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American pharmacy: view from outside

O.A. Miroshnik




The author of these lines accordance with the international program "Business for Russia" underwent 4 weeks probation in the USA, town Little Rock, state Arkansas in November 1997.
I hope that author's observations will be interest for readers about the work of American pharmaceutical enterprises. Factors published in this article - received in the results of personal author's talks with the American pharmaceutists. They will not conform the official point of view, but at the same time they are unique, so long as at definite measure they reflect the work of American pharmacies from inside.
At present time in Russia the definite conformities of pharmaceutical business development observe which took place in the USA long ago.


City's pharmacy

A typical American pharmacy has general area about 100 square meters. The main part of the pharmacy is the hall for visitors where in free access there are shelves with prescriptionless drugs and with accompanying goods: toys, souvenirs; congratulation's cards and so on.
Reception drugs are on several shelves finding fence off partition counter of the pharmaceutist's working place. Reserves of prescriptionless drugs keeping on the shelves in hall are 50-60 000 $. However somebody goes seldom at the pharmacy for prescriptionless preparations, they may be sold at any general store. The portion of receptionless selling is not above 10%. The main profit of any pharmacy receives from selling of reception drugs. 100 prescriptions are on sale at the middle pharmacy daily, and gain receipts are about 3000 $. At the large pharmacies often entering the structure of pharmaceutical network are on sale about 600 prescriptions daily.
The heart of the pharmacy is its computer system. Information about each patient entering the pharmacy with a prescription brings in computer. During some seconds with the help of the modem connection by means of the number of insurance, indicated in the reception ascertain connection with the insurance company and elucidate the sum, which must be paid by the patient himself. In the presence of insurance the patient pays about 15% of drugs cost. However, if he takes in many preparations (more than 4 denominations) monthly, the part of them he pays completely. Different kinds of insurance suppose different variants of payment of the reception drugs. About each patient - buyers there is information which preparations he had bought before and which takes at present time, on the grounds of it conclusion of supposed interaction with new prescribed drug are given. The computer gives instruction about prescribed remedy and prints a special label with drug's name, patient's and doctor's name and so on, stuck to personal container, in which tablets are put place, indicated for a patient. The reception drugs are on sale in packing, which contain 100-1000 tablets and than give by the piece in the strict accordance of quantity, prescribed by the doctor. With computer's help realizes:
Take stock of the sold drugs for the insurance companies and instances, controlling reception sale; calculate drugs quantity, sold on prescription of different doctors; conduct marketing analyses and others.
The main particularity of the American pharmacy is absence of reserves of reception remedies. The necessary preparations bring in claim daily and at the end of the working day with the help of modern connection the claim is directed to a distributor, which in obligatory order implements it next day. So, the patient receives reception drugs the day later.
The retail trade addition on receptionless remedies is not limited, on reception drugs, which are paid advantage with the insurance companies the addition is formally 5% + 3$ about the wholesale prices of the firm-distributor. The addition is not enough for the pharmacies therefore the firm-distributor indicates 2 prices in a price-list: normal and with the wholesale rebate. So far as the addition is made from the normal price, the pharmacy may receive necessary for its profitableness profit from reception remedies' selling. In middle the retail addition is about 25-30%. The pharmacy realizes the settling with a supply-firm two times a month approximately with such an interval the pharmacy receives money from the insurance companies. The circulating capital is 100.000 $ which is necessary for functioning of the middle pharmacy.
The staff of a small pharmacy consists of a pharmaceutist and 2-3 technical workers. The pharmaceutist must be at the pharmacy during the whole day because he is responsible for the true distribution of remedies and introduction of necessary information in the computer. The pharmaceutist duties is to answer all the questions interesting the buyers, relatively prescribed drugs as far as possible fix the price of risk of undesirable interactions of the received drugs by the patient. It is not wonderful that the patients buy the drugs at the same pharmacy and how it was said before each of the patients has its own file in the computer.
The work of the pharmaceutist is enough strenuous because he fits to listen to and consult the buyers sometimes on telephone and do it not formally but with the sincere expression of participation and concern on the occasion of each address. Besides, during the whole day he is working with the computer, packing the tablets in personal containers, compiling claim for remedies daily and doing many other things. The pharmaceutist's pay is 4 000 $ monthly, technical workers - 2 000 $ monthly. If a pharmaceutist is an owner of his pharmacy than the sum equals the pay he receives as a profit. Many pharmaceutist fulfill the additional medical services for increasing their income: inoculations against influenza (20 $ for it), biochemical analyses (for example, determination of cholesterol's level), give consultation on deitic feeding and others.
All cities' pharmacies, working with the population are private. They may belong to independent pharmaceutists, pharmacy's network firms of not - pharmaceutical profile (for example, Trade Company Wal-Mart, specialized on goods selling on reduced prices to private clinics. In town Little Rock with the population of 600.00 inhabitants there are about 100 pharmacies. Pharmaceutical fussiness is not profit but relatively stable.
Last years independent pharmaceutists underwent strong competition from the side of the pharmaceutical networks. The pharmaceutical networks belong to retail firms, selling products of feeding, often indicated pharmacies in belonging them supermarkets. Thanks to purchases of large bathes the pharmaceutical networks can establish lower prices on drugs, that fact draws many buyers. In response to that independent pharmaceutists oppose more qualitative service: additional information ensuring, realize pharmaceutical service (inoculations and analyses), and offer large choice of food addition and other.
In the result of that in the independent pharmaceutists form stable "family" circle of buyers.

