Optimal Pricing: Unlocking Pharmacy Cost Efficiency



Delve into the complexities of the pharmacy industry as the challenge of managing drug-level guaranteed rates with pharmacies and insurers arises. With the potential for end-of-year liabilities due to under- or over-performing those rates, a solution that minimizes risk becomes crucial. Join us on a journey of optimization as forecasting drug utilization through Timeseries Forecasting and optimizing drug prices through Linear Programming takes center stage. Witness the power of a productionized optimization engine, developed with a GCP Kubernetes Pipeline, as it efficiently navigates the landscape of pricing complexities. The impact is undeniable, as monthly publications of optimal prices for over 26,000 drugs are made available to different pharmacies and insurers. With savings amounting to $20 million per month, this groundbreaking approach not only ensures cost efficiency but also fosters stronger partnerships with hundreds of insurance clients. Prepare to embark on a transformative path where optimal pricing unlocks a new era of success in the pharmacy industry.


In the pharmaceutical industry, drug-level guaranteed rates are established between pharmacies and insurers at the start of each year. However, the challenge arises when the actual performance of these rates deviates from the projected expectations. Underperforming or overperforming these rates can lead to significant liabilities for the client by the end of the year. To effectively manage these liabilities and minimize financial risks, it is crucial to develop strategies that consider the uncertain utilization of the drug throughout the year. The goal is to strike a balance between fulfilling contractual obligations, maintaining positive relationships with pharmacies and insurers, and optimizing financial outcomes. By implementing proactive monitoring mechanisms, strategic pricing adjustments, and leveraging data-driven insights, organizations can mitigate end-of-year liabilities and navigate the complexities of drug-level guarantee agreements more effectively.


To address the challenge of minimizing end-of-year liabilities in drug-level guarantee agreements, a comprehensive solution can be implemented. This solution involves several key steps:

  1. Forecasting Drug Utilization: By leveraging advanced Timeseries Forecasting techniques, organizations can accurately predict drug utilization throughout the duration of the contract. This forecasting capability enables proactive decision-making and allows for adjustments to be made in real-time to optimize performance.
  2. Optimizing Drug Prices: A Linear Programming approach can be employed to determine the optimal pricing strategy for the drug. This optimization process takes into account factors such as market demand, competitive landscape, and contractual obligations, with the objective of achieving the minimum liability at the end of the year.
  3. Productionizing the Optimization Engine: To ensure efficient and scalable performance, the optimization engine can be productionized. This involves developing a pipeline, utilizing Google Cloud Platform (GCP) Kubernetes technology. This pipeline enables the seamless execution of the optimization engine, automating the decision-making process and streamlining operations.

By implementing this comprehensive solution, organizations can effectively manage drug-level guarantee agreements, minimize financial liabilities, and optimize overall performance. The combination of accurate utilization forecasting, strategic price optimization, and efficient pipeline execution empowers organizations to make informed decisions, mitigate risks, and maximize profitability.


The monthly publication of optimal prices for over 26,000 drugs to various pharmacies and insurers has resulted in significant cost savings. This initiative has achieved a remarkable $20 million in monthly savings for hundreds of insurance clients. By consistently providing tailored pricing strategies, organizations have not only improved financial outcomes but also enhanced access to essential medications for patients. This data-driven approach demonstrates the effectiveness of proactive pricing management in the pharmaceutical industry, fostering stronger partnerships and promoting affordability in healthcare.

Key Data Points

monthly savings

Intrigued by the accomplishments highlighted in this case study? Do you see parallels with your own organization's challenges? At Blend, we are experts in delivering clear, concise and engaging solutions that meet your unique business needs. We're eager to apply our strategic thinking and domain expertise to help transform your business operations, just as we did for our esteemed client. Reach out to us today – let's collaborate to drive impactful business results and craft your own success story. Contact us today.