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    The Pharmacy Supply Chain: More Challenges?

    The pharmacy supply chain is invisible to the average person. It is pretty much invisible even to most people who work in healthcare. But rather like the earth, you may not think about it until there is a dramatic movement or change—and then the effects are widely felt.

    And as with what seems like every area of healthcare, changes and challenges to the vital supply chain have been coming and will continue to come for the foreseeable future.

    Taken at its simplest, in the pharmacy supply chain an item is made by a manufacturer and is transferred to a wholesaler who distributes it to outlets including retail, specialty, and mail-order pharmacies (along with healthcare facilities like hospitals and nursing homes and some healthcare provider offices). They then dispense it to a consumer.

    Taking part in this chain are all the stakeholders along the line, who may not actually take possession of the product at any point. They include entities such as health insurers, pharmacy benefits managers (PBMs), and group purchasing organizations (GPOs) who may negotiate prices and process payments, and even the consumer who pays out of pocket or has a large copayment.


    The Numbers

    The pharmacy supply chain, also called the pharmaceutical supply chain, is big. Here are some numbers. More than 91% of pharmaceutical products (around $350 billion worth) in the U.S. are handled by members of the Healthcare Distribution Alliance (HDA, formerly known as HDMA), according to that organization.1 Its member distributors deal with 1,500 pharmaceutical manufacturers. 

    Chain drug stores are the largest group of customers for HDA members, with about $123 billion in sales, or one third of all sales in 2014. The next two groups of customers—independent drug stores and hospitals and HMOs account for nearly $54 billion in sales. A typical distribution center manages around 4,300 orders a day and has an inventory of approximately 47,000 stock keeping units (SKUs).1

    The pharmaceutical distribution system is remarkable, said Perry L. Fri, executive vice president for industry relations, membership, and education for the in Arlington, VA. “Each day, HDA members deliver more than 15 million prescription medicines and healthcare products safely and efficiently to over 200,000 chain drug stores, independent pharmacies, hospitals, and other locations across the country.” The entire pharmacy supply chain, Fri added, is a collaborative system.

    Valerie DeBenedette
    Valerie DeBenedette is a medical news writer in Putnam County, N.Y.


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