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An Illustration of How the Media’s Report on “Price Gouging” by Small Drug Distributors is Misleading and Untruthf PowerPoint Presentation
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An Illustration of How the Media’s Report on “Price Gouging” by Small Drug Distributors is Misleading and Untruthf - PowerPoint PPT Presentation


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An Illustration of How the Media’s Report on “Price Gouging” by Small Drug Distributors is Misleading and Untruthful, in Most Situations. As Presented by Pat Earl, Principal and CEO of Secure Pharma Distributor Network. RISING DRUG SHORTAGES IN U.S. Source: U.S. Food and Drug Administration.

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An Illustration of How the Media’s Report on “Price Gouging” by Small Drug Distributors is Misleading and Untruthful, in Most Situations

As Presented by Pat Earl, Principal and CEO of Secure Pharma Distributor Network

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Pharmacist Michael O'Neal, manager of procurement at VUMC, holds the drug propofol, which has been in short supply. / Samuel M. Simpkins / The Tennessean

growing drug shortage leaves patients in the lurch as reported in the tennessean on october 6 2011
Growing Drug Shortage Leaves Patients in the Lurch… as reported in The Tennessean on October 6, 2011
  • According to a pharmacist who is manager of procurement at Vanderbilt University Medical Center “…I don’t know if this is a market adjustment because the whole generic drug industry has become so commodified that you can buy a bottle propofol that can be used in surgery much cheaper than you can buy a bottle of water.”
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These Illustrations Show a 15%-18% Markup to Cover the Costs of Picking, Packing and Shipping Transactions for Propofol… NO GOUGING HERE!
drugs in the market
Manufacturers bid low prices in exchange for sole source GPO awards

One supplier then corners the market for multiple years of contracts

Artificial price controls drive competition to discontinue that product

Limited distribution conspires to drive drugs into commodity exchanges

Artificially low pricing leads to unnecessary shortages

Drugs in the “Market”
growing drug shortage leaves patients in the lurch as reported in the tennessean on october 6 201111
Growing Drug Shortage Leaves Patients in the Lurch… as reported in The Tennessean on October 6, 2011
  • Many of the drugs are old-line treatments with low profit margins for their makers
  • The general public reads the headlines about the drug shortage crisis, and they assume we are talking about these blockbuster drugs that are so…expensive .
  • In reality, we are talking about generics that are $2 each that are proven to work, that patients are now not able to obtain
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Drug Shortages are a direct result of GPO favoritism

and their loss-leader pricing strategies…

No other manufacturer will produce a drug at a loss!

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Perceived “gouging” alluded to is A DIRECT cause of GPO and their chosen partners’ policies that create ”artificial price controls” for their favored member customers.

Small distributors are “restricted” by the manufacturers and the GPO’s from selling these contract items at the exclusive, artificially-set contract pricing between GPO and selected partners.

Hence small distributors must pay the ACTUAL price

pat earl principal and ceo of secure pharma distributor network
Pat Earl, Principal and CEO of Secure Pharma Distributor Network

From my viewpoint as an industry veteran… “I believe that it is rather disingenuous for Premier Purchasing Partners, the other large national GPO’s and their partner manufacturers, in general, to point their fingers at the small drug distributors, who must pay a significantly higher price for their products. The market share for the smaller distributors is comparatively speaking…relatively insignificant.”