GENERIC SHAKEOUT COULD BENEFIT WHOLESALERS: DUPLICATIVE INVENTORY A PROBLEM

The shakeup underway in the generic drug industry may indirectly benefit drug wholesalers by reducing the number of suppliers and cutting back on large inventory demands. National Wholesale Druggist Association Chairman 1988-1989 Barry Krelitz commented on the high costs of carrying a number of generic products at the association's annual meeting on Oct. 15. Discussing the significance of third-party generic incentive programs, Krelitz pointed out that "while dollar sales of generic drugs may represent less that 10% of a wholesaler's prescription drug movement, it can constitute over 40% of prescription stockkeeping units." It is a challenge to the distribution system, Krelitz declared, "to convince managed care organizations to reduce the amount of duplication of generic products in their programs, while striving for the best health care outcome for the patient." While the NWDA chairman suggested working with managed care organizations to cut back on the number of generic stock required for cost reasons, the ongoing investigations by FDA, Congress and the Maryland U.S. Attorney may have the same effect for different purposes. Some of the larger branded lines are making the first moves in renewed promotion campaigns based on the quality and corporate stability themes. Lederle, for example, is undertaking a survey through Hill & Knowlton and the Gallop Poll to determine current attitudes toward the quality of generic drug products. The quality issue could be a potent one with elderly consumers on chronic medications. Michael Farmer, executive VP with a California demographic consulting firm called Age Wave, Inc., told an NWDA annual meeting seminar that his firm's research indicates that the senior market is a quality-driven segment. "Quality counts; they are willing to pay more, but they are sophisticated consumers -- the most sophisticated consumers in America," Farmer said.