Biopharmaceutical Supply Chains: Distribution, Regulatory, Systems and Structural Changes Ahead

255 Pages·2012·7.94 MB·English

by  Robert Handfield

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Business Improvement Biopharmaceutical
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“In working with Robert Handfield, I find it marvelous how he defines the real issues d
in supply chain. This work on the healthcare value chain will be fundamentally f
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important to the pharmaceutical industry as we understand society’s needs and how e Supply Chains
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we must transform our complex supply networks to connect with the medical needs
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of the ultimate patients and customers.”
—Robert Lechich, Director of Operational Excellence, Pfizer Corporation
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Distribution, Regulatory, Systems
“Handfield challenges our current and arguably provincial notions of supply chain i
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commonly held in the biopharmaceutical industry and forces us to really see it for
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what it is—a process that ultimately connects the initial product manufacturing
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process directly to the patient and all points in between. His systemic approach
dismantles various paradigm silos to reveal a complex series of interconnected a
activities and players, demonstrating a dynamic whole and clearer view to making r RobeRt Handfield, Ph.d.
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the current healthcare debate more meaningful.”
—Bill Welsh, PhD, Associate Director, Strategic Programs, Golden LEAF
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Biomanufacturing Training & Education Center,
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North Carolina State University, Raleigh
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A comprehensive exploration of the massive changes in the biopharmaceutical
supply chain that have occurred during the past 10 years, and predicted future t
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trends, Biopharmaceutical Supply Chains: Distribution, Regulatory, Systems c
and Structural Changes Ahead documents the specific impacts of these changes
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for key players in the supply chain.
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Based on interviews with industry professionals, the book presents an overview
of the key challenges and discusses how leading biopharmaceutical companies u
handle these challenges. It exposes the underlying structures that support the
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biopharmaceutical supply chain, focusing specifically on distribution—the point at
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which manufacturers release a finished product to the time that it is administered,
and the complicated set of channels that exist between these two points. This l
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overarching view of the supply chain provides an important piece of intelligence
that can inform business strategy for life sciences manufacturers and distributors
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and help them achieve success in this industry.
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K14356 n
ISBN: 978-1-4398-9970-0 s
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www.crcpress.com
9 781439 899700
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Biopharmaceutical
Supply Chains
Distribution, Regulatory, Systems
and Structural Changes Ahead
ROBERT HANDFIELD, Ph.D.
CRC Press
Taylor & Francis Group
6000 Broken Sound Parkway NW, Suite 300
Boca Raton, FL 33487-2742
© 2012 by Taylor & Francis Group, LLC
CRC Press is an imprint of Taylor & Francis Group, an Informa business
No claim to original U.S. Government works
Version Date: 20120418
International Standard Book Number-13: 978-1-4398-9979-3 (eBook - PDF)
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Contents
Preface.....................................................................................................ix
Chapter 1 Biopharmaceutical.Distribution:.Early.Structural.
Developments.and.the.Changes.Ahead.............................1
Introduction..................................................................................1
Structural.Evolution.of.Biopharmaceutical.Distribution.......4
The.Move.Away.from.Distribution.......................................5
The.Biopharmaceutical.Supply.Chain.(BPS)............................7
Branded.and.Generic.Manufacturers...................................7
Wholesalers............................................................................11
Drug.Chain.Pharmacies.......................................................13
Hospitals.and.Group.Purchasing.Organizations..............16
Health.Maintenance.Organizations.and.Pharmacy.
Benefits.Managers..................................................................18
Bringing.the.Supply.Chain.Together.......................................21
Chapter 2 Key.Forces.and.Myths.of.Distribution.in.the.BPS.
