PHARMACEUTICAL DISTRIBUTION SYSTEMS

To support pharmaceutical distribution business models that meet the requirements of hospitals and health systems with respect to availability and timely delivery of products; further,

To oppose manufacturers, distributors, and wholesalers restricting or making availability of products contingent on how those products are used or through exclusive distribution channels; further,

To encourage selection of a wholesale distributor that (1) purchases products only from a manufacturer before distribution to the purchasing end user; (2) is licensed in the state where it is conducting business; (3) complies with the requirements of the Drug Supply Chain Security Act; (4) is accredited under the National Association of Boards of Pharmacy Drug Distributor Accreditation program; and (5) uses information systems that are interoperable with common types of pharmacy systems.

Rationale

Wholesalers and distributors have traditionally contracted with hospitals and health systems for pharmaceutical product distribution and other services. Many wholesalers have made a large portion of their revenue through speculative buying and other business practices that are no longer desirable because of requirements for pedigrees, the risk of buying counterfeit or adulterated products, demands by manufacturers to limit product transactions leading to supply chain disruption, and the need to manage recalls. These changes, plus the vast diversification of many wholesaler distributors, have resulted in new business models that will affect how hospitals acquire and manage pharmaceutical products. These changing models for distribution may result in higher costs for hospitals and health systems, as current wholesaler distribution systems have become very efficient. ASHP supports support drug distribution business models that meet the requirements of hospitals and health systems with respect to availability and timely delivery of products (e.g., that minimize short-term outages and long-term product shortages, disclose disruptions in product availability, manage and respond to product recalls, foster product-handling and transaction efficiency, preserve the integrity of products as they move through the supply chain, and provide affordable service costs).

Additionally, some manufacturers and distributors have required that pharmacies ensure certain products are not used or sold for use for particular purposes, and there are concerns that this practice could grow. ASHP supports wholesaler and distribution business models that meet the requirements of hospitals and health systems, which includes the ability for pharmacies to obtain products for established patient care uses without restriction.

ASHP supports using strict vendor vetting policies to prevent sales from nonreputable or gray market vendors. Vendors should purchase products only from a manufacturer, not a secondary source; be licensed in the state in which it operates; comply with the requirements of the Drug Supply Chain Security Act; be accredited under the National Association of Boards of Pharmacy (NABP) Drug Distributor Accreditation program; and use information systems that are interoperable with common types of pharmacy systems. NABP accreditation requires a rigorous criteria compliance review.