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Compounding pharmacies, Retail pharmacies, Independent Pharmacy Accounting, Inventory Issues, Pharmacy Growth

Compounding Success: Navigating GLP-1 Growth, Compliance, and Quality With Dr. Kevin Borg, PharmD

Looking at getting into compounding? Don’t just dabble, go all in.  

That’s the theme of this week’s episode of The Bottom Line Pharmacy Podcast! 

Scotty Sykes, CPA, CFP and Marketing guru Austin Murray of Sykes & Company, P.A. sat down with Dr. Kevin Borg PharmD, America’s Pharmacist and owner of Potters House Apothecary and Prescott Compounding Pharmacy to discuss: 

  • The rise of GLP-1 compounding 
  • Challenges faced with regulatory compliance 
  • Importance of quality and accounting in pharmacy operations  

Join the discussion with us! 

The Bottom Line Pharmacy Podcast is your regular dose of pharmacy CPA advice to fuel your bottom line, featuring pharmacists, key vendors, and other innovators.

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If you prefer to read this content, the video transcript is below:

Scotty Sykes, CPA, CFP®: Well, welcome everybody to another episode of The Bottom Line Pharmacy Podcast. We have our very good friend and client here Kevin Borg with Potter’s House Apothecary in Arizona. And Kevin, you got quite a facility there. We came and visited you a few right before COVID hit, I believe it was. And, we’re just blown away by your facility, but, and you were just recently, featured in the NCPA magazine which was an awesome read. Congratulations on that. But I guess we’ll just kick off, kind of tell the listeners about what you guys do and how you’ve been able to grow to the extent that you have. 

Dr. Kevin Borg, PharmD: Yeah, so I opened Potter’s House Apothecary from scratch in 2009. Kind of was a dream and a passion of mine from when I graduated from pharmacy school in 2001. Made that dream happen in 2009. It took about a year and a half of planning and just basically went all in on compounding. From day one, I was not, I did not, I went cash only model and then obviously the pain cream days and the in the late 2010, 2012 time when insurance was paying, we did get into billing insurance for some of those pain creams and things like that. We still to this day are billing insurance, but I’m very seriously considering canceling all of our contracts just because it’s such a pain in the butt dealing with these PBMs as people well know. 

Scotty Sykes, CPA, CFP®: Oh yeah. And you also have Prescott which is cash only. 

Dr. Kevin Borg, PharmD: Yes, I have a compounding pharmacy I bought in 2021. I bought an existing pharmacy there. It’s cash only. It does about 50 compounds a day, whereas Potter’s, with the GLP-1 business that we’re doing now, we’re doing anywhere from 250 to 300 scripts a day. So the mothership here in Peoria, which is Potter’s is, you know, it’s a pretty, it’s a pretty big operation, 14,000 square feet facility. Our lab is about 3000 square feet of that set up for non-sterile and sterile, both negative pressure, positive pressure. So, we do a lot of, you know, USP 800 type stuff, have about 50 employees here at Potter’s House. At Prescott, we have about seven or eight employees. 

Scotty Sykes, CPA, CFP®: You mentioned those GLP-1s, Kevin. Now, we got a lot of content on this. We have a lot of clients doing GLP-1 compounding or the 503B part as well. And there’s a lot of change. I guess the Trizepatide was put on the no longer compound list, I guess, starting in February sometime, but where do you see this kind of going from here where we are here mid-January? 

Dr. Kevin Borg, PharmD: Well, I know this train is eventually gonna come to a stop. And if it’s up to Eli Lilly, it would have already happened. They’ve been very aggressive sending out cease and desist letters. They are not happy that compounders are making money, especially on Trizepatide. So, it’s gonna be interesting to see with the lawsuit, if things get pushed out. Obviously we have, I think, a stop date sometime about a month from now, like mid-February. Semaglutide, I think if patients don’t have access to Trizepatide, I think a lot of them will switch over to Semaglutide, although my clinical opinion, I don’t think it’s as good. I think Trizepatide, it works by two different mechanisms where Semaglutide works by one, but we’re still dispensing a lot of Semaglutide as well, but patients do tend to like the Trizepatide better. It is a little bit more expensive. But yeah, we started doing it August about a year and a half ago and we were kind of late to the party. I wasn’t going to compound the salt forms that a lot of people were doing that got started early. I unfortunately, well, fortunately, unfortunately, anytime you have the FDA in your facility, it’s never fun, but I went through an FDA inspection during COVID and all in all, it wasn’t a terrible thing. We got issued a couple of 483s that were all stuff that was just very ticky tack, minor stuff that we had rectified before they even left. They were here off and on for about three weeks. And so I had reached out to my, when this whole GLP-1 thing had started, I had reached out to my board compliance officer about where the board stance was on compounding Semaglutide sodium. because Trizepatide really hadn’t been out quite yet. It was all still doing Semaglutide and the base forms were not available yet. And this would have been April of probably a year and a half ago, so April 23. And unbeknownst to me, my board compliance officer forwarded that email straight on to the FDA. And then I’m in Cabo for my anniversary and I get an email from the FDA saying don’t do it. So, I was already on record in April of that year that basically I couldn’t start doing it. So, once the base form of Semaglutide and Trizepatide became available, which would have been August of 23, that is when we started compounding them and it kind of just took off. I mean, you don’t have to do a whole lot of marketing on it, it kind of sells itself and people, I mean, the demand is unbelievable. 

