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Key lessons for the supply chain post-pandemic

From pain to practice?

What Are Pharmacy Deserts? 

 Jenni Zilka, SVP, community & specialty pharmacy and president, Good Neighbor Pharmacy, noted that pharmacy deserts are communities without access to pharmacies, hindering residents' ability to fill prescriptions and access healthcare services. These areas are often also healthcare deserts. Definitions vary by location: urban areas lack pharmacies within a mile, suburban areas within two miles, and rural areas within ten miles. Approximately 35 million people live in pharmacy deserts, making this issue pressing. Factors contributing to their rise include reimbursement pressures, decreased foot traffic post-COVID, and the inability of pharmacies to bill for services beyond prescription filling. Independent pharmacies, often serving underserved communities with a majority of government-paid patients, are particularly affected. Zilka also alluded to legislation that is helping to improve patient access.

A transcript of Zilka’s conversation with 

What exactly are pharmacy deserts, and why have they become so prominent?

If you think about a pharmacy desert, it's kind of exactly how it sounds. It's communities where there is no pharmacy, where people cannot fill their prescriptions, but as you know, in many of these pharmacy deserts, they may also be healthcare deserts, where the pharmacy is already playing the role of providing necessary services to maintain good health all around, well beyond just dispensing prescriptions. The definition—which is kind of an industry standard of what a pharmacy desert is—is really where there's no pharmacy, meaning there's no care for the local residents and patients of that area. And it's a little different, depending on if you're urban, suburban or rural, but essentially, it's a one-mile radius. If you're in the city, if people live more than a mile away from the nearest pharmacy; if you're in the suburbs, it's two miles. If you go to more rural settings, then it's 10 miles. Our data shows us that there's an estimated 35 million people live in a pharmacy desert, meaning they don't have access to a pharmacist or perhaps healthcare in general. So that's what a pharmacy desert is.

You asked why we are talking about pharmacy deserts, and why they are more prevalent than perhaps they have been in the past. Candidly, it's just because pharmacies are of all sizes and shapes. Of course, we're here today representing independent pharmacies, but regardless of whether it's an independent or a chain pharmacy, they are really at risk of going out of business. You're probably reading about it in the news these days, but essentially, there're a few key factors that are driving that.

The first is reimbursement pressure. They are continually being reimbursed less for prescription drugs on a day-to-day basis. And then I think as importantly, when you think about COVID, it drove a lot of traffic into the pharmacies. Since COVID is behind us, the need isn't as great. They're not getting as much food foot traffic either, coming into the pharmacy as they were during COVID. It's a combination of reimbursement pressure along less foot traffic. but I think as importantly, not having a vehicle to bill for some of the services that they that they provide, goes well beyond filling prescriptions. What's interesting about independent specifically is that the makeup of their patient base is typically over 50% government paid, meaning state Medicaid or Part D. These are already underserved communities. These are where there's a strong need for a healthcare provider, and that's where they typically where they typically reside.

In this video interview with Pharma Commerce Editor Nicholas Saraceno, Jenni Zilka, SVP, community & specialty pharmacy and president, Good Neighbor Pharmacy, clarifies the meaning behind pharmacy deserts, along with reasons for their increase in prominence. 

KOL Collaboration Series: What Are Pharmacy Deserts? 

Over the past decade, this concept of physicians working directly with hospitals and health systems has become more commonplace. In fact, between 2012 and 2022, the number of physicians working in private practice decreased from 60% to 47%; meanwhile, the proportion of physicians that were directly employed by or contracted with hospitals or health systems rose from 29% to 41%.

 The argument could be made that this idea of consolidating—otherwise known as a formation of this vertical relationship between physician-hospital or physician–health system ownership and affiliations—could result in higher prices, due to physicians having negotiating power with their acquirers. A difference-in-differences study published 

 sought to explore this primary-care physician (PCP)-health system relationship, particularly regarding whether this relationship impacted quality of care.

The analysis—which followed the Strengthening the Reporting of Observational Studies in Epidemiology (STROBE) reporting guideline—examined outcomes for patients whose PCP entered a vertical relationship with a large system in 2015 or 2017 alongside patients whose PCP was either never or always in a vertical relationship with a large system from 2013 to 2017. Various models interpreted differences between patient qualities, PCPs, and market concentration, along with other trends. This 2013 to 2017 data was pulled from the Massachusetts All-Payer Claims Database.

It’s also important to note that the study population only consisted of commercially insured patients who were signed up to a PCP in the Massachusetts Health Quality Partners’ Massachusetts Provider Database in either 2013, 2015, or 2017. The analyses occurred between January 2021 and January 2024.

