Ethan Rhodes
Hospitals require a constant supply of medication to treat their patients. Pharmaceutical distribution models are set up to ensure patients receive the drugs they need, when they need them. Most pharmaceutical products and supplies are ordered through wholesalers, but hospitals can also purchase directly from manufacturers or compounding pharmacies. Wholesalers maintain large distribution centres and offer bulk-purchasing discounts, making medication more affordable for hospitals and their patients. Physicians prescribe medication, and there are different types of medication orders, including prescriptions, over the counter, scheduled medication orders, and PRN orders. There are also other types of orders such as automatic stop orders and STAT orders.
| Characteristics | Values |
|---|---|
| Who places pharmaceutical orders | Physicians |
| How are orders placed | Verbal orders, by phone, computer, or automatically |
| Who receives the orders | Charge nurse or hospital pharmacy |
| Who fulfils the orders | Wholesalers or manufacturers |
| Who distributes the orders | Distributors or wholesalers |
| Who receives the orders from distributors | Hospital buyers |
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What You'll Learn
Hospitals often purchase pharmaceuticals from wholesalers
Wholesalers maintain large distribution centers and utilize national and local courier services to efficiently fulfill order requests from their clients. In the United States, three major wholesalers—AmerisourceBergen, Cardinal Health, and McKesson Corporation—account for over 90% of wholesale drug distribution. These wholesalers compete with each other for contracts and derive their primary revenues from generic drugs, which make up about 30% of wholesale revenue.
The impact of wholesalers on drug spending is significant. They influence the purchase and distribution of prescription drugs by setting generic drug prices, leveraging list price increases, competing in specialty drug distribution, and impacting drug shortages. Wholesalers' business practices, such as "forward-buying," can also affect which drugs are ultimately distributed to patients.
When choosing a pharmaceutical wholesaler, hospitals should consider factors such as product range and availability, pricing structures, and the use of advanced digital tools for inventory tracking, ordering, and analytics. By partnering with wholesalers, hospitals can benefit from consolidated purchasing, clear pricing models, and potential cost savings.
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Sometimes, hospitals buy directly from manufacturers
While most pharmaceutical products are ordered through wholesalers, hospitals sometimes purchase directly from drug manufacturers. This is because pharmaceutical distribution models are set up to ensure patients receive the drugs they need, and each patient setting may call for a different distribution model.
There are several reasons why hospitals may choose to buy directly from manufacturers. Firstly, it could be due to the nature of the drugs required. Specialty distribution is tailored for medications that treat chronic, complex, or rare diseases. These medications often require special handling, such as refrigeration, and may involve limited distribution. In such cases, hospitals may find it more efficient to source these drugs directly from the manufacturer.
Another reason could be related to cost and pricing schemes. Manufacturers may offer rebates and discounts to purchasers in exchange for being listed on a formulary—a list of drugs used to guide doctors' prescribing practices. Hospitals, as large purchasers with significant buying power, may be able to negotiate better prices directly with manufacturers, especially if they can guarantee high volumes.
Furthermore, hospitals may also choose to buy directly from manufacturers to streamline their procurement processes. Traditional distribution channels simplify the process by allowing hospital buyers to order from a single distributor instead of multiple manufacturers. However, this model may not always be feasible or cost-effective for hospitals, especially for specialty medications or when dealing with multiple manufacturers.
Ultimately, the decision for hospitals to buy directly from manufacturers depends on various factors, including the specific needs of patients, the nature of the drugs required, and the potential for cost savings through bulk purchasing and rebates.
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Wholesalers maintain large distribution centres to fulfil orders
In the hospital pharmaceutical procurement process, wholesalers play a crucial role by maintaining large distribution centres to efficiently fulfil order requests. This traditional distribution model, also known as mainline or acute care distribution, simplifies the buying process for hospitals. Instead of hospitals placing multiple orders with various manufacturers, wholesalers allow them to source a wide range of products from a single distributor. This reduces the complexity and cost of operations for both manufacturers and hospitals.
Wholesalers maintain extensive warehouse capacity and distribution centres, ensuring timely deliveries to hospitals. They act as middlemen between manufacturers and hospitals, buying products in bulk from manufacturers and then selling them at wholesale prices to hospitals. This bulk purchasing power allows wholesalers to negotiate discounted prices from manufacturers, which they can pass on to hospitals. Additionally, wholesalers' large distribution networks enhance their supply chain stability, reducing the risk of shortages.
