DRUG WHSLRS. HAVE "RIGHT" TO REDUCE COST OF PRODUCTS FROM SECONDARY SUPPLIERS, DuBOW TELLS NWDA: BUSINESS PRESSURE V. MORAL OBLIGATION

Executive Summary

Drug whslrs. have a right to purchase drug products at the lowest available price in order to remain competitive with other whslrs. who are buying at the same reduced price, NWDA outgoing Chairman Lawrence Dubow told the assn. at its annual meeting in Los Angeles Nov. 10-13. DuBow declared: "I put it to you. If product is available to any proprietor or for-profit entity at preferential price, then does the drug whslr. or any other for-profit company not have the right, the economic and moral obligation, to themselves and their customers to purchase at that same price." While products remain available at unusually low prices, Dubow maintained, competitive pressure will remain strong as an incentive for whslrs. to utilize secondary supply sources. "Does it not make sense to pursue a route of economic advantage, or at the very least economic equality, if in fact that advantage is being afforded to other for-profit entities. Is that not the American way? And when we do not or cannot purchase in the manner I have just outlined, then what effect does the competitive pressure have on us from those whslrs. who are in fact offering products to our customers at reduced cost prices." Dubow maintained that the current price situation requires whslrs. to make decisions pitting business realities against moral considerations. "As much as we would resist purchasing from secondary suppliers in an attempt to fulfill a moral obligation, that burden could become unbearable even for the best of us. This industry has always had serious questions to answer and this could be one of the most complex," Dubow stated. Incoming NWDA chairman for 1985-86 Eugene Bykukal, vice chairman and CEO of Southwestern Drug, noted that the drug diversion and pricing issue will be at the top of the assn.'s agenda for the coming year. Bykukal said that "the issue of illegal diversion, or perhaps drug perverson, and the horrible specter of counterfeit drugs is an issue interlaced with other issues, such as multi-tiered pricing, that can be discriminatory. We cannot dodge these issues any more than we can ignore the changes in health care in America." The new NWDA chairman said that the possibility of federal intervention should be recognized as the industry examines options to eliminate the drug diversion problem. "This will be a major issue during the year ahead. We either address these issues for ourselves, or Uncle Sam will do if for us. And we all know the difficulties and consequences his action can bring to our industry and profession." In a report of the discussions held by NWDA's Associate Members Advisory Cmte. on the drug diversion pricing issue, Chairman Jack Bowman, American Cyanamid exec VP, noted that the cmte. supported efforts to tighten the Robinson-Patman Act, and that efforts by both FDA and the U.S. Custom Service to inspect more closely reimported drugs should be supported. Bowman's comments may anticipate PMA's position on diversion at a scheduled Hill hearing for trade assns. on Nov. 26. Bowman added, however, that "there is a more general approach to all this that mfrs. have in their hands which could make progress on this right now. That is, at the policy level you need to examine your pricing policy. I can't tell you what the right policy is, but if you look at it, make sure it is good for you and it is good for your customer. Then take that next step which is to make sure that everyone in your organization all the way to the sales representative knows your policy and is following ]it[."