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Click the title above for a link to open the Pharmaceutical Commerce August 2023 issue in an interactive PDF format.

Pharmaceutical Commerce - August 2023 Issue (PDF)

's August issue homes in on a plethora of different topics, ranging from alternate funding programs (AFPs) to the importance of prioritizing patient centricity in the pharma supply chain. However, one focal point in our latest issue surrounds pharma wholesalers and, fresh off the pandemic, a glimpse into the key business trends and challenges today for these essential distribution partners.

In his feature, Editor Emeritus Nick Basta explores the 

 in operations, technology, and service diversification by the “Big Three” distributors in the space: AmerisourceBergen/ Cencora, Cardinal Health, and McKesson. He also reminds readers that as enormous as these wholesalers are—ranked No. 11, 14, and 9 on the 2023 Fortune 500 list, respectively—they operate on the narrowest of profit margins—less than 1%. Basta reports that a shifting R&D investment climate among drugmakers is squeezing margins all the way across the distribution chain. And in a guest piece this month, Archbow Consulting’s Rob Besse notes that "every aspect of the pharmaceutical supply chain is under tremendous pressure to lower costs and increase margins." To that end, for pharma, Besse presents the case for using an 

to potentially meet manufacturers' financial, operational, and logistical needs without adversely affecting patient needs.

Highlighting other coverage this month is Ed Schoonveld's “Value and Access” column, where he explores the disconnect between the corporate communications message and actual internal company processes when it comes to prioritizing patients and value in drug development. Schoonveld also lays out the case for a new addition to the Big Pharma C-suite: a 

. Speaking of columnists, Bill Roth of IntegriChain begins his "

" series of articles by discussing various bundle-types affected by the trendline on the demise of new-item generics, along with the impact of the inability for generic manufacturers to raise prices. For readers seeking a broader subject matter, in her “In Focus” feature, Contributing Editor Suzanne Shelley details how a 

 for drug adherence, harnessing digital tools and behavioral science, can help patients and improve clinical and financial outcomes for manufacturers.

— Mike Hennessy Jr., President and CEO, MJH Life Sciences

The August issue varies in subject matters, from the outlook for drug wholesaling to the value of a user-centric approach for drug adherence.

Telling the 'Whole' Story

’s parent company, MJH Life Sciences®, preaches several mantras to its employees, but one that has always stood out to me was that “collaboration saves lives.” While sounding straightforward, the phrase hammers home the importance of teamwork, whether that be internally—with colleagues—or externally—with the men and women we cover in this industry on a daily basis. This became much clearer to me after attending the DIA Global Annual Meeting in Boston in late June.

Readers will notice that I dive into certain aspects of my experiences in this issue’s “

,” but I would like to take a moment to recognize the efforts of my colleagues spanning multiple brands and departments, including:

•Todd Baker, VP of pharmaceutical sciences
•Lisa Henderson, our group editorial director for 


•Miranda Schmalfuhs, group social media editor for all four brands
•Kate Baker, marketing manager for all four brands

At the DIA event, these individuals were essential in helping to coordinate interviews, making sure they all came together from a logistical standpoint, “dividing and conquering” when it came to attending the multitude of educational sessions, and helping to facilitate new connections for future editorial coverage.

Speaking of upcoming coverage and topics, the

 team has been diligently working to construct next year’s media kit, which will feature a revamped editorial calendar and new areas of focus. I look forward to sharing more information on this in the coming months.

In other news, as I write this, more and more details are being released regarding a tornado that struck a Pfizer manufacturing facility in Rocky Mount, NC, which according to multiple reports, supplies nearly 30% of sterile injectables to US hospitals. There had previously been a rumor that this plant contained Pfizer’s COVID-19 vaccine, but that has since been dispelled. We wish them a quick rebuild!

Nicholas Saraceno is Pharmaceutical Commerce's Editor. He can be reached at

As Pharma Commerce continues to increase its conference exposure, it all could not have been possible without the help of colleagues. 

Collaboration at the Forefront

 Pharmaceutical Executive, Applied Clinical Trials, and Medical Device & Technology 

editorial and marketing teams together under one roof for event coverage, which was a rare occurrence. The Boston Convention and Exhibition Center was home to the Drug Information Association (DIA)’s Global Annual Meeting, featuring over 5,000 attendees from various branches of the life sciences sector. Oftentimes, the publications’ areas of focus don’t intersect, but there is a bit of crossover when it comes to certain topics, for instance, drug pricing and biosimilars.

-specific coverage, I reported from several educational sessions, including:

“Is Mark Cuban Really Solving the Drug Pricing Problem?”

“The Inflation Reduction Act Price Setting: What are the Impacts on Biopharmaceutical Innovation from Different Perspectives?”

“The Future of Biosimilars and Interchangeable Biologics: Global Development, Harmonization, and the Inflation Reduction Act”

As a basketball aficionado, my mind immediately gravitated toward the drug pricing panel that references Cuban. It also featured moderator Nancy Brandish Myers, JD, CEO and founder of Catalyst Healthcare Consulting; Craig Barton, SVP of policy and strategic alliances and executive director, Association for Accessible Medicines; Josie Cooper, executive director, Alliance for Patient Access; and Vinod Mitta, medical officer, Centers for Medicare and Medicaid Services (CMS) Innovation.

Cuban—who is primarily known for being majority owner of the NBA's Dallas Mavericks—launched Cost Plus Drugs in January 2022, which as the session outlined, is an online-only pharmacy that negotiates directly with drug manufacturers, side-stepping pharmacy benefit managers (PBMs) and insurers to offer patients drugs at a lower cost.

Cost Plus Drugs provides more than 1,000 total generics, biosimilars, and brand-name drugs, and it is fair to point out that this compares with other online pharmacies, with the likes of Walmart ($4/30-day or $10/90-day fill for over 100 generics) and Amazon (flat $5/month for Amazon Prime members that sign up for RxPass for unlimited number of covered scripts, and 30-day fill for 50 of the most common generic drugs).

 and sister-brand editors were not attending the educational seminars, we also spent time conducting interviews at our show-floor booth and in the press room. One of several meaningful chats was with Courtney Granville, DIA’s global head of science and scientific strategy, who dove into the multitude of issues that are impacting the broader supply chain, such as drug shortages, the availability of raw materials, and last-mile transport. I also had the chance to speak with Venkatraman Balasubramanian, PhD, Orion Innovation’s SVP and global head, industry solutions, healthcare and life sciences, who explained how synthetic data—information that is artificially created with the help of computer algorithms—can be useful in the post-launch commercial environment.

