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Retailers, distributors and manufacturers are being affected by federal rules on durable medical equipment (DME)

DME competitive bidding issues: When is enough enough?

The cold chain logistics process—and pharmaceutical logistics in general—often leaves stakeholders with questions surrounding improving both the data visibility and data sharing processes.

Moderated by Tony Fonk, president and CEO of SpotSee, a discussion on “From Clinical to Commercial: Improving Cold Chain Insights Across the Value Chain,” featured insight from Jeff Lander, director of global logistics engineering, Moderna; Alok Bhatt, senior director, global biologics operations, Bristol Myers Squibb (BMS), and Paul DellaVilla, director of digital solutions and services, Cold Chain Technologies. The gentlemen wanted to determine ways to build processes into company policies that can enable better visibility, discuss ways to monitor aforementioned data, and describe the value of partnerships in these efforts.

Moderna has been making an augmented customer experience its ultimate priority, with the help of direct-to-pharmacy or direct to patient care-type efforts.

“This year, we put a focus on an enhanced customer experience, to be able to not have something show up that needed to be intercepted, that wasn't in temperature range. We were really striving for call it for lack of better words, an Amazon Prime experience for our end user base,” Lander explained. “So that was real-time tracking visibility, and also the ability to intercept the shipment. It also included if we saw our temperature trending in the wrong direction, if we saw some sort of interruption in the network via UPS or FedEx in terms of a missed flight, to be able to provide the visibility, while also having accurate information in terms of temperature, letting it arrive a day or two longer, and knowing confidently that the product is still viable.”

From a brand management perspective, having high customer service levels are imperative—BMS strives to be at 98-99% for most products. Considering the company’s portfolio, many of its customers or wholesalers or hospitals, would function on three months worth of inventory in some cases. In these situations, last mile is still valuable, but to a different extent. However, adding the cold chain variable makes it more a supply chain integrity concern.

“We cannot be playing with our quality—it's important,” noted Bhatt. “Every time we do not deliver the product and don't have the last-mile visibility, that impacts our customer service level, that affects our impact to the patient itself.”

Cold Chain Technologies’ definition varies in the sense that it is literally the final step—the company is interested in the direct-to-patient type of shipment, which requires a different approach when it comes to packaging, and monitoring services, especially when thinking about specialty pharmacy.

“We work a lot with the wholesalers or the direct pharmaceutical manufacturer, where they're going out to their patient, and they still really have that ownership and control of supply,” said DellaVilla. “You typically see them being a little more conservative—with a little bit more protection—whereas you go to the last mile, which is like a specialty pharmacy application, and this really handled more by the URAC standards than you would say, a traditional FDA standard. You're typically looking to be little more cost conscious because you're shipping a smaller volume, so that might be individual dosing, or one-month supply of pharmaceutical products, so the cost impact and the type of shipping will vary in those places.”

Fonk posed the question on everyone’s mind: What are the realities of achieving accuracy, interoperability, and sharing the information?

“It really depends on the type of supply chain,” commented Lander. “It's different for final-mile distribution than it is for a cell and gene therapy drug; it very much depends on the stability of the drug and the final outcome you're trying to achieve. For us, it's really trying to figure out what that right, protection, trackability to price point really is.”

For Bhatt, this concept of traceability begins at the drug substance level.

“When you think about cost of goods, 80% of the cost of the product is in drug substance, which is API [active pharmaceutical ingredient] right, even before it goes to a vial or a syringe,” he explained, “so at the end of the day, the cost of the product is really something that we want to save for now, depending on what the definition of the holy grail is or not. We want to make sure that we are not over emphasizing on traceability, where we don't have to a lot of time.

“As we move forward, there are cost pressures. We talk about IRA, we talk about ESG goals. That’s a moving target for us, where we are getting pressure as a company, as an industry, to bring our costs down. But then there is the 20% that now we have started to focus on as well, where we want to make sure how much is too much—just because we have something should we leverage that? Does it make sense, what's the strategy, or what's the risk strategy toward it?”

When it comes to being able to maintain the integrity of the product, DellaVilla believes that success in the area should start with some sort of control that is able to monitor supply chain variability.

“Control is a big part of how the pharmaceutical industry has looked at maintaining integrity of product, and control could be qualified packaging,” he said. “It could be a chemical indicator, it could be a temperature monitor. It could be a real-time tracker. And because there's that much variability in the supply chain and how we were showing control, I think as we get into the details of the Drug Supply Chain Security Act—and starting to understand how that's going to play and need to be monitored—I think what you're going to need to see is different tools evolve for tracking, not just the serialization, but also those excursions you're going to need to get to a place in which you differentiate. It's about how you start to compare those varied methods of control. That's really going to get to the crux of how we approach it.”

Fonk T, Lander J, Bhatt A, DellaVilla P. From Clinical to Commercial: Improving Cold Chain Insights Across the Value Chain. September 24, 2024. LogiPharma USA 2024. Boston.

A panel offers its perspective on bolstering the temperature monitoring and data sharing process. 

