F.J. Quinn

Evolving technology and service capabilities are the news in reverse logistics for the pharma industry these days. Service providers are touting a greater degree of collaboration with manufacturers, and with retailers, distributors and others along the pharma supply chain. At the same time, it appears to have been a couple of banner years for the recalls business, with large recalls of both ethical and OTC products occurring. (Reverse logistics for pharma is a combination of product returns of expiring or overstocked product, and recalls initiated by manufacturers themselves or by FDA for product defects.)

		“There’s an opportunity to take advantage of today’s technology combined with the willingness of business partners to collaborate,” says Jeff Pepperworth, president, supply chain and pharmaceutical services, Inmar (Winston-Salem, NC). “Collaboration of industry partners will drive best practices to ensure consumer safety, as well as positively impact the cost and efficiencies for the industry.”

		There appears to be an increased sense of urgency on the part of pharma companies, observers say, as they gain a better understanding about the true impact a recall of any size can have from both a liability and brand perspective. Manufacturers reported an average of 2% of their sales volume is returned annually for credit, while Healthcare Distribution Management Association (HDMA; Arlington, VA) member distributors reported an average of 0.03% of total sales dollars were recalled or withdrawn in 2010, according to the 

		Throw in patient-safety concern when a controlled substance is recalled—in an industry where 100% recovery is rarely achieved even for highly unsafe products&mdash;and you have the makings of a potentially painful hit to the bottom line if recalls and returns are not handled adequately. “Effectively managing reverse logistics can have a profound impact on a company’s bottom line,” says Mike Rozembajgier, VP at Stericycle Returns Management Services (Indianapolis, IN). “Even some of the best companies within the pharmaceutical industry at supply chain functions turn to reverse logistics providers for help in managing such a process.”

		Although there are no new regulations affecting the handling of pharmaceutical product recalls, industry members say, mechanisms like the recently passed FDA Safety and Innovation Act (FDASIA) continue to exert strong regulatory influence over the US drug and device industries. “A number of high-profile drug safety issues in the past two years placed additional focus on FDA and the way in which it conducts inspections and investigations,” says Donald Rendulic, director, marketing and communications, Genco Pharmaceutical Services (Pittsburgh, PA). “While no one wants an FDA-mandated recall, with the increased agency finding, as well as the increased scrutiny, it is not unreasonable to expect additional product withdrawals or recall events, and to have contingencies in place.”

		Serialization and e-pedigree—the push to give pharmaceutical products ID numbers that can be tracked throughout the supply chain&mdash;almost made it into FDASIA, but was removed when the bill was reconciled between House and Senate versions. But some in the reverse logistics community expect a federal e-pedigree law to appear soon, and even if it doesn’t, the industry will be moving toward compliance with similar regulations on the books in California. The California rules are scheduled to go into effect beginning in 2015.

		“While a provision calling for the creation of a national ‘track-and-trace’ system was dropped from the final FDA reauthorization bill, future legislation is imminent,” Rozembajgier says. “This anticipation is leading companies to see outsourcing recalls as a more attractive option to managing the process in-house.”

		All of which makes it critical for pharma companies to anticipate and prepare for recalls and have a plan in place before it happens. “Following a recall plan helps lay the foundation, so the company can show that it managed a recall with the safety and reputation of its product in mind and with the patients’ safety as a priority,” Genco’s Rendulic says. “Mock recalls can be the best way to get prepared and understand internal and FDA requirements.”

		Reverse logistics tends to be a messy affair, with unpredictable lots of prescription and OTC products from countless retail and institutional pharmacies, chain stores, and hospitals sent back through various intermediary partners in the reverse supply chain. These third-party agents then arrange for product destruction and cash/credit reimbursements for unsalable drugs to be paid by manufacturers. This provides vendors the flexibility to put their resources towards other parts of the business, such as manufacturing or customer service.

		“This is particularly important during the recalls process, as it allows businesses to look forward instead of backward,” Stericycle’s Rozembajgier points out. “3PLs (third-party logistic providers) can mitigate potential risks and liabilities by providing the data and records necessary to comply with regulatory agencies.”

		Another major benefit of utilizing 3PLs is their ability to collect critical data points from products received. This allows pharma companies to better understand where their returns are coming from, the condition in which they arrive, and whether or not return instructions were followed. “With all of this data, companies can understand how their customers handle returns and recalls,” Rozembajgier says. “This insight can be helpful in creating a stronger business relationship, allowing the manufacturer to adapt its procedures to better suit customers and even lead to more effective management of reverse logistics.”

