Nicholas Basta, Editor Emeritus

 Continue expanding into management service organizations and specialty care networks to strengthen relationships with independent practitioners, secure high-margin specialty drug channels, and create clinical trial and patient outcome data synergies with manufacturers.

 Invest in cold-chain infrastructure, patient services, and integrated logistics platforms to position as a turnkey commercialization partner for emerging cell and gene therapies, differentiating from pure logistics competitors.

Navigate policy and trade volatility proactively

. Maintain flexible sourcing strategies, diversify API supply chains, and engage in active government relations to mitigate risks from shifting tariff policies, state-level drug importation programs, and potential federal drug pricing interventions.

It’s calm seas and smooth sailing, for the most part, in the US drug wholesaling world. The past controversy over improper distribution of controlled substances, leading to a national opioid-abuse crisis, has receded after a broad, 18-year, $26-billion settlement among wholesalers and most state attorneys general in 2022. Today, most headlines about the topic concern how states, municipalities, and local agencies are handling the funds being disbursed.

Similarly, drug wholesalers were caught up in the amorphous “greedy middlemen” controversy over the costs and inequities of drug dispensing in the US. For the most part, that ongoing controversy is putting a spotlight on pharmacy benefit managers (PBMs), and legislative and legal remedies are being sought.

Financially, the Big Three wholesalers—McKesson, Cencora, and Cardinal Health—are doing well, with revenues and operating incomes rising at near-double-digit rates last year and this year. The Healthcare Distribution Alliance (HDA), the trade association for US wholesalers, calculates that in excess of 95% of all prescription shipments are handled by wholesaler-distributors. The Drug Channels Institute, an HMP Global Company, which published an annual report, “The 2024-2025 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors,” estimated that 2024 drug-distribution revenue of the Big Three was $776 billion in 2024.

Contract terms between wholesalers and the dominant drug dispensers—chain drugstores and PBMs—are closely watched items on Wall Street. Cardinal Health took a hit in 2023-24 when it lost its business with OptumRx, a leading PBM, representing 16% of Cardinal’s revenue. But by spring 2025, it was reporting near-identical revenue to the previous year. McKesson, which won the OptumRx business, took a hit of its own as Rite Aid, a leading drugstore chain, closed up shop.

“We had a very successful Business Leadership Conference (BLC) this year,” says Chip Davis, president of the HDA. “The mood among our healthcare distributor members is largely positive.” (BLC, held each June, brings HDA members together for networking.) However, it’s hard to overlook the turmoil brought on by the Trump administration’s gestures toward tariff impositions and efforts to lower drug prices across the board. “HDA has been communicating with the Trump administration, encouraging them to work collaboratively to advance the health and well-being of all Americans while also protecting what works—the pharmaceutical supply chain,” adds Davis.

One indicator of his turmoil is a report that drug manufacturers jacked up their imports of active pharmaceutical ingredients (APIs) from around the world almost immediately as Trump began talking about tariffs. In March, according to a report published on Investopedia,

 “The US imported more pharmaceutical preparations than any other product, totaling $50.4 billion. This was an increase of 71% from February 2025, largely due to Trump’s tariffs,” which are yet to be imposed.

For a while, such stockpiling will leave the industry relatively immune to tariff actions, which have varied from week to week since the spring. This may ultimately turn into just one more issue as the manufacturers deal with the administration; earlier, there was talk of imposing a pricing control strategy to lower costs, and then, at press time, rumors of 200% tariffs.

Another trade-related issue of importance to US wholesalers—individual states opting to import lower-cost drugs directly, usually from Canada—seems to be at a standstill. As of late 2024, Florida, the state that began planning its program in 2020 (and receiving an FDA go-ahead in 2022) had spent millions setting up its process for supplying state agencies, but had yet to deliver any medicine. In 2025, the Trump administration’s well-publicized tariff confrontations with Canada might make the assumed savings of purchasing the drugs there moot.

A May analysis from a legal firm, Buchanan, Ingersoll & Rooney PC, noted that FDA has revamped its review process for state importations “with the goal of alleviating [its regulatory] burdens,” but there were still no active drug movements.

Colorado, Maine, New Hampshire, and New Mexico are among the states also seeking importation permits.

All that being said, the pharma industry as a whole has a rocky road ahead. In addition to the swerves over tariffs, prices and medical policies on drugs from both the White House and HHS/FDA, the industry is facing a looming patent cliff, reminiscent of—but different from—the earlier cliff in the 2010s, according to Bill Roth, general manager and managing partner of IntegriChain’s consulting business, which includes Blue Fin Group (and a 

columnist). Rapid growth in the number of drugs going off patent usually results in falling revenue in most drug-distribution channels. A new shift to cash-pay programs (where consumers sidestep both wholesale distribution and insurance-industry reimbursement) is changing the dynamics of pharma sales—and negatively, for the most part. But those losses could represent savings for the consumer cash payer.

For years, there has been a trend in various professional services—law, government relations, engineering, and others—to hire a company to manage the administrative side of the business, leaving its practitioners focused on their specialty. This has been true of medical practices as well, and private-equity firms have been active in the area. Now, however, there is a growing trend of the Big Three and others buying up those “management service organizations” (MSOs) and providing both administrative and business support.

The grandaddy in this business is McKesson, which invested in and developed US Oncology in the early 2010s. Today, US Oncology comprises 2,700 community oncologists spread around much of the country. McKesson notes that these oncologists and their patients can interact with CoverMyMeds, another McKesson unit that handles prior authorizations and financial support for patients, as well as Biologics, McKesson’s specialty business in biopharma products.

