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Novartis spat with German wholesalers escalates

Pharma company halts supplies to Phoenix Pharmahandel, Sanacorp and Celesio subsidiary GEHE Pharma Handel

Novartis has reportedly stopped supplying three German wholesalers as a result of disagreements on the prices levied for its medicines.

Phoenix Pharmahandel and Sanacorp are the latest wholesalers to be blacklisted after Novartis initially stopped supplying certain medicines to Celesio subsidiary GEHE Pharma Handel in October, according to German media reports.

The dispute centres on the level of discounting for prompt payments that is offered to the wholesalers, which together account for around 60 per cent of the German wholesale market. Novartis reportedly wants to reduce the discount offered from 1.5 per cent to 0.55 per cent.

In a statement, Phoenix said it stopped receiving shipments from Novartis in mid-November, putting supplies to the 10,000 pharmacies it serves at risk. While it still has Novartis' products in inventory, the wholesaler said it could run out at any time and has asked Novartis to resume deliveries or face the threat of legal action.

"Delivery was suspended due to disagreements regarding the delivery conditions," said Phoenix, which said it views the new price conditions set by Novartis as "inappropriate and thus unacceptable".

GEHE Pharma Handel said earlier this month that it too was considering legal action in the face of Novartis' refusal to meet its "statutory service obligations", arguing that the pharma company had unilaterally tried to alter terms of its the long-standing business relationship with the wholesaler.

Pharmacists too have been expressing their concerns, with more than 2,000 letters sent to Novartis to urge the company to restart shipments to the three blacklisted wholesalers, according to an article in the Frankfurter Rundschau newspaper.

Novartis said it continues to negotiate with the wholesalers, and that there was no risk of patients being unable to receive medicines as a result of the supply interruptions.

1st December 2011

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