Emerging Model: Fee-for-Service
Distributors in the pharmaceutical industry are shifting to a fee-for-service compensation model, giving other industries an opportunity to see how the model plays out on an industry-wide scale. Key question: How do you get manufacturers and customers to agree to pay for services that had previously been "free" in the most efficient of supply chains. Cardinal Health says the key is setting the right fee.
The pharmaceutical distribution channel is undergoing a major shift that will make it an interesting test case for possible changes in other supply chains. Cardinal Health, Inc., Dublin, OH, one of the three largest pharmaceutical distributors in the nation, announced that it is changing to a "fee-for-service" business model in an effort to recover income lost in drug ...