		Industry members say efforts are being made to improve processes and efficiencies for returned unsalable healthcare products, such as leveraging technology to streamline data flow between trading partners and cutting down time between when a product is received, and when the manufacturer credits the retail pharmacy for it. 3PLs have access to every piece of information about a returned package, so they can help companies understand where they face the greatest risks, from ineffective return policies to over-reimbursement.

		Maintaining an acceptable turnaround time from receipt, to scanning, processing, and collecting of data necessary for the manufacturer to provide accurate and timely credit to their trading partners should be the goal. “This is even more important when managing a product recall or withdrawals, when time and accuracy of reporting is most important,” Genco’s Rendulic says. “This helps dramatically with the debit/credit reconciliation process, which can pose major challenges to manufacturers and their trading partners.”

		While a large component of handling a drug recall is the physical processing and disposition of the product, even more important is tracking and information exchange of the recall data. Extensive government regulations and reporting requirements, along with an increased focus on pedigree, have increased the need for good tracking, visibility and control measurements, experts say. These are all critical components for any reverse logistics process. Many pharma companies are making investments in security measures, data systems and business processes to improve efficiencies in managing recalls. These include, among other things, barcoding or RFID tracking on returns packages and increased use of online resources to manage recall data. “Methods of communications between manufacturers and industry trading partners still vary, according to the level and depth of the recall and manufacturer strategy,” says Perry Fri, SVP, HDMA. The association and its member companies are committed to collaborating with all stakeholders to help ensure continued safe and efficient delivery of prescription medicines and healthcare products nationwide, both in the forward and reverse supply chains.

		Over the next five to 10 years, it is anticipated that most, if not all, drugs will be serialized to the individual bottle or package. By reporting back the serial number, a manufacturer has the ability to review the actual purchase order where the drug was originally procured. “We are starting to work with manufacturers on 2D Datamatrix serialization on the reverse logistics side,” Inmar’s Pepperworth says. “Ultimately, once we start submitting the EPCIS product tracking and history, we will have full visibility to chain of custody.” Inmar offers technology tools that provide online access to returns status down to NDC/UPC level, authorization tracking, issuance of RAs online, easy discrepancy reconciliation, shipping information and proof of destructions.

		Reverse logistics planning and execution is also improving through wider adoption of standard electronic communications. Technology advances for product tracking, data management and improved communications between industry trading partners is helping drive reverse logistics to the next level. A case in point is the use of electronic data interchange (EDI) standards—namely EDI 180 and EDI 812&mdash;which has reportedly expanded from forward to reverse logistics in recent years.

		EDI 180 provides a standardized, multidirectional electronic format for the transaction set used when trading partners issue a request, or notification of, a return, and pharma companies need to respond and issue the return authorization. EDI 812 is a bi-directional transaction set that aims to automate and standardize financial elements of a return, requesting and authorizing debits and credits between trading partners. HDMA and others have been supportive of efforts to develop standard practices for serializing pharma packages with barcodes or other unique identifiers; many studies of the subject point to substantial savings in managing returns, recalls, and credit reconciliation when individual products can be tracked up and down the supply chain.

		“More companies are utilizing the EDI Guidelines for 180 Return Merchandise Authorization/Notification & 812 Credit/Debit Adjustments that were published by the HDMA in 2010,” observes Robert Schaltenbrand, director of strategic development at Guaranteed Returns (Holbrook, NY). “Utilization of electronic methods allows for the reduction/elimination of human input error and also speeds up the reconciliation and crediting process.”

		The ability to fully automate and standardize electronic communications related to returns can lead to improvements in time efficiency, accuracy, and flexibility. 3PLs report there has been a reduction in manual handling of returns for pharma clients, and it can dramatically reduce the time it takes to reconcile reporting between trading partners. “It also forms the backbone of a powerful data warehouse, allowing manufacturers to spend time evaluating what stories the data tell,” Genco’s Rendulic says. “For those companies that struggle to understand what the data flow means, look for a reverse distribution partner that can not only provide data, but also has tools to better understand it.”

		Inmar provides a comprehensive dictionary of data elements available through its EDI 180. This dictionary allows for manufacturer-specific reason codes, class of business codes and customer identification attributes. “With inclusion of such attributes as class of customer and specific return reason codes, we have streamlined the reconciliation process,” Pepperworth says. “Aggregating detailed data in this space can assist in analysis and root cause analysis.”

		Communicating with standardized electronic communications, such as EDI 180 and 812, is expected to help streamline the reverse logistics process, and lower the cycle time from notification and authorization to shipment and credit reconciliation of a return. “More than three-fourths of the manufacturers surveyed for the 

 exchanged an EDI 180 with third-party processors (reverse distributors) in 2010, up from 59% the year before,” HDMA’s Fri says. “We see this increased adoption as a positive trend.”

