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Pharmaceutical Distributors: Understanding Our Role in the Supply Chain

Healthcare distribution has never been just about delivery. It is about getting the right medicines to the right patients at the right time, safely and efficiently. Every day, pharmaceutical distributors sustain a complex supply chain, serving as an important link in the healthcare system and delivering medicines safely, securely and efficiently. Distributors work around the clock to help hundreds of thousands of pharmacies, hospitals, long-term care facilities, clinics and other healthcare providers across the country keep their shelves stocked with the medications and products that patients need.

Safe, Secure and Efficient Delivery 

The pharmaceutical distribution industry saves the U.S. healthcare system between $33–$53 billion each year through investments in logistics solutions, supply chain expertise and technological advancements. Without distributors, manufacturers would spend substantial financial, logistical and staff resources on this task that could be used in other important ways. Thanks to distributors, the system is more efficient, reliable and secure. As the healthcare system rapidly changes, distributors are constantly envisioning new ways to move and secure the nation’s medicines, all while protecting patient safety.

HDA members are not simply distributors. They are technology innovators, information management experts, security specialists and efficiency professionals, whose expertise streamlines the supply chain to reduce costs and save the nation’s healthcare system both time and money.

Distributors’ Role in the Supply Chain

Pharmaceutical distributors purchase prescription medicines and other medical products directly from pharmaceutical manufacturers for storage in warehouses and distribution centers across the country. State and federally licensed pharmacies, hospitals and healthcare providers place orders with distributors for the medicines and products they need, and the distributors process and deliver the orders daily. With operations continuously running, primary distributors can take orders made by 8:00 p.m. and deliver them to their end destination as soon as the next morning.

As logistics experts, distributors do not manufacture, prescribe or promote medicines. Distributors also do not make clinical decisions as to who should or should not receive a medicine or what medicine is best for a particular patient. Getting a medicine starts with a prescription, and distributors help make sure that what your healthcare provider prescribes gets to your hospital, pharmacy or other healthcare facility safely, securely and reliably.

Regulation of Controlled Substances

The Drug Enforcement Administration (DEA) oversees and regulates the volume and supply of opioid controlled substances in the market. Each entity in the supply chain that handles these medicines, including prescribers, dispensers, manufacturers and distributors, is a registrant of the DEA. In fact, DEA has the most visibility into the demand and flow of controlled substances – from setting the annual quota of controlled substances that can be manufactured to the flow of medications from manufacturer throughout the supply chain and, ultimately, to the patient.

Pharmaceutical distributors report sales of opioid controlled substances to DEA’s Automation of Reports and Consolidated Orders System (ARCOS).* This system monitors the flow of opioid controlled substances, from the point of manufacturing through commercial distribution to delivery to DEA- and state-regulated pharmacies, hospitals and other retailers. Only the DEA knows how much these dispensers buy based on the ARCOS data each distributor and manufacturer submits. An individual distributor only knows what it ships to each of these customers; a distributor does not and cannot know what other distributors may be shipping at the same time to the same customer. The DEA only recently started sharing a limited amount of ARCOS data with distributors.

Industry Response to the Opioid Abuse Epidemic

HDA and its members are committed to stopping opioid abuse and misuse before it occurs through investments in information technology and state-of-the-art monitoring tools to prevent diversion, initiatives to provide education and awareness to consumers, and practical policy solutions to address opioid abuse and misuse.

The industry has put forward a comprehensive set of practical solutions to address the opioid abuse epidemic, including:

  • Enhancing coordination, data sharing and monitoring;
  • Using data and technology to prevent diversion and abuse;
  • Educating patients, families and caregivers; and, 
  • Ensuring appropriate access to safe and effective treatments. 

HDA also is the founding partner of Allied Against Opioid Abuse (AAOA) — a national education effort focused on raising awareness around the safe use and disposal of opioids as well as patients’ rights, risks and responsibilities associated with use of these medicines. This effort builds on distributors’ role as the vital link in the healthcare supply chain, bringing together stakeholders to solve challenges. Similarly, AAOA serves as a centralized information resource, connecting providers, pharmacists and the public to education about the rights, risks and responsibilities associated with prescription opioids.

In addition to supporting AAOA, HDA member companies also are engaged in many other initiatives.


Health Delivered

Report: The Role of Distributors in the US Health Care Industry

Fact Sheet: Distributors Create Efficiencies in Healthcare

Infographic: Delivering Value Across the Healthcare Ecosystem

Fact Sheet: How Do Medicines Get to Where They Need to Go?

Infographic: The Vital Link in the Pharmaceutical Supply Chain

Recent Wall Street Journal Ad: Understanding Our Role in the Supply Chain

*Except the few opioid products that are controlled in Schedule IV or V.

Issues in Distribution

HDA reviews key priority issues and advocates on behalf of its pharmaceutical distributor members for standards, public policies and business processes that ensure a safe and efficient supply chain.

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