The reported 8471 % markup for drugs in the US

A report released on July 25, 2012 by staff in the US Senate committee on Commerce, Science and Transportation, examined the gray market for prescription drugs and why hospitals are forced to pay extremely high prices for some drugs. One example focuses on the drug Fluorouracil, a chemotherapy drug that was sold to a pharmacy by the distributor, resold into the gray market and made its way through several distributors, each adding its own markup, until the retail markup was 8471 %. In the presence of supply shortages, hospitals are forced to pay such prices. Most of these drugs are generic with few producers given the low margins during earlier years. Given that supply shortages will generate such creative supply chains, what should the US government do to assist ? Will margin guarantees incent manufacturers to maintain capacity ? Should distributors be barred from reselling to other distributors ? Or should margins be regulated ?

About aviyer2010

Professor
This entry was posted in Operations Management, Service Operations, Supply Chain Issues and tagged , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s