Understanding Healthcare Distributors and The Industry’s Role in the Supply Chain
Healthcare distributors play a central role in the healthcare ecosystem, connecting 1,400 manufacturers with 450,000 providers, pharmacies and other sites of care. In fact, the industry delivers more than 10 million medicines, vaccines and healthcare products safely, efficiently and reliably every day. Here are three things to know about the industry.
1. Distributors’ logistics expertise helps streamline the supply chain and ensures medicines reach patients.Healthcare distributors provide the essential supply chain infrastructure to support safe and reliable delivery of medicines nationwide. With employees across the country, healthcare distributors handle a range of products, from common over-the-counter medicines to specialty products that require unique handling and constant temperature monitoring. By leveraging advanced technologies, real-time data and robust infrastructure, distributors ensure patients can access lifesaving treatments exactly when and where they are needed.
Unlike other supply chain entities, which rarely touch or handle products, distributors are responsible for the physical handling and security of medicines and healthcare products as they move through the supply chain. Distributors are the only supply chain partner that takes legal ownership, financial risk and physical possession of medicines — warehousing and then delivering products to healthcare settings in all 50 states.
2. Distributors are creating cost savings in healthcare — not increasing costs for patients.Streamlining the supply chain by consolidating orders, leveraging the industry’s logistics expertise and deploying advanced technologies allows distributors to generate significant efficiencies that save the healthcare system up to $78 billion annually. Moreover, a report by BRG shows that distributors’ margins account for less than 1 percent of the cost of brand drugs.
Importantly, distributors do not determine the amount patients pay for their medicines. In contrast to others in the supply chain, like health insurance plans and pharmacy benefit managers, distributors have no control over formulary decisions, benefit design or reimbursement rates for dispensing pharmacies. Instead, the sector’s focus remains on making the supply chain as efficient and effective as possible, reducing costs along the way.
3. Distributors’ central role supports both ends of the pharmaceutical supply chain.Beyond their core role in delivering medicines, distributors provide the logistics, infrastructure, technology and expertise that support their supply chain partners. Distributors’ central focus on logistics allows providers to focus on patient care and manufacturers to focus on research and development. Without distributors, pharmacists would have to maintain relationships with each manufacturer and vice versa, adding time and complexity to what is now a safe and efficient process.
Distributors support providers and pharmacies by simplifying procurement and reducing administrative burden, allowing them to spend more time with patients and focus on providing the best care possible. Distributors also partner with manufacturers to streamline the commercialization process, particularly for specialty products like cell and gene therapies, helping bring new innovations to millions of Americans.
Because distributors take care of the logistics behind the scenes, the industry is empowering partners to focus on what’s most important to the entire healthcare supply chain — the patient.
As the healthcare industry evolves, distributors remain committed to working collaboratively with supply chain partners and policymakers to support a stronger, more accessible and affordable healthcare system for all. Together, we’re not just delivering medicines — we’re making care possible.
Learn more about the role and value of distributors at hda.org/health-delivered.