This year, McKesson has expanded its MSO activity with the purchase of a controlling interest in PRISM Vision Holdings, a provider of general ophthalmology and retina care, for $850 million for an 80% interest. PRISM comprises 180 practitioners in 91 locations.

Late last year, Cencora invested $4.6 billion to acquire 85% of Retina Consultants of America (RCA), the leading provider in the retina space representing 300 specialists operating in 23 states. “The addition of RCA will add to Cencora’s capabilities in specialty and expand its MSO business, broadening physician and manufacturer relationships as well as Cencora’s value proposition to all its stakeholders,” said the company.

A year earlier, Cencora did a similar deal with TPG Capital to acquire OneOncology, an MSO representing over 900 community oncologists across 14 states. That deal was valued at $2.1 billion, with Cencora taking a minority share for $585 million, and having the option to buy out the remainder at a later date. (OneOncology subsequently did a deal of its own to acquire another oncology MSO.)

Last September, Cardinal Health announced its purchase of Integrated Oncology Network (ION), a physician-led independent community oncology network, for $1.115 billion. ION includes more than 100 providers in 10 states, and will be combined with Cardinal Health’s equally sized Navista practice alliance in oncology.

More recently, Cardinal Health acquired GI Alliance, the leading gastroenterology MSO with more than 900 physicians in 20 states, for $2.8 billion (a 71% share of the company, with later rights to acquire the remainder), and the Advanced Diabetes Supply Group (ADSG), one of the country’s leading diabetic medical supplies providers, for approximately $1.1 billion in cash. ADSG serves approximately 500,000 patients annually by providing therapies from leading manufacturers. The former will be folded into Cardinal Health’s Pharmaceutical and Specialty Solutions segment, while the latter will merge with Cardinal Health’s at-Home Solutions business.

A unifying theme of these MSOs is that they depend on specialty pharmaceuticals, which the wholesalers, in turn, are eager to provide. Another theme is that they are primarily community (i.e., independent of hospital) practitioners. Specialty has been the growth area of pharma for years now, representing half the revenue of
manufacturers but only a fraction of the volume of overall drug dispensing. The close relationship also enables the wholesalers to collaborate with manufacturers on clinical trials, and on generating data on patient outcomes and provider preferences.

There is criticism of the acquisitions by antitrust leaders in Congress and elsewhere over potential exclusionary practices by the wholesalers. On the other hand, community practitioners are a viable alternative to increasingly consolidated health systems that have their own antitrust concerns, and the giant wholesalers can be a helpful backstop for the independent practitioners. Finally, as wholesalers compete against each other (and against PBMs) for preferential relationships with manufacturers, the ability to offer access to networks of specialists can be a key differentiator.

It is vital for US wholesaler-distributors to handle specialty pharmaceuticals, since that has been the revenue-growth opportunity for years now. A less compelling case can be made for cell and gene therapy (CGT), which certainly has the attention of biopharma manufacturers, but which is still a tiny volume component of drug distribution. Nevertheless, each of the Big Three has a sizable stake in CGT, offering specialized storage and logistics capabilities, and competing on the range of complementary services they can offer.

“Who better to help industry navigate the complexity of CGT commercialization than the companies that are routinely in touch with providers, payers and patients?” asserts Joe DePinto, president of InspiroGene, a recently formed unit of McKesson. “We see where the future is going,” he adds, noting that recent industry data shows that 16 of the top 20 biopharma companies have, or are collaborating with, CGT development.

“Commercialization planning—including financial risk management, channel strategy, health economics, and payer approach—is critical to launching a complex treatment,” said Fran Gregory, VP, Emerging Therapies, at Cardinal Health. Gregory’s comments are in the “2025 Advanced Therapies Report” from Cardinal Health, which surveys practices and experiences across the CGT commercialization ecosystem.

Indeed, the major wholesalers already have assets in place that can be dedicated to CGT commercialization once they have gone through what McKesson’s DePinto calls a “cell-and-gene-izing” process. At McKesson, this included third-party logistics (3PL) services and building a dedicated cold-chain, repacking, and kitting facility at an existing distribution center in Clermount, KY, coordinating dedicated services with McKesson’s Biologics business unit and its specialty pharmacy, tapping into the CoverMyMeds unit for prior authorization and payer relations, and setting up clinical trial relationships with, among others, McKesson’s US Oncology subsidiary, and a relationship with the Sarah Cannon Cancer Research Network.

At Cardinal Health’s Advanced Therapies business unit, assets include the company’s existing 3PL network to which was added an 8,000-square-foot Advanced Therapy Innovation Center at its La Vergne, TN, distribution center; the Sonexus patient-relationship solutions business, the Navista oncology MSO, and a Real-World and Evidence Insights service.

At Cencora, the Emerging Therapies business unit taps into Cencora’s 3PL services, plus the World Courier express subsidiary (which has ultra-cold storage facilities around the world), and patient access and adherence services.

McKesson’s recently launched InspiroGene business is moving aggressively, according to DePinto. The unit developed a home-grown IT system, InspiroLink, for product ordering and support for providers, and a patient-services activity, InspiroCare, that complements CoverMyMeds. “I like to tell my people that we’re an emerging CGT company within a No. 9 Fortune 500 company,” he boasts.