As we gear up for the next show, you can always find our most recent article and video coverage at 

pharmaceuticalcommerce.com/latest-conference

Pharma Commerce team attends DIA's Annual Meeting for the first time.

The Voyage to Beantown

I have been proud to work in the pharmaceutical industry for more than 35 years. However, there is one thing that I still don’t understand after all this time.

Corporate communications heavily emphasize patients and value, but the internal company processes continue to prioritize speed to FDA approval over providing value to patients at an acceptable ROI. It is hard to believe that an approved drug that sits on the shelf because of poor access is in anybody’s interest, yet company decision-making processes often result in suboptimal market uptake, access restrictions, and/or suboptimal pricing.

In the most recent update of Deloitte’s 

 of the biopharma industry’s ROI, the 2022 ROI for the industry’s late-stage pipeline is projected to be 1.2%, the lowest observed since the study was started 13 years ago. Deloitte is using the report to argue for a “seizing of the digital momentum” in R&D, but the argument could be made that we first need to deal with more fundamental problems in corporate decision-making, specifically those related to delivering differentiated products with real patient value.

 with US and EU payers, serious flaws in biopharma’s evidence packages are highlighted. Payers state that primary endpoints, trial comparators (or lack of comparator), and length of trial are often deemed inappropriate to support value claims, thus resulting in low prices and/or severe restrictions on use. Addressing payers’ evidence demands to demonstrate real patient value may increase cost and risk of clinical failure, but simply ignoring it without a trade-off analysis is not likely to be the right answer.

From my experience in working with many big pharma and small biotech companies, there are many flaws in the decision-making processes that favor theoretical R&D success—i.e., FDA approval overreaching patients—and, hence, commercial success. In personal conversations, access leaders often complain about their lack of ability to impact development decision-making. This is perhaps not surprising, as access leaders often report at many levels below the CEO, thus severely limiting their empowerment and impact.

Based on the points discussed, I have some critical questions for biopharmaceutical company CEOs:

1. When making development choices, are options considered that go beyond speed to FDA approval and benefit the access journey?

2. In revenue forecasting, are your market uptake scenarios consistent with what is realistically achievable under the planned development program?

3. Do you have a senior access champion in your organization, and who has the experience and empowerment to make sure that access is appropriately considered next to other functional aspects for the best company outcome?

4. Particularly for biotech firms: Do you have sufficient (or any) access experience in your team and on your board to guide your preparations for late-stage development, partnering, or commercialization?

Large pharma tend to have strong drug pricing and access expertise on board. Team members understand the decision-making process of global payers and other “access journey” decision-makers. However, changing the corporate decision-making process often is a bridge too far. R&D leaders, who are typically the ultimate decision-makers in drug development, emphasize speed over market attractiveness in line with their typical incentives. Speed to market is important for commercial reasons as well, but not if it leads to a race to nowhere. A strong case can be made for big pharmas to appoint a chief access officer.

Smaller biotechs are most often led by scientists, who understand what is technically required to develop a drug that addresses unmet need. Commercial talent is often only attracted at a much later stage. Even then, the access expertise is still lacking. As a result, development decisions tend to be suboptimal from a commercial view, while putting the company in a poor position for negotiations with big pharma for late-stage development.

Ed Schoonveld is a value and access consultant, and author of The Price of Global Health.

A dive into the issue of evidence gaps, plus the case for a chief access officer.

Are CEOs Getting Access Right?

Alternative funding programs (AFPs) are being used by health plan sponsors to lower their costs, but they are hurting the very patients they should be serving. By forcing the search for funding of specialty drugs elsewhere, patients often must delay treatment that should be covered by their health plan. They also put additional strain on a limited safety net of patient assistance programs that qualifying patients deserve.

With AFPs, health plan sponsors exclude some or all specialty medications from coverage, labeling them as non-essential health benefits (EHBs). This happens despite prescription drugs being one of 10 EHB categories included in the Affordable Care Act (ACA). Without coverage, a patient’s out-of-pocket spending on these drugs no longer counts toward the deductible or out-of-pocket maximum.

Instead, the plans direct patients to separate non-health insurance companies or vendors, that then attempt to connect patients with financial assistance from a pharma manufacturer or charitable assistance foundation. At times, they direct patients to illegally import medications from outside the US.

Patients are told drugs are non-essential

Although specialty medications are FDA-approved drugs, and, therefore, should be covered by all health plans under the ACA, some health plan sponsors deem them non-essential to help reduce their own healthcare-related costs. What one plan deems to be “non-essential,” another plan may not.

Patients required to provide personal info

Vendors require patients to provide details such as household size and annual income to help determine the type of third-party financial assistance they may be eligible for. If patients refuse, the vendors will not help them, leaving patients on the hook for cost.

Patients encouraged to disguise themselves

Vendors help patients disguise themselves as uninsured so that they can apply for patient assistance programs to cover the cost of the prescriptions. No patient should ever be forced to do this, nor should a vendor disguise themselves as a patient.

AFPs tap into limited resources needed by the most vulnerable

Manufacturer and charitable assistance programs are intended for individuals who are uninsured or underinsured, not for individuals who have health insurance that should cover their needed medications. AFPs threaten the sustainability of safety net programs intended for patients most in need by jeopardizing the availability of limited funds.

Patients may incur significant drug costs

Once referred to a vendor, patients have a choice to work with them, or not. If the patient works with the vendor but they are unable to secure funding for them, then the patient may be faced with having to self-pay for the prescribed medication. If the patient chooses not to work with the vendor, they will be responsible for 100% of the drug cost. In each of these scenarios, the cost paid by the patient will not count toward their deductible or out-of-pocket maximum.

Patients may experience delays in treatment

If the vendor determines that the patient is not eligible for assistance from a pharma company or charitable foundation, the patient can ask the health plan for an exception to cover their drug. However, weeks may pass, resulting in a delay in initiation or continuation of treatment, with no guarantee of coverage. Unfortunately, there is no proposed regulation or legislation to ban AFPs. The most important thing patient advocates can do is to make sure elected officials are aware of AFPs and their impact on patients. We encourage patients to be mindful of the language used to describe covered benefits in their plans. We
must work together to ensure that all patients can access and afford their prescribed medications, specialty or otherwise.

Kevin L. Hagan is president and CEO and Amy Niles is chief advocacy and engagement officer; both at PAN Foundation.

While an option for financial assistance, patients should consider the challenges.

