It is no secret that the U.S. healthcare system is complex. Connecting hundreds of thousands of healthcare providers with the medicines and healthcare products that patients rely on every day — both safely and efficiently — requires coordination between a diverse set of stakeholders.
Thankfully, pharmaceutical distributors serve as the backbone of this ecosystem by leveraging their logistics expertise to maintain the efficiency and integrity of the healthcare supply chain and amplify value throughout the system.
By helping manufacturers, providers and pharmacies increase operational efficiency and maximize productivity, distributors create between $33 and $53 billion in healthcare cost savings each year.
So how do they do it?
At the Heart of the Healthcare Ecosystem
Distributors touch on nearly every aspect of the pharmaceutical supply chain. In one year alone, they link 180,000 pharmacies, hospitals and other healthcare providers with more than 1,300 pharmaceutical manufacturers, allowing them to serve the more than 180 million patients who regularly take prescription medicines and use other healthcare products.
Fulfilling this vital role requires relentless and precise activity. Distributor customers purchase more than 11.3 million prescription units each business day, and 83 percent of supply chain customers receive delivery five times per week or more.
Getting Medicines Where They Need to Go
As the healthcare industry becomes more complex, and the availability of critically needed medications grows, distributors’ role has only become more vital.
Over the past decade, the total number of prescriptions handled by pharmaceutical distributors has risen from 3.1 billion to 4.1 billion. To handle this rapid increase, distributors have enhanced efficiency and productivity across the board. During this same 10-year period, distributors have actually reduced their operating expenses from $7.5 billion to $4.6 billion. On an operating expenses per prescription basis, distributors have cut costs in half — from $2.44 to $1.11.
Empowering Pharmacists Across the Country
From nationwide chains to local, independent pharmacies, distributors maximize efficiency throughout the healthcare system by serving as critical partners to the pharmacy community.
Independent pharmacies are an essential part of the fabric of the communities in which they operate, and distributors provide them with the tools and resources they need to serve their customers. From franchising programs and consulting to technology services and the supply of over-the-counter drugs, pharmaceutical distributors empower their independent pharmacy partners to focus on serving their local communities. Distributors’ support helps increase patient access to more than 100 million vital medicines, and this improved access results in cost savings of more than $1.8 billion per year.
For larger chains, distributors have invested heavily in generic sourcing programs that consolidate buying power to help lower the cost of generic drugs. Estimates show that these generic sourcing programs, in combination with other factors, helped save the U.S. healthcare system almost $16 billion last year alone.
The Vital Link Between Manufacturers and Providers
As the logistics experts of healthcare, distributors help consolidate orders between manufacturers and pharmacies, allowing each partner to focus on doing what they do best. Additionally, distributors are increasingly providing hub services to support manufacturers and providers, including patient and provider education, sample and adherence program administration and co-pay support. These may sound like niche services, but it is estimated that patient adherence programs alone have potentially reduced costs to the overall U.S. healthcare system by as much as $8 billion.
As an indispensable part of the overall healthcare system, distributors’ logistics expertise seamlessly connects pharmaceutical manufacturers, healthcare providers and pharmacies to the patients they serve. For additional information on the significant role distributors play in maximizing efficiency within the healthcare supply chain, read the Healthcare Distribution Alliance’s new report: The Role of Distributors in the US Health Care Industry.