		Further reinforcing this point is Inmar’s observation of having seen an uptick of manufacturers engaging in more robust utilization of the 180 interchanges in the past year. “Reverse distributors can provide line item detail for returns, including drivers of creditable vs. non-creditable information,” Pepperworth notes. “One of the key new features we are currently working on is the ability to receive an 812 credit feed in response to our 180 debit memo feed.”

		The tool will show the amount claimed on the return vs. the actual credit amount allowed. “We believe this is a major advance in the reliability and value of data,” Pepperworth says. “Today, we use a hierarchy of various price options to estimate the fair value of a returned item. Most of the systems in place are a variation of the warehouse acquisition cost (WAC).”

		The 812 removes the need for Inmar to load and manage manufacturer price files.

Enhanced handling of controlled-substance recalls

		3PLs say they have security measures in place to control their inventories, and they are focused on compliance with all federal, state and local requirements. “If you have a solid returns process, controlled product is just another link in the chain,” Genco’s Rendulic says. “While controlled substances are more heavily scrutinized, if you have the systems in place, initiating an event with controlled products should be seamless to the manufacturer.” Genco reports having more than 20 years experience in operating state-of-the-art facilities with leading security profiles to protect even the most stringently controlled products.

		Recalls of controlled substances are among the most challenging of recalls to manage. As with any other aspect of handling controlled substances, there are major differences in the reporting and handling when compared with noncontrolled products. Both types of recalls, however, require notification, product retrieval and form completion. “The ability to account for every unit is important for controlled and noncontrolled recalls,” Inmar’s Pepperworth says. “The process and QA controls are important across the entire pharmaceutical line of products.”

		Given overall concerns about prescription drug abuse, attention is being paid to security practices throughout the supply chain, observers say. These products require additional security measures for inventory management, reporting and record-keeping, in forward and reverse distribution. Controlled substances must be stored in a quarantined area; for example, HDMA reports that its members store Schedule III—V products in cages and Schedule II products in vaults within those cages in their warehouses.

		“They do not store or distribute Schedule I products at all,” HDMA’s Fri says. “There are specific regulations governing the return of a controlled substance, for recall or other reason.”

		Schedule II drugs require a DEA Form 222 (electronic or paper) be sent from the receiving DEA registrant to the returning entity in advance of the controlled substances being shipped. “The DEA encourages registrants to implement procedures that may reduce or eliminate the potential for diversion,” Guaranteed Returns’ Schaltenbrand says. “This is an area where ‘one-step’ relationships would be beneficial.”

		In an effort to reduce non-value-added activities, redundant handling and associated costs in reverse logistics, many major 3PL service providers have developed so-called “one-step” or “one-touch” programs, by which they function as the single intermediary between manufacturer and downstream trading partners. In the traditional scenario, upstream manufacturer and the downstream trading partners would each engage their own 3PL partners to handle routine returns. Using the newer approach, a single intermediary handles the entire return from initiation to final product destruction, acting as a partner to the drug maker, pharmacies or other retail partners.

		This approach, however, has its pros and cons. “In theory, fewer stops for returned product is more efficient,” Fri says. “In practice, some parties prefer their own dedicated agents as auditors.” HDMA has not collected any data relative to one-touch processing.

		Proponents say one-step programs offer many benefits, a number of which are linked to fewer touch points, sustainability, cost improvements and collaboration. For instance, by reducing the number of times product is picked up and handled, it helps decrease redundancies in processing and minimizes opportunities for theft or diversion. Costs are lower from a shipping and process standpoint, 3PLs say, as is the carbon footprint, energy and cardboard use for re-shipping returned products to multiple intermediary partners before the drugs are destroyed.

		“Manufacturers have utilized multiple partners for forward distribution of the product for years,” Guaranteed Returns’ Schaltenbrand points out. “Looking to the bottom line, more manufacturers need to embrace the ‘one-step’ model for further cost savings.”

Articles

Improving efficiency, effectiveness of drug recalls

	As pharmaceutical companies rapidly expand into emerging markets abroad, observers say they are running into complex challenges. Distribution issues are arising due to increasing security concerns, country-specific regulatory compliance, and limited scope of infrastructure. But this has not stopped third-party logistics providers (3PLs) from developing a range of strategies and services to ensure Rx drugs are delivered safely and cost-effectively.

“This is an exciting, yet challenging and complex time for the pharmaceutical industry, and there’s never been a better opportunity to create value through the supply chain,” declares Bill Hook, vice president of global strategy, UPS Healthcare Logistics (Atlanta, GA). “Companies are looking to the supply chain to create a competitive advantage, and they’re turning to 3PLs like UPS to deliver quantifiable value.”

