Direct price negotiations

The most difficult step in price controls is arriving at a reasonable or fair price for a medicine. The literature on price controls and the tools employed are mostly from high-income countries. These include the cost-plus method, profit caps, comparative pricing, direct price negotiations and pharmaco-economic evaluations, or a combination of these tools. The cost-plus pricing model is difficult to employ in a coimtry where most suppliers are subsidiaries of international companies or importers of products from other markets. In this scenario, experience shows that it is very difficult to obtain accurate and reliable data to arrive at a determination of real costs and profits. 

Andrew Davenport and Jayant Kalagnanam. Price negotiations for procurement of direct inputs. In Brenda Dietrich and Rakesh Vohra, editors. Mathematics of the Internet E-Auction and Markets. IMA Volumes in Mathematics and its Applications, Springer-Verlag, 2001. 

A controversial issue is the ownership of IP arising from the cooperation between customer and supplier. The customer holds the position that all IPRs resulting from a joint project belong to him. His arguments are that (1) without his input there would have been no invention anyhow and (2) that he has paid for the development of the IP, either directly by funding the supplier s R D work or indirectly through the price that he pays for the product. The supplier maintains that IP is an essential prerequisite for her business. If she cannot advance her know-how, she will drop out of business sooner or later. Also, the customer would not have entrusted her with a project, if he had not been attracted by the supplier s know-how. These opposite views are a critical element in contract negotiations and can become a deal breaker. 

Normally direct procurement is not recommended, but it may be used when there is only one prequalified source for the product to be procured, A history of reasonable prices for the product in question should be assessed to negotiate the price with the supplier. 

In the divisible interest structure, an originator would sell, for a negotiated fixed price, its rights in a pool of receivables equal to one hundred percent of all collections up to a "trigger point" (and possibly also a fixed percentage of collections above the trigger point). Once fixed, there is no adjustment to the purchase price, irrespective of actual collections, and because the transfer is directly from the originator of the receivables to the issuer of the securities, there is no need to create an intermediary SPV, as in the two-tier structure." Thus, the divisible interest struc-... 

GAO and the pharmaceutical companies.21 All of the courts agreed that GAO had the authority to see cost data even if the prices were not negotiated. The courts also agreed that direct costs, such as manufacturing costs, royalty costs, and delivery costs were relevant to the contract and were therefore subject to GAO review.22 But, the courts were split on GAO s right of... 

Retailers exist when they provide convenient product assortment, avaflabflity, price, and image within the geographic market served. The degree of customer preference (loyalty dtre to customer service and price/value performance) that a retailer enjoys in a spedfic area directly affects its abUity to negotiate supply chain relationships. The retailer s financial capahUity and size also determine its degree of influence over other supply chain members. 

One widely used source of prices of commodity chemicals is the Chemical Market Reporter, a biweekly newspaper that provides up-to-date prices for chemicals of commerce and is available in most university libraries. It should be noted, however, that these prices may not reflect the market situation at a particular location nevertheless, they provide a good starting point. Obviously, to obtain better estimates, at least for the immediate future, the manufacturers of the chemicals should be contacted directly. Lower prices than those listed can often be negotiated. Articles on chemicals of commerce in trade magazines can be searched for on the web site, http //www.findarticles.com. To obtain chemical prices, search for the Chemical Market Reporter. Also, www.chemicalmarketreporter.com can be used with a library user name and password. 

It is widely discussed that the selling price of pharmaceuticals in the EU is substantially below that of the same drags in the US due to the ability of each country to directly negotiate prices with the seller. For example, in a 2005 survey of the 150 best selling pharmaceuticals, the prices of these drags varied considerably in Europe in Spain and Italy they were around half of US prices f24, Table IVi. The study also revealed that the situation was different when the prices of biologies were considered. Whereas European priees averaged 88% of US prices, the prices in Japan were almost the same. 

In July 1983, after lengthy negotiations, CWCGP concluded a price support agreement with the Synthetic Fuels Corporation. The SFC price support was complex and involved extensive negotiations. The complexity probably reflected the fact that SFC had never granted price support before and was reluctant to support the electricity price directly. However, the SFC financial assistance is only a product price support SFC gives financial support only when the plant operates successfully. 

---