The vital role of a distributor in the U.S. pharmaceutical supply chain

The pharmaceutical supply chain involves a complex network of stakeholders responsible for the flow of materials, information, and finances – from the sourcing of raw materials to the delivery of finished pharmaceutical products to patients. As the critical link between pharmaceutical manufacturers and healthcare providers, distributors support the continuity and stability of healthcare by providing efficient, reliable, and secure access to the medications patients need – even under the most challenging circumstances.

In this article, we’ll discuss the vital role of distributors in the U.S pharmaceutical supply chain, their direct value, and how Cencora deploys this value to inspire positive change and empower our provider customers to deliver the best care possible.

“Distributors do much more than simply transport and deliver products. They play a critical role in making sense of logistical and geopolitical developments that impact patients’ ability to get the medications they need.”

Heather Zenk, President, U.S. Supply Chain

Demonstrating the value of distributors

Distributors serve as indispensable partners in the U.S. pharmaceutical supply chain, providing value through proven expertise in efficiently and effectively distributing a vast range of products to healthcare providers. As intermediaries between stakeholders, an intricate knowledge of regulatory requirements, inventory management systems, and logistics is critical in maintaining the integrity and reliability of the supply chain – ultimately contributing to the health and wellness of individuals across the country.

$63 billion

in annual savings for the healthcare system¹

10 million

healthcare products distributed daily¹

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Although the complete role of a distributor is far from straightforward, the following are four key areas where our impact is proven:

Supporting financial stability

The flow of payment and reimbursements in the U.S. pharmaceutical supply chain involves various interactions between multiple stakeholders, each playing a role in influencing drug pricing, reimbursement rates, and patient access to medications. Unique capabilities put distributors in a distinct position to support the financial stability and security of the supply chain.

Distributors purchase and pay manufacturers up-front for their products, assume legal and financial ownership, manage inventory, and credit risks. This allows manufacturers to focus on investing in innovation and other core functions for product development and production.

Distributors can also extend credit to qualified healthcare providers to cover the cost of products between patient treatment and provider reimbursement. This helps qualified providers manage a tight cash flow in an often tough and inconsistent reimbursement environment. As their distributor, we provide them with the capital financing to help cover the cost of carrying inventory between dispense and reimbursement.²

As an expert in the supply chain, Cencora provides pharmaceutical contract, order and pricing management across millions of transactions – facilitating orders and invoicing for manufacturer-authorized customers with a simple, straightforward approach. This minimizes the number of steps following a product’s launch, while allowing providers to focus more on the health of their patients.

Leading distribution excellence

Distributors are a critical link between pharmaceutical manufacturers and healthcare providers, helping patients readily access the medications they need. Cencora is proud to be moving healthcare forward through distribution excellence – from creating access to life changing medicines, to providing actionable data insights and market-leading specialty expertise.

Our uniquely integrated distribution network prioritizes the delivery of the products that patients need – securely, accurately, and efficiently. Our strategically located distribution centers are capable of seamlessly moving inventory between locations in emergencies, enabling uninterrupted service and business continuity for healthcare providers in unforeseen circumstances.

To learn more about how Cencora is reshaping the way healthcare is delivered, click here.

Driving innovation

The central role of a distributor in the pharmaceutical supply chain provides the opportunity to partner with stakeholders across the care continuum, enabling valuable insight into the various challenges being faced today, as well as what’s ahead. That in-depth comprehension drives further innovation in distribution, not only for the sake of improving current-day customer experiences but also to pave the way for more efficient healthcare delivery for patients for years to come.

Envisioning a better future is integral to bringing cutting-edge solutions to providers and expanding patient access to therapies, pharmaceuticals, and other healthcare products. At Cencora, we are:

Investing in the future: We support the growth of leading-edge entrepreneurial businesses through Cencora Ventures, a $150 million corporate venture fund investing in emerging healthcare startup companies
Expanding our suite of solutions: We’re constantly developing new offerings and making enhancements to our existing solutions to meet the needs of our customers today and tomorrow
Optimizing the supply chain of the future: In addition to making ongoing investments to continuously improve the efficiency of our distribution services, we’re integrating new technologies and solutions to accommodate the complexities that tomorrow’s biopharmaceuticals will bring
Unlocking the potential of emerging therapies and treatments: New advances are being made in medicine every day, and our goal is to facilitate those innovations by ensuring the patients who need them have access. This is especially complicated for specialty therapeutics like cell and gene, orphan, and oncology. Our expertise in these areas is helping us innovate in step with our partners.

Protecting the viability and efficiency of the supply chain

Distributors provide essential, aggregated data on products, and share insights and learnings from helping manufacturers bring hundreds of life-saving products and therapies to market annually. The data provided enables greater visibility and planning to optimize inventory and improve service levels across the supply chain.

In addition, distributors have a duty to protect the healthcare supply chain against fraudulent activities that harm patient care delivery. As stewards of the supply chain, Cencora is investing in strategies and solutions that provide vigilant validation. This includes helping stakeholders across the care continuum prepare for requirements under the Drug Supply Chain Security Act (DSCSA), amongst other regulations. To learn more about DSCSA and how Cencora can help you prepare, click here.

To learn more about how Cencora is advocating for patient access to pharmaceutical care and a secure, efficient supply chain, click here.

“Operating in the current environment requires distributors to adjust — and sometimes transform — operations with unprecedented speed and precision so that millions of people continue to get the life-saving medications they need every day.”

Heather Zenk, President, U.S. Supply Chain

Distributors play a vital role in ensuring the efficient and effective flow of pharmaceutical products. By serving as the link between manufacturers and healthcare providers, distributors help to maintain a reliable supply chain, support the financial stability of upstream and downstream stakeholders, and work to create transparency and connectivity that is prepared for the future – all while ensuring that medications reach patients in a timely and safe manner.

References

Healthcare Distribution Alliance (HDA). (n.d.). https://www.hda.org/
2019 report: The role of distributors in the US Health Care Industry. https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/the-role-of-distributors-in-the-us-health-care-industry.html

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