AFP Caution Flag for Patients

If you have spent any time thinking about or interacting with the channels in pharmaceuticals recently, you’ve probably thought to yourself, “I think something has changed.” We have retail pharmacies turning away branded prescriptions. We have wholesale distributors charging fee-for-service rates of 300% to 500% of what they had charged just five or six years ago. We have group purchasing organizations (GPOs) thinking about selling to private equity. We have new retailers, GPOs, and distributors getting into the business, while legacy players complain about declining margins. We have pharmacy benefit managers (PBMs) under significant fire exposing their desire for high wholesale acquisition costs (WACs) and average wholesale prices (AWPs). And according to the American Society of Health System Pharmacists, we hit a record of generic drug shortages in the first quarter of this year, while we have report after report of generic manufacturers selling or discontinuing portions of their product lines or simply shutting down their businesses and walking away. What’s happening?

We’ve spent the last year or so staring at these behaviors and have come to a central conclusion. The impact of the 2016 branded patent cliff—in association with the implementation of the 2017 CPI-U penalty for generics—have sent shock waves through the business models that have relied on them for decades. The business areas described above all took significant hits to their financial performances, resulting in changes in leadership and management teams. And we’re seeing these new teams attempting to reinvent themselves while holding their models together.

As noted in a position paper by Bates White Economic Consulting from Sept. 12, 2017,

 the CPI-U penalty on brands resulted from the enactment of the Omnibus Budget Reconciliation Act of 1990 (OBRA 90), when the US government imposed certain regulations on the prices of sole-source (patent-protected) medicines' additional rebates to Medicaid based on the rate of price change over time relative to the overall rate of inflation as measured by the consumer price index for urban consumers (CPI-U). Essentially, if a product’s price has risen faster than the CPI-U, the company selling that product is required to rebate an additional amount to Medicaid that is equal to the amount by which the price of product has exceeded the rate of inflation. As part of the Bipartisan Budget Agreement of 2015 (BBA), Congress extended the CPI rebate provisions to multisource generic drugs.

It may not be an obvious aspect of the pharma industry that so many business models work on a bundled pricing schema that has become highly dependent on economics for generics. In a bundled pricing model, some portion of the products sold are sold well below their cost (usually brands), while the other portion is sold at some higher margin (usually generics). For this bundled pricing arrangement to work for the seller and buyer, the product mix must be predictable and balanced. For the last six years, this has been slowly eroding business models now trying to reinvent themselves.

In this issue's column, I’ll cover five of the bundle-types affected by the trendline on the demise of new item generics, along with the impact of the inability for generic manufacturers to raise price.

For those familiar with generics, historically, larger generic manufacturers have sold about a third of their product at a loss while making enough profit on the remainder of the line to clear an aggregate profit. The loss-leading third works as a hook to secure the relationship with the buyer, and the remainder is where the profit has typically been realized. From the mid 1990s to the mid 2010s, new item generics 

launched at a fever pitch pace, with 2012 being the pinnacle year for generics. New item generics are important to the industry as the generic typically launched at a price between 50% to 90% of the reference product depending upon market competition and reimbursement levels. Then, as more competition entered the generic drug class and reimbursement declined, the price would eventually bottom out at around 5% to 10% of the reference product, the competition would exit the market, and the two to three products left would raise price back up to a balanced level. After 2016, there were no more notable retail generics coming, and on Jan. 1, 2017, the CPI-U penalty was added to generics, creating the inability to raise price as this serves as a penalty due payable to Centers for Medicare & Medicaid Service (CMS) on Medicaid volume.

Given the pressure that the loss of this model placed on channels such as retail pharmacy and wholesale distribution, the purchasing alliances such as Red Oak, WBAD, or ClarusOne, and large hospital GPOs, such as Premier, Vizient, and HealthTrust, have been pressing down on the full portfolio. However, these actions have a long-term effect of decreasing the overall size of the generics market, and brands are simply not as profitable as generics to the channels.


Ask any PBM leader from the late 1980s to current day, and they will proudly describe the role they played in converting sales of branded pharmaceuticals to generics pharmaceuticals. This was their main value proposition to plan sponsors and the reason that retailers used to love PBMs. (Yes, that’s changed quite a bit over the years.) The PBMs would set incentives for a retail pharmacy to maintain a ratio of generics to brands, and if the retail pharmacy sold enough generics, they could receive higher reimbursement margins on all their products. Retailers gladly complied, as dollar for dollar, the retailer could make four to five times the dollars on new item generics. The success of this model is evidenced by 90% of the prescriptions that flow out of a retail pharmacy are generics.

How fast could a retailer convert a branded pharmaceutical prescription? The typical conversion rate since the mid-to-late 1990s has been 90% within the first month; if a brand had a list price of $100, the retail pharmacy might make 5% to 7% percent on it, or $5 to $7. When a generic would launch at, for example, 70% of the brand reference product at $70, the retail pharmacy would make somewhere between $20 to $30 on that same prescription. This was accomplished by the combination of better reimbursement rates and more opportunities for the retail pharmacy to source product. Then, as the price of the product declined and reimbursement went with it—usually driven by the maximum allowable cost (MAC)—the profit would decline to something less than the original $5 to $7 the pharmacy made on the brand. The retail pharmacy would then need to look out to the next new generic for their next opportunity. That is the importance of the 2016 patent cliff and 2017 CPI-U penalty. But payers have held retail pharmacies to that bundled mix of generics to brand and have optimized the reimbursement incentives to continue to favor the generic by both improved dollar economics on the generic and extremely low reimbursement on brands, which are currently at 3%.

This low reimbursement threshold combined with the pharmacy’s cost to service the prescription due to step edits and prior authorizations on some brands has retail pharmacies not accepting some prescriptions for brands—especially new products.

A common question people ask in the industry is how does the wholesale distributor sell branded prescriptions to retail pharmacies at cost less 4% to 5% and to hospital and institutional pharmacies at cost less 5% to 10%? The answer: their generic-to-brand bundle and how they receive their discounts and fees on WAC, and not the contract cost of the product. Just like the payer’s incentive for the pharmacy to sell generics, wholesale distributors create an incentive to buy generics. For years, the wholesale distributors have been able to maintain 85% of their revenues as brands and 15% as generics.

The impact of the patent cliff and CPI-U penalty to them was that brands keep marginally increasing price and new brands keep coming to market, and without new item generics, the dollar portion of generics dropped. Prior to the patent cliff, wholesalers made gross margins of roughly 4.5% on brands and 20% on generics. This mix of product and profit worked as retail pharmacy made enough reimbursement dollars to pay a premium for the generics for the benefit of buying brands that they would otherwise have to buy at cost less 2% for their cost less 4% to 5%.

