Pharmaceutical Inventory Management Agreements Have Unintended Effects on U.S. Healthcare System, says new Pembroke Consulting paper

PHILADELPHIA -- Amidst looming deadlines for new agreements between pharmaceutical manufacturers and their wholesalers, Pembroke Consulting today released a new whitepaper that reveals unintended consequences of Inventory Management Agreements (IMAs) on the healthcare system.

Drug manufacturers and wholesalers have implemented new agreements during the past three years designed to reduce investment buying in the pharmaceutical channel. In theory, these agreements should shift costs to the most efficient point in the supply chain without compromising patient access to medicines.

"IMAs have had the opposite of their intended effect," said Pembroke Consulting President Adam J. Fein, Ph.D. "Our analyses reveal that inventory has shifted one step up the channel back to manufacturers rather than vanishing from the supply chain. Manufacturers added nearly $4 billion in drug inventories during the period when the largest three wholesalers avoided adding $4.6 billion in incremental inventory. Pharmaceutical manufacturers are bearing substantial and generally unrecognized costs associated with this shift."

Pembroke Consulting's paper further contends that the introduction of IMAs may have also increased the risks and velocity of drug product shortages, raising critical questions about the impact of IMAs on patient care and the additional costs imposed on institutions such as hospitals and pharmacies.

A free copy of the research paper titled "Challenge in the Channel: A Critical Review of the U.S. Pharmaceutical Industry" may be downloaded from www.PembrokeConsulting.com/IMA.html.

Pembroke Consulting helps senior executives from wholesale distribution, manufacturing and B2B technology companies build and sustain market leadership. To learn more about the firm and its services visit www.PembrokeConsulting.com. 

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