise fine to use. Extract granules are higher potency. These come in either loose powder form or encapsulated. It is also possible to encapsulate the loose powder yourself on an as-needed basis. Already encapsulated extract powders range in potency from 4:1-5:1 up to 10-or-12:1 extract ratios. Most American-owned Chinese herbal companies are using extracts to make their products (although this is not universal). The exact potency must be asked from each supplier so you can dose your patients intelligently. In any case, the following classical formulas which we all studied in school are a reasonable place to start for most people's dispensaries:
1. Bu Zhong Yi Qi Tang (Supplement the Center & Boost the Qi Pills): Liver-spleen disharmony
2. Dan Zhi Xiao Yao San (Moutan & Gardenia Rambling Pills): Liver-spleen disharmony w/ blood vacuity & depressive heat
3. Du Huo Ji Sheng Wan (Angelica Pubescens & Loranthus Pills): Wind, cold, damp impediment
4. Er Xian Wan (Two Immortals Pills): Yin & yang dual vacuity w/ vacuity heat
5. Er Chen Wan (Two Aged [Ingredients] Pills): Phlegm dampness
6. Gui Pi Wan (Restore the Spleen Pills): Heart-spleen dual vacuity
7. Huang Lian Jie Du Wan (Coptis Resolve Toxins Pills): Damp heat, replete heat, heat toxins
8. Jin Gui Shen Qi Wan (Golden Cabinet Kidney Qi Pills): Kidney yin & yang vacuity
9. Liu Jun Zi Wan (Six Gentlemen Pills): Spleen qi vacuity w/ dampness
10. Liu Wei Di Huang Wan (Six Flavors Rehmannia Pills): Kidney yin vacuity
11. Si Jun Zi Wan (Four Gentlemen Pills): Spleen qi vacuity
12. Suan Zao Ren Wan (Zizyphus Spinosa Pills): Liver blood vacuity, vacuity, disquieted spirit
13. Tian Wang Bu Xin Dan (Heavenly Emperor Supplement the Heart Elixir): Heart qi & yin vacuity
14. Wu Ling Wan (Five [Ingredients] Poria Pills): Water dampness
15. Xiao Chai Hu Wan (Minor Bupleurum Pills): Liver-spleen vacuity w/ lung and/or stomach depressive heat
16. Xiao Yao Wan (Rambling Pills): Liver-spleen disharmony w/ blood vacuity
17. Xue Fu Zhu Yu Wan (Blood Mansion Dispel Stasis Pills): Blood stasis in the chest
18. Yin Qiao Jie Du Wan (Lonicera & Forsythia Resolve Toxins Pills): Wind heat external contraction
19. Zhi Bai Di Huang Wan (Anemarrhena & Phellodendron Rehmannia Pills): Yin vacuity w/ vacuity heat
In other books and articles, Bob Flaws and I have discussed the idea of using only a few basic formulas that you can modify in many ways, in order to treat many, many patients with combinations of these basic formulas. When you need something for a patient that you don’t currently have on your shelf, order it. However, I don’t recommend that you order every ready-made medicine in the book just to have on hand “in case.” This will tie up too much working capital. With FedEx and UPS, you usually can order things as your patients actually need them and have them in hand by the next day if necessary. If you buy these formulas in granule extract form or in encapsulated extract form, they typically come in 100 gram bottles and you could start with as little as one bottle each.
If you buy these as ready-made pills, there are usually 12 bottles to a case. If you can, buy in cases for two reasons. First, to get the best price, and second, because you will probably have to prescribe a higher dose than what’s written on the label, basing your dosing on the extract ratio of the formula and the severity of the patient's symptoms, body weight, digestive strength, and other factors. Therefore, some patients can go through pills much faster than the bottle dose may suggest.
If you prescribe and dispense such ready-made granules, capsules, and pills by the whole jar or bottle, you may be able to run your dispensary [at least for awhile] without hiring a pharmacy worker, even though I do not personally recommend this. (As Marilyn Allen states in Points for Profit, it is very difficult to be the care-giver and the person who charges and receives the patient’s money. This can be emotionally confusing and embarrassing on both sides.) You will probably be able to store these ready-made medicines without any problem in your current space with your current front desk set-up and clinic storage cabinets.