	A 2010 study compiled by Harris Interactive (New York) for UPS shed light on the many distribution issues affecting pharmaceutical firms worldwide. Four in five healthcare companies surveyed are doing business with at least one country outside the US, despite a range of factors being cited as potential barriers to global expansion. The report found nearly half of the companies surveyed intend to expand into emerging countries through 2012, with the likes of Argentina, China, India and Brazil among the top areas targeted.

	“Growing and emerging markets like India and China, as well as within the BRICM countries and Turkey, are the places where this sector sees the most opportunity,” reports Angelos Orfanos, president, life sciences and healthcare, DHL Global Forwarding (Newark, NJ). DHL is also working closely with the clinical trials supply chain, Orfanos adds, supporting manufacturers with the capability to reach new markets with clean patient populations to conduct trials, or with a network of clinical depots to rationalize their supply chain.

	Factoring in global trends in pharma manufacturing and distribution, the market for temperature-control (“cold chain”) services (from air, land and sea carriers; third-party logistics firms; and dedicated packaging and instrumentation) was projected to rise from $6.5 billion in 2010 to $7.6 billion in 2013, according to the 3rd annual 

, a market study and guidance resource of this fast-evolving market pioneered by 

. Supporting this forecast are results from the Harris Interactive/UPS study, which found healthcare and pharma companies are preparing to increase their outsourcing activities in many areas, including distribution. More than a third plan to boost their decision to use third parties in the next two or three years, a significant increase over 2009. Another 26% of respondents plan to maintain outsourcing levels in the near future.

	“3PLs are becoming more of a cross-divisional partner of the pharma industry, with the ability to offer solutions for warehousing, pick/pack, and stock control linked with final leg distribution,” observes Martin Svantesson, director vertical markets, Geodis Wilson (Amsterdam), a global freight management company. “The added value for the end receiver will be a lower cost and more control over the product, from a security aspect.”

	Upholding cold-chain integrity and compliance is morphing into a primary issue, experts say, with the explosion of temperature-sensitive products on the market, new global and regional manufacturing mandates, and supply chains extending globally. Shippers must meet stricter regulatory compliance standards as countries look at different issues in their local markets. According to the 

Global Use of Medicines: Outlook Through 2015

 report released last May by the IMS Institute for Healthcare Informatics (Danbury, CT), significant policy changes made in 2010 will have longer-term impacts on spending and usage of medicines across many countries.

	“Companies are focused on new regulations approaching in the near future, which will help expand the use of serialization designed to protect the well-being of the supply chain,” says Richard Beeny, CEO, LifeScience Logistics (Dallas, TX), a 3PL. “Along with this, companies are looking for more control over their supply chain, so they can create more efficiency within their organization, and can get back to focusing on their core competencies and generating revenue.”

New regs impact temp-controlled transport

	Last year, there were approximately 30 worldwide additions or changes made to “good distribution practices” (GDPs) as part of the management and regulation of pharmaceutical transportation and storage. GDPs exist in various forms, in numerous countries or regulatory jurisdictions, and their principles are in place in many contractual agreements between manufacturers and service providers. “3PLs have to invest in new infrastructure to support these requirements,” says Peter Logan, healthcare VP, DB Schenker (US HQ; Freeport, NY). “This infrastructure is expensive to develop and maintain, and is putting pressure on margins, especially as larger levels of inventory now require temperature-control environments.”

	To that end, DHL has developed a global network of GDP-compliant cross docks, life science competence centers for air freight, as well as GDP and GMP warehouses. “A network of multiuser warehouses meets GMP and GDP standards strategically located with an array of value-added services,” Orfanos says. “This allows customers the flexibility to transform their supply chain and logistics.”

	DHL’s suite of logistics service offerings, from air and ocean, to integrated courier and road freight, enables customers to conduct a “best fit analysis,” which matches cargo to the right transportation model.

	There are numerous scenarios driving customer need for temperature-controlled transportation. The majority of biotech products require refrigerated (2—8°C) storage and transportation, as do most vaccines, blood products and other injectables. Meanwhile, regulatory requirements for what has traditionally been called “controlled room temperature” (CRT) storage (15–25°C) and transportation are tightening—and that covers the majority of pharmaceuticals.

	“Because of regulatory changes, we see a large spike in moving products in controlled room temperatures in the 15—25°C temperature range,” says Bob Gahan, global VP, healthcare, DB Schenker. “We find many shippers’ supply chains have not been budgeted to provide the extra handling to maintain the CRT from the US to the rest of world.”

	What used to be fixed costs for distribution is now trending to variable cost models. Manufacturers are forced in certain markets to consider new routes, packaging and storage, as well as providers experienced in handling specialized cargo. “It is now universally expected that all products be both stored and transported in a way that ensures they are not adversely impacted by the environmental conditions, including temperature, they experience along the route,” reports Karl Kussow, manager of quality, FedEx Custom Critical (Uniontown, OH). “The pharma manufacturer must be able to prove, using stability data, storage and shipping records, that the products were not damaged by extreme temperatures during transportation.”

