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Alliance under fire from independents for £350 low-spend surcharge

Alliance imposes a £350 low-spend surcharge on orders under £5,000 a month

Independent pharmacies have told C+D that restrictions on purchases and stock shortages make it difficult to reach Alliance’s minimum monthly spend, leading to a £350 surcharge.

According to contractors, it is very difficult for them to reach the wholesaler's £5,000 per month mininum spend threshold, especially if they use multiple wholesalers. This means they often fall foul of the surcharge, they say.

C+D understands that Alliance is not the only wholesaler to impose a low-spend surcharge, and has approached other major wholesalers about their policies.

Ordering restrictions

One London-based pharmacy contractor, who wished to remain anonymous, told C+D on Tuesday (August 11) that Alliance “seriously restricts” their purchasing ability by setting restrictions, or quotas, on the number of products a pharmacy can order.

“Every single month they hit us with the surcharge, and then this is across four pharmacies, so each month we have to pay them £1,400,” they said.

A spokesperson for Alliance told C+D on Tuesday (August 11) that the company imposes its surcharge to enable it to operate a “a nationwide, twice-daily delivery service”.

Another anonymous contractor, also based in London, voiced similar concerns, citing stock shortages as another issue.

They said that reaching the £5,000 minimum spend was difficult, as their weekly order from Alliance was around £700.

An Alliance spokesperson said: “Should a product be unavailable at the time of the order, we have a dedicated team in place that can help customers meet their qualifying spend threshold.

“Alliance Healthcare works closely with manufacturers to ensure maximum supply of product to UK patients. In times where demand exceeds supply, we may have to apply quotas to give an opportunity to all pharmacies to access stock,” they added.

“Had to buy higher value items”

A pharmacy technician based in Scotland also told C+D of issues they had with ordering stock from Alliance when working in an independent pharmacy.

“There were a number of times the pharmacy owner had to pay the surcharge. To stop this from happening, they would make sure to put higher value products through Alliance so as not to incur the charge, even if the product was cheaper to source elsewhere,” the technician, who wishes to remain anonymous, claimed. They said the main reason for this was issues with stock.

Alliance asked that contractors who have a complaint contact the wholesaler directly, "as we handle these on an individual basis and take account of any mitigating circumstances."

Difficult to reach

Nathan Wiltshire, group chief executive of the Cambrian Alliance Group, told C+D on Tuesday that reaching the £5,000 minimum spend imposed by wholesalers can be a “real challenge”.

This because the “way that contractors now buy [items] has changed” and pharmacies use multiple suppliers, he added.

“This issue is tied up in the broader question of price transparency and how easy wholesalers make it to understand charging,” Mr Wiltshire said.

He described the process as “time consuming and complex” for contractors.

21 Comments
Question: 
Have you been hit by a low-spend surcharge?

Ashish Patel, Pharmacy owner/ Proprietor

The main problem is that Alliance just does not care. They have the boots stores and everything else is surplus to them. Why they even have alliance reps is beyond me, there is nothing they can do.

I spend over 20k a month with alliance but as I dont spend enough on their 'selected' lines I still get charged the fine. There is no logical reason for this. They still have to deliver to my store on agency lines regardless, there is no extra delivery cost to them just pure ignorance and greed.

David Holdsworth, Community pharmacist

Have you been in a Boots store recently. They haven't changed since I did my ore-reg with them in late 80's. Really badly merchandised, lacking stock and staff disinterested in customer care.

Benie I, Locum pharmacist

They're paid peanuts and treated like ****. Why would you expect great service ??

Freelance Chemist, Pre-reg Pharmacist

 

I do sympathise with the consumers of this wholesaler. 
 

However it is a business, it is free do as it sees fit.

My solution is don't use them, if they realise ppl are no longer using them they will have no choice but to reduce their prices....

 

 

Leon The Apothecary, Student

Unfortunately, a lot of pharmacy business are forced to use them.

Freelance Chemist, Pre-reg Pharmacist

The CMA need to investigate if they have exclusive right for certain products and then demand this money!! 
 