The healthcare industry, with its complex regulatory guidelines and compliance requirements, relies on wholesalers' expertise to ensure the proper handling and distribution of pharmaceuticals. Wholesalers are responsible for maintaining inventory, including specialty medications that require special handling, such as refrigeration, and tighter inventory controls due to their high costs. By utilising both national and local courier services, wholesalers can efficiently deliver these medications to hospitals.
Furthermore, wholesalers offer a diverse range of products through their catalogues, providing hospitals with a one-stop shop for their pharmaceutical needs. They also provide additional services, such as value-added distribution, which goes beyond simple picking, packing, and shipping by offering customised solutions. This flexibility ensures that hospitals receive tailored support for their unique requirements.
While three major wholesalers, Cardinal, McKesson, and Cencora, dominate the market, regional players like Morris and Dickson also make significant contributions. These wholesalers are constantly adapting to the evolving landscape of the healthcare industry, utilising technology to streamline operations, mitigate supply chain issues, and enhance inventory management. By understanding market demands and maintaining strong relationships with suppliers and customers, wholesalers ensure the efficient and effective distribution of pharmaceuticals to hospitals.
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Orders can be STAT, automatic stop, PRN, or one-time
In a hospital setting, medication orders are typically placed by physicians or nurses. These orders are then processed by the hospital pharmacy, which may involve purchasing the required pharmaceuticals from wholesalers, manufacturers, or compounding pharmacies.
Medication orders can vary, and understanding the different types is crucial for nurses and other healthcare professionals involved in patient care. Orders can be STAT, automatic stop, PRN, or one-time, each with distinct characteristics:
STAT Orders
STAT orders, such as "Digoxin 0.25 mg IV STAT," are urgent and to be completed immediately. These orders are typically administered when a patient's condition requires immediate intervention, such as during a seizure or an irregular heartbeat episode.
Automatic Stop Orders
Automatic stop orders originate from the hospital pharmacy rather than a physician's prescription. They serve as a safety measure, reminding physicians to discontinue certain medications after a specific period to prevent potential harm from prolonged use.
PRN Orders
PRN, or "as needed," orders are administered when specific symptoms arise, such as pain, nausea, vomiting, itching, sleep issues, cough, or a fever above 101°F (38.3°C). PRN medications can only be given for the specified indication and must be carefully monitored.
One-Time Orders
One-time or short-series orders are given for medications that are administered once or a limited number of times, such as two doses within 24 hours. These orders are typically used for specific situations or conditions that require a finite treatment course.
It is essential to recognize and differentiate between these order types to ensure proper medication administration and patient care. Each type of order has specific indications and guidelines that nurses and healthcare professionals must follow to provide safe and effective treatment.
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Physicians can give verbal orders to a charge nurse
While most pharmaceutical products are ordered by hospital buyers from wholesalers, there are times when hospitals purchase directly from manufacturers or compounding pharmacies. Each hospital setting may call for a different distribution model.
In hospitals, physicians can give verbal orders to a charge nurse. A charge nurse is a nurse who has a high level of experience and expertise and is responsible for supervising other nurses and ensuring patient safety. They are often the point of contact for physicians and are authorised to receive verbal orders from them.
However, there are risks associated with verbal orders. If something goes wrong, the nurse who followed the verbal order may be held responsible since there is no proof that the physician gave the order. This has resulted in nurses losing their licenses and, in some cases, even facing legal consequences. To mitigate this risk, some nurses refuse to take verbal orders and request a written order instead.
It is important to note that federal regulations and accreditation agency standards do not require verbal order authentication within a specific time frame. Instead, the requirements are usually part of state licensure regulations. The Centers for Medicare & Medicaid Services (CMS) and The Joint Commission do not prohibit verbal orders. However, verbal orders must be dated, timed, and authenticated promptly by the ordering practitioner or another practitioner responsible for the patient's care. Additionally, the authorised documentation assistant is encouraged to repeat the verbal order, especially for new medication orders.
In some cases, orders may be transmitted through multiple individuals, such as when a physician gives an order to a nurse, who then calls another nurse to convey the order. While this practice is legal, it increases the risk of errors in transmission. It is crucial for nurses to follow orders only if they are within the scope of their licensure and to question any orders that seem unsafe or inappropriate.
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