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My grandmother has always taken an interest in my personal and professional undertakings but I was still surprised when she expressed the desire to learn more about my job as a merchant account manager (not exactly a titillating position). D

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

uring the course of our discussion, I explained that we generally charge between 1.5% and 1.75% for retail transactions (depending on the type of card) and over 2% for Internet and MOTO (mail order telephone order) transactions. My grandmoth

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

r shook her head in disbelief and immediately determined that these fees “were too high.” “Andy, she exclaimed, “You’re making 2% profit on each transaction! How much is enough?”

It was time to give Grandma the abbreviated course, Merchant

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

Accounts 101. I explained that our company, indeed all processing banks, are governed by interchange rates – uniform rates that Visa and Mastercard charge their member banks. These, in essence, are our buy rates and if we charge lower than

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

the interchange rates, we will be losing money. “So, you see Grandma,” I added, “We don’t make 2% on every transaction, but only several basis points.” I expounded, “A basis point is only 1/100th of a percentage point.” She quickly reverse

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

course and then said with a smile, “Maybe you’re not charging enough.”

Certainly, business owners, particularly those that are large and process an incredibly large monthly volume of credit card transactions, don’t want to hear that the fee

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

should be raised! Some are even calling for government regulation to ensure a reduction in credit card processing fees. Large retailers, including Kroger and Safeway grocery chains, behemoth drug stores, such as Walgreen and Maxi Drug, and

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

others are even engaged in a lawsuit with Visa and MasterCard, declaring that Visa and MasterCard, for all intents and purposes, are monopolistic entities that violate antitrust laws. The retailers believe that Visa and MasterCard’s standar

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

, uniform fee structure need not change, simply that the associated fees should be reduced.

But how, in practical terms, is this going to be accomplished? Visa and MasterCard are unlikely to determine that their profits are too high and imp

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ement interchange price reductions. Consequently, retailers are urging for state and federal / legal intervention requiring Visa and MasterCard to adopt “cost-based pricing.”

Cost-based pricing may be summarized by the following simplistic

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ormula:

Cost of product or service + Percentage of fixed profit = Cost-based pricing.

But determining the total cost, including Visa and MasterCard’s variable and fixed costs, are extremely difficult to calculate. But even if the cost side

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

of the equation (on the far left of the equation) cannot be determined with complete accuracy, retailers are demanding that Visa and MasterCard reduce the fixed profit percentage.

My initial reaction to the retailer’s position was one of ap

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

roval. Corporate greed (are you listening Exxon Mobil?) hurts the average American consumer whose wallet continues to shrink. It is disconcerting to know that corporate CEOs, CFOs and those on the board get enormous raises, bonuses, benefit

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

packages and huge retirement stipends when so many in the work force can barely make ends meet.

Perhaps if credit card rates would be lowered, then these large retailers would offer customers lower prices. Consumers would benefit and everyo

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ne will be happy – well, save for the folks high up on the corporate Visa and MasterCard ladder.

But then I started reading more about this issue and learned that large retailers may very well decide not to pass on their credit card processi

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

g-related cost savings. As one author wrote, “the hypocritical retailers do not sell their own goods for 'cost-based' prices.” Indeed, profit is the name of the game and these big boys may have trouble sharing their newfound good fortune.

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

oreover, if government regulation were enacted, Visa and MasterCard are unlikely to just sit on the fence, bemoaning the fact that they have to reduce their interchange fees. Somehow money will be recouped and it probably will be through the

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

good, old American consumer / credit card card holder who will be assessed additional fees to use credit cards. Think about the domino effect that higher gasoline prices have caused, leader to higher costs in so many industries.

There rema

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ns a silver lining even if the federal and/or state government does not intercede with Visa and MasterCard’s policies. There are merchant account providers that are willing to price their service using “cost-based pricing.” As long as such

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ompanies remain in the black with their merchant accounts, they may be willing to make the slimmest margin of profit. Less individual profit may only maximize total profits in the long run as these companies will get their share of referrals

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Time Dimension: presented versus 1991 ZIP Codes in one ZIP and the other side in a United States America ZIP Code. The block to ZIP equivalence file organized by the vendors each chunk was assign to one and only one survey building block.

By starting with the best foundation; great looking and flexible retail store displays and retail store shelving, retailers can design and build great looking displays for their product that will help sell their products to their customers. By consistently reinforcing the perceived need for the item today's retailer can create a winning store environment that the customer will want to return to over and over again.

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