The Big Three wholesalers, plus other wholesaler-distributors competing to offer CGT services to biopharma, also compete in a larger arena that includes companies dedicated to specialized biopharmaceutical services, such as Cryoport, Biocair, or global logistics players like UPS, DHL, and Kuehne+Nagel. InspiroGene produced a graphic that shows the importance of logistics for CGT, in that patient care is usually available only at medical research centers authorized by CGT manufacturers to provide service (see Figure 1).

As of press time, two events relative to wholesaler activity were imminent: FDA’s “stabilization period” for completing compliance responsibilities for the Drug Supply Chain Security Act (DSCSA) was ending; and HDA was set to hold its annual Traceability Seminar (Aug. 4-8, Washington, DC), an industry event for securing the pharmaceutical supply chain.

HDA reports that 97%-98% of its members’ inbound shipments were being properly documented and that a comparable percentage had outbound data either being delivered to pharmacy clients directly, or to portals where they can be downloaded by the downstream dispensers (which includes hospital pharmacies, clinics and other entities).

“A year ago, we were looking at significant disruptions in getting properly documented shipments,” says Matt Sample, senior vice president of manufacturer, quality, and replenishment operations at Cencora. “Now, 98% compliance is great—but 2% of a billion shipments is still 20 million that need hands-on follow up.” While the wholesaler preparedness is strong across the board, pharmacies have been a little slower to the game, but their preparedness is improving rapidly, he says. Also, “even if extensive field inspections are outside the FDA’s normal scope, pharmacies need to pay attention to their state boards, who are stepping up.”

In fact, a session at the Traceability Seminar will feature a seemingly picture-perfect example of DSCSA enforcement: Early this year, as referenced by Sean O’Hearen in this month’s column, a pharmacy in Arkansas noticed labeling discrepancies on a shipment of Novo Nordisk’s Ozempic medication, and a state inspector, using the Pulse IT platform that had been set up by the National Boards of Pharmacy for DSCSA product verification, confirmed that the shipment was counterfeit on the spot. The intention of DSCSA, from when it was made into law in 2013, has always been to prevent such counterfeit incursion.

Meanwhile, there is talk among some DSCSA experts of a "next phase" of tracking technology—specifically, the return of radio-frequency identification (RFID)—even though there is no impetus to do so from the FDA. RFID uses electronic tags that can be read from a distance without so-called line of sight, a limitation of current 2D barcodes. Cencora and Antares Vision, a packaging and technology vendor, participated in the second phase of a program organized by the Axia Institute, an offshoot of Michigan State University that promotes RFID technology. According to a recently-announced summary,

 the pilot successfully tracked nearly 7,000 packages through a real-world distribution process, with 100% traceability. The Axia Observer Platform, IoT technology developed by the Institute, collected the data. RFID tagging of pharmaceuticals (which is offered by, among others, Cencora) provides efficiencies in collecting data, but the cost of the tags is still an obstacle as it was in the early 2000s prior to passage of DSCSA.

DSCSA is by no means the only regulatory framework for safe, secure pharmaceutical shipping. For nearly a decade, European companies have been complying with the EU’s good distribution practices (GDP) standards, which involve monitoring and documenting drug movements, shipping and storage conditions and the like. Many US companies (both manufacturers and distributors) also follow this guidance, but overall compliance is spotty, and FDA only depends on longstanding good manufacturing practices (GMP), which are not as detailed.

The Pharmaceutical Cargo Security Coalition (PCSC), founded and managed by Chuck Forsaith, a VP at HDA, began an initiative last year to provide a means of accrediting GDP compliance among US players. Earlier this year, PCSC reported that six logistics companies (AGY Logistics, D-Trans, KL Harring Transportation, Baylor Trucking, Tucker Company Worldwide, and Prime Inc.) have joined DeSpir Logistics in going through the accreditation process.

“We also have an equal number of companies starting the process,” says Forsaith. Additionally, there has been interest shown from both manufacturers and distributors in regards to individualized training in the GDP space, even though the accreditation itself it had been set up primarily for industry supporting vendors. 

1. Hussain A. The US Imports More of This Than Anything Else. Investopedia. July 7, 2025. 

https://www.investopedia.com/us-imports-more-of-this-than-anything-else-11731278

2. State Importation Revamped: FDA Announces Enhancements to State Importation for Eligible Prescription Drugs. Buchanan, Ingersoll & Rooney PC. May 28, 2025. 

https://www.bipc.com/state-importation-revamped-fda-announces-enhancements-to-state-importation-for-eligible-prescription-drugs

3. 2025 Advanced Therapies Report. Cardinal Health. 

https://www.cardinalhealth.com/content/dam/corp/web/documents/Report/cardinal-health-advanced-therapies-report-25.pdf

4. Phase II Overview and Results: Axia's Pharma End-to-End RFID Pilot. Michigan State University. 

https://axia.msu.edu/pharma-end-to-end-rfid-pilot/

Articles

The US drug wholesaling industry is experiencing relative stability following a significant settlement over opioid distribution. The focus has shifted to how funds are managed and the ongoing scrutiny of pharmacy benefit managers. The Big Three wholesalers—McKesson, Cencora, and Cardinal Health—are financially robust, with substantial revenues. They are expanding into management service organizations (MSOs) and specialty pharmaceuticals, including cell and gene therapy. Regulatory compliance, particularly with the Drug Supply Chain Security Act, remains a priority. The industry faces challenges from potential tariffs, patent cliffs, and evolving drug importation policies.

Despite the ongoing turmoil over tariffs, medicine costs, and FDA policy, US wholesalers are performing well. 

