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PacifiCare's Experiment with Distribution

Executive Summary

Believing that its current distribution method using independent drug wholesalers is costly and ineffiicient, the PBM of a leading West Coast managed care organization has set up its own distribution system. Key to PacifiCare's strategy: using the leverage and influence of a PBM to steer patients to selected drugs which it can then buy in large quantities. Logistical capabilities will come from tapping into excess capacity in manufacturers' distribution systems.

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