E-drug: Retail mark-up of pharmaceuticals (cont)
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Towards the end of 2002, we asked for information about retail
markups of medicines over the counter. There had been a request for
information that would help the pharmaceutical sector in a developing
country standardise the retail markups. The response was very
helpful and we would like to thank all e-druggers who responded.
There had already been discussion that can be accessed on e-drug
archives about prices of medicines but this recent discussion was
more specific.
In some cases the situation is confused because a dispensing fee is
charged, either above the markup or instead. Some answers only
covered dispensing.
There were several responses that covered other factors that
influenced the retail price of medicines.
Below are the collated responses in no particular order.
Beverley Snell
e-drug co-moderator
Sierra Leone
Many years ago, I worked as a pharmacist for a pharmaceutical subsidiary of
an international company in Sierra Leone. Our company had both a wholesale
and retail department. We however also purchased pharmaceuticals(for which
we were not sole distributors) from other local companies. The retail
mark-up rule was: (1) Own products 33% (2)Third party products 25%.
I never really got to understand the rationale of this scheme and not
promoting it in anyway but hope that this fact would be useful information
for our inquiring colleagues.
Murtada M Sesay
UNICEF Supply Division
Copenhagen
Denmark
msesay@unicef.org
South Africa
In South Africa there are moves afoot to change the Retail Mark up to
essentially cost plus 10% (to cover storage & holding etc), but that the
revenue on medicines are provided in the form of a professional fee based on
the advise and practices supplied by the pharmacist. In short the drive is
to remove markups on medicines and move towards payment for services
rendered.
However the current status quo is a 50% mark up that often is discounted for
cash, and is definitely discounted by the medical aid schemes ranging from
20% to 35% depending on the scheme and from whom the medicines are supplied.
The reality is that once all the discounts are totalled up, very seldom will
one come above a ten percent mark up anyway. (Has resulted in the closure
of numerous pharmacies in the past years.)
Hope this answers your question in part.
Shawn Bull
"E.G. USHER PHARMACY" <H993830@dohho.kzntl.gov.za>
Netherlands
This is and remains a difficult field, because markups basically depend
on where you get the maximum of your profits from. Pharmacies in NL
sell basically only meds, and no other stuff. But we sell a lot per
pharmacy (500 prescription items/day in the average pharmacy serving
11000 patients). Markup on Non prescription meds vary, usually 50%
on the cheaper ones to 30% on the expensive drugs. I do not know the
average.
I also have not much knowledge about other countries, but possibly the
Community Pharmacy Section of FIP could be of help. Please contact
their secretary, Bente Frokjaer at BF@Pharmakon.dk.
Hope this helps,
Foppe van Mil
"J.W.F. van Mil" <jwfvmil@wxs.nl>
Grenada
Replying to your query on E-Drug discussion group; please note that
in Grenada the wholesalers are allowed a maximum mark-up of 20% and
the retailers 40%.
Kester Cyrus
Pharmacy Inspector
Ministry of Health
Ministerial Complex
Botanical Gardens
St. George's
GRENADA
Tel: 473 440-2962
Fax: 473 440-4127
"Kester Cyrus" <kesterc@chemist.com>
Australia
In Australia, the markup pharmacists receive for the dispensing of
pharmaceuticals subsidised by the Government is as follows:
for items with a drug price of $180.00 or less, the mark-up is 10%;
for items priced between $180.00 and $450.00 there is a flat $18.00
markup; and
for items priced over $450.00, the mark-up is 4%
In addition, pharmacists receive a dispensing fee of $4.62 per item.
Regards
Alan
Alan.Stevens@hic.gov.au
Uganda
Though sometimes relevant authorities may want to fix retail mark-ups
for pharmaceuticals and medical supplies, the major factor that
influences price is supply, if we kept demand a constant.
Leading wholesalers always recommend a certain markup for retail
pharmacies, while our drug regulatory authority developed a national
price indicator for wholesaling. The authority has not yet developed
any for retailing. However, am not sure whether or not the wholesale
price indicator has influenced practice.