With generics as a shrinking portion of the mix, the wholesalers have had to extract more dollars out of manufacturers significantly reliant on their model—specifically, emerging manufacturers (those with one to three products and just starting out), biosimilars, and generics—either smaller companies or the two-thirds of the bundle mentioned in the generic manufacturer bundle. This is creating significant problems for these types of manufacturers and is a direct impact to several of these product types failing to gain the sales and net revenues that had originally been forecasted when they decided to bring these products to market.

Once the distributor bundle is understood, it’s relatively straight forward to understand the GPO bundle. While safe harbor takes effect here, it’s customary for a brand to pay administration fees of 0.5% to 2%, and generics to pay 3% to 5%. This model, too, relies on generics to be priced high enough to generate more dollars. Add to this issue the growing trend of short supply in generics, and the problem compounds itself both for the GPO and its downstream members.

The immediate risk is to emerging pharma, biosimilars, and generics, while the longer-term risk is to branded manufacturers. As a result, we all need to think about the channel through which they sell product to resellers and to patients. As PBMs, retailers, GPOs, and distributors have worked a certain way for more than 20 years, we all have taken their models for granted: we believe they will always be there and will always operate the same way.

While not obvious, the rates of abandonment of some brands have reached 40% to 50%, and even 60%, and adherence to prescribed regimens still hover at the same 75% rate they have over that time. That means that roughly 50% to 60% of legitimate branded prescription volume is lost because the channels have relegated brands to loss-leader positions, and the reimbursement margin is not enough to cover the pharmacy’s cost to service that prescription.

It’s a wakeup call to all of us. The profit left in these businesses is in generics, but even there, there is a movement to shift the sale away from insurance sponsored to cash. That is the trendline that Mark Cuban’s Cost Plus Drug Company, Amazon Pharmacy, GoodRx, and others are assuming/hoping will happen. The industry hangs on this thread and branded manufacturers have to think in new ways.

If we do not act as an industry, the likely outcome is the lack of commercial uptake, product discontinuations, divestitures, bankruptcies, or as we’re starting to see, manufacturers removing their portfolios from Medicaid and, consequently, 340B. This means rethinking PBM contracting and whether cash is a better way to sell products at retail pharmacy. This means rethinking retail pharmacy. This means rethinking the role that GPOs can or need to play. And, of course, this means rethinking modes of distribution.

I will focus on the movement to cash pay. As the generic space appears to be another bubble set to pop in general, it seems only fitting. Layered in this is likely to be the rise of the eCommerce pharmacies focusing on this trendline. I’ll also dive into the "Fight for the Dollar" more at the Access Insights Conference in November.

Bill Roth is the SVP of IntegriChain’s consulting business, which includes Blue Fin Group, a strategic consulting company he started in 2001, and the existing IntegriChain operational consulting business.

1. Manning, R.; Selck, F. Penalizing Generic Drugs with the CPI Rebate will Reduce Competition and Increase the Likelihood of Drug Shortages. Bates White Economic Consulting. September 12, 2017. 

https://www.accessiblemeds.org/sites/default/files/2017-09/Bates-White-White-Paper-Report-CPI-Penalty-09-12-2017.pdf

How the ‘fight-for-the-dollar’ is coming and likely will impact the bundled pricing of industry stakeholders.

Breaking the Pharma Industry’s Bundled Pricing Arrangements

Inconsistent adherence to prescribed medications results in clinical and financial implications for all stakeholders, including patients, prescribers, payers, and the overall healthcare system. For patients managing certain chronic conditions, such as diabetes, rheumatoid arthritis, and many types of cancer, failure to stay on therapy makes it harder for these individuals to manage their symptoms and slow their disease progression. For patients managing other conditions, such as hypertension, high cholesterol, and cardiovascular disease, which often present no symptoms on a day-to-day basis, failure to consistently take their treatments as prescribed increases the patient’s risk of experiencing acute medical emergencies, hospitalizations, or even death that may have been prevented.

Payers end up shouldering the cost of hospitalizations, emergency room visits, and other medical and therapeutic interventions that could have been prevented by consistent adherence to the prescribed medication regimen. Meanwhile, poor adherence among large patient groups over long time periods also dilutes and confuses the real-world evidence (RWE) that life sciences companies develop to help articulate the therapy’s overall safety and efficacy profile. Mixed clinical signals coming from real-world patient experiences can damage not only the brand reputation among prescribers and patients but, importantly, can undermine the pharma company’s bargaining power when it comes to the data-driven negotiations they engage in with drug-pricing and formulary-placement decision-makers.

Meanwhile, as the Inflation Reduction Act (IRA) is likely to create pricing pressure for many branded therapeutics, “it’s more important than ever for drug companies to double down on adherence-related initiatives,” says Kim Plesnarski, VP, market access and patient services solutions for Syneos Health. “Successful interventions that are able to keep patients on therapy help to close the valve on related revenue losses.”

Potholes and speed bumps impede the patient’s journey

A.J. Triano, EVP, customer experience practice, for Syneos Health Communications, notes that it's a "different mountain to climb" when patients don't necessarily feel the impact of their disease on a day-to-day basis. In such cases, it's still vital for these individuals to remain adherent to potentially costly and complex drug regimens in efforts to prevent the occurrence of some abstract problem in the future.

“Unlike cancer patients who typically acknowledge the crucial role of medication in their survival, patients managing long-term chronic conditions with fewer symptoms may feel healthy and not perceive the imminent threat from their disease,” adds Andrew Hourani, founder and CEO of EveryDose. “As a result, they may underestimate the importance of their medications, creating an environment that is prone to non-adherence.”

In the US, roughly half of medications are not taken as prescribed by physicians.

 This non-adherence leads to preventable healthcare costs, hospitalizations and deaths that cost more than $500 billion (roughly 16% of the total) in U.S. healthcare costs each year.

The tendency for any given patient to fail when it comes to taking their drug as prescribed cannot be blamed on forgetfulness alone. Rather, a number of factors are at play. These factors include:

Fear of discomfort (such as from self-injection) or potential side effects

Misunderstanding related to the importance of taking medications as prescribed

Complexity of the drug regimen or self-administration routines

Mistrust of healthcare providers (HCPs) or healthcare systems

Developing a holistic view of the patient experience

According to John Doyle, DrPh, group VP at Exponent and adjunct assistant professor at Columbia University’s Mailman School of Public Health, the adherence concept has been around for quite some time—along with the resources that are used to help address it—but these tools could use improvement.

“The entire adherence challenge has been ripe for re-examination, because many of the early tools have been around for a while, achieving only moderate benefits,” he says. “Version 1.0 of adherence support really focused on tactical tools to provide one-way push reminders. There’s still room for that strategy, but we’ve all learned that that’s not enough.”