	To successfully mitigate the risk of temperature excursions, 3PLs have established handling protocols that take into consideration seasonal variation, arrival days of the week, equipment availability and contingency planning to mitigate transportation risks. The more sophisticated have even gone to the extent of bringing onboard pharmacologist-trained quality management. “’Mode shifting’ or utilizing ocean ‘reefers’ as a means to create a more controllable (albeit longer transit time) solution is often negated due to high product value and unacceptable liability limitations,” says Phil Abbate, global vice president pharmaceutical and healthcare, UTi (Long Beach, CA), a 3PL.

	Meanwhile, technological advancements in active and passive cold-chain solutions, such as cooled ULD containers, dry ice, gel packs and refrigerated trucks ensure products maintain the appropriate temperature while in transit. “Newer temperature recording devices can be used to actively monitor temperatures in real time throughout the entire shipment,” notes Mark Sell, president, MD Logistics (Plainfield, IN).

Meeting product integrity, security challenges

	Indeed, drug makers face new challenges to ensure product integrity and security in the supply chain. Distant markets may have insufficient infrastructure and widely varying regulations, which require 3PLs to work creatively with clients to develop supply chain solutions. A case in point is Walgreens, which last month approached UPS to deliver 375,000 doses of donated flu vaccine to Laos, Hook says, just in time for Southeast Asia’s flu season.

	The delivery involved $9 million worth of temperature-sensitive flu vaccine, which had to maintain a critical temperature range of 2—8°C for five days to prevent spoilage. Close to 50 UPS experts spanning the firm’s airline, brokerage offices, shipment monitoring towers, distribution facilities and freight forwarding business were involved in the planning. “The shipment traveled more than 9,000 miles across five countries,” Hook says. “The vaccines arrived successfully in the hands of the Laos Ministry of Health and were administered to patients in need.”

	While this exemplifies growing reliance on 3PLs, such as UPS, to handle complex temperature-sensitive logistics, equally important is ensuring supply chain integrity. Pharma companies are subject to increasing security expectations focused on preventing counterfeiting and diversion. “Constant monitoring, track and trace, and the capability to intervene when the monitoring detects a security risk, or a temperature risk, are important capabilities in securing the supply chain,” FedEx’s Kussow says.

	The controls and visibility that safeguard the temperature-control chain also enhance transportation security. For example, FedEx has developed SenseAware, a multisensor monitoring device integrated with a FedEx platform for data and device management. “It can monitor temperatures in near real time,” Kussow says. “Secure Comm, the FedEx Custom Critical security command center, uses SenseAware and other devices or systems to fit each customer’s specific security need for layered security monitoring and quick response during transport.”

	Technologies that aid in identifying product diversion and counterfeiting include introduction specialty inks and RFID chips incorporated in a product’s labeling. “In most instances, these technologies will increase operating costs,” UTi’s Abbate says. “However, when their effectiveness in loss prevention is taken into consideration, there may be a financial or service benefit.”

	MD Logistics utilizes tamper-proof seals, tape and package products in secure ULD containers to mitigate security risks, Sell says. “Additionally, RFID technology and GPS (global positioning system) continue to improve security measures throughout the distribution process.”

	The ability to monitor a bulk-freight shipment in transit, using communications technologies like satellite telecommunications or a GPS, has been in existence for several years. But 3PLs say they are taking this one step further by utilizing these technologies to transmit real-time data on temperature, humidity and location, while a shipment is in transit. For example, DHL developed Smart Sensor for air freight transportation and, through RFID and GSM technologies, introduced a product called Ocean Secure, which utilizes a GPS to track ocean containers and shipments.

	“We have also developed Smart Sentry, which utilizes GPS and GSM technology for specialty courier shipments,” Orfanos explains. “We have also started a company based in Germany called AGHEERA, which is solely focused on providing shipment visibility of assets in motion and rest for a broad array of target markets.”

	In a related development, DB Schenker, together with global transportation security firm Kirsen Global Security (Berlin and Berkeley, CA), offer the Smartbox service, which provides satellite-aided shipment tracking in real time, using sensor technology. This solution works by transmitting a shipment’s current GPS coordinates and any deviations from the predetermined route, the company said. It also provides information on additional security parameters, such as temperature, vibrations, activity at the container door and light inside the container. “The additional data it delivers is of great value to everyone involved,” Gahan explains.