On one hand issues such as location of pharmacy, expenses on rent,
utilities like electricity, water, telephone, fax bills, salaries--do
affect mark-ups. But these are highly elusive. They are beyond our
control. In Uganda, where we have many pharmacies, competition is
driving many to cut mark-ups all the time in a bid to hook the other
patient.
On the other hand, in medical fields where there are many
specialists, the consultation charges are lower than in those where
there are few.
Therefore any bid to have mark-ups reduced in any sector should apply
the economic principle of supply and demand.
George Kibumba,
Teaching Assistant, Clinical Pharmacy, Dept of Pharmacy
Makerere University, P.O.BOX 7072, KAMPALA, UGANDA
e-mail:kibumba@yahoo.com
Kenya
Until recently, Kenya had a fixed retail markup of 33 1/3 % (the
wholesale mark up from the fatory was 25%). This has now been
liberated and the
market is "free for all" There is a general drop in prices but most
retailers are now doubling as wholesalers and selling drugs at 25% markup
ex factory (i.e selling retail at trade price). This definitely undercuts
those who are operating purely as retail chemists
Mary Ojoo <mojoo@gerties.org>
Lithuania
Wholesale price Price coeficient Correlation sum Public price
Up to 8,19 1.22 0.00 Lt BxC
8,19-10 1.80 Lt B+D
10,01-15,28 1.18 0.00 Lt BxC
15,29-25 2.75 Lt B+D
25,01-27,28 1.11 0.00 Lt BxC
27,29-75 3.00 Lt B+D
75,01-500 1.04 0.00 Lt BxC
More than 500 20.00 Lt B+D
"Liudas Kanapienis" <liudas.kanapienis@sam.lt>
Denmark
I attach a table from the LIF publication of the Danish Pharma industry (
www.lifdk.dk go to publications and then Tal og Data) it is in danish only
but understandable ( I hope); data from 1997 from EFPIA, the European
Pharma industry ( still largely relevant , at least it gives some
idea)
For looking at the remuneration of the pharmacists, often these margin
structures are not so simple anymore, as they may be complemented or
replaced by dispensing fees, in other words, lower margins may point at
dispensing fees ( like UK). As you can see, large differences among pretty
similar countries.
The other issues is bonuses and rebates that pharmacies get from
manufacturers and distributors : the higher the ex-factory price, the more
room for rebates ( that largely end up in the pharmacy; some governments
use "clawback" mechanisms to get part of rebates back from the pharmacies.
Also many countries start using degressive margins ( the lower the price the
higher the % profit ) in order to provide incentives for generics
dispensing.
Hope that helps ( although somewhat difficult to send it around as a table?)
[The table covers European countries. The majority of markups fall
between 20 and 40%. I can send the table directly to anyone who is
interested. BS moderator]
Kees de Joncheere
Regional Adviser for Pharmaceuticals and Technology
WHO Regional office for Europe
8 Scherfigsvej
2100 Copenhagen, Denmark
tel. 45-39171432/1528
fax 45-39171855
email cjo@who.dk
http://www.euro.who.int/
From Libby Levison - Boston University
As you might recall, I posted a request a couple of months ago about
wholesale and retail markup on pharmaceuticals. The data is for a
paper I am finishing up with Richard Laing on the hidden costs of
procuring pharmaceuticals. I expect the entire paper to be finished
by the New Year, and we'll post it to the Web in January.
As I'm sure you know, hidden costs -- import tariffs, taxes,
wholesale and retail markups, storage, clearance & freight and
procurement method -- can more than double the manufacturer's price.
I'm attaching a table from the paper that has the markup data. The
data from South Africa, Nepal and Mauritius arrived in response to my
E-Drug message. Note that these numbers do not take into account
discounts and rebates; that data was simply too difficult to access.
[The table referred to can be sent direct to anyone who is interested. BS]
Libby Levison
libby@theplateau.com
llevison@bu.edu
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