Pharmacy Class of Trade

Posted on January 26, 2011

I got the following message from Steve Moore, an independent Pharmacy owner. I wasn't sure what to do with it or how to share it with the world. Therefore, I'm just going to post it here for all to see. I'm not going to post his contact info, but he's welcome to post that in the comments section (as well as links and references).

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My name is Steve Moore and I am an independent pharmacy owner from New York. I am wondering if you would consider sharing your thoughts on the following topic, one I think that most pharmacists would be interested in.

When it comes to business side of our profession, most pharmacists don't have a clue as to what is going on. As an owner, it affects me more than most, and I don't comprehend all of the complexities. After speaking to some other pharmacists in my area, I came to realize that they are under the impression that mail order pharmacies were simply discount pharmacies, that mail order just filled prescriptions at a lower price than retail pharmacies. That may or not be true, the larger issue is that mail order pharmacies are able to offer deeply discounted medications because they are purchasing medication a better price than retail pharmacies. PHARMA grants them a special class of trade (COT). I attempted to find a law/rule/etc that grants mail order pharmacies these special buying privileges as a different COT and was unable to do so. I wrote to consulting companies and wholesalers and I was told that there is no such list. If there is no government approved or provided COT list, what makes mail order special other than the fact that PHARMA says so?

My question is, if mail order can do it, why can't community pharmacy designate itself as a special COT? Mail order promotes safety and accuracy, we have a robots and workflow too. We can fill antibiotics and pain meds, mail order cannot. We can deliver meds the same day, mail order cannot. Mail order simply cannot meet 100% of our pharmaceutical needs. If any group deserves a price break from PHARMA, shouldn't it be the group that can meet more needs?

There is a federal law known as the Robinson-Patman Act which specifically prohibits companies from selling the same products to competitors at different prices (order of magnitude wise). Exemptions to this act exist to allow nonprofits (such as hospitals) to purchase medication for their own use at a discounted price. In addition to the hospital COT, there is a 340b class (for now), a long term care class, and depending upon who you ask, anywhere from 7 - 23 classes. The one constant is that the retail pharmacy COT pays the most for medications. COT designations have been challenged in the past but were usually lost on the basis of own use. That meaning, the nonprofit was purchasing medications to use for its patients/employees/etc and was not in competition with retail pharmacies. Mail order pharmacies are for profit and are clearly competing with retail pharmacies, so in my mind a Robinson-Patman exemption should not apply. I understand supply and demand and that some people can pay more than others for the same product, but we are not talking about a few bucks here and there, rather exponential differences. The local hospital pays about $9 for 100 tablets of brand name Coumadin, what does the price sticker on the bottle in your store read?

The fact that mail order pharmacies are buying medications at a lower price than retail pharmacies has an impact on every pharmacist filling 90 day prescriptions at retail for mail order rates. I am not saying that if reimbursement improves, working conditions will improve, but it can't hurt to make pharmacists aware of what is going on. I have contacted our trade associations and industry publications but am also reaching out to bloggers such as yourself. If you feel that this may be something you would like to blog or post about, I can provide some links and references.

Thanks for your time.