In total, the study population featured 4,603,172 patient-year observations in that 2013 to 2017 timeframe, with the following breakdown:

There was mean (SD) age of 38.9 (20.3) years

The study determined that there was no association between vertical relationships and low-value care or ambulatory care–sensitive conditions use. A patient’s PCP that was entering a vertical relationship had no reported association with the chance of a follow-up within 90 days of cancer diagnosis with any oncologist; however, the PCP was associated with a 7.34–percentage point (pp) (95% confidence interview, CI, 2.28-12.40; 

 = .01) increase in the probability of follow-up with an oncologist in the health system.

There was an association between vertical relationships and increased post-hospitalization follow-up with a physician in the health system by 7.51 pp (95% CI, 2.96-12.06: 

 = .001) in the 2015 subgroup. PCP–health system vertical relationships were associated with a significant decrease in disintegration of practice site visits of −1.05 pp (95% CI, −2.05 to 0.05; 

As a result, the study investigators concluded that, “In this difference-in-differences study of vertical relationships between PCPs and large health systems across Massachusetts, we found no association of vertical relationships with low-value care, hospital admissions, or ED visits for ACSCs among the commercially insured. We found that vertical relationships were associated with small reductions in care fragmentation and increases in within-system physician follow-up.

“These findings are consistent with vertical relationships being associated with patient steering but not necessarily improvements in patient outcomes. Because steering within health systems has been shown to increase spending, largely through prices, this suggests that vertical relationships may result in insurers paying more for the same quality of care. The results of this study should be taken into account by policymakers and antitrust regulators when considering the potential benefits against the demonstrated harms (ie, spending increases) of vertical consolidation.”

1. Kane CK﻿. Policy research perspectives. American Medical Association; 2023. 

https://www.ama-assn.org/system/files/2022-prp-practice-arrangement.pdf

2. Ianni KM, Sinaiko AD, Curto VE, Soto M, Rosenthal MB. Quality-of-Care Outcomes in Vertical Relationships Between Physicians and Health Systems. 

A study examines if this PCP-large health system dynamic impacts patient outcomes.

What Role Do Vertical Relationships Play When It Comes to Quality of Care?

The Inflation Reduction Act provides Medicare with the right to directly negotiate with drug companies as a way to improve access to various brand name Part B and D drugs. Never before has the federal government been able to bargain with drugmakers over the costs of the drugs they produce, and it could potentially serve useful to counteract budget increases. 

"Experience in other countries shows that once introduced, price controls become a convenient tool to address government budget overruns," noted Ed Schoonveld, a value & access advisor for Schoonveld Advisory who also  serves on 

Keeping that in mind, on Thursday, Medicare officials released results of the first round of prescription drug negotiations for individuals with Medicare Part D, which would go into effect by 2026.

 People enrolled in the program are also expected to save $1.5 billion in out-of-pocket costs once those new prices are enacted.

The first 10 drugs that will see lower prices go into effect include:

Eliquis (by BMS and Pfizer), a blood thinner for the prevention and treatment of blood clots, which will receive a 56% discount off of the 2023 list price

Jardiance (by Boehringer Ingelheim and Eli Lilly) diabetes, heart failure, and chronic kidney diseases, which will receive a 66% discount off of the 2023 list price

Xarelto (by Johnson & Johnson) a blood thinner for the prevention and treatment of blood clots, and reduction of risk for patients with coronary or peripheral artery disease, which will receive a 62% discount off of the 2023 list price

Januvia (by Merck) for the treatment of diabetes, which will receive a 79% discount off of the 2023 list price

Farxiga (by Merck) for the treatment of diabetes, heart failure, and chronic kidney disease, which will receive a 68% discount off of the 2023 list price

Entresto (by Novartis) for heart failure, which will receive a 53% discount off of the 2023 list price

Enbrel (by Amgen) for the treatment of rheumatoid arthritis, psoriasis, amd psoriatic arthritis, which will receive a 67% discount off of the 2023 list price

Imbruvica (by AbbVie and Johnson & Johnson) for the treatment of blood cancers, which will receive a 38% discount off of the 2023 list price

Stelara (by Johnson & Johnson) for the treatment of psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis, which will receive a 66% discount off of the 2023 list price

Fiasp, NovoLog (by Novo Nordisk) for the treatment of diabetes, which will receive a 76% discount off of the 2023 list price

The selected drugs were among those with the highest total spending when it came to Medicare Part D. Had these negotiated prices gone into effect in 2023 as opposed to 2026, Medicare would have saved an estimated $6 billion.

As noted above, this only represents the first round of negotiations. As part of Medicare’s drug price negotiation program, additional drugs will be chosen annually. Come next year, Medicare will be selecting as many 15 other drugs to be covered under Part D for negotiation, up to an additional 15 Part B and D drugs in 2026, and as many as 20 drugs every year following.

However, when it comes to this development, life science investors in Washington feel as though these negotiations devalue intellectual property.

