Business Math for Pharmacy: Markup and Profit

Markup and Selling Price

Pharmacy business math is tested on the PTCB exam. Markup is the difference between the selling price and the acquisition cost. The markup percentage is calculated as: (selling price - cost) / cost x 100. If a drug costs $50 and sells for $75, the markup is ($75 - $50) / $50 x 100 = 50%.

Gross profit equals the selling price minus the acquisition cost. Net profit subtracts all additional expenses like labor, overhead, and dispensing fees from the gross profit.

AWP and Reimbursement

Average Wholesale Price (AWP) is a benchmark used for insurance reimbursement. A common formula is AWP minus a discount percentage plus a dispensing fee. For example, AWP - 15% + $2.50 dispensing fee would be a typical reimbursement calculation.

Understanding these formulas helps pharmacy technicians interpret insurance adjudication and troubleshoot claim rejections related to pricing.

Practice Business Math

Business math questions are straightforward once you know the formulas. Drill them with our flashcard sets and take PTCB mini exams to practice.