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For pharma companies, an investment in a digital risk management tool is worth considering if they want to meet the European Union's regulatory requirements for pharmaceutical transport and wholesalers
In 2013, the European Union Good Distribution Practice (EU GDP) Guidelines defined the regulatory requirements for pharmaceutical transports and wholesalers in Europe for the purpose of maintaining the quality and integrity of medicinal products. The EU GDP have influenced other guidelines, such as the Pharmaceutical Inspection Co-operation Scheme (PIC/S) and guidelines issued by the World Health Organization (WHO); yet there is no uniform global standard in place. The basic quality and risk management principles are the following:
Since pharmaceutical products consist of sensitive components that can decompose or be damaged if exposed to unfavorable conditions, pharmaceutical shipments are often subject to clearly defined requirements regarding temperature, humidity, or vibration. If the transport of a product does not meet these requirements, the product may have to be disposed of to avoid harmful effects on patients (scrapping case). Pharma supply chains have become progressively more complex due to the increase of finished and semi-finished products manufactured and distributed globally by ship, plane or truck. Figure 1 shows the possible risks during the transport of highly sensitive pharmaceutical products, such as temperature deviations, theft and counterfeiting, damage due to incorrect handling, and danger to people and the environment.
The European Union (EU) has stated that the theft of goods, in general, represents a major problem worldwide, with estimated losses of €8.2 billion annually. The theft of pharmaceutical products, especially during transport, causes damages of around €31 million ($32.3m) in Europe each year1 (with an average loss per incident of around €700,000 [$730,000]).2
Temperature deviation constitutes another crucial risk factor for pharmaceutical logistics. In 2014, the WHO estimated the resulting costs for temperature-controlled pharmaceutical products alone at $34 billion ($35.4bn). Figure 2 presents the breakdown of costs associated with temperature deviation.
The World Health Organization (WHO) defines temperature excursion as “an excursion event in which a Time Temperature Sensitive Pharmaceutical Product (TTSPP) is exposed to temperatures outside the range(s) prescribed for storage and/or transport”. Temperature deviations are tolerable only if the quality of the product is preserved; pharmaceutical companies can use robust product stability data to assess the impact of short temperature deviations. Therefore, the pharmaceutical industry does not aim to eliminate temperature variations completely, but rather to limit them.3 Temperature-controlled pharmaceutical logistics ensure that pharmaceutical products are transported, stored, and handled at a pre-defined, controlled, and stable temperature and humidity level.4 Products in a cold chain, such as AstraZeneca's COVID-19 vaccine or some influenza vaccines, require storage conditions between 2-8 °C.
There are four modes of transport for pharmaceutical distribution: road, rail, sea, and air, with air, sea, and road being the main modes at present. Any combination of these modes is considered a multimodal transport system. Most pharmaceutical transport routes are indeed multimodal because they involve at least two modes of transport. The importance of the air freight industry, especially for pharmaceuticals products, is undeniable: Although only 12% by volume, pharmaceutical air freight accounts for 89% by value, while ocean freight accounts for 88% by volume and only 11% by value. In recent years, irregularities in international supply chains involving all modes of transport have continued to rise. The most relevant factors are shortages of truck personnel, loss of passenger aircraft cargo capacity, lack of sea containers, clearance problems at Chinese ports, the blockade of the Suez Canal, and, in recent times, the coronavirus crisis. Due to the large number of interfaces, temperature deviations occur in 20% of all shipments involving temperature-controlled transport via air cargo logistics.5 Each shipment is reloaded approximately 14 times, depending on the number of airport transfers or reloads to other modes such as truck, rail or ship.6,7 It has been estimated that approximately 50% of all temperature deviations occur in the handling warehouses at (transfer) airports, which cannot always provide active refrigeration.8 In the context of pharmaceutical transports, in addition to freight forwarders acting as 2PLs (second-party logistics providers), other third-party logistics providers (3PLs) are also used. Ensuring the compliance of the latter is usually a task delegated to the 2PL. Nevertheless, pharmaceutical companies increasingly want to see proof of compliance and a risk assessment in relation to route risks.