He notes that Version 2.0 of adherence support is pursuing a much broader set of goals. “Today, the focus is on driving improved adherence through better upstream engagement by educating patients about the disease and about managing the medication," explains Doyle, noting especially the implications of the disease's progression, the role the therapy plays, and helping patients understand the complex drug-administration requirements and potential side effects. “The next generation of adherence support also catalyzes downstream engagement to track and analyze clinical, humanistic, economic, and even social outcomes.”

Importantly, today’s adherence-related tools are increasingly designed to provide two-way communication, rather than just the static “push” reminders of yesteryear. When adherence-support tools are designed to be more interactive, drug companies can collect insights actively, for instance, through regular questionnaires for users, or passively, such as through data collected by wearable health devices or sensors that monitor blood glucose levels or blood pressure on the go, for example. Companies can then use the data-driven insights to tailor the support and outreach and inform ongoing improvement.

“Some patients may respond better to digital or self-service interactions versus more traditional human coaching, and these same patients may have different attitudes toward rewards or peer interventions,” says Scott Snyder, EVERSANA’s chief digital officer. “Understanding the behavioral profile of each patient is just as critical as their clinical profile to combat non-adherence, so using predictive analytics and behavioral segmentation programs can be critical to determine the best intervention strategy for each individual.”

In one recent example, EVERSANA used its proprietary ACTICS artificial intelligence (AI)-driven platform to tailor adherence outreach for an oral anticoagulant from the patient services hub to serve up customized messages to specific patient segments based on real-world data (RWD). The model leveraged RWD related to claims, demographic information, prescription drug costs, and total cost of care.

“Using predictive analytics, we were able to help drive a 50% increase in adherence while reducing the cost of a hub program by nearly 40% over a three-month period for a cohort of nearly 1,000 patients,” says Snyder. “This shows the significant impact of personalizing adherence programs by focusing on the whole patient experience [including their behavioral profile].”

However, too often, efforts to assess the patient experience are overlooked. “Pharma companies should be reaching out directly to patients and physicians, asking, ‘Tell me about how and why the experience of using my product and dealing with this disease are difficult,’” says Triano. “These two questions need to get asked more often when developing adherence-support interventions."

He adds that while it's not always possible to measure the impact, this type of qualitative input can help to establish a growth roadmap for a brand and inform direct, just-in-time messaging to improve patient engagement and adherence to therapy.

“Mining your own call center data will provide a really good jump on this process of gathering up such qualitative insights from users of your product,’” adds Plesnarski.

Meanwhile, to drive patient engagement with support tools or a program, patients often resonate with anecdotes and motivational insights from those in the same position. “After the initial trial, patients want to confirm that their own experience matches the promise of the promotional claims and the experience of other patients," says Triano. "A well-timed testimonial or case study can provide a make-or-break moment to cement adoption and motivate long-term adherence.”

Understanding patient behavior—and then changing it

The hub concept has grown in popularity in recent years, giving patients and providers a centralized, one-stop access to a range of high-touch and high-tech support programs to help patients get on and stay on therapy. “For instance, a patient who is struggling with cost or affordability concerns may require patient services support to help navigate to the best reimbursement options available, while at the same time, a patient that stops experiencing symptoms needs more educational or awareness-focused experiences on the risks of stopping their therapy regimen,” explains Snyder.

However, from a brand perspective, involving multiple vendors or partners to provide different parts of the offering can create tremendous operational burden to ensure they are seamlessly bridging all of the connections, according to Syneos Health's Plesnarski. “Brands should strive toward simplification and streamlining, reducing the number of separate partners and vendors involved," he says. "The more partnerships and bolt-on program elements you have, the harder it can be to pivot in the face of new information or changing market dynamics.”

Experts believe today's digital adherence-support tools have markedly improved, with more customization and better integration with electronic health record (EHR) systems and care plans. In turn, as Doyle points out, this enables stronger networking of the various components in the overall tool. For example, integration of wearable devices with a patient’s EHR can result in a more comprehensive conversation with the individual's doctors and earlier interventions where needed.

“Finding out why a particular patient is non-adherent and then working with the patient to overcome that specific barrier is critical,” adds Hourani. However, he notes that historically, such an approach was a costly and labor-intensive undertaking, as it required live communication between a care provider and the patient.

EveryDose, according to Hourani, uses a conversational AI via a feature its calls Maxwell to help uncover patients’ unique barriers to adherence and deliver a more personalized intervention. The AI engages with patients to reveal potential issues that can then be relayed to care teams through a clinical portal.

Consider this example: If Maxwell notices a discrepancy between a patient’s adherence to a statin and its adherence to other prescribed medications, it will automatically initiate a chat with the patient via conversational AI. “In just a few back-and-forth exchanges, we are able to determine that the patient is having severe leg cramps when taking their statin and has responded by skipping doses,” says Hourani. “We notify the prescribing physician, prompting them to work with the patient to find alternative therapies.”

Another important finding, according to Hourani, is that engagement with the EveryDose app has been the highest with older patients, thanks to what he says are simpler features and an easier-to-understand layout. “Specifically, Medicare patients have been engaging at a rate three times higher than our median user,” notes Hourani. “This disproves the common misconception that Medicare patients don’t engage with technology.”

Traditionally, over-the-counter (OTC) medications have not received as much attention when it comes to organized efforts to keep patients on therapy. However, the OTC smoking-cessation space is unique in that users of nicotine-replacement products are typically not patients under the care of a physician. Rather, they are consumers who have made a conscientious decision to reduce or quit smoking to improve their health outcomes and seek out an OTC drug that can help. Nonetheless, even when a consumer has decided to quit smoking, a mosaic of factors still undermines that individual’s adherence to therapy—yet few programs exist to help consumers using nicotine-replacement products to stay on therapy, and there has not been much innovation in new product development over the past two decades, notes says Ashish Girotra, head of marketing for the consumer care business of Dr. Reddy’s Laboratories.

Dr. Reddy’s, which acquired the Habitrol nicotine-replacement product line from Novartis in 2014, recently conducted a longitudinal study of patients to gain a deeper understanding of when, where, and why people reach for their tobacco, in an effort to more effectively support their objectives when it comes to reducing or eliminating their tobacco use. “The findings were very telling,” says Girotra. “Our study found that cigarettes solve at least 11 different needs that spread over physical, social, emotional, and psychological realms. For some people, it satisfies hand-to-mouth habits or an oral fixation; for others, it’s deeply connected to their feelings of social or psychological well-being.”

According to Girotra, the Habitrol timed-release transdermal patch requires a 12-week commitment, as the nicotine-replacement patches work by successively stepping down to a new set of patches with a lower dosage every four weeks, and despite the simplicity of the design, he notes that adherence challenges are “shockingly pervasive.”

