Speciality Drug Distribution Market

Distribution of Speciality Pharmaceuticals to be Revised for Greater Cost Efficiency

The Speciality Drug Distribution Market  is valued at USD 4.1 Bn in 2026 and is projected to reach USD 10.6 Bn,  growing at a CAGR of 15% by 2033.The increasing chronic disease prevalence is expected to drive the demand for speciality drugs worldwide. In the world of speciality pharmaceuticals, manufacturers will often limit the number of speciality pharmacies that can dispense their medications. Pharmaceuticals manufacturers will determine this distribution strategy based on product characteristics, patient education, market reach, and administration, and dispensing characteristics. Speciality drug manufacturers need to ensure patient access to their products without compromising on patient safety. It is thus imperative that speciality drugs are dispensed in accordance with federal regulations, and are monitored for safety. Many require refrigeration; they are often delivered by mail, whereas many are injected or infused, presenting a challenge to patients. Moreover, they are expensive as well. The industry ought to pursue a cost-effective, and efficient distribution system for expensive therapies, and optimally manage the key elements - medication, patient, and cost.

Traditional Distribution Flow of Physician-administered Products is Challenged, and Getting Fragmented

Each of the distribution channel step costs valuable time and money. The time has come to consider a change that positively affects the patient journey using optimal channel management. One potential avenue to meet these objectives is to enable manufacturers to connect directly with the patients to trim the supply chain to evolve the Hub programmes of today into the direct distribution programs of tomorrow. The Speciality Drug Distribution (SDD) model ~ from manufacturer - through PharmaCord ~ to the patient. Failure to construct technology-driven good distribution channel, for a new speciality pharmaceutical product can hamper prescription uptake. For instance, if a drug manufacturer launches an injectable product through a channel that precludes buy and bill, some physicians may decide not to bother with it - especially if treatment alternatives are available.

Limited distribution drugs (LDD) are the speciality medications only made available to a limited number of pharmacies - and though there are reasons for these limitations, they sometimes make it difficult for patients to access medications as and when needed. Many complex, and chronic condition speciality drugs go through this channel. There are many benefits to limiting drug distribution within speciality pharmacy networks, including greater control, and oversight from manufacturers. Closer patient relationships with prescribers, and pharmacists tend to raise the level of adherence to prescribed medications, and thereby drive optimal treatment outcomes. This includes avoided, or early-detected adverse events that can often lead to hospitalisation, or discontinuation of medication by a patient, which makes it imperative to ensure that only the highly trained clinical staff is dispensing medications, and supporting patients. Additionally, limiting the size of a network ensures greater consistency, and lesser variability of care.

Differing Business Interests Broadens Scope for Market Growth

Interests of different stakeholders within the system such as drug companies, and payers are not always aligned with each other, perhaps conflicting with each other. The distribution channel’s role for patient-administered speciality drugs depends significantly on manufacturer and payer strategies for these products. In the US, a pharmacy benefit manager (PBM) is a third-party administrator of prescription drug programmes for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans. PBMs administer prescription drug plans for more than 266 million Americans. The therapy areas with the highest number of limited distribution drugs include anti-infective, certain forms of cancer, hepatitis C, multiple sclerosis, oncology, ophthalmology, respiratory conditions, rheumatoid arthritis, and rare disease categories. Recently, companies have begun developing speciality drugs for more common conditions such as high cholesterol. In the world of value-based payment, where drug reimbursement is tied to the quality of outcomes, speciality manufacturers are rapidly adopting limited distribution networks.

The speciality product distribution figures include three primary customer groups.

Retail, mail, and speciality pharmacies

Physicians’ Offices/Clinics - Independent physician offices and outpatient clinics are speciality distributors’ largest customer group. The biggest speciality distributors serving these customers are divisions of the Big Three wholesalers. These include the distributors in AmerisourceBergen Corporation’s Speciality Group (Oncology Supply, ASD Healthcare, and Besse Medical), Speciality Solutions (a business unit of Cardinal Health), and McKesson Speciality Health (a business unit of McKesson Corporation)

Hospitals - Some provider-administered speciality drugs are administered in hospital outpatient departments, and hospital-based practices. Hospitals typically receive products from hospital pharmacies that purchase drugs from full-line pharmaceutical wholesalers under preferred vendor contracts

Increasing Business Fosters Market Expansion

Currently, more than 75% of manufacturers are dispensing products through a limited distribution model. It is worth noting that the number of speciality drug approvals has been on the rise, with 39 speciality drugs receiving FDA approvals in 2018 alone. Moreover, the current pipeline for speciality drugs is promising, and new entries into the market will further add to the spending on speciality drugs. Drug manufacturers are always in discussion with PBMs, health plans, and government agencies over the development of pricing models for essential upcoming premium therapies. For instance, in 2018, Express Scripts had declared its interest in setting up exclusive business relationships with biotechnology firms - Biomarin, Spark, and Bluebird Bio. The commencement of the deal intended to facilitate expensive gene therapy distribution was estimated in 2020.

A greater number of drugs will be dispensed as limited distribution drugs, and this will have a huge impact on payer financials. According to Drug Channels Institute’s annual update of the number of US speciality pharmacies as of the end of 2020, there are 1,207 unique pharmacy locations that had achieved speciality pharmacy accreditation from Accreditation Commission for Health Care (ACHC) and/or Utilization Review Accreditation Commission (URAC). The 2020 figure marks a 14% increase over the 1,062 locations in 2019.

Accreditation, Standards, and Laws

Accreditation Standard for Speciality Pharmacy (ASHP), ACHC, National Association of Boards of Pharmacy (NABP), National Committee for Quality Assurance (NCQA), Speciality Pharmacy Certification Board (SPCB), and URAC Speciality Pharmacy Accreditation are some of the entities that weigh in the industry. Among the state, and federal regulations that govern the activities of dispensing medicines, there are three critical laws pertaining to the safety, and security of both the general public, and industry professionals.

• Enforced by the FDA ~ The Drug Supply Chain Security Act (DSCSA)
• DEA ~ The Controlled Substance Act (CSA)
• EPA ~ The Resource Conservation Recovery Act (RCRA)

The laws pertain to the security of drug supply chain, the regulation and security of controlled substances, and management of pharmaceutical hazardous waste. The Academy of Managed Care Pharmacy (AMCP), and Pharmaceutical Care Management Association Division (PCMA) provide thought leadership, and advocacy to the industry on matters of public policy, industry relations, and value of speciality pharmacies.

Major Speciality Drug Distributors

• AmerisourceBergen Corporation
• McKesson Corporation
• Cardinal Health, Inc.
• Cencora, Inc. (formerly part of AmerisourceBergen)
• Walgreens Boots Alliance
• CVS Health / CVS Specialty
• Drug Logistics, LLC
• Anda, Inc. (a subsidiary of Teva Pharmaceutical)
• D. Smith (now a division of AmerisourceBergen/Cencora)
• Smith Drug Company
• Morris & Dickson Co., LLC
• FFF Enterprises
• Kaléo, Inc.
• Besse Medical
• BioPlus Specialty Pharmacy

By Therapeutic Area

• Autoimmune & Inflammatory Diseases
• Infectious Diseases
• Neuroscience
• Oncology
• Rare Diseases

By Product Type

• Biologics
• Cell And Gene Therapies
• Small Molecule Drugs
• Specialty Generics

By Dosage Form

• Injectables
• Oral Solids
• Topicals

By Distribution Channel

• Alternative Channel
• Hospital Pharmacy
• Online Pharmacy
• Retail Pharmacy

By Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East & Africa