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Logistics experts provide an outlook on what the industry must do to overcome potential bottlenecks
Many would agree that the pharmaceutical supply chain presents its respective share of obstacles that all parties must work toward resolving daily, ranging from material shortages to negotiating prices for services.
Pharmaceutical Commerce spoke with Tinglong Dai, PhD, professor of operations management and business analytics at the Johns Hopkins Carey Business School, and Mark Lutcavish, general manager for PharmacyiQ at TRIOSE Inc., a logistics management firm specializing in managed solutions for the healthcare industry, to further explore challenges surrounding the sector, how to be better prepared for future hiccups, and how digitalization can result in great transparency across health systems.
Pharma Commerce: What are the supply chain challenges that pharma is facing going forward?
Tinglong Dai: Pharmaceutical companies are under pressure from regulators, stakeholders, providers, and the general public to strengthen their supply chains. The first challenge is figuring out how to get there. The pandemic and geopolitical conflicts suggest that companies should rethink their supply chain design and use a combination of reshoring, near-shoring, and friend-shoring, none of which is easy to accomplish. A related challenge is how the industry will recoup the value created by improving supply chain resilience. New payment models that recognize and reward supply chain resilience will emerge.
Mark Lutcavish: Going forward, the biggest challenges will continue to center around procuring the supplies healthcare providers need, when they need them, in order to care for patients. Staffing shortages, employee burnout, providing ample continued provider education, and ensuring what is prescribed is available, are all additional challenges. Pharmacies will need to be creative during these challenging times.
What do pharma firms need to do in order to address future vulnerabilities?
Dai: The first step is to improve visibility into their supply chain networks, which will allow them to conduct stress tests. The industry must also recognize that, in the midst of the COVID pandemic and the Ukraine war, they must be more geopolitically aware and reorganize their supply chains accordingly. The muscle memory acquired from the 30-year-old global supply chain practice will no longer serve the industry well in the next 30 years.
Lutcavish: To address future vulnerabilities, pharma firms should consider formalizing an emergency management plan and looking for multiple sourcing points for drug distribution needs. It’s important to take proactive steps to avoid lockouts and limited access by connecting with pharmacy benefit managers (PBMs) and drug distribution contacts to, for example, carve out a process for direct-to-manufacturer access to high-risk medications. Contracting will be a key to success and will likely become more important as time goes on. Firms can also leverage their pharma license for unique purchasing capabilities and distribution access.
How will increased digitalization and analytics help to address the supply chain challenges?
Dai: I see the value of digitalization and analytics as primarily improving supply chain visibility and assisting in aligning with the interests of various stakeholders. Furthermore, the reshoring, near-shoring, and friend-shoring processes will be fraught with difficulties and optimization challenges, which digitalization and analytics can help to alleviate.
Lutcavish: Digitalization in pharma will support greater transparency across health systems, which makes a significant impact on contract compliance, shortages, siloed business operations, and purchasing power.Historically, health system pharmacy visibility has been a challenge. Often, one pharmacy and hospital will hold and maintain larger volumes of hard to access supplies, while another site within the same system cannot get access.
For pharmacists and their teams, staying on top of the many challenges without sacrificing customer experience takes the right partnership. Pharmacies should consider solutions like PharmacyiQ from TRIOSE, which provide individual support from experts to provide guidance through increasingly complex guidelines and standards, as well as advice on how to improve operational efficiency long term.
There are some efforts now to prioritize US manufacturing and strengthen the domestic supply chain. Do you think this is achievable in the long run and that it will work for an industry such as biopharma?
Dai: Absolutely! Consider the COVID vaccines produced by Pfizer and Moderna in the US. Prioritizing US manufacturing and strengthening the domestic supply chain is both feasible and required. Along with reshoring, near-shoring and friend-shoring can and should be included in the industry's overall efforts.
Lutcavish: The overall sentiment from the US government, health systems and manufacturers is largely that US manufacturing is a must-have. Hurricanes and climate impacts on Puerto Rico triggered this concern, and the impact of COVID, the supply chain challenges, and now economic challenges, have compounded it and only further underscored the critical importance of this initiative. To best serve Americans and to learn from our mistakes over the past several years, this has to be done.
What are the other industries that pharma could look for guidance on optimizing costs and minimizing risks in the supply chain?
Dai: Other industries that can serve as role models for pharma include the fashion industry, which has worked hard to learn from tragedies caused by its opaque global supply chains.
Lutcavish: There are very few industries like pharma—the controls, governance, compliance and risks, are unique—so it’s difficult to look to other verticals for guidance. In our work with clients, we’ve witnessed first-hand how critical last mile delivery, analytics, and transparency are to maintain not only pharmacy accreditations, but patient safety as well. Pharma should focus on leveraging tools and solutions that optimize these systems, and look to partners that will continue to develop innovative solutions in these areas.