Drug Shortages: Wholesaler’s role

Wholesalers are a vital link in the flow of product and communication between pharmaceutical manufacturers and healthcare providers. It’s not an easy job.

“We work closely with manufacturers to get accurate product availability information and advance notice when they believe product shortages are likely to occur,” says Andy Keller, vice president, inventory development, Cardinal Health. “However, many disruptions occur rapidly, with little advance notice.
“We have enhanced our processes to increase the responsiveness when we learn of disruptions from suppliers or other market indicators, since an initial disruption can quickly grow, impacting multiple products and suppliers. We do believe that these efforts could be further strengthened if manufacturers [agreed] on a standard definition of what constitutes a product shortage; and what information they provide to the FDA and other entities regarding the expected duration of product shortages.

“We also see one of our key roles as driving increased collaboration, not just with manufacturers, but also with providers,” he continues. “Increasing visibility to accurate demand across the value stream from patient to manufacturer remains a critical element in preventing and managing supply disruptions.”
When shortages do occur, wholesalers must try to satisfy customers’ demands while guarding against hoarding.

“When products are in short supply, we generally receive product allocations from manufacturers, based on our customers’ past buying behaviors,” explains Keller. “Through our Dynamic Allocation system, we determine the amount of product each customer will receive by taking into consideration the amount of product that is available and each customer’s purchasing history and trends. For example, if we only receive 50 percent of a given product order from a manufacturer, our system would dynamically allocate 50 units to a customer that historically ordered 100 units. When a specific product is in short supply, this system helps guard against any one, or group, of customers ordering dramatically larger quantities than they have in the past.”

Potential responses
Cardinal is committed to working with the entire healthcare supply chain to mitigate the impact of drug shortages on providers and patients, says Keller. Some potential solutions:

  • The industry needs to better communicate what products are expected to be in short supply, when the shortages are expected to occur, and how long they are expected to last. “Manufacturers have the clearest line of sight into the cause and potential duration of supply disruptions, and are therefore in the best position to quickly, efficiently and accurately provide product shortage information to the FDA and distributors for planning purposes,” he says.
  • Speed and accuracy of information are critical. “As a distributor, the quicker we are able to access reliable information about the potential for a drug shortage and the pipeline of available alternatives, the better able distributors will be to immediately implement a nationwide product allocation system to help healthcare providers mitigate the impact that product shortages have on patient care.”
  • More standardized information is key. “Currently, there is a lack of standardization in how manufacturers define when a product is – or is likely to soon be – in short supply,” says Keller. There is also a lack of standardization in the three key pieces of information that distributors – and the healthcare providers they serve – need most: the cause of the shortage, its likely duration, and the product alternatives.

Keller believes the FDA could help distributors and healthcare providers by:

  • Collaborating with manufacturers to develop new, consistent criteria for determining when a product is considered to be in (or approaching) a shortage situation, and when this information should be communicated.
  • Collaborating with manufacturers to identify the specific types and frequency of information they should communicate during a drug shortage, particularly as it relates to the shortage duration.

“We also encourage providers to continue to collaborate with us on proactively sharing demand changes and clear communication on increases, which we in turn can share with manufacturers,” says Keller. “This information is critical to manufacturers when there is a shortage, and unplanned increases can actually increase the likelihood of a shortage.”

GPOs Take Action

Group purchasing organizations have devised their own strategies to help members mitigate the effects of intermittent drug shortages.

“Our strategy is multi-faceted,” says Wayne Russell, senior director, pharmacy, Premier. “We clearly communicate with the FDA. And we’re talking to manufacturers, especially some of the newer, smaller companies, and asking them, ‘Are you capable of making any of these products [on the FDA’s drug shortage list]?’ ‘What’s it going to take to get you into this market?’ ‘Do you need access to raw materials?’ ‘Do you need us to talk to the FDA and make them aware of your capabilities, if they aren’t already?’ ‘What can we do to help you?’

“We’re trying to take a proactive approach to bring more suppliers into the market. We think it creates a healthy market and lessens the probability of a shortage. We have had multiple meetings with the FDA around this topic.”

Says Ron Hartmann, PharmD, senior vice president, pharmacy, MedAssets, “Our primary responsibility is to make the best decisions we can on behalf of our members….Pricing is a factor, but it has never been the only factor.

“Quality issues, and the manufacturer’s ability to supply product, have always been factors in our contract award decisions. Given the challenges we’ve had with shortages, we are making sure that the companies we contract with have a good track record in their ability to supply product, and that they don’t have issues with the FDA from a quality and compliance standpoint.

“We also see that part of our responsibility is supporting the generics industry and making sure that the industry is healthy and that there are an adequate number of suppliers.”

“The thing we’ve tried to foster within our membership and encourage our members to do is, stay informed,” says Hartmann. “It’s important to learn from other hospitals’ experiences about how they’re best managing drug shortages, and then share best practices. It has become very clear that it’s important to keep the medical staff informed of supply situations, in particular, of critical drugs, and for pharmacy to offer recommendations for alternatives.”

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