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NAPM LOSES SIX MEMBER COMPANIES AFTER ABORTED MERGER

Executive Summary

NAPM LOSES SIX MEMBER COMPANIES AFTER ABORTED MERGER with the Generic Pharmaceutical Industry Association. Biocraft, Par parent Pharmaceutical Resources, Rugby-Darby, Schein and Zenith, previously members of both associations, withdrew from the National Association of Pharmaceutical Manufacturers. In addition, UDL, which belonged to NAPM only, has quit the association and applied for membership in GPIA. At a March 4 meeting in Newark, N.J., representatives from member companies of both generic drug organizations agreed to a set of principles for a merger. Attendees agreed to refer the principles to their respective associations' boards of directors for final approval. GPIA's board endorsed the merger on March 10; NAPM rejected it on March 12. NAPM said it rejected some details of the merger that were minor but involved changes reportedly proposed by GPIA after the general principles were agreed to at the March 4 meeting. NAPM consequently issued a counterproposal, which GPIA rejected. Both sides agree that the merger, an idea the two associations have flirted with for two years, is dead for the foreseeable future. They also agree that the crucial element that undermined the merger involved the staffing structure and the day-to-day operations of the newly formed association. The merged association was to be headed by GPIA President Dee Fensterer, and NAPM President Robert Milanese was to be second in command. UDL President Michael Reicher, who was chairman of NAPM until he resigned, was to serve for one year as the new association's first chairman. GPIA founder and Chairman William Haddad was to be permanent vice chairman. In a March 19 statement, NAPM said that GPIA "demanded that the responsibility of the senior staff members be not to the chairman and the board of directors [of the merged organization] but only to the board of directors. The other demand being that their president Dee Fensterer be the senior president with the NAPM's Bob Milanese being the subordinate president and that he report to the board of directors." The NAPM board found this part of the proposal "unacceptable." There is a history of hard feelings between NAPM and GPIA's founder. Haddad lured several of NAPM's largest companies to form GPIA during the height of the negotiations leading to the watershed Waxman/Hatch legislation of 1984, when he and NAPM General Counsel Milton Bass had philosophical and strategic differences over the issues involved in the legislation. Ironically, the associations are breaking again just when Congress is preparing to launch into health care reform legislation which could become the only endeavor since 1984 to match or exceed in importance to the industry the setting of parameters for generic drug approvals and for brandname drug patent extensions. In a March 17 resignation letter to NAPM, Reicher urged the board of directors "to work with [the National Pharmaceutical Alliance] and GPIA so that our industry, even though it is not united, can speak with one voice." Reicher added that he "especially will miss" working with Bass, whom he called "the father of our industry," and Legislative Counsel Jim Rubin, who, he said, "almost single-handedly helped us develop a legislation action group that truly made a difference." Due to UDL's withdrawal from NAPM and Reicher's resignation as chairman, the association's Vice Chairman Morton Katz becomes chairman. Katz is president of Clay Park Labs.

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