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Executive Summary

SmithKline's reduced price to whslrs. for Cefizox (ceftizoxime sodium) injectable third generation cephalosporin starts at a base cost per gram of $8.70. The firm's reduction of all items in its Ceftizox line was announced to buyers in a Nov. 1 letter. The new prices, with old prices in parentheses, are: 1 gm/28 ml vials, 1's, $8.70 ($9.50); 2 gm/28 ml vials, 1's, $16.17 ($19.00); 1 gm/100 ml "piggyback" vials, 10's, $94.00 ($100.10); and 2 gm/100 ml "piggyback" vials, 10's, $176.20 ($195.10). SmithKline said that the new prices apply to "current or transit inventory as of" Nov. 1. The firm maintained in its letter that "this reduction in price makes Cafizox, a whslr.-only product, the lowest priced third-generation cephalosporin . . . lowest by the gram, lowest by the day." Estimating a $200 mil. total market for third-generation cephalosporins in 1984, SmithKline said that its new prices will help whslrs. "handle . . . and profit from a larger portion" of the market in the futur. Pointing to the potential for whslr. gains, SmithKline noted that "the vast majority" of the third generation business in 1984 is going to two mfrs. who sell direct to the hospital customer, Hoechst and Roerig. According to Redbook price figures, the new SmithKline prices put Cefizox below its three third generation cephalosporin competitors on a per gram comparison. Through September, Redbook lists the following price to pharmacists for the other third generation entries: Roerig's Cefobid (cefoperazone), $9.50; Hoechst Roussel's Claforan (cefotaxime), $9.18; Lilly's Moxam (moxalactam), $12.21. The published cephalosporin prices, however, realistically represent price ceilings; most cephalosporin business is done on a bid basis. SmithKline's lowest cost pricing strategy for Cefizox highlights the multisource nature of the hospital cephalosporin business, where the competition between brands mimics generic competition in the retail side. The firm told buyers in the Nov. 1 letter that it "will now net price" all three of its cephalosporin products Cefizox, Ancef (cefazolin sodium), and Monocid (cefonocid sodium). The firm added that "consequently we will no longer publish a list price." The Cefizox safety profile "is unsurpassed in its class," SmithKlin told MDs in an Oct. 31 announcement of the price change. "Cefizox has had no related G.I. bleeding as reported with Moxam and Cefobid." In addition, "with cost-effective products in th first-, second- and third- generation classes, SK&F guarantees(END ITALICS) it will continue rational and appropriate promotional efforts for all its cephalosporins," the firm advised MDs. The firm also announced the trade price for pre-mixed Cefizox packaged in Baxter-Travenol's MINI-BAG plastic containers. The pre-mix was approved by FDA in early October. Ceftizoxime sodium injection in 5% dextrose in plastic containers is: $260.64 for 1 gm/50 ml, 24's; $439.92 for 2 gm/50 ml, 24's.The company said that Cefizox pre-mix will be handled like pre-mix Ancef, the other SK&F cephalosporin available in the MINI-BAG containers. "We will use the same special drop-ship program that utilizes the whslr. distribution system." Under the system, orders go directly to Baxter, which distributes the product, and hospitals will designate a S&F whslr. for billing purposes.

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