“All we're really doing here, is doing an end run around long-standing intellectual property protections and now saying, guess what? You develop a drug, you get nine years if it's a small molecule, to recoup your investment, maybe make profit, reinvest that profit 13 years for a biologic. So even if you have extra time on your patent or your exclusivities, it doesn't really matter,” explained John Stanford, executive director of Incubate, which strives to educate policymakers on the role of venture capital.

“We've changed all of our models to say, okay, how much can reasonably be returned in that time? And I think something that people don't appreciate is those first two years of post- approval, you're not ready to sell on day one. You have to figure out manufacturing processes at scale. You have to figure out negotiations with payers, which usually require you having some real world data proving its efficacy. You have to educate physicians and patients that this new product for their therapeutic areas now there and so what you see in the lifetime of a drug is sales take a lot of time to build up.” 

1. FACT SHEET: Biden-⁠Harris Administration Announces New, Lower Prices for First Ten Drugs Selected for Medicare Price Negotiation to Lower Costs for Millions of Americans. 

. August 15, 2024. Accessed August 16, 2024. 

https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/15/fact-sheet-biden-harris-administration-announces-new-lower-prices-for-first-ten-drugs-selected-for-medicare-price-negotiation-to-lower-costs-for-millions-of-americans/

2. Negotiating for Lower Drug Prices Works, Saves Billions. US Department of Health and Human Services. August 15, 2024. Accessed August 16, 2024. 

https://www.hhs.gov/about/news/2024/08/15/historic-first-biden-harris-administration-successfully-negotiates-medicare-drug-prices-delivers-promise-lower-prescription-drug-costs-american-seniors.html

By 2026, the first 10 drugs for individuals with Part D coverage—whose medications are mainly used to treat cancer, diabetes, and heart disease—will see discounts off of list prices ranging from 38-79%.

Medicare Unveils Results of First-Round Drug Price Negotiations

DSCSA

PC: You were just on a keynote panel discussion about insuring the DSCSA compliance deadline. What were the main highlights of the presentation?

So basically, it was to talk about the DSCSA, where we're at as an industry, what challenges are left, and also to educate people that maybe aren't as quite familiar with it. So, you have some people that aren't directly involved such as third-party logistics handlers and freight forwarders, things that may kind of touch it onto the side, but really it was just to spread some information around what's happening with DSCSA and how we look going into November.

PC: Where do things stand in terms of DSCSA compliance preparation?

I think it depends on what part of the supply chain you're in. As you think about manufacturers, they've been pretty prepared. From what we've heard from especially the whole the big wholesalers, I think they're all saying over 90% to 95% already. There are issues that they’re working through, but generally, the manufacturer side is prepared. There’s always going to be some outliers. The big distributors seem like they've done a lot. They've been working at it for a long time. I think on their inbound side, and things are coming up their outbound side. They’re trying to get data through their systems. I’ve heard numbers from 40% to 60% of data of data coming out the other side of their systems. When you think about secondary distributors, they are less prepared because they haven't been getting as much data from those primary distributors such as pharmacies.

The good news is that the big retailers and hospitals have been very present the last several years, and you're starting to see sort of smaller and smaller engaging now.

PC: Where do you think the FDA is at in reviewing waivers and exemptions?

They probably need to do something soon, because if they're going to issue exemptions, companies are going to need time to react to that, especially to let their trading partners know and get them ready. If they're not, it's making people more and more nervous, especially the ones that haven't been able to get ready because of trading partners and things like that. My hope is that in the next month, we'll hear something before we get out of October, hopefully not later. On the positive side, I think it has been applying pressure where it needed to. So, you are seeing more stakeholders engaging because they're realizing the state does not seem to be moving now. I think it is bringing attention to where it needs to be, but I think there's more people getting nervous.

In an interview with Pharma Commerce Editor Nicholas Saraceno, Mark Karhoff, supply chain & DSCSA consultant, National Association of Boards of Pharmacy, discusses insurances to the upcoming DSCSA deadline. 

Latest Conference Coverage

LogiPharma USA 2024: DSCSA Compliance Preparation 

NABP PULSE Program

PC: Can you discuss the NABP’s PULSE platform?

They've been working on it for a few years now. Three or four years ago, there was a pilot that I helped run at NABP where we work with entities across the whole supply chain Even the FDA was an observer. We were focused mainly on traceability. Whenever I need to do a product trace, how is that going to happen? We learned that there is a long way to go, but the industry is probably going to be starting out with more manual means. Such as Excel spreadsheets and other general standards. 

