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Unformatted text preview: ifies GPO of practice eligibility GPO loads contract into their database and notifies distributor of contract eligibility Distributor flags their database that practice is eligible for contract price Group Purchasing Organizations (2/2)
Practice purchases drug from distributor at contract price Manufacturer pays GPO an administration fee of around 2% Approximately 35% of the practice spend is available under a GPO contract Average oncologist spends around $2.3 million per year in oncology drugs GPO contracts can be a simple straight line discount or include rebates based on volume and market share Community-based oncology is unique in that there is a 1:1 owner relationship between the distributor and GPO Specialty Distributor
Owned by AmerisourceBergen, McKesson, and Private Equity
Specialty Distributor buys a $10,000 drug from manufacturer May receive a 2% prompt pay discount*
*Calculated in ASP May charge manufacturer for distribution services of 0.25% - 3% Specialty Distributor-No GPO Contract
Specialty distributor buys a $10,000 drug from manufacturer
May receive a 2% prompt pay discount (included in ASP calc) May charge manufacturer for distribution services of 0.25% - 3% May apply a markup Specialty Distributor sells the drug to the oncology practice for $10,000 Freight costs – basis points Specialty Distributor w/GPO Contract
Specialty Distributor buys a $10,000 drug from the manufacturer
May receive a 2% prompt pay discount*
* included in ASP calculation May charge manufacturer for distribution services of 0.25% - 3% May apply a mark-up Specialty Distributor sells $10,000 drug to practice at contract price of $9,000 GPO charges manufacturer 2% administration fee Oncology Practice w/GPO Contract
∼ 2000 US based oncology practices ∼ 6,000 community based medical oncologists/hematologists ∼ 17% owned and managed by USON Several large buying consortiums (CCE, OPR) Oncology practice buys drug from Specialty Distributor for $9,000
May receive prompt pay discount May receive distributor rebate May receive a manufacturer rebate Practice is reimbursed by Medicare at ASP + 6%...
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