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An Amazon-like model for creating an open market for wholesalers to reach customers
Launched yesterday (Nov. 14), EzriRx.com is intended to be a portal for wholesalers to present up-to-date pricing and availability information to pharmacy purchasers. The same-named company, based in Lakewood, NJ, was founded by a group of programmers and business executives not currently in the wholesaling business; it’s essentially a web-based IT company. Ezriel Green, founder and president, says that the site has been prepopulated with 170,000 NDC codes, and that 10 wholesalers have already signed on, filling some 10-15,000 of those NDC slots with pricing and availability. And while the initial target is independent pharmacies, he has ambitions for attracting closed-door pharmacies and even chains.
Besides the Big Three wholesalers, and the 30-odd full-line wholesalers who are members of the Healthcare Distribution Alliance, there are dozens if not hundreds of wholesalers that operate regionally or for specialized distribution. But all chain pharmacies and most independents have prime vendor relationships with the full-line wholesalers, so what’s the business opportunity? Green says that his company’s research shows that independents typically fill 80-85% of their orders through their prime vendor, and, depending on how aggressively each pharmacy wants to test market prices, research pricing availability online or through (typically) the stack of faxes they receive from secondary wholesalers. “There are a variety of ways for this information to be exchanged; what we’re doing is making it more efficient for the pharmacy purchaser, and providing better ways to obtain credit or clear the transaction through banking systems,” he says. EzriRx will collect a transaction fee from wholesalers on each order.
Green says that both wholesalers and pharmacies are checked out for state and federal licenses prior to registering within the portal. EzriRx doesn’t fill orders itself, and Green says that even the financial details necessary for obtaining credit are not stored on the site, but merely conveyed to wholesalers from their potential customers. Shipment is arranged by the wholesaler, although the portal provides a means of connecting buyers’ and sellers’ FedEx or UPS accounts.
Pharmacies have numerous options these days besides the prime vendor; there are group purchasing organizations for pharmacies (as there are for healthcare providers); there is some direct distribution going on with specialty pharmaceuticals and specialty pharmacies; and the bigger wholesalers compete with each other for a variety of methods of consolidating purchasing and offering discounts. Green says that price variability can be as high as 50% for some pharmaceuticals—and now independent pharmacies will have a streamlined way to locate the lowest prices.