Hospital pharmacy

The hospital pharmacy is a powerful pharmaceutical enterprise. I give some figures reflected interhospital pharmacy's activity of the universal hospital of Arkansas State, being the largest state medical enterprises.
There are 400 beds in the hospital calculating on hospitalization of 30.000 patients annually. The hospital pharmacy receives from the hospital once a year bearing no interest credit on the sale of 12 millions dollars, which during the year is paid off by means of drugs' delivery to the hospital. Preparations on the sum of 20000- 40000 dollars are on sale at the pharmacy daily.
The drug addition at the hospital pharmacy depends on their price. By the price of 20 $ for production's unit addition is 5 $, by the price of 21-40 $ is 10 dollars by the price of 41-60 dollars - is 15 dollars and by the price of 61 dollars and above - 20 dollars. In middle the addition is above 25%. The profit from given production contains 3 million dollars annually. This money is gone for 85 employees' pay of the pharmacy and enterprises' need. By necessary the inexpensive part of profit may be given to the hospital. Doctors' possibility in the drugs' direction is practically not limited: if necessary they may prescribe and next day receive any registered drug in the USA.
Meanwhile all prescriptions are controlled and done with in reasonable. The cost of drugs maintenance of one hospitalized patient is 500 $ average. The more expensive kind of treatment is transplantation of medulla ossium - demands the drugs on the sum of 125000 - 150000 dollars. The patient according to his reckoning pays 10-15% of full treatment cost; other is paid with insurance company.
If a patient has no insurance, the state may pay its treatment, but beforehand for confirmation the inpatient's insolvent will be produced revision of his factual incomes and all his accumulations. Relatively expensive generics are often used for treatment at the hospital. Doubts relatively, qualities of generics are not arised in doctors so far as all of them are of American origin and correspond of FDA and GMP requirements.
The hospital pharmacy drugs are bought in firm - distributors, seldom in producers. The Medical Council that on the base of the grounds of produced firms' agreement fixes the permissible maximum of the wholesale buy prices for its distributor controls the wholesale buys prices. Produced firms need to go that step so bar as by choice of buying drugs their production receives preference. The wholesale price of the distributors is sometimes higher than maximal permissible agreements for concrete hospital. In that case the distributor supplies drugs on agreement price, and producer compensates for his account the loss to the distributor. It is peculiar pay for priority delivery of drugs to the hospital. The drugs are often bought on the base of tenders by conducting of which the basic criterions of selection of suppliers is company reputation, production's quality and length of its service on the market.



