GARDEN CITY, N.Y. -- The practice of pharmaceutical manufacturers offering different prices to customers based on class of trade must end if community pharmacy hopes to survive.
he 36th Annual Pharmacy Congress sponsored by St. John's University College of Pharmacy, Jamaica, N.Y.
"The elimination of discriminatory pricing is absolutely fundamental to the continued existence of community pharmacy," said Waspe. "Make no mistake about it. Discriminatory pricing practices will go away in one of two fashions.
"They will go away because community pharmacy will go away and there will be nobody left to cost-shift to," Waspe explained. "Or they will go away because we legislatively end the discriminatory pricing practices, or through lawsuits or an investigation by the Federal Trade Commission."
Waspe lashed out against "the practice of pharmaceutical manufacturers segmenting their customers into two groups: those with whom they will price-compete, and those with whom they refuse to price-compete.
"If I had the opportunity to use 60% of my customers, which is what community pharmacy is, to subsidize my price competition for the other 40%, I've got the best of both worlds," he said.
Waspe said this practice by pharmaceutical manufacturers shifts the burden of low prices for other classes of trade onto the retail industry.
"I have held invoices in my hands from the same wholesaler, delivered to the same street address, on the same day, for the same quantity of identical products. One was for the corporation's HMO at contract price. The other was for the corporation's community pharmacy. The HMO price was $2 per 100. The community pharmacy's price was $114 per 100."
Waspe said the law allows manufacturers to give discounts for "any economy or efficiency the purchaser brings to that manufacturer which reduces the manufacturer's costs.
"I submit to you there is nothing anybody can do which warrants a 99% price reduction," said Waspe. "If there was, we'd all be out there trying to do it. So that $2 price represents unrealistic, overheated price competition which exists only because $114 is being garnered from 60% of the market. Without that subsidy, the price [for noncommunity pharmacies] would never be $2."
Waspe added that community pharmacies have been accused of "cost-shifting our third-party plans onto our cash customers. There's one small problem they are forgetting about. There are 62,000 community pharmacies in this country competing every day on the price of their product at the cash route. We cannot cost-shift onto our cash customers.
"If we could, our margins would not be declining every year. Pharmaceutical manufacturers, on the other hand, can cost-shift onto community pharmacies because they know we have to have the products to put on our shelves," Waspe said.