In fact, the company recently partnered with CVS to study how many people moved successfully through all three stages of the Habitrol patch, and the study found that only 7% of users made it all the way through—in part because reliance on the nicotine-replacement patch alone does not address the other 11 needs that smokers battle with when they are attempting to quit.

To close that gap, the Habitrol brand has introduced an eight-week version of the product and it has been well received, says Girotra. The company has also piloted an app called AIMI by Habitrol. Launched in 2022, the tool provides gamification to engage users, educational and motivational content, reminders, and easy product re-ordering (to receive the next set of patches days before the current set runs out). To date, the app has only had a “soft launch,” and Dr. Reddy's is currently working on version three to incorporate some of the findings learned from early user experience; it is also partnering with other digital therapeutic companies to help users overcome the range of social, emotional, and psychological hurdles that make it difficult to quit smoking.

Girotra adds that Dr. Reddy’s will likely become involved in the diabetes and metabolic market in the next half of the decade as generic products start entering the space. Thus, he says: “There’s a big opportunity for us to leverage the experience we’ve gained from our Habitrol adherence efforts in terms of digital tools, patient education, behavioral issues, and more to address the multifaceted social, emotional, and behavioral factors that are at work in that sector, too.”

1. Phillion, M. The Impact of Cost on Medication Adherence. Patient Safety & Quality Healthcare. May 9, 2022. 

https://www.psqh.com/analysis/the-impact-of-cost-on-medication-adherence/#:~:text=This%20non%2Dadherence%20leads%20to,U.S.%20healthcare%20spend%20every%20year

2. Watanabe, J.H.; McInnis, T.; Hirsch, J.D. Cost of Prescription Drug-Related Morbidity and Mortality. 

https://pubmed.ncbi.nlm.nih.gov/29577766/

Creating a user-centric approach that harnesses both digital tools and behavioral science is key to getting—and maintaining—patients on therapy, and improving clinical, financial, and, ultimately, brand-success outcomes for pharma manufacturers.

Doubling Down  on Drug Adherence

The outlook for drug wholesaling in the US is mostly promising, but with clouds on the horizon. The industry underwent an extraordinary stress test during the pandemic, responsible not just for ensuring safe and near-universal delivery of relatively complicated vaccines (requiring a dry-ice-charged distribution from the manufacturing sites almost to patients’ arms), but also for the therapeutics needed to address newly sickened patients. And this occurred while deliveries of the hundreds of billions of dollars’ worth of conventional medicines took place during a time of quarantined workers, shuttered businesses, and logistics shortages.

Coming out of the pandemic, many observers see a “new normal” or a “new commercial model” evolving for the drug trade. Telehealth, decentralized clinical trials, and e-commerce-style drug dispensing are among the new elements of healthcare delivery. Drug manufacturers are shifting their R&D dollars from mass-market small molecules to biologics-based therapies for rare diseases. The US government—the biggest drug reimbursor by far—will soon be getting broader discounts on some therapies, squeezing margins all the way across the distribution chain.

With a broad-enough perspective, three dominant trends can be identified: 

Beyond business trends and challenges, however, one post-COVID-19 change dominates: “Both through and since the pandemic, the level of visibility on the pharma supply chain is unprecedented,” observes Chip Davis, executive director of the Healthcare Distribution Alliance (HDA), the wholesalers’ main trade association.

“Traditionally, it didn’t get the attention paid to front end manufacturing business practices or pricing, or tail-end issues like provider-side payment and reimbursement. Now, the focus and attention on the pharmaceutical supply chain is here, and it is not going away anytime soon.”

According to HDA (whose members constitute 94% of all US wholesaling), wholesalers are the essential intermediary between manufacturers (roughly 1,400) and over 330,000 dispensing locations. For most of the 21st century, it has been dominated by the "Big Three": AmerisourceBergen (ABC, soon to be known as Cencora); Cardinal Health; and McKesson. Each is a gigantic company in terms of revenue (they are, respectively, No.'s 11, 14, and 9 on the 2023 Fortune 500 list); the catch is that they (and most major wholesalers) operate on the narrowest of profit margins—less than 1%

The Big Three and some other wholesalers strive to be “full line” providers to their pharmacy customers, meaning that they can deliver essentially every type of drug available. Another part of this relationship is to be the “prime” vendor to their customers—the first place the pharmacy goes to supply its inventory. According to the annual HDA Factbook, HDA members have 103 distribution centers (DCs) around the country (not counting US territories), and they average over 4,300 orders per day, delivering over 104,000 units of products, usually five times a week. For the most part, pharmacies don’t pay for the cost to deliver products.

The biggest pharma companies push for the most economical distribution costs, which for full-line wholesalers means that the rates on branded, mass-market products are relatively low, under the fee-for-service arrangements that were established in the early 2000s. Wholesalers can require higher rates for generic manufacturers (or, equivalently, set their own price margin on the generics they sell), especially when a branded product comes off patent and multiple generics come into the market. In effect, the generics subsidize the delivery of the branded products.

“We work with each manufacturer to assess the appropriate fees to support distribution of their products and reflect the value of the services that Cardinal Health provides,” says Debbie Weitzman, CEO of the pharmaceutical segment of Cardinal Health.

Currently, there are some stresses on this traditional way of doing business. According to Bill Roth, SVP of Integrichain’s consulting business and columnist for Pharma Commerce, when the rate of branded-to-generic switching is low (as it is now), it can cut wholesalers’ margins. One adjustment to be done, then, is to raise rates on smaller, limited-product manufacturers. “I’ve heard of a few instances where a wholesaler simply drops a manufacturer from its lists, which was unheard of a few years ago,” he says.

An added burden, more on manufacturers than on wholesalers, is the so-called national drug code (NDC) blocks that leading pharmacy benefit managers (PBMs)—the organizations that negotiate manufacturer reimbursements on behalf of insurers—impose on products, making them unavailable or expensive to patients. NDC blocks have gone from around 30 five years ago to over 150 now, says Roth.

These stresses are one of the reasons that there is an uncomfortable level of drug shortages around the country. Sales prices of some generics are so low that some manufacturers are selling some of their product mix at a loss, hoping to keep buyers on board with other, more profitable products, according to Roth.

Special mention needs to be made about one class of drugs—opioids regulated by the Drug Enforcement Administration (DEA). In 2021, the Big Three (plus Janssen Pharma) entered a national settlement with multiple states’ attorneys general to pay up to $21 billion over the following 18 years to compensate states and localities for opioid use disorder treatment. A similar settlement, for upwards of $15 billion, was achieved in 2022 involving CVS, Walgreens, and Walmart, plus manufacturers Teva and Allergan.

