entire process starts off with the pharmaceutical industry who is concerned
with the discovery, development and production of drugs. The drugs are moved according
to the graph shown above wherein the distributors get it from the
pharmaceutical company who in turn give it to different pharmacies. These drugs
then end up with the end patients who use these drugs according to the prescribed
usage. This is based on the assumption that drugs are sold as per
prescriptions. However, this tends to vary in different countries as different
government have regulations that differ.
with the parties that influence the supply chain of a particular product, there
are certain influencing parties that play an extremely vital role in this
industry. In certain economies, the government plays the role of an insurer wherein
the government reimburses the patient either wholly or partly. The same
scenario applies to the insurance companies that function in a country. The reimbursement
amounts are dependent on who is covering the patient’s expenses and under what
scheme does such expenses fall in. It would be noteworthy that these factors
vary from economy to economy. To make it easier for our reader, we will be
assuming that both the government and insurance companies facilitate
reimbursements on the basis of its type and degree of coverage. Hence
we say that drugs are price inelastic in this industry as most of the expenses
are not covered by the patient themselves.
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add on to the list of influencing parties in the industry, doctors or
physicians are the entities that prescribe certain drugs or medicines to the
patient. Here we work on the assumption that there are many drugs that an
individual can’t get their hands on without the use of a prescription. Medical
prescriptions are extremely important, especially in developed countries since
these countries are subjected to stricter regulatory measures.