Vaccine delivery in Laos via UPS’ PharmaPort. Credit: UPS

	UPS is creating innovations with its shipment visibility solutions when it comes to handling temperature-sensitive products. The coupling of the new PharmaPort 360 air-freight container offering with UPS Temperature True door-to-door air freight service is pushing the paradigm on temperature-sensitive shipping, Hook says. “Aside from being able to globally monitor and track temperatures in near real time, 24/7/365,” he points out, “UPS has the technology and network to intervene and rescue a shipment experiencing a temperature excursion before it’s too late.”

	Underpinning the logistics requirements for life sciences companies are the business drivers for safe, but economical, transportation. Ocean container freight is considered a less expensive transportation mode for goods, and can be a good option for lower-cost, more stable solid-dose products. Although transit time is longer, sealed ocean containers offer higher security and better access to active cold-chain solutions.

	While healthcare companies are seeking ways to leverage ocean freight wherever possible, there are several challenges that impact any large whole scale movements toward this trend, such as longer lead times and a certain level of transit unpredictability. “One could argue that the products are stuck in the ocean for an extra 15 to 25 days and, for that reason, add cost to the supply chain, similar to products being stored in a warehouse,” Geodis Wilson’s Svantesson says. “This has to be calculated vs. specific products, products in stock at the destination, lead time expectation in order to reach the ‘time to market’ requirement, etc.”

	Perhaps the single most important element in transporting pharma products from the US to locations abroad is selecting a reputable carrier who is transparent about methods used in providing service. As a 3PL solely focused on serving the pharma, biologic and medical device industries, LifeScience Logistics says it is committed to supporting clients with the highest quality, flexibility and compliance in healthcare supply chain solutions. “Our end-to-end solutions model allows for companies to outsource their supply chain needs to us, so they can get back to what they do best: saving lives,” Beeny says.

DB Schenker, too, offers customized, end-to-end solutions for healthcare customers. “We manage healthcare products in a stringently secure, expeditious manner, which can mean the difference between success and failure in maintaining patient safety,” Gahan says. “We deliver innovation and global scope to time and temperature-controlled healthcare supply chains from a single source.”

	A single company capable of providing seamless door-to-door solutions, including customs and other government requirements, on both the origin and destination sides of a shipment, maintains a competitive advantage, experts say. “We offer our customers the capacity to service shipments from initiation to delivery, providing them with security, integrity, speed and visibility,” MD Logistics’ Sell says. “Operating with this global footprint allows us to distinguish ourselves from the competition by providing our customers with streamlined supply chain solutions and a single point of contact.”

	DHL has worked hard to develop an orientation towards the level of quality the industry demands, Orfanos says, and maintains the capacity to shift and adjust its business according to customer needs. “Over the years, we have developed a community of dedicated life science and healthcare professionals who are well-trained with a high degree of competency to be able to handle customer shipments,” Orfanos adds. “Our customized logistics products and solutions, across the entire DHL product portfolio, along with our network of competence centers, GDP and GMP storage facilities, cross docks, clinical depots and, of course, our people are what differentiate us.”

	FedEx Custom Critical quality systems are applied to validated transport solutions and supported by dedicated teams of experts specifically designed to assist pharmaceutical shippers with their GDP needs worldwide. The FedEx family of companies provides an array of high-quality transport solutions in its custodial network, or as an individual shipment transaction to meet special needs. “We specialize in ground and air transport, or the appropriate blend of both to meet the critical needs of each individual shipment in the most effective, safest and economical way,” Kussow says.

	The combination of technology, breadth of services and global network position UPS to meet the unique needs of the pharma market. “What also truly differentiates UPS in this space is the value, control and visibility gained with the full scope of offerings, such as a network of more than 30 dedicated healthcare facilities globally, regulatory compliance expertise, distribution and post-sales expertise, order-to-cash services, package and heavy freight transportation, and brokerage,” Hook says. “All of which is backed by our technology solutions.”

	Geodis Wilson focuses on developing tailored supply chain solutions as it faces opportunities. “We focus on control tower solutions whereby a dedicated team of people are ‘hooked up’ on the management of the distribution,” Svantesson says. “We would run this on three levels: strategic, tactical and operational. The control tower is linked with other regions, depending on the markets nominated.” The firm offers warehousing in the Charlotte and Chicago areas, and oversees investments in four strategic locations for export/import purposes that fit the US pharma market.

 concur they are best positioned to help life science and healthcare customers navigate the challenges of doing business in emerging markets, given their global footprint and years of experience working in these locations. “By only having to concentrate on the supply chain aspect, 3PL companies are able to benchmark ‘best practices’ across multiple clients in multiple geographies,” Beeny says. “By outsourcing their logistics needs, pharma companies can select a 3PL provider, and expect that their product is in safe hands.”

