Question-and-Answer Session
Jason Gurda - Leerink Swann
Good morning. Thank you.
Joel F. Gemunder - President and Chief Executive Officer
Good morning.
Jason Gurda - Leerink Swann
I wanted to start out with your SG&A line. The expense came in I think particularly since you did the acquisition and bad debt was up sequentially significantly better than expected. Is that part of the cost savings program, the $40 million that you had talked about this year or is that more of the Full Potential Plan? I was just curious what was going on there?
David W. Froesel, Jr. - Senior Vice President and Chief Financial Officer
Sure. This is Dave Froesel. Great question. We are benefiting from the non-drug purchasing $40 million annualized program both on the SG&A line and within gross profit. And also as you may understand, as we continue to do acquisitions such as Advanced Care Scripts during the third quarter and some smaller institutional pharmacies, we inherent their SG&A expenses so that’s kind of what’s in the mix.
Jason Gurda - Leerink Swann
Okay. Another question and Joel, I know you talked about that there was a whole bunch of issues obviously going to impact 2009 numbers. But I was wondering, if you could give us a sense for at least your expectations for profitability on some of the newer generic drugs over the next few quarters meaning you already had described?
How you are able to get a little bit better pricing or the purchasing the price during the exclusivity period so that’s going to mean that there is less of an increase maybe during the initial multi-source period. But I’m thinking like several quarters out should we expect that remains flat increases, decreases is there any sense that you could provide on that?
Joel F. Gemunder - President and Chief Executive Officer
Let me say first of all I would like to characterize the first part of your question by saying because we are able to move our purchasing advantages upscale forward and get the benefit of lower prices a little bit earlier than ordinarily that’s not because we are just big it’s because we are able to negotiate effectively on a number of products with the manufacturers, thereby giving us at them some added benefits.
They get the benefit of assurances of steady production rates. We get the assurances of somewhat lower prices. So, now we have and some day I will show it to you when I am retired if that ever happens that we have a very detailed analysis partly based on past history and partly based on computer models of how a drug will behave when it goes generic.
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