By Daniel Abrego
The Direct to Pharmacy model is a distribution model I feel strongly about. So much so that we are rolling it out for the first time in Panama and the region. If you are interested in how it can benefit your business, do read on. And also have a look at our introductory article on the Direct to Pharmacy model.
A quick recap about the Direct to Pharmacy model: Traditionally, pharma manufacturers would sell their products to wholesalers, who would in turn compete with each other to become the main supplier of the product to pharmacies. Through the DTP approach, pharma manufacturers can sell products directly to the pharmacy. All it takes is a logistics provider, such as our 3PL, to coordinate and deliver the medicines.
I have come across some misconceptions about the model and would like to address these, giving my viewpoint as a logistics provider.
- Pharmacies are not interested in changing distribution models.
The reality is that the role of the pharmacist has evolved greatly. No longer do they operate in isolation
from the patient and pharma company. While medical professionals handle prescribing, pharmacists are
stepping up their role in dispensing and taking direct responsibility for a patient’s medication needs and
concerns. For this reason alone, pharmacists benefit from being in closer contact with and being in more
control of the medicine supply chain. 3PLs such as ours with dedicated services can greatly help the
transition for pharmacies into their new role. Also, pharma companies are already leaning towards
reducing the number of wholesalers they deal with (it is more manageable). Thus, the general trend is
already shifting and pharmacies must be made aware.
- DTP pushes drug prices up.
Not at all. Don’t forget that traditionally, wholesalers were marking up the cost of drugs. Up to 50% of their profit was coming from price inflation. It was common practice to buy in huge volume, and sell after the price increase. This was taking away profit from manufacturers, not to mention over-stocking and creating a secondary unregulated market. With DTP, manufacturers gain back more control of the supply chain. Whatever profit the manufacturer makes can be leveraged to offer a discount to patients. Patients get more reasonably priced drugs, and better access through an efficient 3PL. Plus, the likelihood of counterfeit or expired drugs in this controlled distribution method is low.
- There aren’t enough benefits to switching to the DTP method.
Pfizer implemented the DTP method more than ten years ago and it has proven effective for them.
Among their top reasons for sticking to DTP are:
a. Easier to detect counterfeit medicines and prevent losses from them at the pharmacy level
b. Can ensure product integrity and up to date drugs
c. 3PLs offer cost efficiency which wholesalers previously couldn’t, improving supply chain profit
d. All parties have more control over the supply chain
If the DTP model interests you, it is important to choose the right 3PL who has some experience and know-how in drug distribution. The drug manufacturer and 3PL will be working together in this direct model. Ensure your 3PL has an established infrastructure and methodology that enables visibility and tracking at the pharmacy level. I believe direct models are more sustainable in the long run and we are eager to implement it in Central America and around. Bringing down drug costs has become a national, and regional, priority and this is one way to do so.
Mr. Daniel Abrego is CEO of Intercontinental Logistics Corp.