The issue of gray market products isn’t about money, it’s about liability.
Over the course of the past few years, the healthcare industry has been at odds with the “gray market.” The term refers to both legitimate and illegitimate product sold through unauthorized channels to doctors in the U.S. The product usually emerges from the gray market at a much lower price than retail suggests.
While it’s easy to see the upside in savings, many dentists or purchasing managers don’t see the myriad liabilities, which can include faulty product, expired product and even legal trouble.
Many gray market products start off as the real thing. They are shipped to an international destination, usually a second or third world country where the retail price is much lower than the U.S. Rather than reach its intended target, the product is sold back to a dealer in the U.S. and sent back. Even after the long roundtrip journey, the product can still be sold at half the price of its legitimate counterpart.
Gray market purchasing is primarily a practice of small, unauthorized dealers who can’t get the product otherwise. But don’t take too much comfort in the fact that most gray market products start off as legitimate. The distribution shell game often damages the product to the point where it is considered useless or even dangerous.
Here are a few common problems associated with gray market product:
1. In other countries, there’s no regulation to ensure that the product is stored properly. Sensitive products won’t work as designed if they are not taken care of, resulting in faulty product reaching the end user.
2. There’s no telling how long the product been in transit and/or storage. A boat trip halfway around the world is long enough; add to it the inevitable time sitting on a dock and the long return trip. Even if the product manages to retain it’s storage demands, it might just simply expire by the time it gets back. To make matters worse, many times expired product is repackaged with a new expiration date so you never really know what you’re getting.
3. All manufacturer warranties are null and void for gray market products. Obviously, manufacturers will only back up product they can guarantee was stored and delivered in accordance with their specifications. Product purchased from unauthorized dealers means no returns and no refunds. This is especially sensitive when it comes to legal liability for a product malfunction. When gray market product comes into question, the doctors who made the purchase will find themselves all alone if forced to answer.
And while the term “gray market” refers to unauthorized product, it is inherently associated with counterfeit product as well. There have been reports of false product being packaged and resold under popular brand names. This is the most serious violation of purchasing trust, and manufacturers are ultra-aggressive in stamping out this practice.
Probably the biggest, and perhaps the most important question you may be asking yourself is…how can you tell if your products are coming from “gray market” sources?
Price is the biggest indicator. Half-off sticker price is almost always a red flag.
Packaging is also a key indicator. If the expiration date appears tampered with, contact the manufacturer for verification. It is also becoming common practice for manufacturers to market their products under a different name or packaging in other countries. If it doesn’t look normal, start asking questions.
In the healthcare environment, where liabilities are increasingly lumped on practices, doctors and manufacturers, it really does pay to be safe rather than sorry. Most manufacturers have a list of authorized dealers posted on their website, and you can always call to verify a source’s validity.
When you partner with companies like AM-Touch Dental, you get peace of mind knowing that your purchase is backed up by us and the manufacturer. In turn, your patients receive the best product for their oral health and your business and reputation don’t suffer. The value in that far outweighs any gray market temptation.
In an effort to help offices identify and combat gray market ordering, AM-Touch Dental developed plans to maximize manufacturer promotions and internal discounts to keep product costs low for our clients. To speak with an AM-Touch Account Manager about this program, call 800.350.4568.