Understanding healthcare distributors and the industry’s role in the supply chain

Distributors are the logistics experts of healthcare, connecting 1,200 manufacturers to nearly 330,000 providers and pharmacies. Collectively, the industry delivers 10 million medicines, vaccines, and healthcare products safely, efficiently, and reliably every day.

Here are three things to know about the industry.

1. Distributors’ logistics expertise helps streamline the supply chain and adds value to the healthcare system.

With employees across the country, healthcare distributors handle a range of products, from common over-the-counter medicines to specialty products that require unique handling and constant temperature monitoring.

By leveraging advanced technologies, real-time data, and robust infrastructure, distributors ensure patients can access lifesaving treatments exactly when and where they are needed.

Distributors do this while operating on the narrowest profit margins in healthcare; the industry operated on a 0.3 percent net profit margin in 2023.

Unlike other supply chain entities, which rarely touch or handle products, distributors are responsible for the physical handling and security of medicines and healthcare products as they move through the supply chain.

Distributors are the only supply chain partner that takes legal ownership, financial risk, and physical possession of medicines — warehousing and then delivering them to healthcare settings in all 50 states.

2. Distributors are creating cost savings in healthcare.

Streamlining the supply chain by consolidating orders, leveraging the industry’s logistics expertise, and deploying advanced technologies allows distributors to generate significant efficiencies that save the healthcare system up to $63 billion annually.

These savings benefit the healthcare system and, ultimately, patients.

Moreover, a report by BRG shows that distributors’ margins account for less than 1 percent of the cost of brand drugs.

Importantly, distributors do not determine the amount patients pay for their medicines. In contrast to others in the supply chain, like health insurance plans and pharmacy benefit managers, distributors have no control over formulary decisions, benefit design, or reimbursement rates for dispensing pharmacies. Instead, the sector’s focus remains on making the supply chain as efficient and effective as possible, reducing unnecessary costs along the way.

3. Distributors connect care across America and provide support at both ends of the pharmaceutical supply chain.

Distributors connect providers with the medicines, healthcare products, and solutions essential to caring for patients in communities across the U.S. The industry’s services range from pick, pack, and ship operations to specialized offerings such as cold chain management and data analytics. This central focus on logistics allows providers to focus on patient care and manufacturers to focus on research and development.

Without distributors, pharmacists would have to maintain relationships with each manufacturer and vice versa, adding time and complexity to what is now a safe and efficient process.

Because distributors take care of the logistics behind the scenes, the industry is empowering partners to focus on what’s most important to the entire healthcare supply chain — the patient.

As the healthcare industry evolves, distributors remain committed to working collaboratively with supply chain partners, the public sector, and others to make the delivery of medicines and healthcare products even stronger and more efficient.

Together, we’re not just delivering medicines — we’re connecting care across America.