Lilly Digest Survey

both faculty and students, in the planning and implementation of modern pharmaceutical services in hospitals, nursing homes, community pharmacies and, above all, in innovative urban area programs where the need is so great. Only through involvement in programs such as MNCHP can we overcome our present inadequacies and prepare pharmacists to serve as well-acclimated members of the patient-care team. To say that we understand the pharmaceuti-

cal needs of the urban resident and yet never to have observed, or helped organize the supply of these needs, limits our effectiveness in developing the pharmaceutical services and educational programs which are relevant and in keeping with the needs of the public. The truth is-we cannot teach well what we do not really understand and have seldom, if ever, experienced. We cannot hope to motivate our students to a dedicated service when at the

same time these students seldom observe in the college evidence of commitment to the community over and above its teaching responsibilities. The time has come when we in our colleges of pharmacy must be what we say we are all about. It is community involvement which will give impetus to well-developed patient-oriented educational programs and assure that our students are prepared to serve the population as vital and concerned members of the health-care team. •

A Community Formulary?

ent period would be an attack on the wrong problem. Prohibition of patent licenses has severe drawbacks, including the loss of alternative sources of supply in emergency. There is one approach to this problem that appears to have merit. That is the implementation of a community formulary. A community formulary is a feasible method for pharmacies to rationally control their inventories. This method promotes competition and incentive and can work after two procedures are established. Local medical and pharmaceutical societies must form a joint committee to determine what drugs are needed and where duplications occur. Medical service representatives must be allowed an input before the joint committee presents arguments for and possible price ranges of their company's products. The formulary works successfully in the hospital and there should be no reason why the same physicians cannot abide by a formulary in their pri-

vate office practices. The use of a community formulary could have enabled each of the pharmacies in this study to operate its practice with a lower amount of inventory. •

l. Prescription Drug Irulustry Fact Book, PMA, Washington, 42, ( 1968) 2. Whitney, Simon N., uEconomics of the Ethical Drug Industlly: A Reply to Critics," The Antitrust Bulletin, 13, (Fall 1968) 3. Schifrin, Leonard G., "The Ethical Drug Industry: The Case For Compulsory Patent Licensing," The Antitrust Bulletin, 12, (Fall 1967) 4. Kastrup, Erwin W., and Schwach, Gene H., Facts and Comparisons, Facts and Comparisons, Inc., .St. Louis ( 1968) 5. Stecher, Paul G., editor, The Merck Irulex, 8th Ed., Merck and Company, Rahway, New Jersey ( 1968) 6. de Haen, Paul, editor, PMA Review of Drugs, 1940-1965, Pharmaceutical Manufacturexs' Association, Washington, D.C. ( 1966) 7. Wertheimer, Albert I., and Evanson, Robert V., uPatent Licensing of Pharmaceuticals," Inquiry, 7, No. 3 (Sept. 1970) 8. Garb, Solomon, "The Reaction of Medical Students to Drug Advertising," New Eng. ]. of Med., 259, No 3, 121 (July 17, 1958)

percent as total expenses rose 4.6 percent to 32 percent of sales-an all-time high. The bulk of the increase in total expenses occurred in employees' wages, which now stand at 121 percent of volume. The total wage package-proprietor's salary plus employees' wagesexceeded 20 percent of volume during the year and represents almost twothirds of all operating expenses. All individual items of expense rose or remained essentially unchanged in comparison with the past year's figures except delivery which dropped from 0.5 to 0.4 percent. The inventory inveStment went up in dollars but remained at 17.5 percent of volume and the turnover rate was unchanged at 3.7 times. The value of prescription medication fell as a percent of prescription volume. Since prescrip-

tion order volume rose substantially, the productivity of each inventory dollar jumped $7.82. The prescription department again increased its share of total volume to a record high of 44.5 percent. This continues a long-term uptrend in prescription department activity. Over 24,000 prescription orders were dispensed during the year, at an average prescription charge of $4.06. Renewed prescription orders accounted for 54.8 percent of the total-up from the 1969 figure. It is significant that the average prescription department occupied only 336 square feet, less than 15 percent of the total floor area, and yet was responsible for almost $100,000 in prescription volume. The productivity of each square foot of prescription department space was almost five times as great as that of the rest of the pharmacy.

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current system of distribution and marketing of pharmaceutical products for which the consumer must be charged a cost. For changes to occur the consumer and physician must act in concert. The increasingly sophisticated American consumer cannot be blamed if he requests that his physician consider cost in the prescribing of medicines. The weakness in this solution is the unknown relationship between quality, brand and price. lt is indeed difficult for a single physician to determine "value" in drug products. Garb 8 found that in some cases his medical students were unable to obtain satisfactory information from drug houses. The full disclosure of clinical data is a sin que non for evaluation by pharmacists and physicians. Solutions for this situation must be carefully evaluated. Elimination of patents and the lessening of the pat-

References

Lilly Digest Survey As a percent of volume, net profit decreased to the lowest level since 1932 for the average community pharmacy surveyed for 1970 by the Lilly Digest. Total income--owners' salary plus net profit-also was at its lowest level since 1932. All of this despite the fact that the average community pharmacy recorded a volume high during 1970, the 21st consecutive year in which volume increased. On the strength of this increase, total income exceeded $27,000 for the first time since the Digest began publication. The 2,042 pharmacies surveyed had an average volume of $221,470-an increase of 3.6 percent over the 1969 figure. This rate of growth is about one-half of the prior year's uptrend and the lowest since 1965. Gross margin declined to 36.1 percent of sales and net profit fell to 4.1 554

Journal of the AMERICAN PHARMACEUTICAL ASSOClATlON