Pharmaceutical Distribution in the US

Current and Future Perspectives

Publication Date	June 2009
Publisher	URCH Publishing
Product Type	Report
Pages	83
ISBN Number	978-1-905751-15
Product Code	URC00030

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Summary

In recent years, the US government and interested parties have made increasing efforts to protect the national supply chain for medicines distribution. Since it represents the means for medicines to reach patients, any breaches in the system would be catastrophic and could affect millions of people. The system faces numerous external threats, including counterfeiting, terrorism and disruption resulting from man-made and natural disasters. Industry challenges include the dominance of 3 wholesalers, growth of mail order and the wave of pharmacy consolidation.

The US supply chain is set to undergo great changes in the next decade. Although a number of external factors will have an impact, the complex relationship between each of the parties in the supply chain will be the most important. Although they all depend on each other for maintaining the supply chain, they all wish to have greater control of the process of delivering medicines to patients. Pharmaceutical manufacturers and pharmacists all have their own opinions regarding the structure of the supply chain, and their actions to reinforce their views will shape the future of the system.

Pharmaceutical Distribution in the US - Current and Future Perspectives from URCH Publishing, delivers a comprehensive and expert overview of the distribution of medicines in the United States. This 40,000 word report will provide the reader with accurate insight into this complex and rapidly changing sector.

Some key findings from this report include:

In 2008 the US pharmaceutical wholesale market was worth $275bn
McKesson, AmerisourceBergen and Cardinal Health Inc, known as the 'Big Three', account for between 90-95% of revenue within the US pharmaceutical wholesale sector.
The 'Big Three' have been responsible for over 100 buyouts since 1980, at least 57 of which have occurred over the past decade.
It is estimated that US chain drug stores currently account for 41% of all prescription sales, with the dominant players being Walgreens and CVS Caremark.
A change from wholesale to direct distribution in the US is unlikely. A US wide direct distribution model would cost the pharmaceutical industry $47.9bn to operate. This would be 15.5% increase on current distribution costs.

Use This Report To:

Understand the environment for medicines distribution in the US.
Identify where the sector might change in the next few years. Analyse threats and opportunities.
Spot potential areas of pharmaceutical distribution market growth and opportunities for delivering successful sales growth

This unique report will deliver insight into:

Efforts to protect the medicines supply chain and disaster plan, in particular to deal with counterfeiting.
The 3 major wholesalers AmerisourceBergen Corporation, Cardinal Health and McKesson Corporation and the growing concern about their dominance.
The sophisticated technology that underpins distribution in particular EPoS, Barcoding and RIFD
The practice of pharmacy and the main players in the pharmacy sector and current issues regarding dispensing including Rx-to-OTC switching, patient compliance and biogeneerics.

Major organisations mentioned in this report include.

American Pharmacists Association
AmeriSource
AmerisourceBergen
Bergen Brunswig
Boehringer Ingelheim
Cardinal Health
Centers for Medicare and Medicaid Services
CVS Caremark
Food and Drug Administration (FDA)
GlaxoSmithKline
Informed Decisions, LLC
K-Mart
Lewin Group
McKesson Distribution Solutions
Nadro
National Association of Chain Drug Stores
National Community Pharmacists Association
Pfizer
Pharmaceutical Research and Manufacturers of America
RxHub
RxUSA
Sanofi-Aventis
SureScripts
Verispan
Walgreens
Wal-Mart Target
Wegmans
Wyeth

