R.Ph. presses on with suit against Abbott for its return goods policy

August 23, 2004

New York pharmacist, Jim Schiffer, takes on Abbott for its return goods policy

 

GOVERNMENT/LAW

R.Ph. presses on with suit against Abbott over return goods

Can an independent pharmacist get a drug company to change its return goods policy back to what it was six years ago? Sound like a tall order?

Not to Jim Schiffer, R.Ph., co-owner of Jim & Phil's Family Pharmacy in Brooklyn, N.Y. He is charging ahead with his suit against Abbott Laboratories.

Schiffer had filed suit against Abbott back in 1998, when the company issued a new return goods policy that basically refused to accept outdated merchandise for exchange (Drug Topics, May 4, 1998). To settle the suit, Abbott agreed to pay Schiffer $1,200 and the pharmacist was willing to accept this amount. But the settlement fell through because a judge had additionally imposed a gag order on the R.Ph., per Abbott's request, to keep the court proceedings confidential. Schiffer appealed this ruling and, to his delight, a high court recently agreed that it was improper to muzzle the defendant since it was a violation of his right to free speech.

Schiffer told Drug Topics that he hopes his case will now go to trial. According to the New York pharmacist, Abbott is in the wrong for two reasons. First, for Abbott to suddenly change its return goods policy without having reached an agreement with its customers is a violation of contract law, he charged. Second, he said, the courts look at what's known as "custom and usage in the industry." By this he means that if a company is doing business in a certain field, it should follow the custom and usage of the industry. The prevailing practice is for pharmaceutical companies to accept return goods, he claimed, so for Abbott to unilaterally decide not to take them back has generated a lot of complaints from pharmacists. He said he has letters from pharmacists in California, New Jersey, Pennsylvania, and other states backing him up.

Dexter Swanton is one pharmacist who is dissatisfied with Abbott's return goods policy. Abbott's return goods policy is one of the worst in the industry, he said. "I know that many pharmacists try to avoid buying its products," said the pharmacist, who practices at Swanton (Vermont) Rexall Drugs. "We try not to purchase any more of Abbott's products than needed. We also try to switch to another manufacturer, if the doctor agrees." He added, "Most companies' return goods programs are very good and credits help cash flow. We do get penalized various percentages for returns, but in today's atmosphere of shrinking profits and reduced reimbursements, any credit on returns is better than nothing."

Not that all of Abbott's customers look with distaste at its return goods policy. There are some clients who actually like the program. Under Abbott's policy, direct-buying customers get an allowance equal to 1% of their gross purchases. Customers no longer have to ship products back to the company, then wait for exchange merchandise. Many wholesalers welcomed this change when it was put in place in 1998. However, independents are a different story. Most independents purchase Abbott products through their wholesalers, and some distributors have been keeping that 1% credit for themselves, rather than passing it along to pharmacies. Schiffer said his wholesaler isn't sharing that 1% credit with him.

Schiffer believes that the refusal of manufacturers to accept return goods could lead to a public health problem. He noted that Georgia passed a law in 2002 mandating that manufacturers give full credit to pharmacies for expired products, and North Carolina requires drug companies to have adequate provisions for the return of outdated drugs. Abbott abides by the laws in these two states. Other manufacturers have liberalized their return goods policy in response to customer requests, he continued; he hopes Abbott would do the same.

How can Schiffer, a sole independent, expect to prevail against a deep-pocketed drug manufacturer? He isn't going it alone—he has some financial support from the New York City Pharmacists Society. Also it doesn't hurt that the pharmacist picked up a law degree after he launched his suit. Now an attorney at the New York law firm of Allegaert Berger & Vogel on days when he isn't practicing in his pharmacy, Schiffer has a history of taking on those he feels are in the wrong. For instance, he helped spearhead a class-action suit against Aetna over a capitated Rx plan a few years ago. Aetna settled the suit by offering a big award to the pharmacists involved.

So what's Abbott's response to the suit? Laureen Cassidy, spokeswoman for Abbott, said the company's return goods policy has been in place for close to six years. There are some customers who are satisfied with the program and there are no plans to change it. "The suit is without merit, and we hope the court will see it that way," she said.

Judy Chi

 



Judy Chi. R.Ph. presses on with suit against Abbott for its return goods policy.

Drug Topics

Aug. 23, 2004;148:62.