As your practice gets larger and you understand more about Chinese herbal medicine, you can add more ready-made medicines to your inventory. However, again you do not need to buy every ready-made medicine on the market on the off-hand chance that some day you will need it. If you are going to be doing herbs and acupuncture in any case, you can always order a remedy for a patient and have it for the next visit.
When selling ready-made pills, capsules, and tablets, it is important that they be kept in their original container from the manufacturer. This should have a non-tamper seal and an expiration date plus all the FDA-mandated label information. Do not take pills or tablets out of their original container and count them out into unlabeled baggies; this practice does not meet FDA current Good Manufacturing and Storage Practices.
Starting a singles dispensary
After using ready-made formulas for a while, you will probably become frustrated that there is not always a ready-made formula which exactly matches your patient’s needs. At that point you maywant to put in a singles pharmacy, whether that be granule extract singles, bulk-dispensed herbs for water decoction, or alcohol tinctures. Whether you choose granules or bulk herbs, you will need a scale. You can buy a good quality electric digital kitchen scale that can weigh in grams or ounces at any good kitchen supply store. You will also need one or more sizes of plastic baggies and one or more sizes of brown paper bags.
The advantages of a powdered extract singles pharmacy include relatively small storage space and good patient compliance. The disadvantages are short shelf-life, messy dispensing, and potential high price to the patient for higher dosage ranges. The advantages of bulk-dispensed herbs are good potency-to-price (as long as we keep our mark-up reasonable) and longer shelf life. The disadvantages of bulk-dispensed herbs are the need for separate storage containers, a larger storage area, potentially problematic patient compliance (although I have had few problems with this), quality control, and bugs. Personally, it is my experience that bulk-dispensed, water-based decoctions give you the best price/potency ratio as well as great prescribing flexibility. Therefore, I favor a bulk herb dispensary over a granule extract pharmacy. However, I realize that such a bulk herb dispensary is not right for every patient population, nor for every clinic space, and even I, after drinking Chinese herbal decoctions off and on for 25 plus years, like the ease of extracts when potency, speed, or money are less of an issue.
As for which herbs to buy first, I've created a suggested start-up list below. Choose 50 of these medicinals for your initial purchase. Many suppliers will give you a one-time special pharmacy set-up discount if you buy enough the first time. In general, the average per pound cost of Chinese herbs whether you are buying 100 grams of extract powder or one pound of bulk is the same: $8-$15 per herb. (If there are several different qualities of a single medicinal, I recommend that you buy the medium-priced one.) So the average price of 50 herbs is going to be around $400-$800. With bulk herbs, you will also have to purchase some kind of bottles or containers. Although you can use plastic (less expensive), I recommend one gallon glass jars. These will keep your herbs fresher, make a great display for your customers, and retard spoilage and bugs. You can buy this number of glass jars with lids and labels from a local container wholesaler.
You will also need shelf space for these jars, and I definitely recommend that the storage space be visible to your patients. They will love the exotic, old-time apothecary look as well as the smell and, if your patients are like mine, will tell their friends about it. Of course, you could also go out and buy or have built a traditional wooden herb cabinet. This is very expensive but can be quite beautiful and will last for years, if not generations!
