What Are the Unique Capabilities of a Specialty Distributor?Jillian Yang
Specialty distributors play a critical role in supporting drug manufacturers and ensuring patients with rare diseases have access to the medication they need when they need it. To truly understand the unique capabilities of a specialty distributor, it is important to first lay out why they exist in the first place.
As advancements in science have brought about major improvements in how we treat rare diseases, the number of specialty drugs on the market has exploded in recent years. So much so that even in a year dominated by the COVID-19 pandemic, the FDA reported that more than half (26 of 50, or 52%) of all their new drug approvals in 2021 were for rare diseases.
This means there are many more life-saving medications available to treat patients with rare diseases who are desperately in need of new therapies. However, due to the complexity of how these specialty drugs are made and distributed, it also presents an entirely new set of challenges across every step of the patient journey:
Supply: Manufacturers of specialty drugs will often choose to establish an exclusive or limited distribution network in which they contract with either one or only a small number of distributor partners. Because these drugs each require their own highly unique handling in the supply chain, this allows manufacturers to vet and select specialty distributors based on their capabilities to ensure proper handling and delivery. They may also look to the specialty distributor to provide additional support across several areas such as regulatory, financial services, data and market intelligence, and inventory management. By contracting with just one or a small number of distributors, drug makers are able to truly tap into their expansive resources and expertise to create efficiencies that carry across the entire supply chain.
The Healthcare Distribution Alliance’s 2021 Specialty Pharmaceutical Distribution Facts, Figures and Trends found that these distribution models are especially well suited for drugs with small to mid-sized patient populations as well as those that have complex Risk Evaluation and Mitigation Strategy (REMS) programs. REMS is a drug safety program that the FDA can require for certain medications with serious safety concerns to help ensure the benefits of the medication outweigh its risks.
With almost 85% of manufacturers managing some or all of their products through a limited-distribution model according to the 2019 State of Specialty Pharmacy Report, these limited and exclusive partnerships offer many benefits for manufacturers, pharmacies, healthcare providers, and patients.
Cost: The Congressional Budget Office reports that the pharmaceutical industry spent $83 billion on research and development in 2019. Even after adjusting for inflation, that’s 10 times what the industry spent in 1980. Most of that is being used to develop specialty drugs and it’s projected that 60% of the new drugs approved by 2023 will be specialty drugs. While only ~2% of patients will need specialty drugs, the IQVIA Institute reports that they make up 53% of annual spending.
Storage: So, can every hospital have each of the specialty drugs on hand? Huron Consulting Group found that only 1 in 11 hospitals has specialty pharmacy capabilities. Your regular neighborhood pharmacy needs specialty pharmacy accreditation, but according to the Drug Channels Institute, only around 1,200 of the roughly 60,000 pharmacies (2%) in America have achieved it so far.
Expiration Dates: The Pharmaceutical Care Management Association points out that not only do many specialty drugs have special requirements for storing and handling, but some even have relatively short shelf-lives as well, creating an added layer of complexity.
For these reasons, manufacturers of these specialty drugs must develop a fine-tuned distribution strategy that can both meet the current market need and provide the necessary controls referenced above.
This is where the specialty distributor comes in. A specialty distributor provides the knowledge and expertise to support all steps of the patient journey. When assessing potential partners, manufacturers should consider the following unique capabilities of a specialty distributor:
Expertise in Specialty Drugs
At any time, specialty distributors are handling several of the most expensive and complex drugs available on the market today. Many are incredibly fragile, so each drug also has its own unique and highly specialized set of handling instructions. On top of that, the patients receiving them also require a high-touch model of care, as many of these drugs must be administered by a provider.
To address this, specialty distributors have developed a deep understanding of how to minimize the risk across every step of the drug’s journey from manufacturer to patient. These capabilities are then built into everything they do and can be applied to their entire catalog of specialty drugs.
Vast Distribution Network
Because of the special handling required for these life-saving medications and the fact that they are most often not kept onsite by the hospital or provider, timing is everything and there is little room for error.
Specialty distributors offer increased economies of scale by providing operating efficiencies in supply chain management and allowing manufacturers to reduce their own costs related to transportation and logistics. The distributor assumes the risk and responsibility to get the drug to the specialty pharmacy and ultimately the patient. The manufacturer will also engage a third-party logistics provider (3PL) for things like warehousing, fulfillment, and supply chain and inventory management. This will typically happen earlier in the commercialization process prior to product launch and before a specialty distributor is identified.
24/7 Customer Service Support
There is certainly no shortage of pharmaceutical distributors out there, but what sets specialty distributors apart is their dedication to customer service and support. As the overwhelming majority of the products they carry are life-saving, their teams understand that one missed phone call could mean the difference between life and death for a patient.
When researching different distributors, is it important for manufacturers to not only assess the size of their current network, but the depth and breadth of the team they’ll be working with every time an order is placed.
The specialty distributor must have strong relationships with medical facilities so they know who to call when a drug is needed as well as pharmaceutical companies to effectively stay on top of any issues that may be occurring in their supply chain. Here, the distributor can step up in the case of any shortages or disruptions to ensure that drugs are allocated to any patient who needs them right when they need them. There are a lot of moving pieces whenever an order is placed so connectivity here is key and will be driven by the distributor.
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.