Pharma Wholesalers: Looking for Growth

In the midst of a continually growing, healthy market for pharmaceutical cold chain services, the number of worries seems to be keeping pace. The ability to deliver valuable pharma products at specified temperatures is not universal; logistics costs jump up and down as natural and manmade disasters interfere with deliveries; and the business environment is fluid, as a lull settles into the rapid-fire cell and gene therapy (CGT) market. Behind all of this is the new uncertainties to international trade brought about by the Trump administration, which simultaneously wants to impose tariffs on selective nations, demand reshoring of pharma production, and seek lower drug costs. And behind all of that are concerns about cargo theft and counterfeit or adulterated drug trafficking.

On the other hand, clients of cold chain services can rely on increasingly sophisticated packaging, containerization, and delivery technologies. Vendors are building out more options for delivering products safely and securely, and while regulatory screws continue to tighten around shipment documentation and sustainability and environmental restrictions, new technologies offer alternative pathways to compliance.

All in all, it makes for a lively market for investment in vendor growth. 

“The interest of the private equity community in the pharma cold chain remains robust,” says Karen Donovan, a principal at Health Business Group, a consulting firm that has been involved in past transactions. “Mainly, they are looking for the potential of high-value, high-growth businesses.”

A timely example of this is Frontier Science Solutions, a warehousing and logistics company that is seeking to build a “direct global gateway” between Europe and North America. The company says it has received a $1.5-billion investment from GID, a North Carolina real estate and investment firm, to expand operations at Shannon Airport, County Clare, Ireland, and Wilmington International Airport in North Carolina. The Wilmington facility will be structured as a free-trade zone, and will be GMP-compliant for room-temperature (15-25°C), cold-chain (2-8°C), and frozen (0 to -80°C), while also including cryogenic) pharmaceuticals, along with storage, packaging, and delivery services. Ground has been broken on the Wilmington facility, with planned overall capacity of 500,000 square feet (and another 250,000 square feet in the works). It will be operational in August, says the company.

Growth is also on the minds of MD Logistics, which announced last September it would be converting half of its 400,000-sq. ft., Plainfield, IN, facility to full cGMP compliance, with both room-temperature and 2-8°C service. The company, an independent subsidiary of Nippon Express, will also benefit from a similar GDP conversion of Nippon’s Philadelphia facility.

Growth through acquisition has been an attractive option for many organizations in the pharma cold chain. One recent example is Knipper Health, long known for its marketing services and 3PL operations in pharma. At the end of last year, it announced the acquisition of the sample fulfillment services of Patheon Pharma, from Thermo Fisher Scientific.

“The Memphis facility will expand our cold chain footprint beyond our existing Lakewood, NJ, and Charlestown, IN, locations and further strengthen the company’s position for future growth,” said Michael LaFerrera, Knipper Health CEO.

The pharma cold chain market generally breaks down into temperature-controlled packaging, logistics services, and instrumentation/data. New offerings in these categories include:

Artyc, a relatively recent Silicon Valley startup, has extended the technology of its battery-powered, reusable MedStow Micro container to 5 L. The company has been working for a couple years with a sample-management clinical company, and now wants to handle outgoing deliveries of biological drugs and CGT trials. It is rated for up to 72 hours of service before battery recharging, and a -20° to 25°Ctemperature range.

 The Cryoport Express Cryogenic HV3 Shipping System is configured roughly like a carry-on suitcase for air passengers, but can safely hold CGT products and related items at temperatures to -150°C . It can be used for lab-based storage, as well as delivery to point-of-care facilities. Condition and location monitoring are integrated into the container. Cyroport also operationalized its IntegriCell service in the past year, via a newly opened facility in Villers-le-Bouillet, Belgium, and complementing a similar facility at its Houston, TX, location. IntegriCell offers pharma clients a method to pre-qualify apharesis extractions from patients (the portion of human blood that contains white cells, aka leukopaks), cryopreservation, storage, and delivery—essentially, the first step to developing an autologous cellular therapy.

At the other end of the volume range, Envirotainer has expanded its RelEye line of pallet containers to an RKN (single pallet) version, for air freight of bulk deliveries. The existing RelEye line includes the RAP (four pallet) and RLP (two pallet) versions. All have active refrigeration via onboard compressors; fans and batteries; and advanced insulation technology. Each has 18 sensors for internal and external condition monitoring, and can be backed up by the company’s 24/7 Control Tower service. Rated for 130-170 hours service at 4-30°C. RKN tare weight is 583 kg.

 An alternative to the active-powered unit-load device (ULD) technology is passive temperature control, via insulation and phase-change material. Sonoco ThermoSafe introduced the Pegasus ULD several years ago, but in the past year has had it certified by over a dozen air carriers. One of the first to certify the unit was United Air Cargo, which has since certified an additional 14 types of bulk containers. Unlike other passive pallet containers, the Pegasus unit is FAA-certified as an AKP ULD that locks into place in the cargo hold, providing some efficiencies to the air carrier. Active units, which are generally heavier than passive ones, have been competing for market share for years—and will continue to do so. The unit is rated for up to 300 hours of 2-8°C service, and tare weight is 616 kg.

 Somewhat straddling the bulk container range is the new Credo Vault from Peli BioThermal. With an internal capacity of 1638 L, the passive, highly insulated unit can be packed four to a PMC pallet (a standard “cookie sheet” for loading aircraft), thus affording the shipper to send products in multiple temperature ranges in one shipment. The unit is rated at 144 hours at 2-8°C, and has a tare weight of 398 kg.