Besides the financial settlement, wholesalers have new obligations for suspicious order monitoring (including pooling their respective activities). The settlements are cold comfort to families for the tens of thousands of deaths that have occurred, but at least the funds will help mitigate the opioid crisis. While HDA’s Davis notes that closer communication between distributors and DEA is expected from the settlement, there continues to be friction: this spring, DEA revoked Morris & Dickson’s license to distribute controlled substances; in June, a federal judge stayed the DEA action “indefinitely, pending appeal,” according to the company, which is the fourth-largest wholesaler in the US,
operating in 27 states.

In addition, at the very end of 2022, the Dept. of Justice (DOJ) filed a civil suit against AmerisourceBergen alleging numerous and long-lived violations of DEA rules on suspicious order monitoring “from 2014 through the present” and that it is potentially liable for “billions of dollars in penalties.” ABC countered that it did indeed file the reports. Court records show that to date, ABC has filed a motion for dismissal; DOJ has filed an opposing motion; and a second response from ABC is due at the end of July.

Another stressor on wholesalers, shared by manufacturers and dispensers, is compliance with the 2013 Drug Supply Chain Security Act (DSCSA), which has a Nov. 27 deadline for full, all-electronic tracking of pharma products throughout the supply chain. Over the past 10 years, wholesalers have been integrating the technology and business processes to enable this tracking, but they also will depend on pharmacies to acknowledge receipt, and on manufacturers to provide necessary data. No one is fully ready, as shown by surveys conducted by HDA. The association has come out with a proposal to FDA to stretch out compliance deadlines to 2025, while keeping partial compliance requirements in place until then.

HDA has moved its annual Traceability Seminar, where the latest information on DSCSA is to be had, from its traditional mid-autumn date to the end of August, in part to spur pharma supply chain participants to get ready for the nominal November deadline. The meeting will be held in Washington, D.C., from Aug. 29-31.

One of the surprising features of the US pharma supply chain is that over 90% of prescriptions are filled with generic products, but branded and specialty products represent about 85% of the industry revenue. Even so—as noted earlier—wholesalers make more margin on the low-cost generics than they do on the high-priced branded products. The higher priced products, particularly specialty ones, represent an opportunity for multiple distribution channels—mail order, specialty pharmacies, and hospital pharmacies, among others.

In recent years, there has been a trend toward “direct-to- provider” and even “direct-to-patient” drug delivery—and wholesalers have responded by setting up their own specialty distribution businesses, including relationships with providers in areas like oncology and rheumatology. Considerable complexity enters the equation based on the type of reimbursement—a pharmaceutical benefit paid by PBMs, versus a medical benefit paid by hospitalization insurance, for example. Some manufacturers—especially in the growing specialty space—have “gone direct” for years and for many of them, logistics is handled by a third-party logistics provider, or 3PL.

3PLs differ from wholesalers in that they do not take ownership of the drug; they merely act as agents of the manufacturer. Some 3PLs, including the logistics giants UPS, FedEx, and DHL, provide a wide range of additional services, including warehousing, order-to-cash management—even kitting or packaging. “Leading 3PLs have been making a major push to automation in their healthcare facilities—think robotics and automated guidance vehicles, or automated storage/retrieval,” says Brian Shotto, president of a 3PL consulting firm, Lumens Group. “Wholesalers typically lag the 3PLs in this regard.”

While that perspective can be debated, what is certainly true is that the major wholesalers themselves have 3PL business units offering comparable services. Also, there is considerable 3PL-to-wholesaler, and even wholesaler-to-3PL business going on, as suppliers scramble to design the most efficient means of moving product from one location to another.

“Our specialty 3PL helped pioneer the commercialization of innovative cell and gene therapies, including CAR-T, and we are at the beginning of a huge new wave of treatments that promise to revolutionize the best standard of care for even more conditions,” says Cardinal Health’s Weitzman. Cardinal’s competitors, AmerisourceBergen and McKesson, both boast extensive business units handling logistics and business services for clinics and pharmacies.

As of press time, the status of negotiations between UPS and its unionized workers was looming before the entire healthcare supply chain. UPS has a substantial healthcare logistics business, with 30 dedicated distribution centers in the US and dozens more handling global healthcare services. “A significant impact to one of the largest parcel delivery companies, especially one that has a major footprint in the healthcare logistics space, could further exacerbate the drug shortages,” notes Chuck Forsaith, a VP at HDA and head of its Pharmaceutical Cargo Security Coalition.

Besides 3PL activities, pharmacy and mail-order dispensing activities are changing the shape of some distribution channels—albeit only at the fringe, for now. There were huge expectations that Amazon, when it entered the pharmacy space in 2018, would upset the applecarts of both wholesalers and retail pharmacy, but its progress has been slow and recently announced some staff cutbacks. Most recently, the Mark Cuban Cost Plus Drug Company, with its stated goal of selling drugs at the manufacturer’s costs plus 15%, has announced several agreements with companies offering a newly approved diabetes treatment and a biosimilar of the all-time blockbuster Humira, but at costs upwards of 10x less than the competing drugs.

According to the company website, it has set up a “vertically integrated supply chain” and “negotiates with manufacturers and supplies all products to our Cost Plus Drugs pharmacy.”

It was not merely symbolic that AmerisourceBergen announced its name change, to Cencora, at the beginning of this year (it will officially transition on Aug. 30). “To further bolster our position, we must continue to adapt and evolve within our dynamic industry as we pursue the goal of enhancing health outcomes. Building a unified brand is fundamental to our identity as a global healthcare company,” says Steven Collis, chairman and CEO.

Collis, as have the leaderships of AmerisourceBergen's competitors, has positioned his company as a partner to manufacturers in delivering pharmaceuticals originally, and now even “healthcare outcomes.”

Cardinal Health’s Weitzman sings the same song: “With a breadth of in demand services that are critical to the healthcare value chain, we work from product research and discovery to lifecycle management and patent extension. Our commitment to manufacturers is to drive market access, improved cost, patient adherence, and support and improved outcomes.”

The push into clinical research is notable, because there has been a parallel universe of “clinical trial logistics” next to commercial logistics for many years; now, the two are beginning to merge.

Going back a number of years, the Big Three used to have significant investment in contract packaging for manufacturers, but that has dwindled. At this point, the emphasis seems to be on assisting manufacturers in reaching directly to patients, via services like patient-support hubs and adherence programs.

“I have a hard time embracing the argument that there is a shift away from wholesalers,” concludes HDA’s Davis. “In my conversations with industry leaders, it is clear that their businesses are evolving, and they are very focused on where the science is going.”


