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Former Deputy Commissioner of FDA Highlights Value of Small Distributors

WASHINGTON, Dec. 7, 2011 /PRNewswire/ -- Dr. Scott Gottlieb, the former deputy commissioner for medical and scientific affairs with the U.S. Food and Drug Administration, testified before the U.S. Senate Committee on Finance that small distributors play an important role in helping reallocate drugs to ensure that patients get the treatment they need. The committee hearing centered on how to address the drug shortage issues currently facing the nation.

A practicing physician and a resident fellow at the American Enterprise Institute, Gottlieb's prepared statements noted:

"Some also blame these shortages on what they refer to as 'manipulation' of drug middlemen or so-called 'gray market' distributors. However unpleasant, the markups charged by small distributors often reflect their higher costs, and aren't simply profiteering as has been alleged. ... Many small distributors routinely provide critical-need products to hospitals that cannot otherwise secure these same products from their primary wholesalers. This is especially important in rural areas. Moreover, small and independent distributors typically must purchase products at prices above the Wholesale Acquisition Costs. They cannot access drugs at the lower prices that GPOs negotiate with manufacturers. As a result, the difference between the higher prices charged by small distributors and those typically provided to hospitals by GPOs can often be misleading. What might appear as an enormously priced drug being offered by a small distributor may actually reflect an appropriate mark-up."

During the hearing, discussion focused on whether the FDA should set up a clearinghouse of scarce drugs for health care providers to help circumvent potential bottlenecks in distribution. Gottlieb pointed out that this is a role small distributors already play in the market.

"I would just add to that a lot of the reallocation that does take place in the market place is the small distributors reallocating product, and often times they have to acquire the product at a much higher price than what GPO might acquire it at," Gottlieb said. "I raise this just because there has been a lot of discussion about the so-called gray market and profiteering, but a lot of the small distributors who are acquiring the drugs at higher prices – and significantly higher prices – and then selling obviously them at higher prices as well, are performing an important market-clearing function."

Gottlieb's comments highlight the vital role small distributors play in health care – a role on which the National Coalition of Pharmaceutical Distributors has been working to educate people for several months.

About NCPD

The National Coalition of Pharmaceutical Distributors is a national trade association representing the wellbeing and interests of the independent and specialty pharmaceutical distribution industry. NCPD is dedicated to securing the pharmaceutical supply chain and is aggressively working to help enact federal legislation to revamp the nation's chain of custody laws for prescription pharmaceutical products.

SOURCE National Coalition of Pharmaceutical Distributors
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