NWDA adopts dues cap; Cardinal rejoins distribution association.

NWDA ADOPTS DUES CAP, CREATES PERMANENT BOARD SEATS FOR LARGEST MEMBERS as part of an "overhaul of its mission statement, bylaws and dues structure," the National Wholesale Druggists Association announced July 11. Dues, which are calculated based upon sales, would not increase on amounts above $2.38 bil. in sales. Active association members with that level of sales also will receive permanent seats on the board of directors.

The structural changes and accompanying focus on distribution issues sufficed to bring Cardinal Health back into the wholesaler association.

Cardinal left NWDA in late 1996 over concerns that some NWDA projects no longer served its best corporate interest as the company continued to expand into new fields. While at the forefront of the movement of wholesalers into new businesses, Cardinal was not the only NWDA member to express such concerns, leading the NWDA board to appoint an executive committee to examine the focus of the association and create the new structure.

Four NWDA members currently meet the $2.38 bil. threshold for a permanent board seat: McKesson, Bergen Brunswig, Cardinal and Amerisource. The companies will determine their own representative to the board. The new members will formally be elected to join NWDA's current 10-member board at the active member congress Oct. 31, during the association's annual meeting. The number of permanent seats will fluctuate with the number of members reaching the sales threshold.

Dues for the largest members essentially will be capped at approximately $65,000 annually. NWDA dues for active member companies are calculated as a percentage of sales in a series of defined brackets. A minimum of $2,500 covers sales of up to $20 mil. A fee of $60 per million dollars in sales is levied on sales of $21 mil. to $300 mil., dropping to $40 per million for $301 mil. to $500 mil. in sales and $20 per million for sales over $500 mil. up to the cap at $2.38 bil. An "administrative charge per distribution center" will be "eliminated," NWDA added, and the dues structure will provide "incentives for increased participation in NWDA meetings and surveys."

Consolidation in the industry is addressed by another bylaws change, which "provides budget continuity by extending an acquired member company's individual dues assessment one additional year before consolidating it into the dues schedule of its new parent company." NWDA recently lost its fifth largest member, when FoxMeyer filed for bankruptcy and its assets were acquired by McKesson.

NWDA also announced a new mission statement, directing the association to "assist its members in developing the best distribution system for pharmaceutical and health-related products and information." Previously, NWDA's mission was to "assist its membership in enhancing their profitability and productivity in marketing and distributing health and consumer products and services consistent with the public interest."

Cardinal verbally alerted NWDA that it would rejoin the association the first week of July, following up with formal paperwork a week later. NWDA had agreed to the dues restructuring at a board meeting May 9; the bylaws amendments were approved this month.

As part of the re-focusing of NWDA on distribution, the association's "Strategic Distribution Initiative" will be "a central focus," NWDA declared. The initiative "places emphasis on bar coding, electronic data interchange and activity-based costing" and is studying redundancies in the supply chain, NWDA said. Government and regulatory affairs "will also continue to be a key focus."

An earlier high-profile NWDA initiative outside the distribution field, the Concept Pharmacy project, will come to what the association called its logical conclusion with a wrap-up at the annual meeting in October. The Concept Pharmacy, a project undertaken with the American Pharmaceutical Association, was designed to raise awareness among pharmacists and wholesalers of the possibilities associated with pharmaceutical care through depictions of specific practices at innovator pharmacies and an annotated bibliography of studies of economic issues of pharmaceutical care ("The Pink Sheet" Nov. 6, 1995, p. 14).

The Concept Pharmacy exhibit debuted at the APhA annual meeting in March 1996. Cardinal acquired the Medicine Shoppe pharmacy franchise in late 1995. The wholesaler explained at the time of the acquisition that it would use Medicine Shoppe to develop programs it could roll out to its other pharmacy customers ("The Pink Sheet" Sept. 4, 1995, p. 7).

NWDA's shift in focus likely will be accompanied by some personnel changes on the board as firms replace representatives with responsibility for varied businesses with the senior executive responsible for distribution activities. Bindley Western already has adopted this philosophy for choosing its representative: Keith Burks, Bindley Western Drug Company president and chief operating officer, sits on the NWDA board, not corporate Chairman Bill Bindley. A potential change along those lines could feature a shift in Bergen Brunswig's board representative from CEO Donald Roden, currently NWDA board vice chairman with a term expiring in 1999, to someone with more focus on the distribution business, such as Bergen Brunswig Drug Company President Brent Martini.

The office of vice chairman itself ultimately will be eliminated, to be replaced by the position of immediate past chairman. NWDA also plans to abandon its Senior Council of past chairmen "as so few senior councilmen are active in the business today."