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Healthcare Distribution Centers: Key Facts and Figures

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Pharmaceutical distributors have a long history of bringing the newest advancements and technologies to their warehouses. Back in 1947, the National Wholesale Druggists’ Association (an early iteration of HDA) tapped Ohio State University marketing experts to reimagine an entirely new type of layout for wholesaler warehouses, which included longer aisles, moving belts, “and roller skates for order pickers.” While the roller skates never caught on, healthcare distributors’ commitment to harnessing innovation to develop facilities that safely and securely get prescription medicines and medical products to the patients who need them has only grown.

Today, state-of-the-art, highly automated distribution centers play a significant role in helping distributors efficiently deliver medicines to hundreds of thousands of state and federally licensed pharmacies, hospitals, clinics and other healthcare providers across the country each and every day. With facilities strategically located throughout the country, distributors operate more than 200 distribution centers as of 2017.

According to the HDA Research Foundation, on a typical business day, pharmaceutical distributors pick an average of 97,395 products and handle a total 5,024 orders. It is estimated that 92 percent of all prescription sales in the country now go to market through pharmaceutical distributors.

Accommodating this product volume requires large facilities, and the average healthcare distribution center is now more than 170,000 square feet. To ensure critical prescription medicines and healthcare products get to where they need to go, these distribution centers must also operate around the clock.

Healthcare distribution centers are more than just warehouses and loading docks, however. Healthcare supply chains are becoming more complex, and pharmaceutical and medical products increasingly require complex handling needs. To meet customer demand, distributors are leveraging the next generation of advanced, highly automated distribution centers to make sure lifesaving medicines reach the people who need them.

All products are entered into sophisticated inventory management systems that track supply levels and are used to pick, pack and ship products when they are ordered by state and federally licensed pharmacies, hospitals, clinics and other healthcare providers. All of this occurs on a 24-hour daily cycle, so HDA members can provide next-day service to their customers.

Overall sales through healthcare distributors rose by 5 percent from 2016 to 2017, and this increase was in part driven by the continued growth of specialty drugs. Given that many of these products are biologically derived, specialty drugs need unique logistical requirements, such as cold chain handing, in which products are kept in refrigeration units to ensure they remain effective and are not compromised in transit. Modern distribution centers are equipped with the latest technologies to handle these logistical challenges and ensure specialty products reach patients both safely and securely — and faster than ever before.

Controlled substances require even more coordination and security. These products are locked, monitored and stored in spaces regulated by the Drug Enforcement Administration (DEA). Schedule 2 narcotics are housed in high-security vaults, and distributors conduct inventory checks of controlled substances frequently. All controlled substances are handled under surveillance and are packed in specially sealed bags.

Healthcare distribution centers are the epicenter of getting prescription medicines and medical products to the patients that need them. At these centers, healthcare distributors ensure medicines are handled properly and protect the supply chain from counterfeit products so that your next vital medication is just a pharmacy or healthcare provider away.

ABOUT THE HEALTHCARE DISTRIBUTION ALLIANCE

The Healthcare Distribution Alliance (HDA) represents primary pharmaceutical distributors — the vital link between the nation’s pharmaceutical manufacturers and  pharmacies, hospitals, long-term care facilities, clinics and others nationwide. Since 1876, HDA has helped members navigate regulations and innovations to get the right medicines to the right patients at the right time, safely and efficiently. The HDA Research Foundation, HDA’s non-profit charitable foundation, serves the healthcare industry by providing research and education focused on priority healthcare supply chain issues.

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