Leading IDNs are being judicious with supply orders “for the foreseeable future,” GPO executive says

Editor’s note: As the coronavirus pandemic has evolved, JHC has reached out to several healthcare supply chain organizations to help assess the situation for our readers to try and make sense of what is going on. The following are responses from Chaun Powell, MBA, group vice president, strategic supplier engagement, Premier, originally posted on JHC’s blog in late March.

The Journal of Healthcare Contracting (JHC): How are you working with member organizations to identify and mitigate potential impacts or supply disruptions?

Chaun Powell: This is an incredibly challenging and fluid situation with variables that are in constant flux. As a member-driven organization, we are working on behalf of nearly 4,000 acute care hospitals and health systems and 175,000 non-acute providers. The caregivers at these facilities are working around the clock to promote the safety of their patients and clinicians, and we must do all we can as a country to support them. Above all, we would like to thank our caregivers for everything they’re doing to provide critical care to our communities.

To provide some insight on the speed at which this is escalating, the Premier Disaster Preparedness and Response Team activated on January 24. Over the next five weeks we tracked the progress of the virus and the impact to the global supply chain, yet the impact on the U.S. was minimal. Less than a month ago, there were still only three states with fewer than 10 confirmed patients domestically. Now we are serving providers across 49 states dealing with more than 3,500 confirmed cases. In order to be effective, we have had to pivot our internal processes significantly to make sure that our clinicians are able to deliver uninterrupted care. In addition to the work that we are doing with members, we are also partnering with government agencies, the Administration, suppliers and distributors in the private sector to create both short-term and long-term solutions grounded in data created as a result of our primary research with the ultimate goal of informing public understanding.

We collaborated with the White House Administration’s COVID-19 supply chain task force to share our data-driven perspective about the current state of health system preparedness and potential actions that could be taken to ensure a more reliable supply chain. Premier presented unique insights and data on the 2,000 unique items that are currently on national allocation and in shortage, and key recommendations to protect the integrity of our acute, non-acute and pharmaceutical supply chain.

Since activating over seven weeks ago, we’ve been sending daily updates to our field team and members, and maintaining near real-time updates on our internal Disaster Preparedness Response Community. There, we’ve been equipping our members with updates including links to the CDC’s latest guidance, appropriate use guidelines for PPE and response to many of the questions we’ve gotten from our members. We also have the Premier Safety Institute, a public-facing site where we provide the most up-to-date scientific documents, resources and tools primarily focused on clinical information.

JHC: What product categories are seeing the most strain?

Powell: Currently, the categories where members are experiencing the most difficulty accessing supplies include N95 masks, ear loops, hand sanitizers, COVID-19 testing swabs and reagents, PAPRs and gowns.

Further compounding this issue is the fact that Russia and the entire EU have joined India, Taiwan, Thailand, South Korea and China in halting exports of personal protective equipment (PPE).

We recently released results of a survey of non-acute care providers, who are experiencing supply chain strain in accessing PPE. This follows up our survey released at the end of February, which asked acute care providers about their inventory levels related to PPE.

JHC: What are some best practices of leading IDNs, health systems and hospitals that have disaster and disruption plans in place? How are they trying to stay ahead of any potential issues?

Powell: We continue to advise all members to follow CDC-recommended conservation protocols for PPE. Currently, there are roughly 2,000 unique stock keeping units (SKUs) that have been placed on allocation from distributors. This means that in most cases, supply ordering is limited to historic levels. This underscores the importance of all providers following rigorous conservation protocols.

As of March 11, the CDC has revised its guidance on masks and respirators. Personnel should continue to wear facemasks and eye protection while providing care to known or suspected COVID-19 patients. However, a respirator, ex N95, is only required during high-risk procedures. Industrial N95 masks that are NIOSH-approved and certain expired N95s are also allowed.

To go along with the CDC’s revised stance, CMS has temporarily waived annual fit testing for respirators, which will avoid wasting masks used in the annual validation.

Leading IDNs are being judicious with supply orders for the foreseeable future. This is true for both the PPE supply chain as well as the pharmaceutical supply chain. By avoiding panicked ordering, providers prevent straining the supply chain at large.

Obviously, we all need to follow the CDC’s general health guidelines here, particularly healthcare workers: wash hands regularly; cover a cough or sneeze, avoid touching our eyes, nose and mouth; avoid close contact with people who are sick; and stay home when sick.

One additional area of interest for many industry stakeholders should be the increase in gray market activity. We’re cautioning our members to be careful about anyone approaching them outside of their normal supply chain channels purporting to have access to PPE, pharmaceuticals and other healthcare supplies, and to work with their GPO to identify the authenticity of these goods.

JHC: How do we as an industry prevent shortages that may occur due to hoarding and panic buying?

