How to Open an Independent Pharmacy


Opening a successful independent pharmacy is a challenging undertaking for any pharmacist, especially with the competitiveness of today’s retail pharmacy market. Building a new pharmacy from the ground up doesn’t guarantee foot traffic, and leasing or owning a property doesn’t mean you’re ready to open for business.

The path to a successful independent pharmacy starts with a detailed business plan, excellent advice from reliable sources, and good financing. In our opinion, proper planning and good advice are the hallmarks of sound business practice that are key to establishing and maintaining a successful independent pharmacy. Regardless of your reasons for opening your own independent pharmacy, there are several steps that should be taken to ensure your success. 

Start Early


While location and advice from others are important aspects to take into consideration when opening a pharmacy, timing is the most essential consideration. Proper planning and preparation are two things that will save pharmacists headaches, but neither can occur without ample unless there’s enough time. Generally, the planning process should be started at least six months in advance.

By starting early you can avoid feeling rushed to find a location, have more time to seek advice, and have the time to complete the many applications needed to obtain licensing, permits, gain contracts, and enroll in services.

You can also use this time to develop a business plan. Your potential customers are currently visiting other locations for their pharmacy needs, so your plan should address a few things:

  • Consider the population. Can the area support another pharmacy? What are the area’s demographics? Are there enough patients for the services you plan on offering?
  • Think of the future. It’s not enough to assess things as they are. Your pharmacy should be set up to improve things for patients over time. A successful pharmacy is one that can provide for and grow with its customer base.
  • Figure out the community’s needs. Talk with people in the community to learn what they look for in a pharmacy and what their current pharmacy does that frustrates them.
  • Map out licensing requirements and timelines. What timeframe do you need work within to apply for licensing, what entities can you start working with prior to groundbreaking, and what items  cannot be completed until the doors open?

Get Advice


It’s impossible to open and maintain a successful independent pharmacy without consulting others who can offer valuable advice. Ask for references from people you already trust like colleagues, wholesalers, PSAO’s, and professional associations to identify other people that can help guide you throughout the entire process from planning and  building to opening and maintaining your pharmacy. 

Trusting your gut and having your own opinions is good, but since this is something you may have never done before, you will want to speak to several different types of people. As the adage says, “Don’t put all your eggs in one basket,” so don’t take all your advice from just one person. Another option to consider is hiring a consultant, broker, or principal that opens pharmacies regularly.

It’s also a great idea to speak to other pharmacists who have previously opened their own pharmacies. They can provide advice and insight that others simply can’t.  In addition, they can offer suggestions for solutions to challenges that you are likely to encounter.




Everyone knows how important an independent pharmacy’s location is, but this step is often more complicated than most pharmacists realize. The main question in regards to location, as mentioned earlier, is whether the area can handle another pharmacy. Knowing the answer to that question and understanding the competition are two often overlooked aspects of establishing a location.

When it’s time to actually look at locations, visibility is essential. If your pharmacy is tucked into a corner or down a side street that doesn’t have any visibility from high-traffic areas, it can be a huge problem. Corners are typically the best location for pharmacies for this very reason.

If you’re buying a location that currently or previously housed a pharmacy, do your research. Analyze the current and past performance of the location, look into the services they offer, and gain access to their patient base.

Look into any restrictions the area may have or you could lose out on patients. In western Pennsylvania, for example, UPMC only works with Express Scripts. Find out in advance if your area location requires you to work with a wholesaler’s PSAO. You must have access to the patients in your area, or your pharmacy will be doomed to fail.

For pharmacists looking to open a location in a competitive area, it could be beneficial to choose a spot between two chains. Walmart and CVS, for example, can’t compete with an independent pharmacy’s customer service. Positioning your pharmacy between two of these locations and adding services the chains lack, such as DME supplies, vaccines, and patient education programs, could give you the customer base you’re looking for.


Work with the Right People


Every independent pharmacy owner will need to put a team together that can prime them for success. This team should understand how to guide a new pharmacy through legal, business, and compliance processes. Team members could include an attorney, an accountant, financial advisors, and an insurance agent. Again, use references and do your research before making any decisions.

