HDMA report highlights specialty distribution services

An annual report, Specialty Pharmaceutical Distribution: Facts, Figures and Trends is now available from the Healthcare Distribution Management Assn.’s Center for Healthcare Supply Chain Research. It provides a highly useful picture of how products flow through this channel, and what services manufacturers can look for in dealing with these distributors.

Although the specialty market is growing rapidly, there are a relatively small number of specialty distributors, and the biggest ones are subsidiaries of the major wholesalers, plus Express Scripts’ CuraScript subsidiary and a few others. Overall, the category handled $41.5 billion, or 33%, of the $124.1 billion in specialty pharmaceutical sales in 2014. The report’s survey data (based on HDMA-member specialty distributors) also shows that specialty distributors concentrate on serving independent physician-owned clinics (representing 68% of specialty distributor sales in 2014). Specialty distributors have, on average, distribution agreements with 156 manufacturers.

The basic services specialty distributors provide to these manufacturers aren’t too dissimilar from traditional wholesaling: supply chain, financial, data/information and regulatory compliance. However, their distinguishing characteristic is the additional services: patient and provider support; reimbursement support; marketing; hub services; and expanded data services (including clinical data).

On a sales-dollar basis, the report finds that sales to independent physicians clinics rose 7 percentage points in 2014 (to 70%), while sales to hospitals and hospital-owned clinics dropped by 3 and 6 percentage points, respectively. The report authors speculate that some specialty distribution might be migrating back to traditional wholesalers, who also serve the hospital market. (It’s worth keeping in mind that manufacturers can opt to sell to wholesalers, to specialty distributors, or to sell directly to providers; the latter constituted 10% of specialty sales in 2014.)

The report is available for purchase from the online HDMA store.