After purchasing these drugs, pharmacies must safely store and dispense these drugs to patients. Pharmacies typically purchase drugs at WAC, adjusted for any purchase discounts e. A formulary is a list of drugs that are covered under the health plan with information on tier placement and coverage criteria that correspond with patient cost sharing for each drug. For instance, they may include value- or volume-based rebates that are paid if certain predetermined thresholds are met.
For drugs dispensed, PBMs submit rebate claims to manufacturers for retrospective rebate payments. In most instances, rebates or discounts are not reflected in the price or copay a patient pays at the pharmacy. PBMs then pass on a portion of negotiated manufacturer rebates onto health plans. The amount of rebates passed through to the health plan can vary based on contract terms and there are differences across markets; however, there is typically near-full pass through of rebates in Part D.
PBMs can also offer services like drug utilization review, disease management, and consultative services to assist plans with their benefit structure. In addition, PBMs may offer fee-based services to manufacturers such as rebate or program administration and, data collection. But, now we need others to know it too. We must work together, as manufacturers and distributors, to provide others in and outside our industry with more information on how each member of our supply chain operates and how, without even one us, patients would be negatively impacted.
We are all working diligently as an industry to keep costs as low as possible and increase efficiency. However, there is still more that can be done and benefit design and access issues need to be addressed.
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A mix of feature articles and current new stories that are critical to staying up-to-date on the industry, delivered to your inbox. They analyze the anticipated demand and future competition and forecast marketing costs to produce the wholesale acquisition cost WAC.
This is the baseline price at which wholesale distributors purchase prescription drug products. Manufacturers can choose to issue discounts and rebates based on factors including market share, volume prompt payment. Wholesale distributors are paid a distribution service fee for their services. Contractual agreements between wholesalers and manufacturers may include discounts for prompt payment and bulk purchasing. The role of the wholesaler in the life sciences supply chain management is to make the process of purchasing drug products from pharmaceutical manufacturers more efficient.
Wholesale distributors connect 60, U. This enables manufacturers to ship bulk quantities of medications to a comparatively small number of wholesaler warehouses versus shipping to thousands of pharmacy and outpatient dispensing outlets.
Some wholesalers specialize in dealing with a particular range of products, such as biologics or to specific types of customers, such as nursing care facilities. Today wholesale distributors provide a range of specialized services such as specialty drug distribution, pharmaceutical repackaging, electronic order services, drug product buy-back programs and reimbursement support, specialty pharmacy and disease management services.
By combining their purchasing power, wholesalers can help smaller pharmacies better negotiate with manufacturers of generic drugs. Revenues for pharmaceutical wholesalers are typically calculated based on the difference between what they anticipate having to pay to manufacturers for life sciences products and the amount they receive in payments for selling the drugs to the retail and non-retail customers. Discounts, such as for prompt payment and fees on services provided to their customers can also be earned.
The pharmacy category can include independent and chain pharmacies, food stores or big box stores with pharmacies and mail-order pharmacies. Specialty pharmacies focus on providing higher cost biotechnology drug products.
Due to the pending shift in demographics, it is anticipated that mail order pharmacy use will continue to increase significantly. Serving as a critical interface between manufacturers, PBMs and wholesalers, pharmacies facilitate consumer billing and payments for those who participate in group health benefit plans.
Manufacturers of multiple-source drug products compete to sell drugs to pharmacies. Because pharmacies keep a wide range of drugs in stock so that they can be prepared to meet demand immediately, they have less leverage to negotiate rebates or discounts with manufacturers of single-source brand name prescription drugs. Typically, pharmacies purchase prescription drugs from wholesalers at a contracted discount off the WAC. The rate varies based upon the size and purchasing power of the pharmacy.
Pharmacies contract with wholesalers to stock their facilities with prescription medicines and use agreements with facilitate full, timely payment for drug product purchases and fulfillment of other obligations in exchange for a discount.
The role of Pharmacy Benefit Managers in the pharma supply chain is designed to provide an entity which focuses on improving cost savings, access, convenience and safety for consumers, employers, unions and government programs. Pharmacy Benefit Managers originated as basic claims administrators and have evolved to become complicated organizations that provide a variety of services including:.
Within the life sciences supply chain, PBMs tend to have the most significant leverage in obtaining brand-name medications that have close substitutes. Presented September 18, Accessed September 18, September 21, Jill Murphy, Assistant Editor.
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