Temperature control for labs, hospitals, biobanks, and the like is being enhanced with the newly introduced VIP Eco-Smart ultra-low-temperature freezer from PHC Corp. of North America. The units have capability between 528 and 729 liters, and can now switch between 115 Vac and 240 Vac. An innovative inverter compressor, combined with high-performance insulation, cuts average power consumption by 30%, according to the firm.

Q Products & Services, well known in the industry for its PalletQuilt and related thermal covers (usable on both insulated or uninsulated containers), is extending its product lines with the Power In-Lock device, a locking and communication module to be mounted in trailers, on containers, or storage units. The module is activated via a Bluetooth connection, and provides status to one’s desktop or mobile device.

When looking at the products these vendors protect and deliver, two trends stand out: the entire pharma industry is going in a direction of more temperature-controlled products (predominantly injectable biologics); and the cold chain vendor community is competing aggressively for future CGT business.

That CGT focus is occurring even though there is something of a lull in the CGT developer space. According to an annual count

, the number of CGT bankruptcies was 27 in 2023, dropping to 22 in 2024, which it says “may point to a gradual recovery.”

For gene technologies, especially those making use of CRISPR technology, the current perspective is grim: “Most stocks of CRISPR companies are down 80% from their 2021 peak,” according to 

"We expect the macroeconomic and sector-specific challenges that have impacted many companies serving the life sciences industry to continue for the near future," Jerrell Shelton, CEO of Cryoport, told analysts at the company’s Q3 2024 meeting. Nevertheless, “we continue to be optimistic about our long-term business growth trajectory.”

All that being said, the longer-term outlook is positive. An annual report from BioPlan Associates, which tracks global biomanufacturing trends, reported that the capacity for bioprocessing reached 14 million L in 2024, up 15% from the year before, and will grow at double-digit rates through the next five years. And the American Society of Gene & Cell Therapy, in a quarterly report based on the Citeline data service, counts a surprisingly high 33 commercial gene therapies, 35 RNA therapies (including a bunch of COVID-19 vaccines), and 72 cell therapies approved worldwide, with healthy pipelines of investigational products in the works.

Even so, CGTs will be an unusual platform for cold chain logistics growth, for the simple reason that a large number of them are based on developing therapies for individual patients, and for rare to ultra-rare diseases. A 2023 study from IQVIA, “Pharma’s Frozen Assets,” found that during 2021, all cold chain pharmaceuticals represented only 0.2% of the industry’s volume of prescriptions, while at the same time constituting 32% of the industry’s revenue. By volume, CGTs will represent a small fraction of that 0.2%

So, the bulk of the pharma cold chain market is 2-8°C refrigerated product, and not ultra-cold CGTs. In the 2-8°C regime, the star products today are the GLP-1 obesity and diabetes treatments; over the past few years, Novo Nordisk’s Ozempic and Wegovy GLP-1s have risen to $40.6 billion in sales, according to the company. Eli Lilly’s sales of Mounjaro and Zepbound have jumped to $5.4 billion in 2024, after being on the market a shorter time than Novo Nordisk’s. The GLP-1 market is expected to expand as new therapeutic targets are found, and as next-generation GLP-1s are approved. Biosimilars, whose lower prices expand the market for biologics, are another growth factor, as are vaccines. Currently, the 2-8°C sector is valued at nearly $400 billion, according to the IQVIA study, and has been growing at almost twice the rate of room-temperature products.

As money continues to flow into CGTs, via venture capital or Big Pharma acquisitions, vendors continue to invest in the field. UPS Healthcare Logistics recently announced that it plans to double its revenue between 2023 and 2026 (to $20 billion) and is following through by acquisitions of two European pharma cold-chain companies, Frigo-Trans and BPL. It has also just announced that three earlier acquisitions—Marken, MNX, and Polar Speed—will now be united as UPS Healthcare Precision Logistics. The announcement did not specify CGTs, but given Marken’s long involvement in clinical trial logistics, that can be assumed.

Other recent acquisitions include Cold Chain Technologies’ purchase of Tower Cold Chain, a UK company—both providers of temperature-control packaging and containers—and Sensitech’s purchase of the Monitoring Solutions business of Berlinger & Co. Both of these companies have been providers of temperature-tracking hardware and services.

It’s possible that the Trump administration’s full-scale reversion away from sustainability and climate change mitigation will have broader, global implications, but for now, most governmental and corporate efforts remain focused on making progress on those fronts.

“While policy shifts in the US may create short-term discussions, the broader industry trend is clear—pharma companies are continuing to invest in sustainable practices,” says Alison Crawley, global sustainability manager, Sonoco ThermoSafe, “not only to meet regulatory requirements but also to drive efficiency, reduce waste, and support their own ESG commitments. Sustainability isn't just a regulatory obligation; it’s a business and reputational imperative in a globally interconnected market.”

In the recent past, commentators on the sustainability issue in pharma cold chain noted that discussions had gone from it being a “nice to have” feature of vendor contracts to a “must have.” Now the discussion is evolving further, with vendors offering state-of-the-art analytical techniques for measuring carbon footprints precisely. One example is SkyCell, which has marketed a bulk container for air freight for several years; it offers a “TCO + CO2e” (total cost of ownership plus CO2 emissions) formula for its reusable units. Envirotainer and others offer comparable analytical techniques.

Another aspect of addressing the sustainability issue is to switch from air freight to ocean shipping, via “reefer” containers that have onboard refrigeration. Ocean freight for cold chain pharma took a hit during the pandemic, when ports around the world were backed up for weeks because of delivery hurdles (which in turn raised costs astronomically), but has since bounced back. Conventionally, ocean freight offers a seven- to tenfold reduction in shipping costs, and an even greater reduction in carbon emissions.

