In case you missed it, PSS World Medical Inc. (PSSI), one of the largest med-surgical product distributors, pre-announced weak EPS today.The #1 item cited in PSS' press release? “Costs associated with state pedigree laws, particularly within the state of Florida, for the sale and distribution of pharmaceutical products.”
The company is apparently saying that the unexpected expenses (I guess $2M, judging by restatement amount) come from the way that Florida is interpreting and enforcing the law. I’ve also heard that extra expenses include fines for non-compliance and inventory impairment.
I suspect this issue stems in part from HB371, a controversial amendment to Florida’s pedigree laws. At the time, PSS announced an intention to attain “authorized distributor” status and increase direct buying from manufacturers. (See H.B. 371 signed by Gov. Bush and this PSS press release.) Perhaps PSS and the State of Florida did not see eye-to-eye on PSS’ role as a one-step distributor of pharmaceuticals?
Their Q1 earnings call is next Thursday (7/26/07), so I presume we will learn more at that time.
Let's hope that a federal compromise can be reached as a part of the FDA reauthorization legislation. State-based pedigree laws - talk about a design flaw...
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