Gray Goods

The pop-up ad appears as you browse the internet. It is an ad for your favorite composite at a price that seems almost “too good to be true” from an online seller you may or may not have heard of or bought from before. The savings seem too good to pass up.

We’ve all heard the expression “if it seems too good to be true, it usually is!” And that is often the case in situations like this. You may be looking at an offer to sell you gray goods. The caution bell in your head should be ringing loudly. Here is what you need to know about gray goods:

What are Gray Goods?

Gray goods are goods sold outside of a manufacturer’s authorized dealer network. This can include products actually produced by the manufacturer and diverted from another market or they can be counterfeit goods made to look like the manufacturer’s authentic products.

 

What are the Risks of Buying and Using Gray Goods?

The World Health Organization estimated in 2010 that more than 8% of medical devices in circulation were counterfeit. This number has surely increased in recent years and is affecting dentistry like never before. If the goods are counterfeit, you probably won’t know it just by looking at the product or package. Counterfeiters are usually very good at mimicking the authentic goods. However, the product inside is not the same. In fact you don’t know what is inside the package or who made it. As a result, you could end up putting something in your patients’ mouths that has not been produced under the strict quality control standards required by the U.S. Food and Drug Administration. Its formulation may never have been subjected to FDA review and pre-market clearance the authentic goods received. This obviously compromises both the quality of your work and patient safety. The manufacturer will surely not stand behind such products.

 

Diverted Goods are Authentic Goods, What are the Risks with Those?

That is true. However, the concern with diverted goods is how the goods were stored and handled while being diverted. Products are diverted in a number of ways. The process usually starts with an authorized dealer of the manufacturer in a market where prices are generally lower due to currency fluctuations, market conditions, and local promotions selling the goods to a third-party or chain of parties who then resell the products in another market where prices are higher. The authorized dealer may or may not know the goods are intended for diversion. The risk begins when the goods pass to that third-party, who is not subject to the manufacturer’s scrutiny. Authorized dealers have contractual obligations to handle and store the products under specified conditions to protect the integrity and freshness. When products are diverted, this is lost. It is entirely possible they will be stored in someone’s garage or transported in a container ship rather than an authorized distributor’s climate-controlled warehouse. They can also be re-packaged to extend or remove expiration dates. You simply don’t know!

 

What can You Do to Protect Yourself From the Risks of Gray Goods?

Dentists and their staff should always work only with reputable dealers and distributors who are authorized by the manufacturer. If in doubt, ask the manufacturer, not the dealer. This is your best insurance against getting and using gray goods. Burkhart Dental Supply is an authorized distributor for all manufacturers whose products we sell. Because of our reputation for integrity, Burkhart never has and never will knowingly sell gray goods.

Written by Bill Sundheimer, Former Director of Merchandise Sales
Published in TIPS – January/February, 2020.

Category: Merchandise

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