Distributors of specialty pharmaceuticals save the health care industry billions of dollars annually via efficient, extensive measures to ensure their safe delivery, according to new research from the Healthcare Distribution Management Association (HDMA).


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HDMA: Specialty Rx distributors save billions in costs

April 25th, 2011

ARLINGTON, Va. – Distributors of specialty pharmaceuticals save the health care industry billions of dollars annually via efficient, extensive measures to ensure their safe delivery, according to new research from the Healthcare Distribution Management Association (HDMA).

Released Monday by the Center for Healthcare Supply Chain Research, HDMA's research arm, the report finds that companies that distribute only specialty drugs save the industry an estimated $3.5 billion, based on an analysis of the value of their services and of the increased cost if manufacturers and health care providers assumed their role.

The savings derive from their skills in preserving and delivering delicate medicines in high-tech, cold-chain and just-in-time delivery systems and in performing a range of value-added services for the health care industry, HDMA explained. The savings total about $8 billion when the analysis is expanded to include traditional distributors that handle specialty drugs.

The report, "Specialty Pharmaceuticals and the Role of the Specialty Distributor," was developed by global management consultant Arthur D. Little Inc., according to HDMA.

"This research spotlights the vast and indispensable services that specialty pharmaceutical distributors deliver in the fastest-growing sector of the pharmaceutical industry. They provide lifesaving medicines to many of society's most vulnerable patients, and they do it with exceptional skill and quality that lowers the cost of health care," stated Karen Ribler, executive vice president and chief operating officer of the Center for Healthcare Supply Chain Research.

Biological and other specialty drugs present distribution challenges because extreme heat, humidity and light, excessive shaking and vibration and even pH changes can compromise their effectiveness. The report notes that distributors preserve such medicines in storage and transit through a variety of specialized measures and techniques.

What's more, the report pointed out, such measures are becoming more important given estimates that seven of the top 10 pharmaceutical products will require cold chain distribution by 2014. These practices are often required in federally mandated Risk Evaluation and Mitigation Strategies, or REMS, for drugs that must be controlled carefully to ensure they are used safely.

The study also noted that specialty distributors use technologies to manage inventories, transactions and deliveries with speed and precision. These include customer relationship and warehouse management systems and electronic data interchange (EDI) communications to process purchases, shipping notices, invoices and payments. These systems all cut inventory and distribution costs by shortening transit times and reducing loads and paperwork errors. In addition, they assist manufacturers with marketing and help providers meet capital needs, taking costs out of both ends of the health care supply chain.

"The pharmaceutical landscape is changing. Specialty pharmaceuticals will continue to play a more important role as selective therapeutics in oncology, orphan drugs and biotechnology products become more prevalent and attractive to biopharmaceutical companies," observed John Brennan, managing director of Arthur D. Little Americas. "Our research documents the specific handling requirements of specialty pharmaceuticals, identifies the value-added services provided by distributors and provides an economic analysis of the value distributors bring to manufacturers."

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