Why do pharmaceutical companies use distributors?

The distributor provides patients with timely and convenient access to safe prescription drugs by purchasing from a multitude of manufacturers, ensuring products are properly stored and transported to countless dispensing points, and maintaining compliance with federal and state regulations. . Manufacturers create drugs and sell them wholesale to wholesalers, who in turn sell drugs to pharmacies. In this process, wholesalers use complex logistics and packaging methods to receive and deliver medicines on time and in good condition.

Pharmaceuticals range from manufacturers to distributors, retailers and patients (shown in blue in the figure). Distributors play an intermediary role in the supply chain between manufacturers and retailers. Procur products from manufacturers, provide warehousing services, and ship medicines to retailers. By doing so, they reduce the number of transactions that would occur if each retail pharmacy, healthcare professional, or facility had to order products directly from manufacturers.

Distributors handle products that account for 91% of total pharmaceutical sales revenue. Some companies are avoiding drug supply chain middlemen and even physician office visits by prescribing and delivering medicines directly to patients. These companies negotiate on behalf of their clients or simply on behalf of the general public and have been gaining ground. These men's and women's health companies recruit patients online and through apps, prescribe generic drugs and over-the-counter products, and deliver medicines to patients' homes in discrete packaging.

Hashed Health and Chronicled are equipping prescription products with stamps, labels and other anti-tampering technology to give doctors and patients confidence in the authenticity and quality of their pharmaceuticals. Press releases, executive statements of public testimony and information on HDA efforts on behalf of pharmaceutical distributors and the supply chain. A trusted pharmaceutical wholesaler keeps costs low and inventory high, and gives customers better purchasing power. A pharmaceutical provider offering products such as wholesale medicines and over-the-counter pain relievers saves time and money for independent pharmacists and homecare companies.

Researchers point out that there are many variations in this basic structure of the pharmaceutical supply chain, largely due to the constant evolution of actors in the supply chain. A wide range of stakeholders are also involved in the pharmaceutical supply chain, including manufacturers, wholesale distributors, and pharmacy benefit managers (PBM). Few people understand exactly what role wholesale distributors play in the pharmaceutical supply chain, and they often confuse them with manufacturers, pharmacy benefit managers, or even pharmacists. The following is a summary of the key inflows and outflows of drugs, services and payments in the traditional pharmaceutical supply chain.

PWC also released a report this year stating that, to meet the demands of a growing market, the pharmaceutical supply chain must undergo a “radical overhaul”. These treatments are often complex, costly, and significantly more sensitive to temperature changes and microbial contamination than other pharmaceuticals. The flow of pharmaceuticals from manufacturers to distributors, retailers and patients evolved separately from funding mechanisms for the same products. Imagine if every pharmacy and hospital in the United States had to maintain relationships with all pharmaceutical manufacturers and order each drug they needed separately.


Rachel Celli
Rachel Celli

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