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Pharmaceutical Distributors Provide Essential Services to Specialty Rx Supply Chain

December 21, 2015

ARLINGTON, Va. — New research published by the Center for Healthcare Supply Chain Research, HDMA’s knowledge partner, indicates that pharmaceutical distributors provide the specialty pharmaceutical supply chain essential services while efficiently aggregating and delivering thousands of lifesaving medications to a large network of providers for the treatment of critically ill patient populations with chronic or rare diseases.

Conducted by PwC Strategy&, formerly Booz & Company, The Role of Distributors in the U.S. Specialty Pharmaceuticals Value Chain traces the continued growth of the specialty industry and the changing market dynamics affecting its unique supply chain. It also further attempts to quantify the value that traditional and specialty distributors provide through the physical delivery of medicines and other important support services. Research was based upon previous Center data, stakeholder interviews, data collection, secondary research and model assumptions.

Distributors’ significant investments in value-added services in the decision support tools, analysis and reports, consulting and patient service categories provide direct savings to the healthcare industry. For example, a subset of the support services provided to physician’s clinics — including automated and integrated billing and receivable management systems, workforce management tools, revenue cycle and reimbursement services, as well as offerings to enhance the patient experience — represent approximately $1 billion in economic savings to the healthcare sector.

The study notes the role distributors play in ensuring the financial stability of the channel by extending credit to a variety of provider customers. This saves them additional financing costs of 6.5 percent of their expenditures on specialty drugs.

In addition to these findings:

  • Specialty medicines continue to represent a large and quickly increasing share of prescription drugs in the U.S.; these medicines are expected to represent 43 percent of the market share by 2020.  

  • About 90 percent of all specialty drug sales revenue flows through traditional and specialty distributors.

  • Changing industry dynamics, including market consolidation and shifting alliances, the evolving regulatory environment, the introduction of biosimilars and the shift to providing value-based care to patients, are creating challenges and opportunities for trading partners in this segment.

 “In an industry segment that is rapidly evolving it is clear that pharmaceutical distributors’ role is as important as ever,” said Karen J. Ribler, Executive Vice President and COO of the Center for Healthcare Supply Chain Research. “With more unprecedented growth expected for this segment in the future, distributors will continue serve as critical business partners in the years to come.”  

The Role of Distributors in the U.S. Specialty Pharmaceuticals Value Chain may be downloaded for $250 as a single-use PDF from E-junkie.com. Visit the Center website for further details.   

ABOUT THE HDA RESEARCH FOUNDATION

The HDA Research Foundation is the 501(c)(3) non-profit charitable organization of the Healthcare Distribution Alliance (HDA). The Foundation serves the healthcare industry by providing research and education focused on healthcare supply chain issues. The Foundation’s mission is to conduct research and disseminate information that will enhance the knowledge base, efficiency and effectiveness of the total healthcare supply chain; and to provide thought leadership to further enhance the safety and security of the healthcare supply chain through future-focused study and programming.

ABOUT THE HEALTHCARE DISTRIBUTION ALLIANCE

The Healthcare Distribution Alliance (HDA) represents primary pharmaceutical distributors — the vital link between the nation’s pharmaceutical manufacturers and more than 200,000 pharmacies, hospitals, long-term care facilities, clinics and others nationwide. Since 1876, HDA has helped members navigate regulations and innovations to get the right medicines to the right patients at the right time, safely and efficiently. The HDA Research Foundation, HDA’s non-profit charitable foundation, serves the healthcare industry by providing research and education focused on priority healthcare supply chain issues.

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