The Urgent Need for Better Visibility in Drug Supply Chains

Some are warning that less-than-ideal supply chain practices are driving up the cost of prescription pharmaceuticals, a topic that will be heavily debated in the approaching US presidential election.

Even a year after the World Health Organization pronounced the COVID-19 epidemic to have been ended, the medicine supply chain is still in disarray. According to two executives from Intelliguard, which offers medication inventory management services to some of the largest hospital and healthcare companies in the U.S. as well as major healthcare testing and equipment manufacturers, ongoing issues are made worse by the fact that supply chain management strategies within pharmaceutical suppliers and hospitals compare unfavorably to the retail business.

Tim Tinnel, chief operating officer of Intelliguard, says that improving visibility into demand is the way forward because drug supplies typically operate more on a "push" than a "pull" approach. He contends that the use of intelligent inventory management systems increases healthcare professionals' awareness of drug shortages before they become an issue by providing greater visibility into their availability or unavailability. "But it's also essential to recognize that there will always be drug shortages; you just have to prepare for them as best you can."

Tunnel adds that the situation is further exacerbated by the fact that generic pharmaceuticals are, by definition, produced by different producers, making it more difficult to organize information about what is accessible at any one time. "Again, improved visibility would help," he said.

Inefficient supply chains raise the cost of pharmaceuticals, whether brand-name or generic. "I'd like to see a slowing in price increases across pharmaceuticals in general," Tinnel says. "I believe that providing customers with insight into a measured supply chain is what gets us there. I don't think manufacturing expenses have risen dramatically. If we can improve manufacturers' visibility, they will be able to predict better, produce less waste, and be more efficient in their supply chains. I believe that is crucial to at least maintaining prices."

Managing the combination of brand-name and generic medicine supply is a difficulty. Preferences of healthcare providers frequently influence demand rather than just pricing. Paulo Viola, vice president of data science solutions at Intelliguard, says, "From a supply chain management perspective, it adds to this complexity, so when you have a shortage of a specific medication, you have to have a good supply chain to understand all the generics of the drugs, where they are, and in what quantities." Thus, keeping an eye on the equivalencies is also crucial. Furthermore, not every business is performing so well. That is, in my opinion, an area where many healthcare systems might use improvement.

According to Viola, when a medication has a generic substitute, the whole supply chain is better shielded from problems that may occur from shortages caused by specific producers. Under such circumstances, supply chain efficiency in terms of sheer availability should take precedence above only lower costs. "Everyone benefits from it, including the patient and the hospital," he claims. "It gets to the patient all the way."

Tinnel and Viola, who both worked in retail before joining Intelliguard, claim that the drug industry typically compares poorly to the retail sector when it comes to attaining supply chain awareness. The goal is to improve the flow of information to manufacturers on how drugs are recommended by physicians and surgeons, as well as how they are utilized in hospital pharmacies. Hospitals frequently place orders without having sufficient knowledge about the anticipated demand. Tinnel claims, "They're ordering a large quantity in a single order." "They're not gazing too far into the future." A supply disruption could then take the hospital by surprise.

Enhancing communication regarding the pharmaceutical supply chain—from producer to distributor to hospital—as well as the prescription and administration processes are necessary. "It's imperative to connect the entire supply chain to give manufacturers a more comprehensive understanding and enable them to align their production and usage rates," Tinnel explains. That is the approach taken by all retail businesses. Compared to the healthcare industry, retail is far more adept at handling that process.

Radio frequency identification is a tool that Intelliguard utilizes to track inventory placement precisely throughout the supply chain and guarantee the availability of high-quality data. That has a financial component, according to Viola. However, the patient's safety is the priority. We need to know if the patient will receive the necessary medication at the appropriate time.

Tinnel hopes that when COVID-19's effects fade, some lessons have been learned. He states, "I'm sure a lot of adjustments have been made, and we're now rebounding from that." "However, an upward trend in the manufacturing of generics is still necessary before we can even return to the push methodology that distributors currently employ, which is inefficient."