The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The private Bahamian pharmaceutical industry will have to “eat a significant loss” on existing National Prescription Drug Plan inventories after the National Insurance Board (NIB) - virtually overnight - changed the scheme’s pricing by up to 40 per cent.

Tribune Business sources in the industry, speaking on condition of anonymity, said the absence of planning and co-ordination meant they would have to sell existing, higher-priced drug inventories to consumers at the new, lower NIB prices.

As a result, both pharmacy wholesalers and retailers will have to absorb the losses incurred on existing inventories themselves, until they are exhausted by National Prescription Drug Plan (NPDP) customers.

No industry participants were willing to speak ‘on the record’, but an e-mail sent out by Gary Cash, of Lowe’s Wholesale Drug Agency, confirmed that its retail clients would not receive “credit” for older, high-priced inventory already supplied.

“It has been brought to our attention that a new NIB NPDP contract will soon be implemented,” Mr Cash wrote in the e-mail obtained by Tribune Business.

“Please note that our Accounts Department is kindly requesting all existing NIB accounts be brought up to date before new NIB contracted items may be invoiced.

“Moving forward, all NIB accounts should be brought current every two weeks as originally agreed. Also, please be aware that unless prior arrangements have been made, products purchased under previous contract cannot be returned for credit once the new contract is in effect.”

One doctor told Tribune Business that a pharmacist colleague of his was “very perturbed” by the sudden changes to “NIB”s formulary and prices”.

The pharmacist had called both his wholesale supplier and NIB, with each pointing the figure at the other for failing to inform him of the upcoming changes earlier.

“A lot of the prices went down for what pharmacists can charge under the NPDP,” the doctor said. “They are now left with a lot of stock they bought at, say $10, and can only sell it at $5, so they are going to be selling it at a loss.”

Tribune Business contacts in the pharmaceutical industry confirmed that the price changes took effect at midnight last night, even though some in the industry only received the e-mail from NIB yesterday.

“No notice; too bad; suck it up,” was how the doctor surmised NIB’s attitude. “This is so egregious. It hurts.”

One senior pharmaceutical executive told Tribune Business that, in some cases, the NIB “bid price” for prescription drugs had decreased by up to 40 per cent compared to the previous contract.

They attributed the reductions to manufacturers, such as Novartis and GSK, reducing prices so their ‘branded’ drugs could better compete with the lower-cost ‘generics’ that are available on the market.

“You have to eat that 40 per cent because wholesalers are not crediting those products back,” the executive said, confirming that wholesalers would be affected just as much as retailers.

“What really should have happened is that this needed to be co-ordinated,” they added. “The manufacturers, wholesalers and should provide stock levels of older tender items, and then provide the availability of new items.

“A transition should take place over a 30-day period where you wind down your inventory. It results in some level of out-of-stock, but this was never done, never entertained.”

The executive suggested that NIB needed more pharmaceutical industry experience in the management of the NPDP, especially persons who understood procurement and supply chain management associated with social programmes.

“It’s been done in a really impromptu way,” they told Tribune Business. “Everybody has to eat it. It have inventory that has now lost value.

“If this was co-ordinated it could have reduced that significantly and less hardship would have been felt. It’s all being done very hastily, and there is no concern for private sector parties and private providers involved in a social health scheme.

“Everything is happening very hastily. There had been several extensions of the current NIB tender over the past several years, and then there was this morning’s e-mail notice that the new tender is going into effect at midnight tonight without any notice or consultation. The disregard is very concerning.”

The pharmaceutical industry and outside observers will likely be wondering whether this is taste of the administrative efficiency to come when the Government implements its National Health Insurance (NHI) scheme.

These fears were articulated in an August 2015 NHI position paper developed by members of the Bahamas Pharmaceutical Association, which said: “The relationship between NHI and participating pharmacies should not be one of a ‘Boss versus subordinate’, nor should it be a dictatorial ‘take it or leave it’ approach, as was articulated at the onset of the [NPDP] six years ago.”

The NPDP’s membership more than doubled by 2013, growing rapidly from its initial 11,040 in 2010 to just over 23,000. Programme costs rose to $9.5 million from $1.2 million over that same period.