After you have purchased your initial 50 medicinals, then commit to buying $50 of new herbs per week or per month, depending on your budget until you have a variety of 275-300. This will be in addition to restocking whatever you have used up. If you have a case that requires a specific herb, order it as needed. You should be able to treat the vast majority of patients with 250-300 herbs. In fact, you will find that, most of the time, you are using only around 80-100 ingredients. This is especially so if you specialize, which I very much suggest that you do. I would not stock more than 300 herbs unless you have a case for whom you know you need something. Below are the 85 herbs I would buy first:
Bai Zhu (Rhizoma Atractylodis Macrocephalae)
Bai Shao (Radix Albus Paeoniae Lactiflorae)
Ban Xia (Rhizoma Pinelliae Ternatae)
Cang Zhu (Rhizoma Atractylodis)
Chai Hu (Radix Bupleuri)
Che Qian Zi (Semen Plantaginis)
Chen Pi (Pericarpium Citri Reticulatae)
Chi Shao (Radix Rubrus Paeoniae Lactiflorae)
Chuan Lian Zi (Fructus Meliae Toosendam)
Chuan Xiong (Radix Ligustici Wallichii)
Da Huang (Radix Et Rhizoma Rhei)
Da Zao (Fructus Zizyphi Jujubae)
Dan Pi (Cortex Radicis Moutan)
Dan Shen (Radix Salviae Miltiorrhizae)
Dang Shen (Radix Codonopsitis Pilosulae)
Dang Gui (Radix Angelicae Sinensis)
Du Zhong (Cortex Eucommiae Ulmoidis)
Du Huo (Radix Angelicae Pubescentis)
Fang Feng (Radix Ledebouriellae Divaricatae)
Fu Xiao Mai (Fructus Levis Tritici Aestivi)
Fu Ling (Sclerotium Poriae Cocos)
Gan Jiang (dry Rhizoma Zingiberis Officinalis)
Ge Gen (Radix Puerariae)
Gou Qi Zi (Fructus Lycii Chinensis)
Gou Teng (Ramulus Uncariae Cum Uncis)
Gui Zhi (Ramulus Cinnamomi Cassiae)
Han Lian Cao (Herba Ecliptae Prostratae)
He Huan Pi (Cortex Albizziae Julibrissinis)
He Shou Wu (Radix Polygini Multiflori)
Hong Hua (Flos Carthami Tinctorii)
Hou Po (Cortex Magnoliae Officinalis)
Huang Lian (Rhizoma Coptidis Chinensis)
Huang Qin (Radix Scutellariae Baicalensis)
Huang Qi (Radix Astragali Membranacei)
Huang Bai (Cortex Phellodendri)
Jie Geng (Radix Platycodi Grandiflori)
Jin Yin Hua (Flos Lonicerae Japonicae)
Lian Qiao (Fructus Forsythiae Suspensae)
Long Gu (Os Draconis)
Mai Ya (Fructus Germinatus Hordei Vulgaris)
Mai Men Dong (Tuber Ophiopogonis Japonici)
mix-fried Gan Cao (Radix Glycyrrhizae Uralensis)
Mu Tong (Caulis Akebiae)
Mu Li (Concha Ostreae)
Mu Xiang (Radix Auklandiae Lappae)
Niu Xi (Radix Achyranthis Bidentatae)
Nu Zhen Zi (Fructus Ligustri Lucidi)
Pu Gong Ying (Herba Taraxaci Mongolici)
Qiang Huo (Radix Et Rhizoma Notopterygii)
Rou Gui (Cortex Cinnamomi Cassiae)
San Qi (Radix Pseudoginseng)
Sang Ji Sheng (Ramulus Loranthi Seu Visci)
Sha Ren (Fructus Amomi)
Shan Zhu Yu (Fructus Corni Officinalis)
Shan Zha (Fructus Crataegi)
Shan Yao (Radix Dioscoreae Oppositae)
Sheng Di (uncooked Radix Rehmanniae Glutinosae)
Sheng Jiang (uncooked Rhizoma Zingiberis Officinalis)
Shi Chang Pu (Rhizoma Acori Graminei)
Shi Jue Ming (Concha Haliotidis)
Shu Di (cooked Radix Rehmanniae Glutinosae)
Suan Zao Ren (Semen Zizyphi Jujubae)
Tao Ren (Semen Pruni Persicae)
Tian Hua Fen (Radix Trichosanthis Kirlowii)
Tu Si Zi (Semen Cuscutae Chinensis)
uncooked Gan Cao (Radix Glycyrrhizae Uralensis)
Wei Ling Xian (Radix Clematidis Chinensis)
Wu Wei Zi (Fructus Schisandrae Chinensis)
Wu Mei (Fructus Pruni Mume)
Xiang Fu (Rhizoma Cyperi Rotundi)
Xing Ren (Semen Pruni Armeniacae)
Xu Duan (Radix Dipsaci)
Yan Hu Suo (Rhizoma Corydalis Yanhusuo)
Ye Jiao Teng (Caulis Polygonis Multiflori)
Yi Yi Ren (Semen Coicis Lachryma-jobi)
Yu Jin (Tuber Curcumae)
Yuan Zhi (Rhizoma Polygalae Tenuifoliae)
Ze Xie (Rhizoma Alismatis Orientalis)
Zhe Bei Mu (Bulbus Fritillariae Thunbergii)
Zhi Ke (Fructus Citri Aurantii)
Zhi Zi (Fructus Gardeniae Jasminoidis)
Zhu Ru (Caulis Bambusae In Taeniis)
Once you decide to bite the bullet and have a singles pharmacy and write and fill your own prescriptions in-house, the next thing you need to do is hire a helper. Most every practitioner balks at taking this step at first...as did I as a young practitioner. But think about it: you can earn $60-100 or more per hour seeing patients. You should be able to hire a pharmacy helper for $15-20 per hour. If you try to see patients and make their formulas up, it will take away from the number of patients you can see. Do you want to pay yourself $15 per hour or $90? It’s simple mathematics. Unless you are only seeing a few people per week, you cannot afford to make up your patients’ herbal