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Purchasing - Changing your wholesaler

Switching wholesalers should not be undertaken lightly, says Annette Arthur.

Photograph: SPL
Photograph: SPL

Traditionally, pharmaceutical manufacturers have sold their products to pharmaceutical wholesalers at a discount of about 12.5 per cent and these are then sold on to dispensing doctors, giving the GPs a discount of around 10-11 per cent.

Many of the large pharmaceutical companies have now decided on Direct to Pharmacy (DTP) schemes where they pay the wholesalers only as Logistic Service Providers (LSPs) to deliver the drugs, thus removing the discount structure.

National suppliers
Currently there are three national wholesalers - AAH, Unichem (shortly to become Alliance Healthcare) and Phoenix. Because of the new DTP schemes you will have to have an account with at least two of them, one of which will need to be Unichem as it is the sole distributor of Pfizer products.

There are also several regional wholesalers, but their usefulness is declining because of the need to use one or more of the 'big three' for certain brands.

When considering a change of wholesaler, dispensary buying staff need to calculate which mainline wholesaler gives them the best discount, not only for day-to-day items but also for required prescription drugs from the large pharmaceutical companies.

For example, Janssen-Cilag offers a 6 per cent discount through AAH, but 7 per cent if goods are bought through Phoenix.

The large wholesalers will also offer extra services, like monthly data discs, but it is worth making an appointment with the local representatives to see who can offer the most effective all-round package.

Extra discounts for surgical and so-called zero discounted lines such as insulin can be negotiated. The new wholesaler should also ensure that any manufacturers' discount schemes still in place are transferred across.

The three main wholesalers have now announced a low spend surcharge. Unichem's surcharge is £250 if the spend is less than £3,500 per month, with Pfizer products not counting in the overall amount.

AAH's surcharge is £300 if the spend is under £2,000 (although it says this can be reviewed on an individual basis) and Phoenix's surcharge is £200 if the spend is less than £3,000, though there is no surcharge if the practice is a PSUK member.

Shortline wholesalers
Shortline wholesalers (SLWs) are so named because they do not hold a complete range of products, tending to specialise in generics, parallel imports and surgical sundries. Better discounts can often be achieved by buying through SLWs and many offer continuity lines, meaning the patient gets the same brand of a generic drug every month.

In the past, dispensaries have usually dealt with one mainline wholesaler and perhaps two SLWs. In the increasingly difficult world of sourcing medicines, there is now the real possibility of having upwards of five deliveries per day. Many dispensary managers are now saying that too much time is spent unpacking goods rather than dispensing prescriptions.

To make things a little easier, many surgeries have joined buying groups and these offer excellent services for practices, particularly where the dispensers have the responsibility of buying.

The biggest of the buying groups is PSUK which is affiliated to Phoenix. Members have to pay a monthly premium but gain extra discounts in return, including full discount on all zero-discounted lines.

Generic brands can be chosen by setting up a 'cascade' system. This means that, if the first choice brand is not available, the second choice will be sent automatically. Dispensers therefore do not have to worry about being out of stock. Purchases are delivered from Phoenix twice daily.

Prescribing.org is a company set up by a dispensing GP, Dr Julian Brown, and there is no signing up fee or monthly subscription. Prices on this site are updated daily, it gives price comparisons and allows purchases from mainline and shortline wholesalers.

Switching wholesalers is not something to be undertaken lightly. At best, it can maintain and build on a good relationship between both parties but at worst can be nothing short of disastrous. Ensure strong dialogue between GP, dispensary management and wholesaler and carefully peruse the final written agreement before signing.

Dispensary buyers are having to spend more time sourcing drugs to offer continuity of supply. A strong relationship with a good wholesaler will go some way to making this task less stressful.

  • Annette Arthur is a consultant for dispensing practices.

Points to note

  • Understand what discounts the large pharmaceutical companies are offering through different wholesalers.
  • Investigate the use of a buying group.
  • Only change wholesalers when there is a clear benefit.
  • Ensure there is a strong dialogue between GP, dispensary management and wholesaler and carefully check final written agreements before signing.

 

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