Why Pharmaceutical Companies Rely on Distributors

The use of distributors in the pharmaceutical industry is essential for providing patients with safe and timely access to prescription drugs. Distributors purchase products from a variety of manufacturers, store and transport them in accordance with federal and state regulations, and deliver them to numerous dispensing points. This process reduces 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. The pharmaceutical supply chain is complex and constantly evolving.

It involves a range of stakeholders, including manufacturers, wholesale distributors, and pharmacy benefit managers (PBM). While few people understand the role of wholesale distributors in the supply chain, they are essential for keeping costs low and inventory high, as well as providing customers with better purchasing power. Companies such as 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. In addition, 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.

Treatments for complex conditions are often costly and sensitive to temperature changes and microbial contamination, making it even more important for pharmaceuticals to be handled properly. The flow of pharmaceuticals from manufacturers to distributors, retailers and patients evolved separately from funding mechanisms for the same products. If it weren't for distributors, every pharmacy and hospital in the United States would have to maintain relationships with all pharmaceutical manufacturers and order each drug they needed separately. This would be an inefficient process that would lead to higher costs for consumers. Press releases, executive statements of public testimony and information on HDA efforts on behalf of pharmaceutical distributors and the supply chain demonstrate the importance of these middlemen in the pharmaceutical industry. A trusted wholesaler helps keep costs low while providing customers with better purchasing power.

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”.

Rachel Celli
Rachel Celli

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