Expressed centralization of wholesale pharmaceutical link is formed in the USA and at present time there are 40 firm-distributors during the whole country. For example, in Arkansas State there is no its firm-distributor and local pharmaceutical enterprises are serviced by 4 distributors, finding in the neighboring states. The leader of pharmaceutical distributors has annual volume if selling of 12 milliards dollars. The marginal profit of the wholesalers is not above 5%. The firm Walsh distribution, where I have been takes the 20th place and its annual turn over is 400 millions dollars.
In the price-list of the firm there are 30 000 denominations (however it is necessary to say that one remedy may be repeated 10 times in different dosage and from different producers). The firm works with 1400 producers. There are 200 people in the firm's staff. Pharmacy's order is fulfilled extraordinarily operatively 200 town's and hospital pharmacies of Arkansas state receive drug already next morning after claim's mounting. It is one of the main demands to distributor; though it is already mentioned above that the town's pharmacies practically has no warehouse reserves of remedies.
In the USA drugs are used, produced only in the USA, in rare cases, in Canada. If European firm, producing original remedies, intends to sell its production in the USA it must preliminary build there its production capacities. Not all the European firms can overcome that barrier and go into American market.
Export and selling in the USA European generics and the more as produced generics in countries of the "third peace" are impossible so far as there sufficiently own resources for substances production and prepare. To the point in the USA there are enormous quantity of pharmaceutical firms turning out generics. The prices of the American generics are in comparison with Russian.
The distinctive peculiarity of American pharmaceutical market is wide utilization principle new remedies, on which in Russia in the best case the mention in scientific survey appears. The prices on new original remedies are very high, but not infrequently above 100 $ for standard packing.
In connection with inculcation of new and expensive remedies in the USA there is a powerful system of its advancement. Usually in one town from each sufficiently large firm-producer work several medical representatives, each of which moves limited number of preparations.
In the center of attention of medical representatives are doctors. Arrival of medical representative to a doctor is obligatory accompanied with transmission him under signed of 20-30 (!) trial examples of publicity drug, souvenirs of medical purpose and other. Each doctor has its own storehouse of the expensive preparations that really utilize for trial treatment or transfer too needy little provided patients. In difference to Russia in section "medical representative - pharmaceutist - doctor" the first has lower material provide and social status. Usually it is a person with a middle (4 years) economic education, getting short medical trening in their firms. Their pay is 2-4 thousands $ monthly and in addition to that they receive once in two years a new inexpensive service car.



Elite of the middle class (in which enters the most part of the countries population) are doctors. The full education and doctors probation lasts 12 years, in the result of that he acquires deep knowledge in the all practically important medicine's aspects "The doctor of family practice" may be given as an example. From 4 till 7 thousands of patients are under of his observation. During the day he receives from 15 till 30 patients of all ages with the most different pathology. In the evening after returning home consultations on telephone or urgent calls may be. The main doctor's purpose renders maximally full help the patient on place. For that in his dispensary there is necessary diagnostic and procedure equipment, drugs. The doctor of family practice fulfils urological and proctological examination, gynecologic inspection, carries out microscopy of the urine, feces, and vaginal smears. He gives help the patients with skin pathology and cerebral disturbances, with joint's lesions and infectious diseases carries out inoculation and makes biopsy. Exactness of diagnosis and effectiveness of treatment is no more than 80-90%. "The doctor of family practice" directs only very complex and hopeless patients to narrow specialists and matter here is not only in professional pride.
The examination's cost lasting from 5 till 30 minutes contains is 40-75 dollars (in middle - 50 $) medico-diagnostic procedures is paid separately. Fibrogastroscopy - 472 $, fibrogastroscopy with biopsy - 573 $, electrocardiogram - 40 $, intravenous infusion - 150 $, spirometry - 55 $, sigmoidoscopy - 165 $, rentgenography - 40-110 $. By doctor's visiting the patient pays from is own pocket the first 10-25 $ the other is transferred with the insurance company that attentively watches for validity of all additional examinations and procedures. The most part of coming for medical help money spend on payment of production expenses, on earnings of several nurses and technical workers. Earning of "doctor of family practice" is enough high and is from 5 till 20 thousands $ monthly. But not only the income's level determines the special position of doctors in a society (many American people have the same earning), and their common medical knowledge and different practical habits on which often depends safety of the most valuable that each people has - his health. Namely those choose the doctors among other professionals and provoke in American people genuine respect and universal honour.