Scotty Sykes, CPA, CFP®: Mm-hmm. The demand is crazy. 

Austin Murray: Yeah. 

Dr. Kevin Borg, PharmD: And anybody that’s been in pharmacy, especially in compounding, we’ve never had an opportunity like this. I’ve owned this business for 15 years now, there’s never been a brand name drug that’s been this hot where it’s gone on shortage. And this is unprecedented times. By all means, I’m very grateful that we have had this opportunity and very grateful back from day one when I didn’t want to do sterile compounding that my business coach and mentor said, you’re going to do sterile compounding. And thank God we did. And we have been from day one, but you know, just allow us that opportunity to you know, we’ve been flat for probably eight, 10 years in terms of our revenue. So, you know, 2024 was a very good profitable year for us. You know, this we know this train isn’t going to go forever. Trizepatide looks like it might end in February, we’ll see. Semaglutide I’m maybe hoping we get through the summer, but we never we just don’t know. We don’t know what that’s going to look like. If they, you know, with a new administration coming in, you know, with the things that FDA might change, I’m very bullish on peptides in general. I feel like the whole trying to stay healthy and the whole wellness and longevity aspect of peptides, which the FDA is basically saying we can’t do. I’m hoping that could change in the next three to four years, maybe even sooner, for us to be able to compound those because I think there are a lot of benefits for patients using other peptides other than the weight loss peptides. 

Scotty Sykes, CPA, CFP®: Yeah. And you know, from a demand perspective, we’re hearing people are getting the peptides, the Semaglutides or whatever. They’re getting that from somewhere. So, if it’s not at your pharmacy, they’re getting it at the med spa. They’re getting it from a strip mall somewhere. They’re getting it. So, they might as well get it from the pharmacy with why we’ve seen a big uptick in the 503B where the pharmacies are, you know, buying it from those facilities. 

Dr. Kevin Borg, PharmD: Yeah, and that’s a great opportunity for, you know, normally the pharmacies that are just doing retail and don’t do any compounding. It’s a great opportunity for them to make a little profit on a script by sourcing it from the 503Bs.  

Scotty Sykes, CPA, CFP®: And selling it. Yeah. 

Dr. Kevin Borg, PharmD: Again, that’s not an opportunity that we’ve ever had in front of us before. So, you know, every pharmacy, whether you’re doing compounding or whether you’re you know, just your traditional retail pharmacy, is looking for any other way that we can bring in some cash business and try to keep the doors open and stop fighting these PBMs, be able to dispense prescriptions that way. 

Scotty Sykes, CPA, CFP®: And I’ve said this on other podcasts before, but somebody was saying, well, is it too late to get in? know, one of our guests said, well, even if you get into it and it’s a month, that’s a month of revenue and profitability you otherwise wouldn’t have had. So, 

Dr. Kevin Borg, PharmD: Yeah, I mean it does take some time to ramp up. I would definitely say it’s late, if you don’t have a clean room or anything like that. I don’t know that I would make the huge investment, because that’s about $100,000 investment to try to do that and then try to get your formulations and stuff like that established and get batches produced and tested. It definitely takes, there is  ramp up time, but I would, if someone were to reach out to me and ask me, I would say, you know what, you’re better off just going the 503 sourcing it from a 503B route.  

Scotty Sykes, CPA, CFP®: 503…yeah. 

Then, you know, and all you’re basically buying is inventory and then you’re just reselling it and not billing it through to insurance that that’s the quick route that you could still make some profit versus, you know, obviously starting from, you know, a sterile compounding pharmacy from ground zero, which is a huge investment. And I wouldn’t  

Dr. Kevin Borg, PharmD: Then, you know, and all you’re basically buying is inventory and then you’re just reselling it and not billing it through to insurance that that’s the quick route that you could still make some profit versus, you know, obviously starting from, you know, a sterile compounding pharmacy from ground zero, which is a huge investment. And I wouldn’t tell someone to make that investment just for something like this because it’s not going to be long lived. 

