Study: Specialty Distributors Save Billions of Dollars in Healthcare Costs, Delivering Medicines That Save Patients Suffering From Debilitating Illnesses

ARLINGTON, Va., April 25, 2011 /PRNewswire-USNewswire/ -- Distributors of specialty pharmaceuticals for patients suffering from cancers, orphan diseases and other serious illnesses save the healthcare industry billions of dollars a year by using efficient and extensive measures to ensure their safe delivery, according to a new research report released today by the Center for Healthcare Supply Chain Research, the research foundation of the Healthcare Distribution Management Association (HDMA). The Center retained global management consultant Arthur D. Little, Inc. to develop the report, titled Specialty Pharmaceuticals and the Role of the Specialty Distributor.

Companies that distribute only specialty drugs save the industry an estimated $3.5 billion, based on an analysis of the value of their services and of the increased cost if manufacturers and healthcare providers assumed their role. The savings derive from their skills in preserving and delivering delicate medicines in high-tech, cold-chain and just-in-time delivery systems and in performing a wide range of additional value-added services for the healthcare industry. The savings total about $8 billion when this analysis is expanded to include traditional distributors that handle specialty drugs.

"This research spotlights the vast and indispensable services that specialty pharmaceutical distributors deliver in the fastest-growing sector of the pharmaceutical industry. They provide lifesaving medicines to many of society's most vulnerable patients, and they do it with exceptional skill and quality that lowers the cost of healthcare," said Karen J. Ribler, Executive Vice President and Chief Operating Officer of the Center for Healthcare Supply Chain Research.

Biological and other specialty drugs present formidable distribution challenges, because extreme heat, humidity and light, excessive shaking and vibration and even pH changes can compromise their effectiveness. The report indicates that distributors preserve these medicines in storage and transit through a variety of specialized measures and techniques.

Such measures are growing even more important given estimates that seven of the top 10 pharmaceutical products will require cold chain distribution by 2014, according to the report. These practices are often required in federally mandated Risk Evaluation and Mitigation Strategies, or REMS, for drugs that must be controlled carefully to ensure they are used safely.

The study also notes that specialty distributors use technologies to manage inventories, transactions and deliveries with speed and precision. These include customer relationship and warehouse management systems and electronic data interchange (EDI) communications to process purchases, shipping notices, invoices and payments. These systems all cut inventory and distribution costs by shortening transit times and reducing loads and paperwork errors. In addition, they assist manufacturers with marketing and help providers meet capital needs, taking costs out of both ends of the healthcare supply chain.

John Brennan, Managing Director of Arthur D. Little Americas said, "The pharmaceutical landscape is changing; specialty pharmaceuticals will continue to play a more important role as selective therapeutics in oncology, orphan drugs and biotechnology products become more prevalent and attractive to biopharmaceutical companies. Our research documents the specific handling requirements of specialty pharmaceuticals, identifies the value-added services provided by distributors and provides an economic analysis of the value distributors bring to manufacturers. We were thrilled to work with the Center to create an impactful report that will be leveraged by every distributor involved in this valuable market."

The report, Specialty Pharmaceuticals and the Role of the Specialty Distributor, is now available for purchase through the HDMA Marketplace, http://www.ShopHDMA.org.

About the Center for Healthcare Supply Chain Research
The Center for Healthcare Supply Chain Research is a 501(c)(3) non-profit charitable organization that serves as the knowledge partner of the Healthcare Distribution Management Association (HDMA). The Center serves the healthcare industry by providing research and education focused on healthcare supply chain issues. The Center's mission is twofold: to conduct research and disseminate information that will enhance the knowledge base, efficiency and effectiveness of the total healthcare supply chain; and to provide thought leadership to further enhance the safety and security of the healthcare supply chain through future-focused study and programming.

About HDMA
HDMA is the national association representing primary healthcare distributors, the vital link in the healthcare system. Each business day, HDMA member companies ensure that more than nine million prescription medicines and healthcare products are delivered safely and efficiently to 164,000 pharmacies, hospitals, nursing homes, clinics and others nationwide. HDMA and its members work daily to provide value and contain costs, saving the nation's healthcare system an estimated $32 billion per year. For more information, visit www.HealthcareDistribution.org.

About Arthur D. Little
Arthur D. Little, founded in 1886, is a global leader in management consultancy; linking strategy, innovation and technology with deep industry knowledge. We offer our clients sustainable solutions to their most complex business problems. Arthur D. Little has a collaborative client engagement style, exceptional people and a firm-wide commitment to quality and integrity. The firm has over 30 offices worldwide. With its partner Altran Technologies, Arthur D. Little has access to a network of over 17,000 professionals. Arthur D. Little is proud to serve many of the Fortune 100 companies globally, in addition to many other leading firms and public sector organizations. For further information, please visit www.adl.com.

SOURCE Center for Healthcare Supply Chain Research