Community pharmacies and state pharmaceutical associations are forming buying groups to enable community pharmacies to offer price discounts to managed care organizations that buy in volume. Often, independent pharmacies and small chains cannot compete for bids with buying groups and managed care conglomerates. Many manufacturers also do some direct distribution to retailers, hospitals and government agencies. Direct retail sales allow them to remain sensitive to customer needs and to retain some control over product promotion and delivery. Drug repackagers buy brand name and generic drugs in bulk quantities, repackage them in smaller units and sell them under their own label to private practice physicians, HMOs, hospital emergency rooms and other healthcare providers who dispense directly to patients.
Community pharmacies dispense most pharmaceutical products in the United States.
Community pharmacies include independent pharmacies, cooperative chains, chain pharmacies and franchises. Hospital pharmacies dispense the second largest volume of drugs. Most hospitals have joined group purchasing organizations in order to negotiate favorable drug discounts with pharmaceutical manufacturers and wholesalers. Government agencies, HMOs, mail-order businesses and physicians also buy, sell and dispense drugs. The next article in this series will focus on trends within the pharmaceutical industry.