Companies' emphasis on delivering pharmaceuticals is evolving into a collaboration focused on healthcare outcomes.

Wholesalers Step Up Their Partnering

Three wholesalers — AmerisourceBergen (soon to be known as Cencora), Cardinal Health, and McKesson—dominate drug distribution. Almost every US hospital, pharmacy, clinic, physician office, surgery center, long-term care facility, and government account has a primary business relationship with at least one of the “Big Three.”

For pharmaceutical manufacturers, their default distribution model for launching a new drug generally involves signing a distribution services agreement (DSA) with all three wholesalers.

But these companies are increasingly asking if there are alternative distribution models (ADMs) as they consider the wholesalers’ financial effects on their gross-to-net calculations. This is especially true for emerging pharmaceutical
manufacturers looking to launch into the full-line wholesale space servicing pharmacies or hospitals.

Questions these emerging companies usually ask include:

Is there a viable, less expensive alternative to
the default model?

Can other regional or independent wholesalers service my entire customer base?

Is there a subset of the “Big Three” wholesalers to consider?

Is selling directly to my customers a viable option?

An argument can be made that the answer to these questions is “Yes particularly for specialty pharmaceuticals with fewer target customers.”

But there is a fifth, additional question that is essential to answer:

Can an alternative distribution model meet the manufacturer’s target customers’ financial, operational, and logistic needs without adversely affecting patient needs?

For this article, the definition of an alternative distribution model is one in which a manufacturer can bypass their customer’s prime vendor wholesaler to deliver their products and receive the same (or similar) financial, operational, and logistic services as those companies provide. This would include a manufacturer selling direct or engaging a network of distribution sites instead of a fourth mega-wholesaler.

It’s important to remember that the larger wholesalers have invested heavily in technology, infrastructure, and financial services. The barrier to entry in this well-established distribution market is complex. Significant investments have been made to accommodate their customers’ financial, operational, and logistic needs, thus increasing the difficulty of bypassing them with an ADM.

The three factors manufacturers must keep in mind when considering an ADM are:

: Not surprisingly, the cost a customer pays for their overall drug spend is critical. Customers contract with their prime-vendor wholesaler to receive off-invoice discounts, contract pricing facilitation, and service like next-day delivery, technology, and late order cutoff times in return for shorter, negotiated invoice terms and agreeing to purchase the vast majority of their total pharmaceuticals spent from that wholesaler. Both customer and wholesaler model financial forecasts are based on these factors. The sales revenue, drug shipping volumes, and reciprocal discounts can be significant. Discounts are generally based on revenue tiers, product mix (percentage of the brand to generics and/or biosimilars), and contract portfolio (GPO, manufacturer, or government contracts).

Therefore, any purchase outside the prime vendor model has the potential to reduce revenue and alter the product mix or contract portfolio, thus adversely affecting the discounts for the customer’s entire book of business. And since those off-invoice discounts are based on the lesser of the product’s wholesale acquisition cost (WAC) or contract price, any ADM should account for those discounts and contract pricing within the economic modeling. A manufacturer focused primarily on distribution fees is missing critical elements of the customer’s overall financial picture.

 Prime vendor customers take advantage of efficient inventory management and ordering systems using technology provided by their wholesaler. These systems create routines for which alternative ordering exceptions can be inefficient for already busy personnel. They clearly understand how late they can order and still have the drug arrive the next business morning. The wholesaler’s ordering system also becomes a resource for product research, so a manufacturer’s drug(s) not appearing within that system creates confusion, extra work, and the potential for alternate drug selection. Any ADM would need to create an ordering system that is efficient, non-disruptive to ordering routines, and should always display the customer’s correct pricing, inclusive of expected discounts and contract pricing, at the time of purchase.

: Remembering that the prime vendor agreement always features negotiated invoice terms less than typical distributor invoice terms (30 to 60 days) is important. Any attempt to standardize or lengthen terms via an ADM could adversely affect the customer’s receivable reserves and operational efficiency.

: Drug Supply Chain Security Act (DSCSA) regulations take effect in November. Wholesalers will play a key role in ensuring the electronic, interoperable exchange, verification, and tracing of serialized data moves from manufacturer to dispenser. It is likely that a significant percentage of dispensers will not be ready to manage serialized data and will rely on their wholesaler for assistance once their systems are fully operational. The ADM must fill that role to ensure full manufacturer and dispensing customer compliance.

: As a rule, customers expect their drug order(s) to arrive the next business day before noon. Distribution centers are geographically located to accommodate all customer needs within their sales territory. Prime vendor wholesalers offer later cutoff times to account for inventory replenishment or may also provide same-day delivery for emergency requests. These orders ship via a courier hired by the wholesaler to pick up the shipment early each morning and deliver it later that same morning. Couriers operate on established routes accommodating numerous delivery locations. Additionally, they are better equipped to manage local weather issues, which can be extremely serious for patients awaiting their medicines.

Unless the ADM has a shipping location within a reasonable distance from the customer and a significant volume to justify a courier to manage multiple customers on an established route, they will ship all orders via overnight delivery service using logistics partners like UPS or FedEx. Although these logistics partners are reliable, they generally require earlier cutoff times and can be more costly per shipped unit than couriers. The ability to deliver medicine promptly and efficiently must be considered and supported.

: New vendor approvals can be tedious and lengthy for large customers, such as chain or specialty pharmacies, hospital systems, and government accounts. An ADM would likely require the same due diligence the prime vendor wholesaler did upon winning the service bid. The timing of these processes must be factored in early on to prevent delays in patient therapy initiation.

: Wholesaler customers are used to efficient returns that, in some cases, can be re-introduced to the wholesaler’s shelves and sold to another customer rather than being wasted by more complicated returns procedures. Busy personnel assume the drug in their hand needs to be returned to their prime vendor wholesaler. Any product initially purchased via an ADM being returned to the wrong wholesaler cannot be sent back; thus, an errant return can be costly for the customer expecting credit.

The key questions and considerations for drug manufacturers pursuing an effective alternative distribution model.

Pharmaceutical Commerce - August 2023

Pharmaceutical Commerce - August 2023 Issue (PDF)

Telling the 'Whole' Story

Collaboration at the Forefront

The Voyage to Beantown

Are CEOs Getting Access Right?

AFP Caution Flag for Patients

Breaking the Pharma Industry’s Bundled Pricing Arrangements

Doubling Down on Drug Adherence

Wholesalers Step Up Their Partnering

Are ADMs a Viable Option for Pharma?

Exploring Uses of RFID Technology

Patient Centricity in the Pharma Supply Chain