Several years ago, an industry consultant, Alan Kennedy, pioneered an industry consortium for ocean freight, called the Poseidon initiative, to harmonize operating practices among life science shippers and customers. Now, saying that “With the market moving towards more resilient and sustainable intermodal transportation solutions, it was not deemed appropriate (nor unbiased) to focus on a single mode,” according to Kennedy. To that end, Poseidon has been subsumed into a new consortium, GDP-Universal Compliance Initiative (GDP-UCI), and now has 36 members, ranging from ports to logistics companies and a few pharma shippers. The deliverable, says Kennedy, will be an Integrated Pharma Eco-Lanes certification project to align pharma's environmental/sustainability objectives with GDP.

Ocean freight also figures in the reusability or reverse-logistics practices of cold-chain packaging companies. Emball’iso, a global provider of passive containers, touts a four-continent, multiple-site reconditioning system that allows clients to return the containers via ocean freight.

Sidestepping the reusability process altogether, packaging provider Temperpack has done away with expanded-polystyrene insulation altogether, offering two alternative materials—ClimaCell, made from paper and starch, that can be “curbside recyclable.” It has won Cytiva, a biotech manufacturer, as a client for the company’s cold-chain products.

Although the relatively high carbon footprint of air freight is a challenge, that community is not sitting still. One initiative, obtaining fuel from renewable or biological sources—sustainable aviation fuel—has been deployed by several air carriers. Another, growing rapidly, is drone delivery, whose carbon footprint is only the electricity that charges its batteries.

Drone delivery, led by companies like Zipline or Matternet, has been in use for several years in African countries, where getting needed health supplies to remote regions is a challenge. Now, however, it is making headway in the developed world, especially for last-mile delivery from hospital systems. Zipline, for example, is commercializing a Platform 2 drone, which can hover upwards of 300 feet over a location, then drop a “droid” that has some maneuverability on a tether, complete the delivery, and then retract the drone and return to its home base. Both Zipline and Matternet have FAA approval for “beyond visual line of sight” (BVLOS) operation, meaning that the drone flight does not need on-the-ground visual guidance. Both companies, interestingly, note that they are compatible with cold chain deliveries.

The push toward more sustainable operations has some hurdles to overcome besides the Trump administration animus. France, for example, announced last fall that a mandate to eliminate polystyrene and similar polymers from packaging (which would have significant implications for cold-chain packaging still used for the majority of shipments) by January has been pushed back to 2030.

— Nicholas Basta is Founder and Editor Emeritus of Pharmaceutical Commerce

This analysis might underplay part of the cold chain market, because there are some room-temperature products that require temperature control similar to the refrigerated products. Additionally, the actual shipment volume of, say, an injectable pen with its associated temperature control could be an order of magnitude larger than a comparable shipment of an oral solid.

1. Masson, G. The 2024 Biotech Graveyard. 

https://www.fiercebiotech.com/special-reports/2024-biotech-graveyard

2. Mast, J. The CRISPR Companies are Not OK.

https://www.statnews.com/2025/02/06/crispr-gene-editing-medical-breakthrough-not-matched-by-financial-success

Vendors are growing, and product and service offerings are expanding.

The Hot Market for Cold Chain Services

Like a football game where the ball is fumbled at the goal line, the US pharmaceutical supply chain must wait yet again for a complete traceability solution to take effect. When the Drug Supply Chain Security Act (DSCSA) was passed in 2013, it set a 10-year process of industry preparation for tracking pharmaceuticals at the package level, from point of manufacture to point of dispensing. In 2023, the FDA allowed for a one-year “stabilization period” before enforcing the law. Now, a year later, it has again deferred enforcement, depending on the type of trading partner, for six months to two years.

Going forward, the FDA has proposed a schedule for exemption expiration (i.e., when compliance becomes mandatory):

Manufacturers and repackagers: May 27, 2025

Dispensers with 26 or more full-time employees: Nov. 27, 2025

Previously, dispensers with 25 or fewer employees were granted an exemption until Nov. 27, 2026.

Industry representatives generally supported the action, recognizing that a significant portion of the supply chain was still not ready. The position of the Healthcare Distribution Alliance (HDA), the trade group of wholesalers, was to “applaud” the decision, saying that “Given the interdependency of the pharmaceutical supply chain, FDA’s phased-in approach will allow supply chain partners to better align their data exchange processes to ultimately achieve full implementation.”

At the National Association of Chain Drug Stores (NACDS), the trade group “expresses appreciation to the FDA for making a sound decision,” while noting that its members were reporting receiving complete DSCSA data “for only about 25% to 50% of prescription drug products that dispensers receive.” Per DSCSA rules, “without compliant data and transactions, dispensers cannot accept ownership of the product, and the product either must be quarantined or rejected and sent back to the trading partner.”

But unofficially, there is some grumbling, including a belief that the string of deferrals will continue.

“The industry has taken massive, monumental steps to get to where we are today,” says Greg Cathcart, senior vice president at NNIT and president of Excelis Health Solutions, a longtime DSCSA specialist. “I’m disappointed that FDA couldn’t push this through and start slapping the bad guys.”

He is also suspicious that after the current postponements are expired, other delays could appear.

Another industry consultant, Scott Pugh, principal of Jennason LLC, is even more pessimistic.

“The [pharma supply chain participants] are not being forthright in why we continue to have delays,” he notes. “It won’t surprise me at all that there will be more delays in the future.”

