Chapter 5 | Drug Distribution & Supply Chain

Question 1

Three companies that account for nearly 90% of all drug wholesale:

Answer 1

-Cardinal health
-McKesson HBOC
-AmerisourceBergen

Question 2

PDMA

Answer 2

Prescription Drug Marketing Act

Question 3

Primary wholesale distributors

Answer 3

but most of their drugs directly from manufacturers. Legally considered authorized distributors within the meaning of the PDMA, because they usually have ongoing relationships with manufacturers.

Question 4

Secondary wholesale distributors

Answer 4

Buy from primary and other secondary wholesalers as well as manufacturers but are not considered “authorized distributors” of the manufacturers within the means of the PDMA

Question 5

Distributors are normally the responsibility of experienced managers, such as NAMs (national account manager)

Answer 5

True

Question 6

What are the two legal classifications of drug wholesalers?

Answer 6

Primary Wholesale Distributors (buy most of their drugs directly from the manufacturers), and Secondary Wholesale Distributors who buy from primary and secondary wholesalers and manufacturers. (Not considered “authorized distributors” of the manufacturer’s).

Question 7

Published wholesale price or “list price” suggested by the manufacturer of a drug.

Answer 7

Average Wholesale Price (AWP)

Question 8

Entity consisting of two or more hospitals or other healthcare entities that is formed to offer its members access to purchasing contracts for health supplies.

Answer 8

Group Purchasing Organization (GPO)

Question 9

A company that owns and operates three or fewer pharmacies (Community or neighborhood pharmacies).

Answer 9

Independent drug store

Question 10

What does IDN stand for?

Answer 10

Integrated Delivery Network

Question 11

What is the average size of prescriptions dispensed by mail-order pharmacies compared to those dispensed by retail pharmacies?

Answer 11

3 times larger

Question 12

Brokerage sales, dock-to-dock delivery sales, drop shipments, and any other form of sales not placed in inventory.

Answer 12

non-stock sales

Question 13

What is another name for a rebate?

Answer 13

After-market arrangement (They do not affect the prices paid at the time of service).

Question 14

As a pharmacy, what is the benefit of buying from Wholesalers?

Answer 14

They can buy by-the-bottle and receive a delivery daily, so there’s no need to keep a large stock. This situation also lowers costs, and requires paying only ONE supplier instead of dozens of manufacturers.

Question 15

Who’s responsibility is it to visit distributors and distribution centers?

Answer 15

NAMs

Question 16

What type of sale bypasses the need for intermediary distributors?

Answer 16

Manufacturer-Direct Sales

Question 17

The average size of prescriptions dispensed by mail-order pharmacies is usually ____ times larger than those dispensed by retail pharmacies.

Answer 17

three

Question 18

Name 3 examples of Non-Stock Sales.

Answer 18

-brokerage sales
-dock to dock sales
-drop shipments

Question 19

By FDA law, large chain pharmacies are not allowed to buy directly from manufacturers. True or False?

Answer 19

False. Some large pharmacy companies DO buy directly from the drug manufacturers, but they are exceptions.

Question 20

Any distributor of prescription drug that has a written agreement with the manufacturer of the prescription drug and conducts at least two transactions with the manufacturer of the prescription drug within any 24-month period.

Answer 20

authorized distributor

Question 21

The percentage fee that is paid by the dispenser to the wholesaler for the cost of distribution.

Answer 21

upcharge

Question 22

The combination of drop-ship and dock-to-dock delivery services provided by wholesalers. Wholesalers do not bring the product into their warehouses.

Answer 22

brokerage

Question 23

Wholesaler revenues that are generated from fees and other charges obtained from dispensers.

Answer 23

sell-side margin

Question 24

A wholesaler obtains the drugs from the manufacturer and delivers them to a dispenser’s own warehouse without taking the drug into its own inventory. (a type of “non-stock sales”)

Answer 24

dock to dock delivery

Question 25

The type of sale that bypasses the need for any intermediary distributor. The product is sold and shipped directly by the manufacturer to the dispenser.

Answer 25

manufacturer direct sale

Question 26

Refers to the early payment discounts and other earned/negotiated rebated and discounts received by wholesalers from drug manufacturers. Increases in the value of the wholesaler’s inventories as manufacturers prices rise, are also considered this…

Answer 26

buy side margin

Question 27

a company that owns and operates four or more pharmacies

Answer 27

chain drug store

Question 28

a drug manufacturer directly delivers the drugs to a dispenser, but the order and payments are made through a wholesaler

Answer 28

drop shipment

Question 29

the time differential between when a wholesaler receives payment from its customer and when the payment is due to its supplier

Answer 29

float

Question 30

a pharmacy that dispense prescriptions to patients who submit their prescriptions by mail or fax

Answer 30

mail-order pharmacy