Hardly anything in the pharmacy industry is straightforward. The same goes for pharmacy billing, which is a process that involves the pharmacy, the patient’s insurance plan, and the patient themselves.

As an independent pharmacist and small business owner, you must ensure that your work is properly compensated — and that the patient is being billed accordingly.

Pharmacy billing is yet another complex concept that shapes the entire industry. Nevertheless, knowing its in and outs is necessary to run your business properly.

Let’s start with the basics.

1. What is Pharmacy Billing?

Pharmacy billing is defined as the “sending of a prescription to the pharmacy and the pharmacy then billing a patient’s drug insurance and dispensing the medicine either directly to the patient or to the provider’s office.”

In essence, pharmacy billing encompasses the entire prescription process: a patient goes to the doctor’s office, the doctor writes and sends a prescription to the pharmacy, the pharmacy bills the patient’s insurance plan, and the patient pays their portion.

On the specialty side of things, the NABP describes two methods of pharmacy billing: “white bagging” and “brown bagging.”

Brown bagging refers to the pharmacy dispensing medications directly to a patient who then takes the medication to the doctor’s office for administration.

White bagging cuts out the patient as the pharmacy fills a prescription that is then directly transported to the doctor’s office. This mainly applies to oncology practices that regularly prescribe costly medications or injectables.

For retail settings, however, the process is a little more simple. Still, it’s easy to mix up pharmacy billing for medical billing.

2. How to Tell Pharmacy Billing and Medical Billing Apart

Just like medical and pharmacy insurance plans, the difference between pharmacy and medical billing is subtle yet substantial.

Medical billing has the doctor’s office do all the heavy lifting of the prescription-dispensing process: the doctor’s office bills the patient’s medical insurance, acquires the medication through a wholesaler or a pharmacy, and administers it then and there.  

No pharmacy involvement here. It’s important to tell the two apart to know which specialty medications you should stock up on. Doctors’ offices will go out of their way to acquire certain specialty drugs to administer to the patient.

Doctors often prefer to administer these more niche drugs themselves, so there isn’t much use to having them on your independent pharmacy’s shelves.

3. Pay Attention to Compound Billing

Speaking of niche, your independent pharmacy should offer clinical services. If you’re not already making your independent pharmacy into a healthcare destination, these are the 4 pharmacy services you need to try right now.

Among these services is compounding. Compounding a prescription requires careful attention and near-perfect precision. It’s hard enough to get a compounding prescription right while dealing with the hectic workflow of your independent pharmacy.

And then there’s compound billing, which is sometimes just as tedious as the medications themselves. Compound binillg is a step above billing a normal prescription.

Ensure that you’re properly compensated for the careful work you and your independent pharmacy are doing. The way to ensure that you’re receiving proper compensation is with the help of your pharmacy software system.

4. Your Pharmacy Software System Should Help with Pharmacy Billing

Your pharmacy software system ensures you’re doing your work in the most efficient way possible — filling prescriptions, sending refill requests to the doctor, etc. It should also make pharmacy billing easier.

Your pharmacy software system should make pharmacy billing a straightforward process. It should be able to tell you the out-of-pocket cost of a medication, how much a patient’s insurance plan is willing to pay, and how much you’re getting compensated.

Patients might have multiple third-party plans: a primary and secondary insurance plan that works together on select prescriptions. They might also have a discount card in their profile whenever their insurance doesn’t cover a certain medication.

Your software system should make the processing of different third-party plans less tedious. Different patients require different things to get their prescriptions at a lower cost, so have software that intuitively makes it happen.

5. Pharmacy Billing Goes in Waves

Though pharmacy work can sometimes feel repetitive, patient copays are often there to say otherwise.

Whether it’s due to fluctuating day supplies or dosages, deductibles, or patients reaching the dreaded donut hole, pharmacy billing rarely looks exactly the same on a month-to-month basis.

What’s important is you ensure that both patient and provider are fulfilling their ends of the bargain. This is especially the case for independent pharmacists and their hopes of growing their small businesses.

In order to be a healthcare destination, your independent pharmacy needs to have all its ducks in a row, both in terms of inventory and finance. Accurate pharmacy billing — whether it be for regular prescriptions, compounding medications, or vaccines — will give you an idea of where your independent pharmacy is financially.

Given how nothing remains constant in pharmacy billing, make sure you’re attentive and mindful of how your pharmacy’s services are driving your profit.


Like most aspects of the pharmacy industry, pharmacy billing plays a vital role in your independent pharmacy’s success. Other than being properly compensated for your work, proper billing also prevents end-of-the-year tax problems (as if you don’t have enough to worry about.

With the right billing system — with the right pharmacy software system — you can enjoy the success of your independent pharmacy as it continues to deliver exceptional patient care.