The basic problem is that no one is asking why the interoperability of diverse systems, from a group of solution providers, is difficult to achieve.

“The EPCIS (Electronic Product Code Information Services) standard is robust, but different vendors are interpreting it different ways,” says Pugh, leading to incompatibilities that have to be resolved on a point-to-point basis.

EPCIS version 2.0, a standard developed by the GS1 organization for supply chain visibility, is used in a variety of industries besides pharma. Pugh’s comments hark back to the early days of pharmaceutical package “pedigrees,” and the belief that eventually, pharma supply chains would exchange information as smoothly as, say, international credit-card transactions by banks.

A more positive view comes from Elizabeth Gallenagh, general counsel and senior vice president, supply chain integrity, at HDA. She points out that each successive postponement by the FDA has led to tighter, stricter requirements to continue; the latest delay gives carte blanch to pharma trading partners but only if they are already testing electronic data exchange. The latest exemption from DSCSA compliance “is not meant to be a free-for-all if you haven’t done anything, or that you should stop doing anything," says Gallenagh. "Organizations need to continue to work through lagging trading partners, bringing the system to fruition.”

Dan Walles, serialization and traceability business leader at TraceLink, a leading solution provider, adds that many pharma trading partners are already up and running with their systems; within the TraceLink client network, a “terabyte a month” is being generated, representing billions of DSCSA transactions cumulatively.

The intent of DSCSA all along has been to tighten up US supply chains and prevent diversions or counterfeiting of drugs—at the unit-of-use level—from the point of manufacture to the point of dispensing. According to HDA data, 99% of drug shipments received have these barcodes now. Earlier DSCSA compliance milestones called for sharing bulk data with trading partners. The “enhanced drug distribution system” nominally in effect now requires the individual barcodes to be tracked, and to be accompanied by trading-partner data to validate the transaction. The sticky part has been the ability to align the physical shipment with the electronic transaction (for example, shipments received without transaction data, or the latter without the former.)

Under full DSCSA compliance, a shipment must be quarantined at the respective trading partner until the data are verified. HDA data (as of the end of 2023) show that the wholesalers themselves were able to scan only 80% of incoming shipments for serial data; the task is also complicated in that 5% of the data were unreadable. These vagaries are why pharmacies, at the tail end of the supply chain, report 20% to 50% missing data for incoming shipments.

When there are such data gaps, what is to be done? The planned-for response is called “exceptions handling”—a manual, semi-automatic or fully automated system to correct the data gaps. LSPedia, a DSCSA software provider, has had considerable success recently with a product called Investigator, a tool that can automate some of the EPCIS syntax or data errors, and automatically generate an email to the originating trading partner for verification. According to Riya Cao, CEO, Investigator reduces the time spent resolving exceptions from days to hours (or less).

“We’ve run surveys of our customers on the exception frequency they are experiencing, and it’s gone down from 9.8% at the beginning of this year to 6.5% currently,” she says.

The currently indefinite regulatory situation has another component: the status of exempted manufacturers or other trading partners. In late 2023, FDA issued instructions

 for "waivers, exceptions, and exemptions (WEEs)" to the then-looming DSCSA deadline. The program enables a party, typically a manufacturer, to apply for an exemption from DSCSA compliance when barcodes and related documentation are not finalized. The WEE is intended to have a set time limit, after which the party can re-apply.

The latest enforcement delay, announced in early October,

 granted exemption to trading partners who are already exchanging DSCSA data. Trading partners who are not, and hadn’t previously obtained a WEE, were able to request a WEE until the end of November. (Left unsaid was the status of companies not exempted and not possessing a WEE.) This state of confusion could be a knotty problem for a wholesaler who is receiving exempted data, WEE data, and non-WEE data. LSPedia’s Cao says that her company is readying a new compliance module that will provide current data on trading-partner WEE status—in effect, a new data-tracking service to make up for the lack of compliant data.

Yet another subsidiary component of DSCSA traceability is the process of handling saleable returns—a longstanding practice among trading partners whereby unsold drug stocks are returned for a refund. Some of these returns are discarded, but some of them (amounting to tens of millions of dollars annually in the US) can be resold. But to do that legally, the products’ tracking data must be received, validated, and reissued when a transaction is made.

The mechanics of processing these data was not formalized under DSCSA, but industry, led by HDA, created a verification router service (VRS) to enable the current possessor of product to obtain tracking data from its origin. (Since the product might have changed hands multiple times in the supply chain, it is not automatically known who the originator of the product is.) According to industry sources, the VRS system, which requires collaboration among the solution providers that are generating and storing DSCSA data for their clients, is up and running, although its use is not universal. (Trading partners who are bothering to collect the data can also find its source manually through their own efforts.)

According to HDA, the current members of the VRS Provider Network are: Antares Vision Group (which includes the solution provider rfXcel); LSPedia; Movilitas.Cloud; the National Association of Boards of Pharmacy (NABP); Optel; Tracelink; and Trust.med.

Within the VRS Provider Network, NABP, which represents state-level pharmacy regulation, has set up a service for its members overseeing retail pharmacy. The service, Pulse, is designed to make it easy to verify the identity of a trading partner. This becomes more necessary as transactions move from a face-to-face negotiation between buyer and seller to an online marketplace abetted by DSCSA-validated transactions. In other words, both the product and its seller can be authenticated with the appropriate digital signatures.

Pulse, in turn, has a group of vendors that offer interoperability with their data: Antares Vision Group (rfXcel); Axway; Engineering Industries eXcellence (owners of Movilitas.Cloud); InfiniTrak; LedgerDomain; LSPedia; Optel; and Systech.