Another reason why it’s important to start the planning process early is that you will need to engage the services of a lot of different suppliers. You’ll need to choose a wholesaler, PSAO, pharmacy software vendor, as well as vendors and suppliers for front-end and OTC merchandise. In addition, you will need to staff your pharmacy. Your advisory team should be able to provide suggestions on suppliers who can provide you with the best service, as well as guide you in the process of applying for your pharmacy permit from the state board, DEA number, Medicaid number, and other permits and applications as required by federal, state, and local regulations in your area. The process of opening a pharmacy will be difficult, so these advisors can also serve as your cheerleaders to help keep you going when the going gets tough.


Know what order to follow

You know you need a location, staff, contracts, products, and inventory.  However, you’d also like to bill Medicare, maybe offer diabetic testing supplies and shoes, and possibly offer immunizations, but in what order do you need to complete things in order to be the most efficient?  Are there items that are hinging on other items?  What applications and permits are needed prior to moving on?

Below is our recommended order of tasks that must be completed when opening a pharmacy.

  1. Apply for Employee Identification Number (EIN) - The driving force of everything is your Legal Business Name (LBN). It is very important to use the LBN exactly as it is listed on your EIN document on all future applications that request your LBN.
  2. Find a location- Many applications and permits will require a physical address prior to filing.
  3. Buy insurance (professional, umbrella, liability, etc.)- You need insurance while you are building, but applying for things like accreditation will also require proof of insurance.
  4. Apply for National Provider Identifier (NPI) - You need an EIN and a location to apply for your NPI. You will need to have your NPI in place before you can move forward with many of the necessary applications.  Ensure that the LBN you use to file for your NPI is identical to the LBN on your IRS document.
  5. Assign a Pharmacist-in-Charge (PIC) - You need to identify your PIC in order to complete your application for pharmacy licensure. He or she will be identified as the PIC on your actual pharmacy license.
  6. Apply for state pharmacy license- The name on your state license will serve as your “Doing Business As” (DBA) name for everything moving forward. Ensure it matches the DBA on your NPI.
  7. Apply for a DEA certificate- The DEA is needed for dispensing any controlled substances
  8. Register with National Council for Prescription Drug Programs (NCPDP).
  9. Open pharmacy bank account- You’ll need account information for direct deposits of reimbursements from Medicare and Medicaid. Ensure that you use the LBN on your IRS document as the name on the account.
  10. Secure funding- Having working capital and a line of credit will help ensure success. Loans are generally for building and property, but many other expenses will rack up prior to opening for business.
  11. Secure furniture, fixtures, and inventory.
  12. Secure contracts or get a PSAO.
  13. Hire staff.
  14. Submit Medicare application for immunization PTAN.
  15. Open Pharmacy.
  16. Complete Medicaid application- Some states, such as New York, require accreditation prior to applying for Medicaid.
  17. Purchase a surety bond- You will need a surety bond if you seek accreditation.
  18. Apply for accreditation- If you wish to bill Medicare for DMEPOS items, you will need to be accredited. You must be open for business before applying for accreditation.  An onsite survey from your accreditation organization is part of the accreditation process.
  19. Submit Medicare application for DMEPOS PTAN.

Even with the best planning in place, things can go wrong, and setbacks can happen. While delays are part of the process, they are never welcome. That’s why so many independent pharmacies work with R.J. Hedges & Associates to ensure their opening process goes smoothly.  Generally, brokers stop working with clients at the time of closing, wholesalers stop working with new owners 90 days after opening, and advisors seem to come and go.  R.J. Hedges & Associates can be with you the entire way, from planning, acquisition, and financing to completion of applications, and all of the way through establishing and maintaining healthcare compliance.

Contact R.J. Hedges today to learn about the many ways they benefit independent pharmacies and can serve as a resource for you while opening your own independent pharmacy.


Becky Templeton

Becky is a Board Certified DME Specialist and Accredited Business Intermediary. Her education and training background fuels her desire to understand how things work, while trying to get the simplest answers and best methods for implementation. She is the go to woman for R.J. Hedges’ training and the voice of many of our videos.

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