Your attention is directed to the enclosed brief questionnaire. You can help me by supplying basic and accurate information for my presentation. The form enclosed requires only a short time to complete and will be most useful to me. Although your representative may have explained your policy to me personally, I will appreciate a written statement from you. Any other information that you can supply will contribute to my discussion. Since many firms are now revising their pricing structures the importance of recent and factual information is obvious. A prompt reply from you will make my task that much easier. Enc. Sincerely yours, Merritt L. Skinner, R.Ph. Today's Prescription - Your Biggest Health Value Al (This is the cover letter that was forwarded with a copy of the remarks made at the Purdue Pharmacy Management Conference. This went forward to each of the 126 member firms of the P.M.A.:) December 3, 1965 Gentlemen: In a letter dated October 6, 1965 which was forwarded to each member firm of the Pharmaceutical Manufacturers Association, I requested that a brief questionnaire having to do with manufacturers pricing structures be completed and returned to me. As explained in the letter, the statistical data gathered was to be used in preparing remarks to be presented at the Pharmacy Management Conference conducted by the Purdue University School of Pharmacy and Pharmacal Sciences on October 28, 1965. Approximately one-half of the PMA member firms responded to my letter, and approximately one-third of them completed the questionnaire. Requests have been received for copies of the prepared remarks. Sincerely yours, Merritt L. Shimmers Merritt L. Skinner, R. Ph. Enc. REMARKS BY MERRITT L. SKINNER, R.PH., PLYMOUTH, IND., At the PHARMACY MANAGEMENT CONFERENCE, PURDUE UNIVERSITY, OCTOBER 28, 1965 A COMMUNITY PHARMACIST LOOKS AT DIFFERENTIAL DISCOUNTS Fellow pharmacists, ladies and gentlemen: It is indeed a privilege for me to appear before you today. It has been my pleasure to have participated in previous pharmacy conferences here at Purdue, but as I recall at those times my assigned subject was easy compared with the task I am faced with today. The subject of pricing structures and differential discounts is one of the most complicated problems confronting those of us who are involved in the distribution of pharmaceutical products today. There seems to be universal agreement that the pricing system currently in use by most of the pharmaceutical manufacturers is often inconsistent, discriminating, unfair and generally chaotic. In order to try to determine what the pricing situation is today, I prepared a brief questionnaire and forwarded it to be 126 member firms of the Pharmaceutical Manufacturers' Association along with a cover letter describing the purpose of the questionnaire and requesting assistance in gathering the desired data. A copy of the questionnaire and the letter will be distributed to you at the close of this presentation. Forty-eight replies were received; a return of 38%. Statistitions say that this is a good sampling, but I am disappointed that my report to you is not flavored with statistical data from some of the larger companies. Ten of these giants failed to venture a reply to my request for pricing data; I wonder why. Could it be that they don't have a price policy? Is it possible that they might have a different policy for each customer? Or could it be that their attorneys have warned them not to disclose their discriminatory pricing schedules to their customers. The questionnaire was designed to make the job of completing it as easy as possible, and to simplify the task of extracting the data from the completed forms. Nevertheless, some of the companies reporting complicated my planned procedures by writing elaborate letters containing cleverly composed phrases of evasion instead of completing the questionnaire as requested. Generally, the questionnaire forms were returned to me quite promptly, but these letters of nebulous explanation are still slowly dribbling in. A few companies simply sent me a series of price lists in hope, I imagine, that I had plenty of time to try to locate the desired information therein. Upon opening an envelope from one of the reporting manufactures I found the following: Time does not permit a complete summarization of the accumulated data, but perhaps it is appropriate to mention a few of the findings at this time. 1. Chart one is a comparison of discounts between individually owned community pharmacies, and chain drug stores who maintain warehouse facilities. Useful replies - 28. Both obtain same discount 20. Chain received better discount 8. 2. Chart two is a comparison of discounts to individual pharmacies, chains, and wholesalers. Useful replies - 36. Wholesalers received best discount 25. Chain and wholesaler received same discount which was better than to individual pharmacy 3. All three receive same discount - 8. 3. Chart three is a comparison between discounts given to the individual community pharmacy and the physician in private practice. Useful replies 21. Pharmacy received best discount 7. Physician received best discount - 3. Both received same discount - 9. Separate physician price list mentioned but specific discount given omitted - 2. 4. Chart four is a comparison of discounts to physicians in private practice as opposed to physicians in group practice (clinics) or proprietory hospitals. Useful replies 25. Instances in which clinics and proprietory hospitals get the best discount 11. Instances where both get the same price - 14. 5. As could be expected most of the firms give discounts of 10% to 20% to tax supported institutions over and beyond the discounts given to any other category. In cases where bids are given for large purchases, the discounts undoubtedly are still greater. Let us consider for a few moments the unfortunate results of the distributional policies of some of the pharmaceutical manufactures. I have a copy here of a letter dated May 7, 1965 from a California pharmacist to Armour Pharmaceutical Company complaining that the pharmacist had purchased directly from Armour 100 5 cc vials of Acthar Gel 40 USP units at a cost of $2.06 per vial considering the value of the free goods included in the deal. One week later his wholesaler offered him the same item in 10's at $1.80 per vial. To make matters even worse for this pharmacist, on the same day one of his physician customers to whom he had intended to sell the product brought to his attention a pamphlet from a physician supply house offering the same item in single vial quantities at $1.35 per vial. The Red Book price for this item is $4.50 per vial. In the July 6, 1965 issue of the "Voice of the Pharmacist" an instance is reported in which a Michigan pharmacist paid to his wholesaler $17.50 for 100 tablets of a well known brand of prednisone while the bid price to a nearby hospital was $4.05 per 100 tablets. The president of one of the state pharmaceutical associations recently publicly admitted that he was purchasing some of his drug inventory from hospital sources and that he would continue to do so until the manufacturers stopped discriminating against him. Pharmacists have been warned by eminent legal authority that it is just as illegal for them to purchase as it is for the hospital to sell inventory purchased by the hospital at a special price. The Executive Director of the A. Ph.A. in an address to the National Wholesale Druggists Association at the 1964 convention urged the attorneys who take this viewpoint to test their legal theories in the court room. I notice that a year has passed and not a single manufacturer, or the associations who employ legal counsel advocating this viewpoint have instituted a suit. It seems to me that if the manufacturers are really serious about wanting to eliminate this matter of hospital drug diversion, they could effectively accomplish this end by using the authority that they alone possess to remove the discriminatory aspects of their price structures. For each instance of a violation of ethical, and legal standards cited here, each of you in this room can probably cite another from your own observations. The practice is so widespread and has, over the years, become so integrated into the scheme of things as to cause one to wonder if it is really worthwhile to resist. pharmacist stand up to industry and expect to be heard? heard, how can he hope, by his efforts, to accomplish even a measure of change? He can, and I think he most assuredly will rise to the occasion. How can a And even if |