formulas yourself. The good news is that this helper will be able to free up your time in a lot of other ways. He or she can answer the phone, schedule appointments, do your basic book-keeping and filing, do your purchasing, keep your inventories, and, most importantly, tell your patients what they owe and collect the money. It is not likely that you will keep your dispensary person busy full time just making up formulas. Therefore, he or she can also be your front desk person, and, no matter what, at some point fairly early in your practice, it is my belief that you absolutely have to have a front desk person. A front desk person is one of the main things that will make the difference between subsistence earnings and having a going commercial concern. Having your front desk person also make up prescriptions will keep them busy and help pay for their salary.
Although I know people who have single dispensaries in alcohol tincture form, I have no experience with this myself. Nevertheless, the herbs that I would stock first would be the same. The measuring out of formulas would be by some fluid measurement as opposed to weight, and you would need to buy small bottles and dropper caps for the custom-blended formulas to be put in. Clear or amber-colored, dropper bottles are available from wholesale packaging supply houses.
If you choose to dispense either powdered extract or tinctured formulas, you can usually included dosage and administration instructions on the label, which you could also make yourself on a regular printer. If you put your clinic name and phone number, such labels are even good marketing. However, if you choose to dispense bulk herbs for decoction, you will need to create a printed instruction sheet explaining to the patient as clearly and simply as possible how to make and take their decoction. In my experience, it is possible to create a single-sided sheet with check boxes that can work with any formula and dosage regimen. (There is a sample form included as an appendix in the back of this book.) For instance, there can be several check boxes for cooking time of the main herbs. Then there can be check boxes for pre-cooked, short-cooked, steeped, and dissolved medicinals.
You as the prescribing practitioner should fill out this form which is then passed to your dispensary helper along with the actual prescription to be made up. When the patient comes to pick up their formula, these printed instructions should be included in the bag with the herbs. For first-time patients, the dispensary helper should read the instructions to the patient, explain anything the patient needs explained, and ask if the patient has any questions. Since efficacy from Chinese herbal decoctions partially depends on correct cooking, it is important that the patient understands exactly what he or she is supposed to do. As yet another source of collateral income, you might also sell Chinese herb cooking pots in your clinic. These are inexpensive, are designed and dedicated to this single purpose, and are another way to provide one-stop shopping for your patients.
What to charge
Many practitioners have a hard time figuring out what to charge for their herbal remedies, whether these be ready-made or custom-filled. I have seen practitioners charge both too much and too little. What you charge should not be pulled from out of the air, but rather be based on sound business mathematics. If you are selling ready-made medicines, you should double their price if they are cheaper medicines. If they are more expensive, you should at least mark them up at least 50% above what they cost you. Such mark-ups are fair, reasonable, and standard. After all, we would not expect a shoe store, a food store, or a restaurant not to mark up their products and our businesses are the same...anything that takes up space and cash flow needs to bring in at least some amount of profit or we cannot afford to sell it!
When it comes to custom-filled formulas, some clinics have a set price per formula no matter whether the ingredients are expensive or cheap and whether there are only a few or more than 20 ingredients in the formula. The idea is that, on average, the clinic will make money. When doing it this way, there is the tendency to charge whatever the market will bear because one does not want to lose money on the transaction. However, there is another way to do it that personally think is more equitable for everyone.
