Cooperative partnerships and pricing in the pharmaceutical supply chain

Kathleen M. Iacocca and Stephen Mahar

International Journal of Production Research, 2019, vol. 57, issue 6, 1724-1740

Abstract: The pharmaceutical supply chain has become highly consolidated. Currently, over 70% of all prescriptions are handled by three pharmacy benefit managers which each own a mail-order pharmacy. To compete in this environment, small and midsized pharmacies must seek efficiencies in their operations. The paper considers the value of cooperative partnerships between mail-order and chain pharmacies to leverage strengths of both players. To examine the viability of the strategy we develop a mathematical model that assesses the value of partnerships between independent organizations operating in different channels. The model is used to determine whether and to what extent pharmacies should consider partnerships that leverage a competing channel to allow mail-order customers to pick up prescriptions at chain stores in particular regions. Computational results provide insight into the impact of drug prices, reimbursement contracts, and revenue/cost-sharing policies on the optimal supply chain design and highlight conditions under which it is beneficial for chain and/or mail-order pharmacies to enter partnerships.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2018.1504249 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:57:y:2019:i:6:p:1724-1740

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2018.1504249

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().