Most importantly, there was a lack of directory. So, when you think about state regulators, they have almost a similar role to the FDA in terms of what they have to do. The FDA has a few other things that are baked into the law, but they have to basically enforce it and regulate it. How do they get ahold of somebody? Nobody has a directory that includes all of the manufacturers. The FDA doesn’t have a directory that includes downstream. They’re responsible and they do a lot of registration for the manufacturer sector, drug approvals, and things like that. They have a database that’s required for wholesalers and 3PLs to self-register. Once you go beyond that, they don't have ways to get a hold beyond trying to gather information through their portal.

So really, that all brought forward the need for NABP to create this pulse platform to become a connective tissue between state regulators, small pharmacies and then all the trading partners in the supply chain. Additionally, also found that a lot of the small pharmacies lacked the resources to be able to comply with DSCSA, so they're providing tracing and eventually product tracking capabilities in the platform for dispensers as well. It’s meant to try to help fill the gap where they know there's a lot of big players that are involved. As we go down the supply chain, how do we get them engaged? That’s actually where a lot of the counterfeit events have been happening.

In an interview with Pharma Commerce Editor Nicholas Saraceno, Mark Karhoff, supply chain & DSCSA consultant, National Association of Boards of Pharmacy, discusses the NABP's PULSE program and how it will support supply chains. 

LogiPharma USA 2024: The National Association of Boards of Pharmacy's PULSE Program

On the second day of this year’s LogiPharma USA in Boston, a panel titled “Conveying Key Goals and Strategies Across the Value Chain,” discussed how collaborating with distributors and other logistical partners takes consistent and clear communication across the vast systems and networks that the pharmaceutical industry operates in. Headlining the discussion were Lucy Alexander, capabilities lead, global supply chain & strategy, AstraZeneca; Mohit Agarwal, global head, digital transformation supply chain, commercial excellence, Supply Chain Expert; and Scott Sutton, senior director, supply chain, Morphosys.

Alexander kicked off the conversation, discussing the best ways to manage strategy settings in a multinational company such as AstraZeneca.

“It really starts with being aligned at the corporate level,” said Alexander. “What is our corporate strategy? Sometimes, that can be difficult to instill, so we need to make sure everybody is clear on that. In business school, I had a strategy professor who explained to us that strategy was not what we were choosing to do, but what we were choosing not to do. We all know that’s a tough decision. It’s easy to say that you want to increase sales by 10%, but how you do that can be a bit thorny. As you start getting into things such as competitive positioning, I think those discussions are super important, and I think we need to have supply chains are part of those discussions so that we really understand what the organization is trying to achieve and then we can reflect that into our strategic approaches within supply chain management.”

Sutton offered his thoughts on how it may be different for smaller organizations such as Morphosys.

“I think a lot of the principles are very much the same, but there are some key differences as to how organizations go about the different aspects,” said Sutton. “For a small organization, I think less is more. Communication is easier, the ability to gain alignment is easier, and there’s less people in the organization. In big pharma, I see a lot of boards and communities need to review something inside out before it goes. In a smaller company, you reassemble a schedule or a meeting with an expert, get aligned, and move on. That part is a bit more simplified.”

Sutton also explained that there were a number of challenges specific to smaller pharma companies, such as finding the right partners and maintaining relationships with those partners.

“I firmly believe that you pick vendors and contract manufacturing organizations across your value chain, trying to match the vendor working with the size of your company, sometimes it's hard for a really small company to go to a big contract manufacturing organization, maybe even impossible,” he explained. Similarly, I think larger companies don’t go to smaller contract manufacturing organizations because it's just not quite the right match.”

Switching gears, the panel then discussed how to properly balance introducing new and emerging technologies while also managing risks and the critical nature of the work that's being done in pharma organizations.

“I’m a big fan of experimentation, said Alexander. “Find something small and safe that you can trial and learn as you go. For us, we've gone from technology that needs to be very specific about what it's going to do and how we're going to use it to things that are evolving. As I said, it’s when we can identify a small space and get everybody around the table to agree again. What are we trying to get out of this process and what does it look like? What data do you need to have available? It can be a bit constraining, but that’s okay because you’re starting to learn.”

Closing out the discussion, the panel members discussed adjusting to changes and properly communicating those changes to parties outside of the organization.

“I definitely think that you need to keep track of the issues, especially if you spend any length of time on a project,” said Sutton. “This is especially true for smaller companies trying to launch their first product. You make a lot of decisions early on as you go through the mid-stage up until you are ready for product launch, and a lot of those assumptions change. The strategy needs to shift as you go. I think that the alignment is hopefully an easier transition in smaller organizations because there's less players involved in terms of communication and decision making.”

Agarwal, M Alexander, L, Sutton, S. Conveying Key Goals and Strategies Across the Value Chain. September 24, 2024. LogiPharma USA 2024. Boston.

Session discusses the soft skills needed to ensure that communication strategies are being followed with distributors and other logistical partners across the value chain. 

Ferdi Steinmann, OpenText

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