The pharmaceutical manufacturer must prepare the Standard Operating Procedures (SOP) and the qualification of the route, which is part of the transport validation concept, and is based on a quality risk analysis and summarized in a validation master plan (VMP). A statistically consistent number of tests, which depend on the complexity of the route, are performed along the entire supply chain during Performance Qualification (PQ). For global supply chains with all possible combinations of seasons at the point of dispatch and destination, a complete set of annual data is usually statistically relevant and necessary.9 Many pharmaceutical manufacturers therefore expect participants in the supply chain to be EU GDP-certified; this includes the airline, freight forwarder, handling agents, and other subcontractors such as freight forwarders or warehouse operators.10
In order to cope with the aforementioned issues, a number of solutions have been introduced. In cooperation with other universities and industry partners like Bayer AG and Boehringer Ingelheim, Frankfurt University of Applied Sciences has developed the Mytigate platform. It has been marketed by Mytigate GmbH since March 2020, and is currently being used by various pharmaceutical manufacturers, freight forwarders, and integrators.
Transport service providers can create a profile in Mytigate by filling out a self-disclosure questionnaire and uploading acquired certificates. The self-disclosure is linked to a scientific model that indicates risks and allows for quick comparability of service providers and routes. As a consequence, any weaknesses of the service providers are immediately exposed via risk scores. Conversely, pharmaceutical companies and wholesalers with a good risk score can be sure that the service provider is able to fulfil regulatory requirements worldwide. Once the partners of a route have been selected, the performance of the route can be determined by assigning recorded quality data (e.g., temperature deviations, delays, etc.) to this route and the transport partners linked to it. Solutions like this can offer multiple advantages for the pharmaceutical industry, such as i) a reduction in scrapping cases and CAPAs (corrective and preventive actions), ii) a reduction in insurance and packaging costs, iii) higher customer satisfaction, iv) lower penalties, and v) the possibility to increase sales. Total savings potentials have been estimated between €250,000 ($260,400) and €1,000,000 ($1,040,700), depending on the product range and transport routes. For pharmaceutical companies, an investment in a digital risk management tool is therefore worth considering in every respect.
About the authors
Prof. Dr. Yvonne Ziegler is CEO at Mytigate and Full Professor of Business Administration with special focus on Aviation Management at Frankfurt University of Applied Sciences. Dr. Vincenzo Uli is Product Owner at Mytigate and Research Associate of Business Administration at Frankfurt University of Applied Sciences.
1. Ekwall, D., Brüls, H., & Wyer, D., “Theft of pharmaceuticals during transport in Europe,” Journal of Transportation Security, 9(1-2), 2016. https://www.researchgate.net/publication/283084912_Theft_of_pharmaceuticals_during_transport_in_Europe
2. Freight Watch International, FWI SCIC database. FreightWatch International, Supply Chain Intelligence Center, 2015.
3. Basta, Nick, “Thermal blankets find a growing cold chain role,” Pharmaceutical Commerce, 4 Jun, 2017. https://www.pharmaceuticalcommerce.com/view/thermal-blankets-find-growing-cold-chain-role
4. Al-Refaie, A., Al-Tahat, M. & Lepkova, N., “Modelling relationships between agility, lean, resilient, green practices in cold supply chains using ISM approach,” Technological and Economic Development of Economy, 26(4), 675-694. https://doi.org/10.3846/tede.2020.12866
5. Environtainer, The Active Cool Chain. https://www.envirotainer.com/resources/industry-insights/2019/an-active-cold-chain-in-pharma-air-freight/
6. Reynolds-Feighan, A., “Comparative analysis of air freight networks in regional markets around the globe,” in Handbook of Global Logistics, Springer 2013, pp. 325-66.
7. IATA, Pharmaceutical handling. How to become CEIV Pharma certified. Centre of Excellence for Independent Validators, 2019. https://www.iata.org/contentassets/
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9. Pharma Logistics IQ, Lane Qualification and Continuous Monitoring. https://www.pharmalogisticsiq.com/supply-chain-security-track-trace/interviews/
10. Engel W. & Brehm, S., “Certification according to the Good Distribution Practice-GDP,” in Pharmaceutical Logistics, Springer, 2017, pp. 31-50.