Figure out the per gram cost of each ingredient. This can then be entered into a computerized program or into a hard-copy ledger. If we know that there are 16 ounces to a pound and 28 grams to an ounce, this is fairly straightforward. Then figure out the percentage of mark-up you would like to make on your single herbs. This can be anywhere from 50-100%. Add this mark-up to the per gram cost listed in your ledger. When the dispensary person fills the prescription, they figure out exactly what the prescription should actually cost. Next they figure in the cost of any supplies, such as plastic baggies and brown paper bags. Then they take the time they spent making the formula, divide that part of an hour into their hourly wage and add all this together. Violá. You know that you are making money on each and every prescription filled, and the patient knows that they are paying a fair and equitable prince for their medicine.
Figuring the Cost for Bulk Prescriptions
Price per gram including percentage of mark-up x number of grams per ingredient
+ cost of plastic baggies
+ cost of brown paper bag
+ cost of time to make Rx
= cost of patient’s medicine
This same equation can also be used to price custom-blended alcohol tinctures. However, in that case, you will have to substitute ounces or drams for grams and bottles for baggies. Otherwise, everything is the same.
While it will take your herb dispensary/front desk person a little time to learn the per gram prices, with a little practice, he or she will not have to look at the book or even use the computerized system. With a little practice, they will also become very quick at weighing out each medicinal. Our herb dispensary person held her job for so long that she could tell you what 9-10 grams feels like of all the most commonly used medicinals just by the way it feels or fills her hand. Over time, she also learned how to tell good quality from bad quality of all the major ingredients and knows when something doesn’t look, feel, or smell right. It took her only 2-3 minutes to do the math for a given prescription.
Every now and again, for whatever reason, a patient will ask if he or she can return some or all of their medicine. Of course it’s not a problem to accept returns of any ready-made medicines that are unopened. We do not accept returns of any ready-made medicine that has been opened and I don’t feel that you should do so either. Individually written and filled extract powder formulas should also not be returnable since the powders can not be separated out again. At our clinic, we do allow returns of bulk-filled prescriptions under the following conditions: We will credit the patient’s account for 50% the per gram price of any ingredients that can be easily separated by our pharmacy staff. Any ingredients that cannot be separated are not returnable. We insist that the separation be done by our clinic staff wearing clean plastic gloves. Patients must be made to understand that this is a compromise solution for both parties. Given the nature of bulk-filled prescriptions, this the best one can do.
Once you have a singles dispensary, be it powdered extracts, alcohol tinctures, or bulk herbs, you will very likely wonder how you ever got along without one. It will be a great source of extra revenue, it will help pay for clinic support staff, and should improve your therapeutic outcomes – all great reasons to move in this direction. However, you will still want to keep a selection of ready-made Chinese medicines in your clinic. There will always be cases where such ready-made medicines provide a simple, cost-effective solution for the patient.
This blog is excerpted from The Successful Chinese Herbalist by Bob Flaws and Honora Lee Wolfe,
1. Contact several Chinese herb suppliers and find out how much one case of each of the Chinese herbal formulas you would like to initially stock will cost. Ask them for an initial dispensary start-up discount.
2. Write a representative formula for a hypothetical patient. If you plan on selling custom-blended formulas from powdered extracts, find out how much 100 grams of each of the ingredients would be. Then add your mark-up and figure out the selling price of that formula to your patient. If you plan on having a bulk herb pharmacy, cost out the formula the same way. If you plan on hiring an herbal dispensary helper, figure a portion of t their hourly wage to the final cost. Also figure in the cost of plastic baggies and paper bag.
3. On page ___ is a suggested ready-made medicines “starter” list. Divide this list into categories by function (exterior-resolvers, qi supplements, blood quickeners,e tc.). Are there other ready-made formulas that you feel you need? Add those to your list as needed. By calling several companies, find out what creating this initial pharmacy will cost.
4. Find out the “foot-print” or dimensions of the jars you plan on using for either powdered extracts or bulk herbs. Then calculate the number and size of shelves you will need to store these ingredients. Consider whether you will build the shelving yourself or have it professionally built. If you intend on building the shelves yourself, find out how much the materials will cost. If you are going to have the shelving built, get an estimate from a carpenter. Also consider the foot-print of the shelving and any herbal formula preparation area and what fraction of your clinic’s square footage that will be. Then figure in the cost of that square footage into what income your dispensary must generate per month/year.
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