Drug and Druggists' Sundries Wholesalers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 7,200 drug and druggists’ sundries wholesalers in the US distribute biological and medical products; botanical drugs and herbs; pharmaceutical products; and related goods. Prescription drugs account for over 80% of industry sales. Other product categories include cosmetics and beauty supplies; vitamins and nutritional supplements; non-prescription drugs; and personal care items.
Regulated Environment
The distribution, compounding, purchase, and storage of pharmaceuticals is highly regulated by the Drug Enforcement Administration (DEA), FDA, and US Department of Health and Human Services (HHS).
Reimbursement Rates and Coverage
The drug wholesale industry is affected by changes to medical reimbursement rates, which continue to fall as the healthcare industry looks for ways to cut costs.
Industry size & Structure
The average drug wholesaler operates out of a single location, employs 36 workers, and generates about $107 million annually.
- The drug and druggists' sundries wholesale industry consists of about 7,200 firms that employ about 260,000 workers and generate $770 billion annually.
- The industry is concentrated; the top 50 companies account for 86% of industry revenue.
- Large companies include McKesson, Amerisource Bergen, Cardinal Health, and JM Smith. Large firms may have international or pharmacy retail operations.
Industry Forecast
Drug and Druggists' Sundries Wholesalers Industry Growth
Recent Developments
Nov 4, 2024 - Medicare Part D Payment Updates Finalized
- Annual out-of-pocket costs for the Medicare Part D drug benefit will be capped at $2,000 in 2025, according to the Centers for Medicare & Medicaid Services (CMS). Many insurers are increasing premiums for their stand-alone drug plan offerings, however, according to health policy research firm KFF. Some major plan sponsors, including Aetna and UnitedHealthcare, are also reducing their stand-alone prescription drug plan offerings, and overall, there will be fewer prescription drug plans in 2025 than in 2024 – 524 plans nationwide, down from 709 in 2024.
- The Biden administration reached an agreement with drugmakers to lower prices on the 10 costliest prescription drugs under Medicare beginning in 2026. The agreement with drugmakers is projected to save older adults $1.5 billion in out-of-pocket costs when the new prices go into effect in 2026. The drugs are purchased through Medicare Part D, a prescription drug coverage program for Americans who are 65 and older. The 10 medications were used by 9 million patients with Medicare coverage in 2023 and accounted for $56.2 billion in total Medicare spending. The government estimates that, had the negotiated prices been in place that year, Medicare would have saved about $6 billion. Total annual spending on prescription drugs in the US exceeds $405 billion, and Part D alone accounts for more than $215 billion.
- AARP, formerly the American Association of Retired Persons, is among the interest groups advocating for state-level legislation that would allow lower-priced prescription medication to be imported from other countries. "The federal government has cleared the way for states to create their own importation programs, noted Joe Stelling, Associate State Director at AARP. Advocates are now pushing for New York State to pass legislation that would make it legal to import prescription drugs from Canada and other countries. The US Food and Drug Administration (FDA) has authorized Florida to import prescription drugs from Canada, granting preliminary clearance for bulk purchase medicines from wholesalers there. The FDA has long resisted drug importation efforts on grounds that it could not ensure the safety and supply of medicines shipped from abroad. Florida reported that it expects to save approximately $183 million annually once its Section 804 Implementation program (SIP) pathway is approved. SIP is relatively new and is the first drug importation pathway to be independent of the individual patient and the drug manufacturer. A SIP is a “pathway” under Section 804 of the Federal Food, Drug, and Cosmetic (FD&C) Act that allows for the importation of certain prescription drugs from Canada. The state’s Agency for Health Care Administration must submit additional drug-specific information for the FDA’s review and approval, ensure eligible prescription drugs have been tested for authenticity and degradation, and are in compliance with the specifications and standards set forth in Section 804(e)(1) of the FD&C Act, and relabel the eligible prescription drugs to be consistent with the FDA-approved labeling requirements.
- Drug and druggist’s sundries wholesaler industry employment decreased slightly during the first nine months of 2024, according to the US Bureau of Labor Statistics (BLS). Drug and druggist’s sundries wholesalers slightly increased their prices during the first nine months of 2024, according to the BLS.
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