Is a Limited Distribution Network Right for You?Jillian Yang
Over the past 5 years, the FDA has approved an average of 51 novel drugs annually. As a manufacturer prepares to bring any new drug to market, there are several important decisions to be made along the way. Among these is the distribution network.
With all of the resources that go into developing a drug on the front end (R&D, clinical trials, etc.), distribution can at times be pushed to the back burner. However, the distribution network for a drug should not – and cannot- be left as an afterthought until it is time to hit the market. In fact, there are various benefits that come with identifying the right network and partner(s) early on in the commercialization process.
This goes for any new drug, but especially for specialty drugs. This is because they in particular require their own set of unique and highly-specialized instructions for everything from transport to storage, handling, monitoring and ultimately dispensing to patients. As a result, manufacturers must vet and select distributors based on their ability to meet these needs. And because specialty pharmaceuticals target smaller patient populations and tend to be more expensive, the stakes are incredibly high to ensure that they are transported and stored correctly.
For these reasons, manufacturers of specialty drugs may look to what is known as a Limited Distribution Network (LDN).
WHAT IS A LIMITED DISTRIBUTION NETWORK?
In a Limited Distribution Network (LDN), manufacturers distribute their drug through one or a small number of distributor partners.
One survey shows that 85% of manufacturers are using a limited distribution model for some or all of their products. From January 1, 2021 through the end of February 2022, the FDA approved 75 novel drugs. Of those, 80% went to market with a Limited Distribution Network.
WHY USE A LIMITED DISTRIBUTION NETWORK?
You might be wondering why a drug manufacturer would spend a decade or more and billions on R&D, clinical trials, and FDA approvals to bring a new drug to market and then choose to limit its distribution? While it may seem counterintuitive at first, an LDN can actually provide a number of benefits to the manufacturer both before and after the drug is approved. By selecting the right distributor partner(s) early in the process, they are then able to tap their knowledge and help optimize the complex and costly path to bring the drug to market.
Most of the novel drugs currently being approved are specialty drugs. According to Managed Healthcare Executive, around two-thirds of the FDA approvals between 2015 and 2020 were for specialty drugs. This is important to note because these types of drugs lend themselves to the benefits of a limited distribution model for several reasons. Because they are needed for a small minority of patients (only 4% according to BenefitsPRO) and often have specific storage needs, a mass distribution model is inefficient and places a burden on multiple facilities that are otherwise removed from the process. By contracting with just one or a small number of distributors, manufacturers can leverage their expansive capabilities and expertise across the entire supply chain including help with financial services, data and market intelligence, and inventory management.
Access Market Intelligence explains some other benefits of using a Limited Distribution Network which include:
- Ensuring the distributors have any needed training to monitor and reduce risk
- Improved ease of tracking inventory
- Oversight any special dose requirements and/or lab monitoring needs
- Having special capabilities needed for physician-administered drugs to efficiently serve patients, providers, and payers.
HOW DO YOU CHOOSE A DISTRIBUTION PARTNER?
When a drug manufacturer decides that a Limited Distribution Network is the best model, the next step is finding the right distribution partner (or partners). An LDN can also allow for greater oversight from the manufacturer since they are only dealing with one, or a few, distribution partners. Of course, manufacturers should seek out established partners with strong experience and a good reputation in the field, but what other capabilities should they be looking for in a specialty distributor?
Here are some potential questions to ask:
- How vast is their distribution network? Does it cover your geographic needs?
- What are their delivery methods?
- Do they have any cold chain or special storage, distribution, and delivery capabilities which may be needed for your drug?
- How do they handle tracking and reporting? What will be shared with you and when?
- Is there a call center or other means of 24/7 support?
- How do they develop mitigation strategies?
- Do you trust them?
Answering yes to these while also assessing capabilities to address any unique needs is a fantastic start to identifying the right distribution partner.
IN SUMMARY: DON’T OVERLOOK IDENTIFYING YOUR DISTRIBUTION NETWORK & PARTNER(S)
When developing a new drug, a manufacturer should consider the distribution model early in the commercialization process to ensure they are setting up for success when it’s time to launch into the market. A Limited Distribution Network offers many benefits to manufacturers, providers, and patients. It provides drug manufacturers with the opportunity to bring on the right distribution partner early to help navigate the complex nature of distribution for the initial launch of the drug and beyond. From there, an LDN can save the manufacturer money and resources once the drug goes to market by providing the necessary infrastructure and expertise to achieve the best outcomes in tracking, delivery, difficult storage needs, and patient care.
BioCareSD is proud to serve as a leader in specialty distribution for more than 40 years. We strive every day to deliver unparalleled service to our patients and partners and, most importantly, to provide patients across the country with fast and easy access to life-saving medications.
To learn more about partnering with BioCareSD, please contact us here.