Emerging markets influence changes in global pharma distribution

The business of contract manufacturing in biopharma—heading toward $40 billion/year globally by mid-decade, by some estimates&mdash;continues to evolve even as the business volume grows. Manufacturers/brand owners currently look to two models&mdash;the close network between major consumer-goods retailers ad their extended chain of suppliers, and suppliers to those suppliers; and the high-volume, high-growth pattern of consumer electronics, where billion-dollar products are changed annually if not faster with barely a hiccup. There are signs that biopharma is tracking these progressions closely&mdash;but still from a follower position. In the past, biopharma could comfortably operate with production quotas determined semiannually, and products sitting in warehouses for weeks if not months; now, the push is on to have lean, fast-changing supply chains, low inventories, and, above all, tightly knitted coordination between the brand owner and the network of CMOs. 

But progess has been slow and painful. “Pharma companies are making strategic investments in realizing their strategic vision, and that involves identifying and building relationships with strategic CMOs that are aligned to their direction,” observes Michael Prucha, director, life sciences, at Clarkston Consulting (Durham, NC), a management and technology consulting firm. “As a whole, I believe many pharma companies are in the advanced stage of identifying their strategic partners and finding ways to make those relationships work and achieving effective collaboration.” 

The increased use of CMOs in pharma manufacturing can be attributed to the flexibility, improved time to market, and reduced scale-up costs they offer to clients, observers report. This outsourcing option also helps relieve capacity and capital constraints, lowers production costs and capital spending, avoids shortages, improves supply chain predictability, and provides specialized manufacturing capabilities. “We have seen a steady increase in contract manufacturing over the past number of years,” says Kristie Zinselmeier, senior director of marketing at BioPharma Solutions, a Baxter business unit which provides sterile manufacturing services for pharma and biotech companies. “We have seen an increased recognition that scarce resources need to be concentrated in the areas which drive the most value for pharma.” 

Eli Lilly (Indianapolis) finds CMO relationships effective because they enable flexibility, and support Lilly’s business development strategy and market access efforts. “CMO use is driven by several factors, including business-development agreements, efforts to gain market access, or technology considerations,” says Andrew McLaughlin, a Lilly spokesman. “Strong CMO relationships also allow flexibility in planning and operations. For example, rather than build a single plant to support a new technology, it may make more sense to use a CMO.” 

As pharma companies continue integrating outsourcing as a mainstream tool, industry members say their relationships with contractors are taking on greater significance. But despite this, the ability of CMOs and their clients to establish effective relationships has not changed all that much over the years, according to the 2011 8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production from BioPlan Associates (Rockville, MD). A major reason for this is the inability, or unwillingness, of both clients and contractors to see the problem from their counterpart’s side.

Clients would prefer to believe their CMOs can prescribe the overall process and define clear deadlines and milestones for deliverables, says Eric Langer, managing partner. This is unrealistic, given the unpredictability and complexities associated with manufacturing a biologic. “CMOs, on the other hand, are hesitant to provide worst-case scenarios for fear of losing the business,” Langer adds. “As a result, there are often big gaps in the expectations on both sides. This leads to frustration, miscommunication, and damaged relationships.” The annual study from BioPlan Associates is based on responses from 352 global biopharmaceutical manufacturers. 

	To that end, pharma companies are making a concerted effort to forge closer ties with their CMO networks to create an environment for effective communication and collaboration. For example, CDC Software (Atlanta), a provider of end-to-end enterprise solutions, reports its most effective clients advocate an open partnership approach to managing collaboration within their supply chain. “The increased visibility up and down the supply chain allows for better planning by the supply base and better planning at the distribution centers,” notes Jason Childers, director, product engineering for CDC TradeBeam, CDC’s product line business. 

Taking it a step further, drug makers are reportedly re-inventing processes and technologies used to support the CMO model in order to enhance integrated collaboration and mitigate deficiencies. “From a CMO’s perspective, the ability to be truly integrated into the planning aspects of collaboration allows for the ability to contribute the most value,” BioPharma Solutions’ Zinselmeier says. “Information sharing allows each party to understand and play their role in support of their mutual objectives.” 

Pharmaceutical companies willing to engage in integrated collaboration can reap financial benefits, according to Clarkston Consulting. For example, integrated collaboration will allow pharma companies to access timely and accurate information for improving manufacturing and provide a foundation for enhancing supply chain security. Data sharing across sites and at all stages of development and manufacturing allows for greater process understanding. 

“We encourage as much collaboration as possible, whether it is related to supply chain, process development or new product launches,” says Kristin Brown, CSCP, customer service and planning manager at Pharma Tech Industries (Royston, GA), a provider of contract manufacturing and packaging services for pharma, OTC, medical device and personal care products. “We strive to provide more than just the actual product for our clients.” 

