Report looks at drug wholesalers and American health care

A recent study by the Drug Channels Institute, a leading management educator for and about the pharmaceutical industry, analyzed the highly dynamic prescription drug distribution industry. The report also analyzed crucial health care trends that will affect wholesalers and distributors.

“Almost all brand drugs flow through wholesalers and distributors, it is one of the most efficient distribution systems in the world, they add a lot of value to the U.S. health care system and they have built very large very profitable companies by doing so,” Drug Channels Institute Founder and CEO Adam Fein, author of the study, said.

The major three wholesalers – AmerisourceBergen, Cardinal Health, and McKesson – reported revenues in excess of $300 billion. Wholesalers are deepening their relationships with drugstore chains like CVS Health, Walgreens Boots Alliance, and Rite Aid, although specialty drugs are offering smaller profit margins.

“The deepening relationships put up barriers for manufactures and make it harder for manufactures to develop alternative distribution options,” Fein said. “So the potential is that these vertical relationships could raise the cost of distribution and raise the cost of health care. To the extent that these relationships create efficiencies, cost will go down. At this point, it’s too soon to tell.”

The Drug Channels Institute’s report, “2015–16 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors,” also addresses related issues like health care reform and pharmacy consolidation.

“The report really tires to shed some light on a part of the health care system that most people look at and don't analyze, but one that is crucially important to understanding how products and money flow for pharmaceuticals,” Fein said.