Austin Murray: Now you mentioned you don’t have to do a lot of marketing for this kind of product, but I imagine there’s some marketing tactics that you do for the pharmacy. Do you mind breaking down like maybe what some of those things are that you do to market this? 

Dr. Kevin Borg, PharmD: Yeah. So we have two outside sales reps that are marketing to practitioners that , so if we have a doctor or nurse practitioners, some sort of a practitioner that reaches out to us, we’ll have a sales rep follow up with them. But so much of this is consumer driven. It’s people will search it out to what Scotty said. People are going to get this one way or another. I mean, there’s peptide companies online that are selling it for research purposes only that people will source it from as well. People are going to get it one way or another because they want it and they know it works. And I mean, I’ve seen a handful of patients that have, you over a year’s time have lost a hundred pounds and it’s really significantly positively impacting patients’ lives. And they want to continue to have access to this. They don’t want to spend the $1,200 that it’s going to cost them to buy ZepBound or Mounjaro if they can access it for, you know, a quarter of the cost. 

Scotty Sykes, CPA, CFP®And Kevin, switching gears here, when you came on board, there was quite a tax issue with inventory and fundamentals weren’t quite there. And then we were, we cleaned that up. I want to ask you about like the importance of the fundamental accounting and what it’s been able to do in terms of tracking your performance, knowing where you stand, the tax planning component of it, how that’s kind of impacted you and what you’re able to do and plan for. 

Dr. Kevin Borg, PharmD: Well, you know, especially because we’re so profitable this year. I mean, obviously you and I have had multiple conversations about tax planning for this year because we are going to have a pretty big tax liability. But when we first joined with you guys in 2018 I was going through a kind of a business transition, a personal life transition as well. We were running with two different systems, did not track inventory very well at all, we hadn’t had an outside third party company come in and do an inventory level on us. We were basically kind of just doing it by hand. And obviously you recommended us to use like inventory IQ to come in and, you know, basically get a clean slate to start from, to see really where we were. And, you know, back in the 2014-2015 when we were doing a lot of pain creams and had some heavy, you know, heavy, ticket items that were big, big inventory numbers. I mean, you guys kind of came into a big fat mess with us and really helped us to clean up that.  

Austin Murray: So, kind of come in full circle here, you know, if you’re a pharmacy, it’s not too, not too, too late to get in on the GLP craze, but better make sure you’ve got some good fundamental accounting there so you can really optimize going in that direction. That’s interesting. 

Dr. Kevin Borg, PharmD: Yeah. Yeah. Like I said, if you’re going to do it, like you’re listening to this podcast and you want to, you want a piece of this pie, I would say source it from the 503Bs and you know, you probably can make at least a hundred dollars profit per script on something like that. That’s my guess based on where you’re sourcing it from, but that’s an opportunity that, you know, the 503Bs get an extra 30 days per what the FDA’s decision was so you can sell those and maybe dispense those even into March maybe past that so. Certainly, an opportunity to make some revenue on that side of things. 

Scotty Sykes, CPA, CFP®: Kevin, any other words of wisdom for our listeners out there before we let you go? 

Dr. Kevin Borg, PharmD: My thing is in compounding if you’re gonna do it, don’t dabble in it. Invest in what you’re doing. mean, you mentioned our facility, we’re heavily, heavily invested. I spent a lot of money in equipment for our, whether it’s our sterile room or our non-sterile compounding equipment that we use. Hundreds and hundreds of thousands of dollars in equipment that we use just to try to make sure we’re putting out the best quality product. So, my biggest, anybody I would say anything to is if you’re, especially on the sterile side, get trained, invest well in your facility and how you’re doing things and make sure you’re testing your products. The last thing me and you talked about people buying things and you know we’ve seen stories on the news about people making this stuff in their frickin kitchen sink just to try to make money on it and this is honestly kind of the wild wild west which scares me because we really do try to focus our business on quality I mean, that’s why we’re PCAB accredited and have been for a long time. We don’t make more money, we can’t charge more because we’re PCAB accredited. It’s just how I’ve tried to run my operation from day one. But if you’re gonna do it, do it and commit to doing it the right way. No dabbling in it. There’s just, there’s too many patients’ lives at stake and especially with the GLP-1 stuff. They’re not hard to make. It’s just, you gotta commit to doing quality and making sure you’re sending, if you’re making batches of these things, to send it out for testing. So, you make sure you’re putting out a quality product. Yes. 

Scotty Sykes, CPA, CFP®: Professional product. Amen to that. Well, Kevin, I appreciate your time and appreciate the opportunity to serve you and the pharmacies there and congratulations on all your success. Thanks for jumping on. 

Dr. Kevin Borg, PharmD: Thank you. Appreciate the Sykes team. Appreciate you guys. Happy to help in any way I can. Anybody that wants to reach out, feel free to email me anytime. 

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