Main Subject - Business

Traditionally small to mid sized businesses have been set up with what is called multi-tier pricing for their credit card processi

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

ng. This system is usually set up with three tiers (qualified, mid-qualified, and non-qualifed.) Occassionally, if the business

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

Examples of combination products may in

owner has negotiated well, there will be a fourth tier for qualified offline debit cards. While this system has worked well for m

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

ny years, the increasing number of rewards and corporate cards being issued has made this type of pricing obsolete.

Visa and Mast

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

ercard have many different interchange categories for the multiple card types that are issued. Tier pricing takes a large number

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

Combination pro

of these categories and lumps them into one of the three tier buckets available to the merchant. If the merchant only ever takes

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

tandard credit cards then this system will work well for them. Once they start to see more debit, rewards, and corporate cards be

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

ing used in their place of business they will notice that their merchant services bill has increased dramatically. This is becaus

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

e many of these transactions are falling in to the mid or non qualified transaction categories.

Some of these cards are actually

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

ot that much more to process than a standard credit card, but the underwriting company for the merchant account needs to make sure

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

that they are profiting on every transaction. They can ensure profit if they charge a large mark up for any transactions that ar

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

Following aspects would a

e not qualified. So you may pay 2.9% for a mid qualified transaction and 3.5% for a non qualified transaction (These numbers can r

dd to the challenges in developing combination products:

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

nge much higher and lower.)

The fact is that some of the cards that fall into these categories may only cost an additional quarte

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

r of a percent to process. So the merchant may over pay by 1-2% to run certain card types. The business owner can avoid this if

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

they are set up on interchange plus pricing.

What interchange plus pricing does is pass the true cost of running the card right t

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

rough to the merchant. So the fees associated with that individual transaction will be put through at the lowest possible cost.

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

Professional from academic institutions, pharmaceutical industries, health care indust

The business owner pays a mark up at the end of the month based solely on their number of transactions and the sales dollar volume

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

. (typically .25-.50% plus $.10-$.15 per trnasaction.)

This system will almost always prove to be a better deal than a three tie

.

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

structure. Make sure to check your latest credit card processing statement to look for a high number of mid or non qualified tra

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

Companies that provide selfless information through particip

nsactions. If you see them, then setting up an interchange pluse pricing system may be the way to start saving your business money

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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