The Clinical Supply Chain: Putting in Place a Cornerstone Strategy

30th May 2018 (Last Updated December 11th, 2018 09:32)

Frank Leu, CEO, Novapeutics LLC, devises a strategy that combats the numerous regulatory hurdles that supply chain managers tackle

The Clinical Supply Chain: Putting in Place a Cornerstone Strategy

The rapid technological advancements in the clinical supply chain today are undeniably solving complex logistical problems, while inadvertently creating new ones. This leads to the increasing need for regulations to address how to properly implement new technologies. There are multiple challenges, such as inventory and warehouse management, that need to be addressed in order to avoid the worst outcomes. That can include shortage, expiration, product loss, and temperature deviations in the final delivery.

The above-mentioned challenges are amplified when the pressure to maximize the return of future drug candidates is increased by the sponsor’s desire to cover as many markets worldwide. When any new country is added to a clinical study, it could dramatically increase the logistical and regulatory challenges associated with clinical trial supply distribution. In an intricately connected ecosystem, consisting of researchers, manufacturing facilities, logistics providers, care practitioners, and patients, it is virtually impossible to satisfy these various demands without losing speed or security. Furthermore, with additional compliance demands created to keep up with the latest innovations, it is extremely difficult for all stakeholders to properly and cohesively meet future requirements.

Navigating Regulatory Hurdles

The regulatory complexities that exist between countries could easily lead to a shortfall in planning for distribution logistics. This is exacerbated by the sensitive and highly regulated nature of clinical supplies, which often place an extreme burden on a study’s budget and timeline, consequently putting patients at risk. The standards and accepted practices in one part of the world may be unacceptable in another, thus knowledge of a country’s regulatory requirements is critical. It’s important to understand the regional differences and business practices as that can make the difference between clinical supplies moving successfully between countries, being detained in customs, or rejected entirely.

Additionally, speed and accuracy are two major concerns, as patients demand more personalized and advanced care. This often requires direct contact with care providers in a way that is unprecedented, however, life science and health care companies are seeking to accelerate speed to market. This is all against the backdrop of increasingly strict regulatory requirements that often limit much needed rapid technological adaptation.

The current cost for drug development requires an enormous amount of time and money; therefore, additional expenses pose a real barrier in adopting the changes necessary. PricewaterhouseCoopers estimated that the development of a new small molecule drug could cost up to $4 billion to discover, develop and get to market.1 While there is huge pressure on pharma companies to deliver through their R&D budget, recent research suggests that only half of them adopt the right digital technologies for necessary improvements.

The intrinsic challenge is truly integrating new technologies into supply chain processes. Many top pharmaceutical companies today are huge conglomerates, consisting of many divisions, facilities, and research arms that are spread across multiple geographic regions. To complicate matters even further, large pharma companies are also required to operate with multiple external partners, each with their own complex ecosystems.

Furthermore, partners may own entire segments of the value chain. So, it may come as no surprise that the data and information flow are complex and prone to expected delays. Networks are open to vulnerabilities with the compliance culture often mismatched and at times neglected. The push for personalized medicine today requires the implementation of patient centricity, which is a main directive for many life science companies. If this truly becomes a major focus for the industry, then the security of patient data in digital supply chains must be managed closely while maintaining its robustness. Additionally, it’s important pharma companies can scale this approach for emerging and advanced economies across the globe.

Reducing Costs through Partnerships and Outsourcing

In recent years, the sector has adopted a number of strategic moves to improve its efficiency, including outsourcing and partnerships. For example, outsourcing clinical trials has allowed pharma companies to reduce their overhead costs. Meanwhile, collaborating with third-party distribution providers have allowed them to expand and extend existing supply chains. Such collaboration has reduced costs and improved output. However, it has also opened the door to significant risk, such as data breaches.

Naturally, the digital supply chain is a highly desirable target for cyber attackers, due to its required connectivity within the players in the ecosystem. For pharma companies and all stakeholders, the entire ecosystem must be protected to avoid downtime that often leads to the loss of revenue, loss of consumer confidence, and most importantly, the human life that could ultimately be endangered. This can easily translate to insufficient security that can lead to the spread of counterfeit drugs. According to the Pharmaceutical Security Institute, worldwide counterfeit drug incidents increased 10-fold in one decade, from 196 in 2002 to 2,108 in 2012.2 The estimated worldwide economic cost of counterfeit drugs is around $75 billion, while Europe alone is over €10 billion.3

In Europe, in order to combat this issue, from February 2019, prescription medicine in the EU must come with a security feature allowing drug dispensers to verify their authenticity. While in the U.S., the FDA’s Drug Supply Chain Security Act calls for the pharma supply chain to create an “electronic, interoperable system to identify and trace certain specific drugs as they are distributed in the United States.”4 The complete compliance from all drug dispensers is expected to be complete by 2023. The rapid adaptation of technologies requires a high number of regulations, while at first this can seem as overwhelming for the pharmaceutical industry. The increase in compliance requirements will assist in the integration of the pharma supply chain and eventually increase efficiency and security.

Cornerstone Strategy

In order to be effective in dealing with the ever-changing regulatory landscape, stakeholder organizations must develop and implement a cohesive cornerstone strategy. There are several elements that need to be in place to create a cohesive, agile and responsive global supply chain:

A) Stakeholders need to coordinate among each other in the supply chain and understand where it stands in the overall market. Define its immediate and future path; be familiar with and know how to work with regional regulations. The stakeholder’s organization can then modify its infrastructure accordingly, with the goal of improving operational efficiency

B) Leadership must support the changes made to improve the chain via various stakeholders, to ensure all regional teams are set up in such a way that is consistent with the planned strategy. This starts by making sure all individuals are well trained and have been given the tools necessary to execute their designated tasks. In order for this to work, a strong integration is required throughout the entire organization; no one in the chain can be allowed to establish its own process that is not part of the global integration

C) A truly integrated global supply chain requires the use of common IT systems and the supporting technologies. These include: warehouse management systems, enterprise resource planning platforms, and procedures for product and location labeling

D) Each organization must have an early engagement team to adapt quickly and cope with ever-changing market dynamics. The organization must have an operational infrastructure in place designed to respond instantly and adapt efficiently in response to any oncoming changes initiated by partners and vendors due to regulatory changes. The infrastructure enhancement needs to be flexible in its process, which can largely be achieved by using the latest technology and innovative services

Collectively, an infrastructure needs to be agile so organizations can be innovative and deliver enhanced value. In today’s rapidly evolving regulatory landscape, compliance is essential in order to maintain efficiency within the supply chain. As the number of countries varies and grows with each trial, ensuring the packaging and labeling is compliant with each country’s regulatory requirements is a challenge.

By first identifying the key challenges present in the regulatory and logistic landscape, and then implementing emergent technologies, industry stakeholders can achieve an infrastructure that will be highly adaptable to the ever-evolving supply chain.

 

References:

1) Pricewaterhouse Coopers – https://www.pwc.com/gx/en/industries/pharmaceuticals-life-sciences/pharma-2020/previous-issues.html

2-3) Pharmaceutical Security Institute – http://www.psi-inc.org/index.cfm

4) FDA’s Drug Supply Chain Security Act – https://www.fda.gov/Drugs/DrugSafety/DrugIntegrityandSupplyChainSecurity/DrugSupplyChainSecurityAct/