Powell: Coronavirus illuminates a critical message that we’ve been communicating for a very long time. We, as a nation, need to be more intentional with our supply chain. Over the past several years of a bull economy, there has been much focus on profitability as most healthcare systems only materialize a 2% profit. With decreasing reimbursements, in order to maintain their ability to offer patient care and other community benefits, healthcare providers have tasked their supply chain professionals to help reduce expenses, and they in turn typically turn to commodities. This becomes problematic as suppliers, in an effort to remain cost-competitive, have moved more manufacturing offshore. We now find ourselves relying on Asian manufacturing for large portions of our supply chain. This became apparent during the Ebola crises, but our memories faded about the risks of reliance on other countries to support our product needs until January.

In order to regain a competitive edge in the healthcare supply chain, we must collaborate across private and public sectors to improve visibility to upstream stakeholders including the locations of raw materials, contract manufacturers and distributors. We must also increase the regulatory obligation of suppliers to provide advanced notice of disruptions. In today’s supply chain environment for devices and medical consumables, we often are not made aware of a shortage until it has already been declared. The late notice leads to hoarding, as healthcare systems react to protect their patient populations. The downstream impact is amplified when the supply chain is overseas and not easily within our control. In summary, increasing visibility to the upstream supply chain, increasing regulation around notification periods for disruptions, and bringing product manufacturing back to the U.S. will allow us, as a healthcare ecosystem, to be more proactive and less relegated to reactivity.

JHC: Are you seeing lessons learned from previous disasters being implemented? If so, how have we gotten better at handling situations like this?

Powell: Given Premier’s unique position in the supply chain as an extension of America’s healthcare providers, we understand firsthand the impact to patient care when hospitals and health systems do not have access to the drugs and medical supplies needed to treat patients. We also know that during shortages, prices tend to skyrocket and clinicians are removed from patient care as they are called on to help source alternative therapies. During outbreaks such as H1N1, Ebola and COVID-19, access to these drugs and medical supplies can determine whether our ability to practice modern medicine is threatened. Therefore, it’s critical that we proactively address these known supply chain vulnerabilities now.

In order to truly address these supply chain vulnerabilities, we need additional transparency to understand true risk. We also need to create incentives to encourage domestic manufacturing of drugs and medical supplies. These are common-sense, market-based, holistic and sustainable solutions that Congress can act on. Congressional action is imperative to ensure the United States healthcare supply chain in prepared for the next COVID-19.

For drugs, Premier supports S. 2723 – The Mitigating Emergency Drug Shortages (MEDS) Act introduced by Senators Susan Collins (R-ME) and Tina Smith (D-MN). Supported by over 75 provider organizations and health systems, the MEDS Act builds upon the prior work of Congress to provide additional authority to the Food and Drug Administration (FDA) to help mitigate drug shortages and develop market-based incentives to help ensure a stable supply of medications critical for patient care. Specifically, the following scenarios exemplify the need for enactment of the MEDS Act:

  • A major concern with the COVID-19 outbreak in China is the overreliance on a single nation for a significant portion of the United States’ drug supply. The MEDS Act helps address this overreliance by requiring the Secretary of Health and Human Services (HHS) to develop a report to Congress with recommendations to incentivize the domestic manufacturing of finished dose formulations and active pharmaceutical ingredients (API). The MEDS Act also examines the risk to national security. – We also support the Preventing Drug Shortages Act, a similar bill in the House of Representatives.
  • A lesson learned from Hurricane Maria is the lack of transparency regarding where critical drugs are manufactured, the source of API, and redundancy plans. To overcome these lessons learned, the MEDS Act requires manufacturers to report to the FDA the exact location of manufacturing for these critical drugs, the exact source of all raw materials, and redundancy and contingency plans to ensure a stable supply. In the case of COVID-19, this type of information would be critical to understand exactly what is being manufactured in China, exactly what proportion of API and raw materials are manufactured in China, and what a manufacturers’ contingency plans are should manufacturing in China no longer be feasible. This is all critical information to understand the true risk to the supply chain and potential drug shortages due to pandemics such as COVID-19.
  • Another major unknown currently is the downstream impact of any potential API shortages as a large portion of the world’s API is manufactured in China. Currently, API manufacturers do not have to report supply disruptions to the FDA. The MEDS Act would expand FDASIA Title X reporting requirements to API manufacturers and require reporting of potential supply disruptions to the FDA, creating an early warning system that would allow the FDA upstream visibility to appropriately assess risk and rapidly work to identify alternative sources of supply.

For devices and medical supplies, we need to arm the FDA with similar authority to act for supply disruptions and shortages as they do in the drug space. As FDA articulated in their FY 2020 budget request, no law requires medical device manufacturers to notify FDA when they become aware of a circumstance that could lead to a device shortage. By creating such a requirement, as currently exists for drug manufacturers, it would ensure FDA has timely and accurate information about likely or confirmed national shortages of essential devices to enable FDA to take steps to promote the continued availability of devices of public health importance.