Michael J.W. Thomas, CPhT
Clinical Technician, Kennedy
Health System
Cherry Hill, NJ
In
a Perfect World, drugs used to improve the quality of life for patients in need
would be in abundance. Each
morning, the Pharmacy Buyer would go out to the Medication Garden outside the
hospital and pick the daily supplies needed that for day. If there were a drug you didnŐt grow
yourself, a simple phone call would bring Jennifer Lopez or Brad Pitt to your
door in minutes bringing you exactly what you wanted. And it wouldnŐt cost a cent.
Unfortunately,
this isnŐt a Perfect World.
As
Pharmacy Purchasers, we are at war.
As drug companies continue to face chronic drug shortages, or simply
discontinue the manufacturing of other items, we are constantly at odds with
the technicians who distribute, the pharmacists who dispense, and the physician
who prescribes drugs that at times we simply cannot acquire. We use every method, every trick, every
resource at our command. We harass
the wholesaler. We beg our direct
accounts. We even borrow from one
another, bargaining and bartering as though we are on the streets of
Cairo.
And
then there are the secondary distributors.
The
secondary distributors. Those
companies who by some are considered to have the audacity of a telemarketer and
the morals of a convenience store clerk.
It is said that they hoard drugs to create artificial shortages, and
then prey on the weak and helpless buyer to buy their wares at exorbitant
prices. If you believe some
individuals, youŐd believe they sell babies stolen from their cribs.
Now
letŐs take a reality check.
In
the many years of doing business with many of the secondary distributors, their
side of the story paints a completely different picture. And while this is not a defense of the
industry or profession, it is a perspective cultivated by lenghty and revealing
conversations with several individuals in a sampling of the companies who do
this type of business. There are
two prejudices that this writer would like to shed some light on regarding the
biggest myths regarding secondary distributors:
-
Do secondary
distributors hoard drugs to create false shortages, and
-
Do secondary
distributors over inflate price to increase their profit margin
LetŐs
examine each prejudice.
This
writer has spoken to many representatives in the industry and what has been
discovered is this: secondary
distributors have their eyes and ears open, tracking trends in the drug
manufacturing industry and also listening to the needs of their clients. This writer has coined the term Őmedication
futuresŐ, because like any other
stock speculator, it is their job to follow the sojourn of a product, from raw
material to shipment to a hospital.
In short, they can be your eyes and ears, as well as your forecasters
for problems. Another thing this
writer has discovered is that they can discover trends in shortages and becomes
sort of an early warning system for the smart buyer. In this writerŐs experience it has been noticed that many
times shortages travel from West to East.
The West Coast will become aware of a shortage, then transmit this need
to a secondary distributor representative. If a representative receives several requests for the same
item, the good representative will begin mentioning this item to their other
clients. On several occasions,
this writer has actually averted a shortage by discovering a trend forwarded by
a secondary industry representative.
Some of the methods that they use in acquiring items are direct
purchases and through multi-wholesaler relationships. As purchasers, we are ÔmarriedŐ to a primary wholesaler, and
most of us have secondary wholesalers as a backup. The secondary distributor has the advantage of buying from
several wholesalers, if not them all.
That gives them the advantage to purchase for a client an item that may
not necessarily be available from either your primary or secondary
wholesaler. In addition,
this writer has even had the experience of having a secondary distributor
representative borrow a drug from a neighboring hospital in their area to
supply a client clear across the country!
It
has also been the experience of this writer, that secondary distributors
experience the same shortage problems as we do. Their advantage is that while we must locate these drugs in
addition to preparing our regular orders, processing invoices, unpacking
orders, putting out fires, etc., their sole responsibility is to find these
drugs and get them to us. Again
their advantage is a resource for us to use.
This
one is simpler to explain. As
Pharmacy Purchasers, we enjoy the benefits of Group Purchasing Organizations
and Private Contracts; both designed to give hospitals the best possible price
for the products we purchase.
Sometimes these discounts can go as deep as 90%, depending on the product. Secondary distributors do not
enjoy such a luxury. When they
acquire a drug, it is quite possible that they will pay the retail price, and
sometimes more. That, in addition
to charging a mark-up for their services, perceive the prices they charge to be
inflated. After all, if you are
used to paying $10 for a drug and suddenly someone tells you they will sell it
to you for $100, it is natural to feel something underhanded is going on. BUT if you knew that product actually
cost the secondary wholesaler $95, that $100 doesnŐt seem so bad. As a practice, this writer routinely
checks the AWP listing of a drug before agreeing to make a purchase.
Although
to most of us this information was not common knowledge, those who regularly do
business with the secondary distributors have developed very good professional
relationships with them. As with
any business, the true barometer of confidence in a company is measured in
dollars. Pharmacy Purchasers do
not have the luxury to spend the hospitalŐs budget on extraneous or frivolous
purchases. Quite the contrary,
most of our budgets are carefully scrutinized to make sure we get the maximum
benefit from our dollar. We have
to be accountable for every cent of a multi-million dollar budget. And even through all this scrutiny, all
this evaluation, the secondary distributors enjoy a thriving business. Those who do business with them
trust that their representative is doing the best they can in an extremely
volatile and dynamic market. As
was mentioned before, this is not a blanket commendation of the industry. There are the companies who cerate the
bad publicity for the industry, creating the telemarketing/convenience store
myth, and in time, they will be ferreted out and eventually disappear. Such is the nature of business.
What
have we learned?
This
writer would hope that secondary distributors now would seem a little less like
the ghouls some have made them out to be and more of a tool to be used when
necessary. This writer suggests
that in order to keep your jobs and maintain your budgets, that you exhaust all
avenues to acquire a drug before consulting a secondary wholesaler. They are and should be a last resort
after all other avenues are explored to the best of your time and priorities. For as good as their intentions may be,
most of us still have a budget to maintain. And like any other industry, there are unethical factions
that will prey on a purchaserŐs naivety.
This cannot be avoided.
Most good purchasers will easily pick up on the danger signals and avoid
these companies. It is up to
the good purchaser to use this resource as wisely as you would use any other
resource at your command: with
intelligence, moderation and frugality.
We
are coming into the most critical time of the year. Already companies are recording shortages for some of their
products. Some companies actually
close shop at the end of the year, or simply cease production of the product
for whatever are their reasons.
This is the time of the year when purchasers are at their most
frantic. Secondary distributors
may be a resource to consider, if you have not used them before. This writer predicts a very bad winter
for supplies. So donŐt toss that
faxed circular. Take a second to
take a look. Or take a moment to
listen to a representative. They
may help cure one headache of one product you may need.
ItŐs
worth it just to keep an open mind.