Latest Conference Coverage

LogiPharma USA 2024: Enhancing Cold Chain Insights

One topic of major focus at this year’s LogiPharma USA is sustainability. Of course, some could make the argument that it has been a buzzword for quite some time now, as noted by various stakeholders’ pledges to achieve net zero emissions over the next couple of decades. However, what is just as important as one stating his or her intent to solve a problem is one’s effort in determining 

A panel discussion regarding "How Pharma Can Better Understand Its Carbon Footprint and Reach Sustainability Goals" convened yesterday, and was moderated by Joe Van Der Bosch, president of DeSpir Logistics. He was joined by Alaina Passavant, account manager, CDP Supply Chain; Kaushik Datta, a pharma supply chain expert, Chandan Trehan, digital supply chain & sustainability Lead with Bosch; Jeff Tucker, CEO, Tucker Company Worldwide, and Joe McCannon, director for sustainability at the Office of the Federal Chief Sustainability Officer, Council on Environmental Quality (CEG).

The presentation was powered by multiple objectives, including:

Becoming aware of various the types of data and data sharing that is happening across the ecosystem.

Defining carbon offsetting and how it can be of value to reach sustainability goals.

Demonstrating the results and benefits of sustainability efforts

From Passavant’s point of view, there is certainly plenty to be done in this regard, and with these efforts comes complexity.

“From my seat and who I work with, there are companies who want this environmental data, whether it be emissions, energy use, or water and commodity tracking from their suppliers. They're trying to understand what their supply chain is doing,” she explained. “They come to CDP, because we have a questionnaire that tracks this and asks suppliers and companies about this. They're finding that the most basic thing is that they don't know who to contact at their suppliers. They don't know who's responsible. They don't know if their supplier has a sustainability team or is aware of what even emissions are.

“ … I think one of the big opportunities that we're having, though, is that there is a significant growth in expectations of improving on all topics, whether that be sustainability for planet or sustainability for cost reductions, profit margins, etc., but just having that growth and the opportunity to come together as customers in a similar level of your supply chain to then ask your suppliers to do XYZ or to report on things [is valuable].”

In that manner, supply chain stakeholders can come together to agree upon common KPIs, which can drive action and improvement forward. After all, it’s impossible to improve something that immeasurable.

When it comes to how tech can help support industry’s efforts in achieving change, Trehan pointed out that it ought to stem from the use of both artificial intelligence and internet of things, as these can be beneficial toward the environment.

“When you use technologies like these, you are not just improving efficiency, but you are also reducing wastages in your supply chain, which have a direct impact on the sustainability aspect,” he explained. “When you bring in a technology like blockchain, you're creating a more democratized balance of information data sharing between your supply chain partners, which essentially brings down the resistance to a little bit to some extent when it comes information sharing; we know we work in a very regulated environment, and any information or any data which is not necessarily required for any regulatory filing is often received with a lot of resistance. People ask, why do you need this data?

“… One thing that I'll definitely say is when we embark on a journey of making investments in the supply chain, especially around technology, we have to approach it with a little bit of guarded optimism. There's no one technology that can solve the problem in its entirety. It's a team game, and everybody either wins or loses together. So that kind of guarded optimism is absolutely necessary.”

Van Der Bosch posed the question to McCannon, is what's being described as how industry is responding to this challenge any different when you look inside the government, and how do you think the government can help support the industry in these initiatives?

Being that he works for the federal government, McCannon noted that industry’s take on the situation is not that dissimilar from government’s perspective. However, being that the government functions as one massive organization, the challenge lies in orchestrating it to be more effective, more sustainable, and more resilient. As the largest purchaser of goods and services in the world, a lot of the day to day involves trying to navigate this complexity of orchestration and understanding how the CEQ can work with all of the agencies in the executive branch.

“I would say that the way we've approached, the way we've started is by trying to set very clear, expectations for what we hope to accomplish, and also to set an example for other governments and other organizations,” he said. “That started with something called Executive Order 14057, which came out in December of 2021, and this executive order said, in pursuit of a net zero emissions economy by 2050, the federal government is going to make some really serious commitments to decarbonizing its own operations.”

He also revealed breaking news regarding a program that will be released in the coming weeks.

“ … I think this is the first time that's being shared that we are launching in the middle of October, something called the Supplier Accelerator, which will be a web-based program, starting with webinars, where we'll basically be walking through the really vast federal resources that are available to help organizations—and certainly including pharmaceutical organizations, which are some of our biggest suppliers—to take advantage of the resources that were introduced by several Biden-Harris administration programs, including the Inflation Reduction Act. And this has billions of dollars in it in the form of incentives, tax credits, grants, which can be used for onsite microgrids, building efficiency projects, electrification of fleets, and introduction of vehicle charging infrastructure.”

VDB J, Passavant A, Datta K, Trehan C, McCannon J. How Pharma Can Better Understand Its Carbon Footprint and Reach Sustainability Goals. September 24, 2024. LogiPharma USA 2024. Boston.

A panel offers insight surrounding the industry’s carbon footprint, including ways to begin initiating positive change. 

LogiPharma USA 2024: How Pharma Can Reach Its Sustainability Goals

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. 

Ron Lanton III, True North Political Solutions

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