For the record I have no financial interest in pharmacy businesses. 

Watto 59, Community pharmacist

You do not seem to be aware of the agency schemes which has left no choice other than to use this abomination of a wholesaler.

David Holdsworth, Community pharmacist

This exposes another major problem as to why are there so many products out of stock at present. In my 30 years in pharmacy I have never known it as bad. Nobody seems to be able to explain why the problem exists.

Freelance Chemist, Pre-reg Pharmacist

My theory is....

MHRA do unannounced visit at the Indian manufacturing site. Find problems to do with GMP etc and this impact supply. 
 

or we pay peanuts in this country for drugs, manufacture/wholesaler supply to market that pays them more. 

generics are manufactured to terrible standards!!

 I only ever use branded/original if I need meds for self.  
 

I came to the above choice when patient told me generic viagra didn't work aswell as the original brand.  

 

 

Benie I, Locum pharmacist

Money money money...

david williams, Community pharmacist

I have raised this issue on many occasions. Openly told, "spend more with us"  not just what you need to. A very poor company for community pharmacy.. Poor I.T. I believe, it is time that government intervened to stop wholesalers owning community pharmacies. This position allows manipulation (some, not me, say corruption) of the whole process of reimbursement for medicines. Vertically intergrated companies are designed to maximise and camoulflage profits. A great idea for capitalism, not so good for fair distribution amongst the network.  

Freelance Chemist, Pre-reg Pharmacist

Vertical integration is a massive problem just look at the meat industry in the USA the same applies to pharmacy and the UK

Daniel Pharmacist, Community pharmacist

Is anyone actually satisfied with Alliance as a wholesaler? I can't see how they could actually be worse they currently are. If I could choose not to deal with them I would make that choice in a heartbeat.

On Break, Community pharmacist

No. They are the most difficult and unreliable wholesaler. Nearly everyday I have a tote missing because one of their lorries turned up late or the otc tote was left out side in the rain so came soaking wet. There's no point asking for a restricted product because I'm told I either have no right to buy or alliance are not my preferred wholesaler. Even when I tell them they are the only one who has an item in stock they still refuse to supply. I think the £350 charge is the only way to get people to buy from them because they are often not the cheapest either for generics. Not for us anyway. 

Mr CAUSTIC, Community pharmacist

The time has come to stop the agency model . I ordered Pradaxa via Phoenix and it was out of stock . As it was ordered via AAH i received no notification . It was only when the patient came in and we contacted phoenix we were told it is out of stock . We are not dealing in smarties where an out of stock situation doesn't matter  someone could die as a result . Is this situation because phoenix do not keep enough stock or the manufacturer was out of stock ? In times long gone one could ring another wholesaler . The government should intervene now and make all drug manufacturers supply all wholesalers . A little job for Dominic Cummings I think .

 

Leon The Apothecary, Student

At least with AAH Point and Alliance Online, you can check if something is not likely to arrive. Online ordering is getting better, but still not great when considering implementation into PMRs.

N O, Pharmaceutical Adviser

As far as I know, if you opt out of their generic deal and stick to ordering solus products and counter lines, there is no low spend surcharge. This is a gimmick used by Alliance in getting you to agree for a generic deal or just make extra £350.

Dave Downham, Manager

Not helpful if stock is OOS at the AAH and it's on a dual supplier model.

SP Ph, Community pharmacist

I think what NO is saying is right, when ordering only Agency items. For example, if a branded product is OOS at AAH then Alliance have to supply it without charging the £350. If they don't then call the Manufacturer and then they hve to send it directly to you, or may be force Alliance to supply.

Leon The Apothecary, Student

A surcharge for low spending does not make sense really. If you are needing less stock, then Alliance wouldn't be needing to spend as much money delivering goods.

If Alliance wanted to be intelligent about it, they could even develop a function of having a "no-rush" delivery to optimise delivery logistics.

Freelance Chemist, Pre-reg Pharmacist

They are a business it makes for good financial sense for them to charge
 

 

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