Content

Executive Summary
Chapter 1: The US Pharmaceutical Supply Chain
- The pharmaceutical supply chain
- The US pharmaceutical industry
- The role of pharmaceuticals
- US pharmaceutical manufacturers
- Pharmaceutical Research and Manufacturers of America (PhRMA)
- The US biotech industry
- The Biotechnology Industry Organization (BIO)
- Case study: the pharmaceutical and biotech industries at a state level
- The US pharmaceutical market
- The US healthcare system
- Medicare and Medicaid
- State Children's Health Insurance Program
- Pharmaceutical legal obligations
- Wholesale distribution
- The US wholesale market
- Primary wholesalers
- Secondary wholesalers
- Prescription Drug Marketing Act
- PDMA revisions
- The pedigree requirement
- State-level actions
- US pharmacy market
- Pricing freedom
- US pharmaceutical spending
- Pharmaceutical pricing issues in the US
- US consumer pricing studies
- Outlook for US biopharmaceutical R&D
- Average wholesale price and average sales price
- Internet trading
- Parallel trade
Chapter 2: The US Wholesale Sector
- Wholesaling in the US
- The Healthcare Distribution Management Association
- The National Coalition of Pharmaceutical Distributors
- Wholesaler consolidation
- Challenges to the dominance of the Big Three
- Case study: RxUSA launches legal challenges against the Big Three
- Cardinal Health Inc
- McKesson Corporation
- AmerisourceBergen Corporation
- Wholesaler technology solutions
- Electronic data interchange
- Collaborative planning, forecasting and replenishment
- Enterprise resource planning
- Order fulfilment packages
- Database technology
- Electronic point-of-sale technology
- Barcoding
- Case study: US highlights benefits of barcode and RFID technologies
- Costs and benefits of EPC/RFID implementation
- Warehouse technology
- Dispensing technology
- Future systems
- The US supply chain and direct distribution
- Development of direct distribution in Europe
- Rationale behind changes in the supply chain
- Challenges to direct distribution in the US
- US wholesalers and globalisation
Chapter 3: Pharmacy in the US
- The US pharmacy sector
- The American Pharmacists Association
- Case study: the AphA and medication therapy management
- The Academy of Managed Care Pharmacy
- Chain drug stores
- -Walgreens
- -CVS Caremark
- National Association of Chain Drug Stores
- Case study: the National Trust for Historic Preservation responds to chain drug stores
- Independent pharmacies
- National Community Pharmacists Association
- Mail-order pharmacies
- Online pharmacies
- Case study: PharmacyChecker.com
- Pharmacists and parallel trade
- OTC products
- Rx-to-OTC switching
- Pharmacists and OTCs
- Case study: US pharmacists and Rx-to-OTC switching of allergy products
- Pharmacy benefit managers
- The Pharmaceutical Care Management Association
- Case study: PBMs force patients to switch medications
- The future of US pharmacy
- Patient compliance
- Pharmacies and retail health clinics
- Case study: 2008 survey of patient use of retail health clinics
- Case study: Florida tightens pharmacy regulations
- Biogenerics
- Case study: biogenerics legislation restrictions for pharmacists
- Pharmacy groups launch Project Destiny
Chapter 4: Protecting the US Supply Chain
- Safeguarding the supply chain
- Disaster planning and the supply chain
- Alternative strategies for mass distribution of medicines
- Case study: US community pharmacies launch Rx History
- Case study: ICERx.org
- Product shortages in the supply chain
- The Food and Drug Administartion (FDA) and drug shortages
- Case study: vaccine shortages and the effect on the supply chain
- Counterfeiting
- Anti-counterfeiting cooperation
- Counterfeiting and the pharmaceutical industry
- FDA anti-counterfeiting measures
- FDA recommendations on combating counterfeits
- Case study: the FDA's Counterfeit Alert Network
- Case study: AstraZeneca opts for mass serialisation to prevent counterfeiting
- Using nanotechnology to combat counterfeiting
- Case study: FDA Nanotechnology Task Force report
- References
List of Tables
- Table 1.1 Types of manufacturer medicines
- Table 1.2 The four parts of Medicare
- Table 2.1 Cardinal Health corporate business units
- Table 2.2 McKesson corporate business units
- Table 2.3 AmerisourceBergen Corporation business segments
- Table 2.4 Overall risks of DTP identified by the OFT
- Table 2.5 Challenges for a US direct distribution model
- Table 3.1 Potential patient benefits of medication therapy management
- Table 3.2 Potential competitive advantages of mail-order pharmacies
- Table 3.3 PharmacyChecker.com classification of online pharmacies
- Table 3.4 Top five major players in the pharmacy/retail clinic sector
- Table 3.5 The four components of Project Destiny
- Table 4.1 The application of the HIPAA in emergency situations
- Table 4.2 Recommendations to improve mass distribution of medicines during an emergency through using the private sector
- Table 4.3 ICERx.org partnerships
- Table 4.4 Key areas of focus for the International Medical Products Anti-counterfeiting Taskforce (IMPACT)
List of Figures
- Figure 1.1 Outline of the traditional supply chain
- Figure 1.2 Global R&D expenditure
- Figure 1.3 Pharmaceutical revenues for major companies (2007)
- Figure 1.4 Pharmaceutical R&D for major companies (2007)
- Figure 1.5 Revenues for major biopharmaceutical companies (2007)
- Figure 1.6 R&D for major biopharmaceutical companies (2007)
- Figure 1.7 US pricing environment compared with Europe and Japan
- Figure 1.8 Ongoing US pharmaceutical R&D dominance
- Figure 1.9 Share of parallel imports in European pharmacy markets
- Figure 2.1 Annual revenues for Cardinal Health and subsidiaries
- Figure 2.2 Annual revenues for McKesson Corporation
- Figure 2.3 Annual revenues for AmerisourceBergen Corporation
- Figure 3.1 Annual revenues for Walgreens
- Figure 3.2 Annual revenues for CVS Caremark
- Figure 3.3 Average annual sales per US pharmacy location
- Figure 3.4 Staff costs as a percentage of US pharmacy operating expenses
- Figure 3.5 Online pharmacy price analysis for select brands
- Figure 3.6 Online pharmacy price analysis for select generics
- Figure 3.7 Flow of goods and payment in the US supply chain
- Figure 4.1 Counterfeit drug cases opened by the FDA