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Post by thall on Jul 28, 2017 14:57:57 GMT -5
On seekingalpha there was a discussion about who determines retail afrezza prices. The CEO apparently had said that the retailer did and "Matt-PK" supported that contention. Then "Looking For Diogenes" said:
"MannKind doesn’t have a normal wholesaler relationship---they have a consignment arrangement where they pay the distributor a set fee for each prescription that is dispensed by CVS, Walgreen’s, etc."
Is that correct? If that is the case, then I would think MNKD would determine the final pricing. Any further insight? |
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Post by peppy on Jul 28, 2017 17:37:55 GMT -5
On seekingalpha there was a discussion about who determines retail afrezza prices. The CEO apparently had said that the retailer did and "Matt-PK" supported that contention. Then "Looking For Diogenes" said:
"MannKind doesn’t have a normal wholesaler relationship---they have a consignment arrangement where they pay the distributor a set fee for each prescription that is dispensed by CVS, Walgreen’s, etc."
Is that correct? If that is the case, then I would think MNKD would determine the final pricing. Any further insight? when sanofi dropped Afrezza, Matt P said they had a consult group looking at price. As far as I can tell afrezza price has not dropped from the Sanofi price. What changed is titration packs were made.
I think the distributor situation you describe is probably correct. Distribution has been an issue at times.
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Post by thall on Jul 28, 2017 17:59:44 GMT -5
Which distribution scheme is correct -- the retailer buys the merchandise and sets the price or the retailer just holds the stock for Mannkind and gets paid per piece sold?
To me, the latter would make more sense. If I were selling any kind of merchandise, I would want as much control over price as possible. In particular, the price of afrezza has increased by about $100 per 90 cartridge box since Sanofi left. "Matt-PK" and I presume the CEO, although it's only second hand, would argue that Mannkind can't do anything about the price. If "diogenes" is correct then MNKD should be able to lower it.
While I'm here I may as well also ask about the savings card. It says, "you may pay as little as $15 for each inhaled insulin prescription depending on your insurance coverage." However, there's no explanation of that. If your insurer refuses coverage, you can't use the card?
Also, it says, "Maximum benefit is limited to $150 for each prescription." That seems like it would put the titration pak at a disadvantage since it costs $700. It would make more sende to get two prescriprions for the 90 paks. |
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Post by peppy on Jul 28, 2017 18:10:15 GMT -5
Which distribution scheme is correct -- the retailer buys the merchandise and sets the price or the retailer just holds the stock for Mannkind and gets paid per piece sold?
To me, the latter would make more sense. If I were selling any kind of merchandise, I would want as much control over price as possible. In particular, the price of afrezza has increased by about $100 per 90 cartridge box since Sanofi left. "Matt-PK" and I presume the CEO, although it's only second hand, would argue that Mannkind can't do anything about the price. If "diogenes" is correct then MNKD should be able to lower it.
While I'm here I may as well also ask about the savings card. It says, "you may pay as little as $15 for each inhaled insulin prescription depending on your insurance coverage." However, there's no explanation of that. If your insurer refuses coverage, you can't use the card?
Also, it says, "Maximum benefit is limited to $150 for each prescription." That seems like it would put the titration pak at a disadvantage since it costs $700. It would make more sende to get two prescriprions for the 90 paks. I believe this is/was correct : "MannKind doesn’t have a normal wholesaler relationship---they have a consignment arrangement where they pay the distributor a set fee for each prescription that is dispensed by CVS, Walgreen’s, etc."
Regarding price, the more afrezza the line makes, the less cost. Cost is volume sensitive, I believe.
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Post by nylefty on Jul 28, 2017 18:38:29 GMT -5
Prices for Afrezza vary from pharmacy to pharmacy. Check on GoodRx if you don't believe me.
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Post by matt on Jul 28, 2017 19:36:00 GMT -5
The manufacturer cannot set the final selling price; that is a per se violation of the Sherman Antitrust Act. Period, full stop.
However, the manufacturer can cut off product supply to any retailer that undercuts the target price which is why you don't see luxury goods sold at Wal-Mart. Once a manufacturer sells a product, they can no longer control what happens to it or what prices a subsequent participant in the supply chain sells it for. That said, price changes by the manufacturer will ripple through the pharmaceutical distribution channel very quickly because they work on very tight margins.
The issue with MNKD is that they may not be seeing usual and customary price behavior because of low volumes. The distributor might only stock nationally instead of locally, so when an order comes in they have to air ship it via FedEx to meet service level obligations to the pharmacy. Those extra costs ultimately fall on Mannkind either through lower wholesale prices or higher retail prices to the end customer. The distributor is agnostic about what they sell, a box is a box, but they run on about 1% profit margins so they have to make a profit on every shipment. Low volume hurts.
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