HDA specialty distribution survey: more deliveries to hospitals, fewer to physician practices

It is well known that specialty pharmaceuticals are the growth arm of the pharma market, and this inevitably increases business for specialty distributors (which includes many of the full-line distributors of all pharma products, as well as some businesses dedicated to this sector). And since a significant percentage of specialty products require additional handling (especially cold chain delivery), distributor practices affect the packaging, handling and dispensing of these products.

The Healthcare Distribution Alliance Research Foundation, in its 2017 edition of Specialty Pharmaceutical Distribution: Facts, Figures and Trends, reports that distribution (by sales) to hospitals is rising, while that to physician practices is declining. In 2016, specialty distributors shipped 35% of their sales to hospitals (up from 30% in 2015) while sales to physician practices dropped from 49% to 45% (there is some shifting of categories between “hospitals” and “hospital owned clinics”—which declined in the past year—going on as well). Shipments to specialty pharmacies—a high-growth component of the retail pharmacy sector—rose from 6 to 8%. (Somewhat masking these trends is the ability of manufacturers to ship directly to specialty pharmacies or hospitals, bypassing the wholesale channel, and typically making use of third-party logistics [3PL] firms. Some of the major wholesalers offer this service as well.)

Survey respondents reported that in 2016, 47% of the products they handled required refrigeration, and another 2% frozen storage. However, only 9% of manufacturers required use of temperature-monitoring devices, and only 3% required temperature monitors to be included in the shipment. It is highly likely that these shipments—at least at the case level—already had temperature monitors in place by the manufacturer; the technology is in place for manufacturers to monitor shipment conditions independently of who is handling the transportation. The survey also found that 63% of wholesaler distributor agreements included specific handling instructions. (Which is no surprise, since “special handling” is one of the criteria that defines a specialty product.)

The 2017 report repeats a detailed description of open, limited and exclusive distribution, which continues to be a much-discussed aspect of specialty pharmaceutical commercial practices. The survey found that the number of products specialty wholesalers distribute exclusively jumped from seven to 25 between 2015 and 2016.

The 2017 report was produced with support from platinum sponsor CuraScript SD; silver sponsors Genentech and Value Drug Co.; and bronze sponsors Pharmacy First; Sensitech Inc.; and Smith Drug Company, Div. J M Smith Corp. It is available at no cost at the HDA website.