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MFRS. SHOULD DEVELOP AUTOMATIC DATA HANDLING FOR HOSPITAL CHARGE-BACKS TO REDUCE 'FRICTION' WITH WHSLRS. -- CYANAMID's BOWMAN RECOMMENDS AT NWDA MEETING

Executive Summary

Drug mfrs. should invest in the development of automatic data handling systems to facilitate the hospital charge-back business they are doing with drug whslrs., NWDA Associate Members Advisory Cmte. Chairman Jack Bowman told the NWDA annual meeting. In discussing ways to reduce what he called the "friction" between mfrs. and whslrs. over the charge-back business, Bowman said that both sides, and particularly the manufacturing side, need to speed up their development of automated electronic transmission and handling of this data. Problems occur most often when someone tries to handle charge-backs on a manual basis. The amount of data and the complexity of it simply leads to too much trouble." Bowman added that "as mfrs., it is hard to divert data processing development resources for systems like this, but I think that management should be encouraging faster development than has been happening so far." Noting that "the charge-back business has become vital for a lot of us," Bowman pointed out that disputes and delays over charge-backs show that "it is an area that we haven't worked the kinks out of yet." The Cyanamid exec observed: "It is easy to see what the root cause of the friction in charge-backs is. It is the fact that this whole phenomenon has grown so rapidly. A few years ago there just weren't any charge-back systems. Now, nearly all whslrs. and mfrs. have some kind of involvement with them." Whslrs. Should Supply Services That Independent Pharmacies Are Seeking Through Retail Buying Groups, DuBow Says Although the charge-back programs have been a developing business, "only now are we beginning to evolve uniform systematic ways of handling charge-backs throughout the industry." Noting that previously systems have varied from whslr. to whslr. and from mfr. to mfr.," Bowman said that "this variation is a problem." He added that "another problem is that because it has grown so rapidly, top management on both sides really doesn't understand yet how their own actions and policies affect the other side. It is easy for me to set up a system of charge-backs that is good for the mfr. but if it doesn't fit the whslr. very well there is just going to be a lot of hassle." In his discussion of other business issues in the industry, outgoing NWDA Chairman Lawrence Dubow said that whslrs. should be supplying the services that some independent pharmacies are now seeking through the formation of retail buying groups. The formation of buying groups "is a noble effort on the part of retailers and I commend them for it," Dubow declared. "But should we as drug whslrs. allow anyone to charge our customers for a service we should be supplying? Should our customers to paying fees to any organization or any service group for the privilege of buying from us at preferential or deferential prices bid by mfrs?" While he said that he endorsed "the concept of the independent retail pharmacy attempting to improve his purchasing position," Dubow said: "I reject the notion that they have to pay someone else to do what we should be, can be, and will be doing for them. And, I should add, what we have always been doing for them."
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