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Executive Summary

Mail-order pharmacy sales grew 37% in 1991 to $2.9 bil. and almost 6% of the total pharmaceutical business as tracked by the IMS/DDD marketplace audit. Calling the 1991 growth pattern "consistent" with 1990, IMS VP-Field Operations Doug Long told a March 10 session of the National Wholesale Druggist Association Marketing Conference that mail-order pharmacy growth is beginning to level off a bit after big jumps two years ago, when it was up 57% in dollar growth in one year. Similarly, Pharmaceutical Data Services puts the mail-order segment of the retail prescription drug trade at about 5%-6% of total prescriptions. PDS VP-Marketing/Product Development Patrick Miller predicted that the rapid growth will continue for another year and then he predicts an "abatement" of the growth. IMS' Long sees a renewed challenge to mail order from chains. "What I think you'll see in the mail order segment in the next couple of years," Long predicted, "is the chains are going to jump back in this marketplace." Chains were the largest volume category in the DDD tracking for 1991 with sales of $12.34 bil., up 17%. Clinics, including dialysis centers, were the fastest growing segment, up 43% to $1.57 bil., (see box below) presumably on the back of the increased use of specialty products such as Amgen's Epogen. PDS's Miller cited the reduced discounts by manufacturers and marketers to the private sector as one factor increasing competition for mail order. "As the industry moves increasingly towards a one-price policy," Miller said, "volume purchasers do not get any price advantages." Miller also credited retail pharmacy with narrowing the price difference between mail order and retail prescriptions. "Currently the cost per patient in prescription reimbursement plans as handled by major medical programs is already significantly lower than the cost per patient when mail order is used," Miller maintained. "Cost per unit (retail pharmacies v. mail order) are essentially the same. The cost-containment pressures operating in prescription drugs are beginning to eliminate the cost advantages that mail order sought to obtain through bulk purchases," he told NWDA.

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