Supply.Chain.....................................................................23
Key.Forces.Overview.................................................................23
Myths.of.Biopharmaceutical.Distribution..............................24
Compensation.Forces............................................................24
Structure.of.Fee-.for-.Service.Inventory.Impacts...............28
Perception.of.Manufacturers.to.FFS...................................31
Manufacturers—Stable.Group........................................31
Manufacturers—Explorer.Group...................................32
Manufacturers—Malcontent.Group..............................33
Manufacturers—Oblivious.Group.................................33
Channel.Forces......................................................................34
Group.Purchasing.Organizations...................................39
Product.Forces.......................................................................41
iii
iv  •  Contents
Conclusion..................................................................................48
Compensation.......................................................................48
Regulation...............................................................................49
Channel.Forces.......................................................................50
Product.Proliferation.and.Customer.Segmentation.........51
Chapter 3 Regulatory.Trends.............................................................55
Introduction................................................................................55
A.Complex.Regulatory.Distribution.Environment..............56
Regulatory.Environment.for.Wholesalers..............................58
Prescription.Drug.Marketing.Act.(PDMA).of.1988.........58
Hatch–Waxman.Act:.The.Entry.of.Biosimilars.and.
Generics.................................................................................60
Medicare.Modernization.Act.of.2003................................60
Medicare.................................................................................61
Reimportation........................................................................63
Medicare.B:.Impact.on.Oncology..................................64
Medicare.D:.Free.Samples....................................................65
Possible.Robinson–Patman.Liability.for.Price.
Discrimination......................................................................66
Other.Important.Drug.Distribution.Laws........................68
Legislation.That.Ended.the.Forward-.Selling.Model.for.
Wholesalers.and.Manufacturers..............................................69
The.Obama.Healthcare.Reform.Act........................................72
State.Licensing.Codes............................................................74
Direct.Mail.............................................................................75
Challenges.to.Enforcement—Counterfeit.Drugs...................76
Subsequent.Legislation.in.Anticounterfeiting.and.
Pedigree:.A.Case.Study..............................................................78
Rebate,.Pricing,.and.Payment.Structures.for.Medicaid:.
A.Significant.Threat.on.the.Horizon.for.Wholesalers..........81
Impact.of.Material.Handling.Legislation.on.
Pharmaceutical.and.Biotech.Distribution..............................85
Cold.Chain.............................................................................85
The.Rise.of.Biologics.versus.Pharmaceuticals...................87
Pay-.for-.Performance.Mandates...............................................90
Conclusion...................................................................................91
Contents  •  v
Chapter 4 The.Last.Mile:.Changes.in.the.Hospital.
Environment.That.Impact.the.Life.Sciences...................93
The.Healthcare.Imperative........................................................93
Patient.Safety.and.Total.Cost.of.Patient.Care........................95
The.Root.Cause:.Multiple.Handoffs........................................96
Life.before.Automated.Pharmaceutical.Dispensing.........98
Automated.Dispensing.Market.Penetration......................98
Limitations.to.Automated.Dispensing............................100
The.Race.to.the.Bedside...........................................................101
The.Genesis.of.an.Idea........................................................101
Automated.Replenishment.................................................102
The.Journey.toward.Automated.Pharmaceutical.
Distribution...............................................................................103
Phase.0:.Preautomation......................................................103
Phase.1:.Implementation.of.Auto-.replenishment...........105
Phase.2:.Early.Integration...................................................107
Phase.3:.Auto-replenishment.Integration........................109
Total.Patient.Cost.....................................................................111
Challenges.on.the.Horizon.for.Biologics.and.
Pharmaceuticals.in.the.Hospital.Provider.Environment.....116
Personalized.Medicine.and.Pay-.for-.Performance..........118
Reimbursement.Models......................................................118
Pay-.for-.Performance.(PFP)...........................................118
Step.Edit.Therapy............................................................119
Price.Capping.................................................................120
Outcome-.Based.Pricing................................................120
Accountable.Care.Organizations.................................120
New.Developments.in.Comparative.Effectiveness........122
Conclusions..............................................................................124
Chapter 5 The.Blurring.of.Boundaries.in.Biopharmaceutical.
Supply.Chains:.The.Case.of.Oncology.Medicine..........127
Introduction..............................................................................127
The.Oncology.Market........................................................128
Growth.of.Cancer.Treatments...........................................130
The.Oncology.Supply.Chain...................................................131
vi  •  Contents
The.GPO–Distributor–Physician.Relationship.in.
Oncology....................................................................................133
Services.Provided.by.Specialty.Wholesalers.and.
