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NWDA HEALTHCOM (IOS) FUNDRAISING EFFORT TOPS GOAL SET BY NWDA SERVICE CORP. TO LAUNCH THE EDI NETWORK; 186 CONTRIBUTORS INCLUDE LARGEST WHOLESALERS

Executive Summary

NWDA Service Corp.'s list of founders that contributed to the start-up of the Healthcom electronic communications network by Nov. 1 includes 186 drug manufacturers, consumer product companies and wholesalers. The list of companies contributing "fair share" funding for the launch of the electronic data interchange (EDI) network includes 56 wholesalers. All of the major wholesalers, such as McKesson, Bergen Brunswig, FoxMeyer, Alco Health Services and Cardinal Distribution, are participating in the launch of the inter-organizational system (IOS), as are most of the regional wholesalers that make up NWDA membership. However, two of the large regional wholesalers, Commons Brothers and Krelitz, did not sign on by the Nov. 1 deadline. Nearly all of the major pharmaceutical manufacturers and their subsidiaries and all of the larger generic firms have joined the founders group. Syntex and Upjohn are absent from the list. The Founders group is based on separate contracts with NWDA Service Corp, which will administer the network, and therefore includes corporations as well as marketing divisions of some drug manufacturers and individual distribution centers of some wholesalers. NWDA estimated that the founders group represents "in excess of 90%" of the industry's current EDI volume. In addition, NWDA surpassed its funding goal to cover the costs of launching the network, NWDA Services Corp. VP-IOS Development David Prins reported. Founders members will receive priority status in getting set up on Healthcom. In addition, they will receive repayment of their initial investment in the system plus a premium capped at 50% of their initial contribution if the network turns a profit. NWDA Service Corp. was set up by the National Wholesale Druggists' Association as an arms length, for profit business. Founders members also are eligible to select representatives to serve on the Healthcom applications steering committee and on the technical standards committee and will vote to elect the application steering committee membership. NWDA Services Corp. is offering incentives to those companies that did not contribute before Nov. 1, but still want to participate in the network. Organizations that contribute "fair share" funding based on expected use of the network by Feb. 2 can participate in the selection of the committees that will oversee Healthcom but will not be eligible for a possible return on their contribution. Organizations are not required to contribute funding to the network's start-up costs in order to make use of the network, Prins emphasized. The technical standards committee consists of ten members, evenly divided between manufacturers and wholesalers. The committee is co-chaired by Chris Gleason from FoxMeyer and Margaret Hresko from SmithKline Beecham. Alco, Cardinal, F. Dohmen and Bergen Brunswig are represented on the committee as are Searle, Miles, and J&J Consumer. A fifth member representing a manufacturer will be added. Similarly, the NWDA Services Corp. board is evenly divided between wholesalers and manufacturers. The applications steering committee also will be balanced, Prins noted. The launch of the Healthcom system will occur in two stages. Prins described the first phase, expected to be completed by mid- January, as "initialization" during which communication capabilities between trading partners will be set up. The second phase of the Healthcom launch, Prins said, will begin in January with many companies using the new network in addition to their current communications mode. Prins said that he expects the second stage of the phase-in to last about 90 days at which time firms will choose what services they will rely on. Currently, 13 manufacturers and wholesalers are using Healthcom as part of the network's shakedown. The design of an item-level database has begun and is on target to be operational by mid-1993, Prins said. NWDA Services Corp. plans to have detailed specs for the database completed by mid-January with programing and testing to follow. NWDA Services Corp. is currently negotiating with a number of firms that deal with large pharmaceutical product databases, including First DataBank and MediSpan for help with the initial data load. Design and set up of the database is targeted for completion in April.
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