LSPedia’s Cao calls NABP’s effort a “noble vision,” but notes that take-up among retail pharmacies has been limited (recently, Walgreens announced its participation). The trading-partner-identification process also affects the rest of the supply chain; trading partners worry about an anonymous request within a network seeking either to extract or to inject information that could affect downstream transactions. Yet another effort, managed by the Open Credentialing Initiative (OCI), seeks to provide technological solutions to validated identification. The sponsors of this organization (all of which specialize in digital credentialing) are: LedgerDomain; Legisym; Spherity; and Trust.med.

A vendor that has established a preferential position in the DSCSA compliance space is TraceLink, which is aggressively moving to take advantage of the relatively large client base it has. According to Walles, TraceLink has more than 1,600 clients globally, to which some 290,000 trading partners have linked. A long-standing part of TraceLink’s business model is that a client can onboard its preferred trading partners; and once those trading partners are in the network, they are identifiable to other TraceLink clients.

Walles says that the current version of its DSCSA platform, Magnum Opus, is being built out with 50 types of business transactions, all of which depend on “serialized data as a tool to provide visibility across the supply chain.” One example of this functionality is a digital recalls tool, which automates the workflow for managing a product recall from pharmacy shelves, typically a highly manual process. With the appropriate serialization data, the recall can be targeted to the specific lot or item numbers, and where they are stored. He says that this capability is an example of the “value beyond compliance” that practitioners in the field have been hoping for; and it’s “making a meaningful positive impact” on pharmacy operations.

Last year, the company announced the Multienterprise Information Network Tower (MINT), a resource to enable the trading partners along a supply chain to share information and coordinate activities. Between that and the Magnum Opus platform, the solution provider expects to foster an environment where other supply chain specialists can link their systems and distribute trading-partner data faster and more effectively. Most recently, it announced a collaboration with Tecsys, a software provider of warehouse management systems, to this end.

Even as some participants in the pharma supply chain struggle to get compliant DSCSA data systems up and running, others, already well along in implementation, are looking at business improvements. At Excelis Health Solutions, CEO Greg Cathcart says his company is involved in an effort with a major retail organization to rationalize inventories across a large number of retail outlets.

“The company wants to be able to decide, when inventory is low at one outlet, should it reorder from the supplier, or move inventory from another outlet,” he says.

The pharma industry is at the point where high-performing organizations will out-compete the poorer ones, through better use of their DSCSA investments.

Waivers, Exceptions, and Exemptions from the Requirements of Section 582 of the Federal Food, Drug, and Cosmetic Act: Guidance for Industr

https://www.fda.gov/media/113342/download

Waivers and Exemptions Beyond the Stabilization Period 

https://www.fda.gov/drugs/drug-supply-chain-security-act-dscsa/waivers-and-exemptions-beyond-stabilization-period

— Nicholas Basta is Founder and Editor Emertus of Pharmaceutical Commerce

Because of the potential for product shortages at pharmacies, the FDA has not only given industry more time for compliance—but time to catch up on 
boosting the supply chain’s interoperable efforts.

Did Industry Fumble the DSCSA Deadline?

Image Credit: Adobe Stock Images/Nuchylee.com

While the warnings about inabilities to comply with the 2013 Drug Supply Chain Security Act (DSCSA) rose as the Nov. 27 deadline for full compliance approached, FDA stuck to its guns, insisting that compliance would be mandatory (with exceptions) by that date. Now, however, prodded by supply chain participants and a letter from Congress, FDA has pulled back. Under an Oct. 9 announcement,

 it says that trading partners (manufacturers, distributors, and dispensers such as pharmacies) who have already connected with each other to convey compliance data, are now exempt from compliance. Paradoxically, trading partners who do not have this connectedness are still facing the Nov. 27 deadline, unless they apply for a waiver, exception, or exemption (WEE) by that date. Previously, several hundred organizations had applied for WEE status under a mid-2024 FDA pronouncement.

The intent of DSCSA all along has been to tighten up US supply chains and prevent diversions or counterfeiting of drugs from the point of manufacture to the point of dispensing. Most drugs now have 2D barcodes that uniquely identify each drug package; earlier compliance milestones called for sharing bulk data with trading partners. The sticky part has been an ability to track individual items. Manufacturers and wholesaler-distributors have invested billions to accomplish this, but various studies have shown that upwards of 20% of shipments have some type of error that prevents compliant transactions.

Going forward, FDA has proposed a schedule for exemption expiration (i.e., when compliance becomes mandatory):

FDA’s rational for the postponement is simple: “This exemption is part of the agency’s broader efforts to avoid supply chain disruptions and ensure patients will not face delays in receiving the medicines they need.”

The fact that there are existing shortages independent of DSCSA compliance—and probably taking note of emergency shortages that have cropped up in the wake of Hurricane Helene—made the November deadline an unpleasant reality. Significantly, FDA’s announcement notes that “Trading partners who rely on the exemptions described in this [Oct. 9] document do not need to submit a notification or request for a waiver or exemption to FDA.” Essentially, FDA is enabling an honor system where trading partners are supposed to continue their compliance efforts.

1. DSCSA Exemptions from Section 582(g)(1) and Other Requirements of the FD&C Act for Certain Trading Partners. 

. October 9, 2024. Accessed October 11, 2024. 

https://www.fda.gov/media/182584/download?attachment

The now-11-year odyssey to track drugs by item through the supply chain will be under a regulatory exemption for up to two years.