Distributors..........................................................................135
Differentiated.Services........................................................135
Profitability.in.the.Oncology.Market....................................136
Class-.of-.Trade.(COT).Pricing.................................................137
Emerging.Relationships.in.the.Oncology.Supply.Chain....139
Competitive.Acquisition.Program.(CAP).............................141
J-.Codes.......................................................................................142
J-.Code.Specificity.Challenge..............................................143
Dosing.Challenges...............................................................143
Cost.Challenge.....................................................................144
Payer.and.Reimbursement.Systems.......................................145
Managed.Care.Synopsis......................................................147
Misaligned.Incentives.in.the.Oncology.Supply.Chain........148
Payers.....................................................................................148
Oncologists...........................................................................149
Specialty.Pharmacies...........................................................151
Home.Infusion.Companies................................................152
Hospitals...............................................................................152
Manufacturers......................................................................153
Patients..................................................................................155
Conclusion.................................................................................155
Endnotes....................................................................................157
Chapter 6 The.Changing.Landscape.of.the.Life.Sciences.
Supply.Chain:.Recommendations.for.Players.
in.the.Industry.................................................................159
Introduction:.An.Industry.in.Flux.........................................159
A.Multi-.agent.Simulation.View.............................................160
Massive.Disruptions.in.Biopharma.Value.Chains...............163
Growing.Adoption.of.Price.Restrictions.by.
Regulators.and.Governments............................................163
Declining.R&D.Productivity.............................................164
Emphasis.on.Pay-.for-.Performance....................................165
Increasing.Emphasis.on.Personalized.Medicine.............165
Fragmentation.of.Mass.Markets........................................166
Contents  •  vii
Emergence.of.Biotech.and.Biologics.................................167
More.Restrictive.Regulations.............................................167
Increasing.Use.of.Pervasive.Monitoring..........................168
Changing.Roles.of.Primary.and.Secondary.Care...........168
Opportunities...........................................................................169
Global.Market.Channel.Development.and.Alternative.
Reimbursement.Models...........................................................171
Growth.of.Global.Markets.................................................172
Opportunity:.Emerging.Markets......................................173
Patent.Protection.Issues......................................................174
The.AIDS.Epidemic.............................................................178
“Acting.Locally”...................................................................180
The.United.States............................................................180
Europe..............................................................................181
Asia...................................................................................181
The.Rest.of.the.World.....................................................181
Partnering.with.Governments.as.Part.of.the.Solution....182
Opportunity:.Personalized.Medicine.and.Customized.
Therapeutic.Distribution.........................................................183
Personalized.Medicine........................................................184
Opportunity:.Compliance............................................190
Aligning.Capabilities.to.Drive.Solutions.....................192
E-.Pedigree.and.Serialization:.The.War.on.Counterfeit.
Drugs.and.Black.Market.Sales................................................193
Counterfeit.Drug.Challenges.............................................193
The.Rise.of.E-.Pedigree.Regulation....................................195
The.Early.Promise.of.RFID.Technology...........................198
Counterfeiting.and.Pedigree.Technology.Solutions......202
GS1.and.the.Serialization.Alphabet.Soup.......................204
Distinguishing.Attributes.................................................209
Key.Issues.Surrounding.Traceability................................211
The.Global.Serialization.Landscape..................................211
Pfizer:.Setting.Priorities.and.Learning.from.
Experience............................................................................216
Merck:.Learning.to.Manage.the.Process..........................217
What.Does.It.Take.to.Be.Able.to.Implement.
Serialization?...................................................................219
Critical.Requirements.for.Successful.Collaboration....221
viii  •  Contents
Rx-360:.Industry.Collaboration.Initiative.for.
Global.Track-.and-.Trace.................................................221
Opportunity:.Specialized.Distribution.Channels..............223
Direct-.to-.Consumer.Customized.Distribution.for.
Oncology.and.Injected.Biotherapies................................225
Temperature-.Controlled.Specialized.Distribution........226
Why.Is.Cold.Chain.a.Current.Issue?...............................227
Industry.Changes...............................................................227
New.Technologies...............................................................228
Data.Logger.Technology...............................................228
Cooling.Technology......................................................229
Looking.Forward:.What’s.Next?............................................232
References.............................................................................................237
Additional.Reading.................................................................240