Poll: What are your thoughts on direct supply?

delivery van wholesaler

The Guild is lobbying the government about the “extremely worrying” decision for AstraZeneca and Amgen to go direct with some of their medicines

Amgen has recently announced it will be directly distributing its osteoporosis biologic Prolia (denosumab) from 1 December.

“Amgen will be providing guidance and support to community pharmacies over the coming weeks so they can smoothly make this transition to the new distribution model for Prolia,” Amgen said in a statement.

“The efficiencies provided by this new model will enable Amgen to support community pharmacy through the provision of in-pharmacy customer programs, the first of which will be launching soon.

“Pharmacists play a very important role in the management of patients with osteoporosis, in addition to a patient’s GP, and Amgen recognises community pharmacy as a key partner for the delivery of in-pharmacy customer programs that will improve patient engagement and compliance.”

Last month AstraZeneca also revealed that it would exclusively distribute nine product ranges products direct to pharmacies, effective from 1 November.

The company said it was “making this change so AstraZeneca can monitor supply and demand for these specialised products more closely, respond to market need with greater speed and accuracy and improve efficiencies”.

Both Amgen and AstraZeneca have said they would be using DHL to deliver its medicines, via its existing direct to pharmacy distribution service, used since 2012 for Pfizer Direct.

Before these most recent announcements, Pfizer Australia was the only major pharmaceutical manufacturer in the country to use a direct distribution model.

Pfizer Direct was introduced in 2007 and became Pfizer Australia’s exclusive retail distribution channel in January 2011.

NSW Guild President David Heffernan has said Guild leaders are “in a fury” over Amgen’s decision.

“Members are furious – they do not like the decision. You can understand why members see it as a cynical attempt to bypass the PBS in order to extract more profit from the consumer – you can’t blame them for feeling that way,” he told AJP.

“The PBS was designed for access and affordability.”

Guild National President George Tambassis says he has “personally expressed the Guild’s serious concerns to the CEOs of both companies about the issues and flow on effects of their respective decisions on community pharmacies, but have not had a satisfactory response.

“The Guild is working closely with the Federal Government on this extremely worrying chain of events. Health Minister Greg Hunt has been receptive and understands this issue will affect our pharmacies, the supply chain and ultimately our patients.

“I want to be perfectly clear on this point: these companies are shifting to exclusive direct supply for their own commercial benefit. Any pharmacy programs they may choose to promote as part of the change are ancillary to that primary purpose.”

The Guild says exclusive direct supply creates many issues, including:

  • Lack of storage capacity in our fridges to allow for large orders to avoid delivery fees
  • Cashflow impact of carrying larger amounts of stock
  • Delivery lag times
  • Different order cut-off times
  • Increased workload dealing with multiple suppliers
  • No certainty that CSO delivery standards will be adhered to
  • Increased complexity of ordering

“In summary this change increases the costs for community pharmacies and undermines the CSO supply chain,” says Mr Tambassis.

Meanwhile the Interim Report of the Review of Pharmacy Remuneration and Regulation has suggested the removal of the CSO, adding that the direct supply model shows the distribution of PBS-listed medicines can maintain a “generally satisfactory standard” without government regulation.

A submission by business consultant and industry analyst Michael Rhodes to a Senate Inquiry, which is looking into how red tape affects the pharmacy sector, also targets the CSO as a “$200M waste of money that funds inefficiency in the wholesaler supply chain under the auspices of guaranteeing supply mainly to remote or regional pharmacies.

“If the government wants to reduce red tape, remove the CSO and divert the funds to innovation which a) tracks the supply chain demand and supply of all PBS medicines and b) ensures digitisation of the consultation to collection process within the industry,” says the submission.

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  1. Jarrod McMaugh

    Exclusive direct supply is the biggest issue. Sure, have direct supply if you like, but don’t then prevent it from being sold through others. That’s anti-competitive.

    That’s like a popular soft drink deciding they won’t sell through corner stores, only through supermarkets.

  2. Anne Todd

    I agree Jarrod, in the good old days late last century you had a direct account with some suppliers (A&H) for example and purchased a gross or two of ventolin etc monthly but were confident you could still by less common lines or top up if you ran out at the usual wholesaler.
    Or you could choose to buy just from your main wholesaler and use more of a “just in time”ordering system keeping less stock in reserve depending on your storeroom capacity.
    But being forced into ordering direct is a pain especially when combined with high cost drugs and credit card auto payment methods and any delay in GST/PBS refunds. Must be hellish on the budget juggling even if it is good for the flying points.

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