Expert Discusses Unique Challenges of Distributing Specialty Drugs

Natalie Bedford, senior vice president, US Pharmaceutical Distribution Services at McKesson, discusses the unique challenges of distributing specialty drugs. Specialty medications require significant investments and specialized handling due to their complex nature, short shelf lives, and focused patient populations. However, building the necessary infrastructure and distribution networks poses high costs and operational barriers for manufacturers.

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Q: Compared to traditional medications, what are some challenges and considerations associated with distributing and managing specialty medications?

Natalie Bedford: Specialty drugs are known for being high-touch, high-cost medications that are brought to market to treat chronic and complex diseases, and as a result, they often require very much patient intervention and patient support. They also typically have administration and handling needs as well, and furthermore, they even are almost always temperature sensitive. So they could require refrigeration frozen; it typically has short shelf flights. As a result, distributors need to invest significantly in capabilities to support these drugs. So that could be distribution centers, that could be equipment that could be processes to ensure the safe and secure distribution of the product through the supply chain. Additionally, specialty distributors are often also different from traditional distribution of medications, and that they help manufacturers build limited networks to support the unique customer base for those patients. They also have data management. They also provide 24 hour customer service all to help support in the best interest of the patient.

Q: Why would a company choose to partner with a distributor instead of distributing the product themselves?

Natalie Bedford: Because of the uniqueness and complexity of specialty medications, there needs to be a significant investment in infrastructure to really support the capabilities to support the distribution of products to ultimately ensure the patient gets the right product at the right place at the right time. We already talked a little bit earlier about the significance of some of those investments and what needs to be done, but let me talk to you a little bit about more of the other reasons why. Expertise in infrastructure, right, especially distributor does it for a multitude of different products and a multitude of different therapeutic areas, and it's got the ability to be agile, flexible to meet the unique needs of that customer. A manufacturer may be a little bit more difficult for them to do. Second is our nationwide reach. Now granted, while specialty products typically are limited to a small patient population, that then results in a very custom distribution network was very unique, and you may limit to certain classes of customers. McKesson, we're proud to say, or we will boast that we've got one of the largest, most expansive networks of downstream customers, whether it's providers, whether it's health systems, specialty pharmacies. Our breadth is untapped, and that way we can really customize and meet the needs of every customers to ultimately get to every patient that's needed. The third would be cost efficiency, right? This has been a theme as you can see, but there needs to build, not only to build, but also to maintain the infrastructure to distribute is incredibly costly. So it's not just that capex costs that you initially put in for the build, but it's the ongoing operational costs that you need to maintain, and then be flexible and agile to meet the changing needs of that product and your customer demand. As a result, the manufacturer can, by partnering with a distributor, can be have those costs and efficiencies. Lastly, I would say is manufacturer can focus on the core competencies. I was in the manufacturing world for over 28 plus years, and one of the things that manufacturers are most proud, that's why we celebrate them, is because they can bring innovation of science to patients. Let's let them continue to focus on those competencies like research and development and marketing and sales and ultimately getting at access to patients when they need it.
Q: Does McKesson as a specialty distributor partner strategically with manufacturers?

Natalie Bedford: We here at McKesson believe that we are uniquely positioned because of our organizational structure, and our capabilities to be the partner of choice for manufacturers. We've got a scale of assets and capabilities that helps us meet the vast different needs of our manufacturing partners and the diversity of the specialty medications to market. Additionally, we really look to partner with our manufacturing partners when there are events in the marketplace that need a problem-solving mindset. So whether that's the commercialization of COVID vaccines, or a recent Change Healthcare cyber attack, we are their first day want to be there for our partners to also make sure those patients have access to medicines. Additionally, let me go back to our structure because that's why particularly in our organization, strategic manufacturing, pricing relations, that's where we also think we're uniquely positioned. Specifically when it comes to distribution. We've got 4 pillars to our organization. I'll first start with policy. We've got a policy group that's front and center to really help work with manufacturing partners if we have time. We could talk about that a little bit later. Secondly, we've got a strategic strategy and pricing team. That team is uniquely positioned to have visibility both upstream to manufacturers and downstream to our customers to understand the challenges are really look holistically the channel economics, so we can help our manufacturer partners bring their products to the best way possible for launch. Third would be we just launched our Cell and Gene Center of Excellence. We've been on this journey for the last 18 months to work incredibly excited about where we are today, and that we can really help partner with these really new another medicines are coming to market. Coming soon will be some exciting announcements that you hear from us, and last but not least, the organization which I lead, United States Pharmaceutical Distribution Services, just having fun with the United States with the US pharmaceutical distribution services, in which my organization is responsible for full line branded vaccine, biosimilar, and specialty medications. We've got the breadth of all those branded manufacturing relationships, and whether they're just one piece of these different categories, or across all of them, we can uniquely partner with them and understand their portfolio. So that is why we truly believe that we are the best partner from a distribution perspective to help manufacturers get their products to patients.
Q: Is there anything else you would like to add?

Natalie Bedford: To us at McKesson, it's just not about size and scale. It's about operational excellence. It's about redundancy, resiliency, and business continuity. It's about innovation, and in both how we partner with our manufacturers partners, and helping design new channel strategies or new channel networks to help support the uniqueness of the products coming to the market and the patients they serve, and it's also about innovation and building new capabilities to support the specific needs of those populations to ensure that every product gets to the right patient at the right time at the right place. For us at McKesson. It's not just a package. It's a patient.