Achieving better collaboration requires extended visibility and partnership across the trading partners in the supply chain. This visibility can be extended back to the primary pharmaceutical manufacturer and as far out into tiers three and four in the supply side, reducing lead times, lowering premium transportation costs, and reducing stock-outs, CDC’s Childers says. “The net effect is an overall reduction in waste and less working capital tied up for shorter periods of time.” 

TraceLink (Woburn, MA), developer of the TraceLink Network, an industry-wide supply collaboration network, reports seeing CMOs working to share greater inventory visibility at their sites with customers. Providing accurate inventory balances for API/raw material levels and different classes of finished goods inventory is helping pharma companies improve financial reconciliation. “Quality teams from both sides are looking past phone and email towards collaborative workspaces that provide a complete communication trail, from quality review initiation to final product release,” says Brian Daleiden, VP marketing. “Not only does this help ensure quality expectations are met on both sides, but it also provides new visibility into the quality workflow and highlights opportunities to decrease delays in the review cycle.” 

Communication and collaboration are expedited when companies can share process and manufacturing data in real or relevant time. Quality can vary from site to site and batch to batch, so the ability to identify and compare critical process parameters (CPPs) and key performance indicators (KPIs) faster is extremely valuable and changes the paradigm from reactive to proactive. “Performance measurement strategies are keys to success,” says Hussain Mooraj, partner, global lead, life sciences supply chain products at Accenture. “The ones that succeed are very clear on the metrics.” 

CMO-pharma relationships work when both parties engage in discussions and planning upfront and put in place mutually agreed upon data requirements which will aid in process understanding and process improvement for all parties, says Geri Studebaker, VP customer operations, Aegis Analytical (Lafayette, CO), a provider of manufacturing and process intelligence software. “While many contracts currently lack performance incentives, innovative clients and CMOs could benefit from collaborative clauses that support joint cost reduction initiatives with incentives built in for the CMOs.” For instance, a sponsor company could implement a quality by design (QbD) program which manufacturing partners must adhere to. Studebaker recalls how one biopharmaceutical company working with multiple CMOs wanted to increase the predictability of quality and yield by identifying causes of process variability and atypical batches. “This company also wanted to reduce report preparation and distribution time, and reduce communication and information-sharing hurdles due to disparate geographical locations and data systems,” he says. “As part of a QbD initiative, the company implemented Aegis’ process intelligence software platform to provide a single view of process data to help mitigate risks and facilitate collaboration across its CMO network.” 

Collaboration and agreement on critical metrics throughout the lifecycle of a product provides a mechanism to adapt to changing requirements. “As an example, during the clinical phases of a product life cycle, yield is often a critical factor as the API is scarce and lost production batches could impact the overall time to market,” BioPharma Solutions’ Zinselmeier points out. “During sustained commercial manufacturing, yield continues to be an important metric, however, it does not have the same potential impact.” 

IT tools enable collaboration, gauge CMO performance

	As CMO-pharma relationships continue evolving, so have technology offerings that support both parties. There are a wide variety of technologies being leveraged to support multi-enterprise collaboration and facilitate appraisal of CMO performance. “Successful CMOs are putting in place processes, practices and IT systems that allow them to more efficiently and effectively collaborate with sponsor organizations,” Studebaker says. “Key elements include successful technology transfer and the sharing of process and manufacturing data between organizations.”

Aegis reports its value proposition for Discoverant software maps to CMOs’ need to differentiate through timely, efficient data exchange and reliable and consistent quality control, plus ensuring product delivery meets regulatory and client requirements. “For sponsors, our software platform helps manage the complexities of working with CMOs by gathering and sharing data across the virtual manufacturing network,” Studebaker says. “Shared and timely access to data promotes product quality and effective collaboration for both sponsors and CMOs.” 

Lilly maintains a range of IT tools for use by its teams overseeing external manufacturing. “Shared collaboration sites, for example, help improve the flow of information between parties,” McLaughlin says. “We also utilize IT tools that facilitate tracking the scope of partnerships, (which are) useful for when questions from regulators or others require quick assessments of the location and type of manufacturing done outside the company.” 

In order to best manage their network of preferred CMOs, Clarkson Consulting advises pharmaceutical companies to implement a business intelligence (BI) software system and take advantage of the opportunity to incorporate their preferred CMO partners in jointly establishing a portal that allows them to share defined information in real time. BI software is utilized for combining information from various data repositories and displaying it in a number of powerful dashboard views for end users to review. “A BI solution will reduce the complex management issues of using CMOs and provide integrated collaboration between the pharmaceutical company and multiple CMOs,” Prucha says.

Utilizing IT tools to gaining visibility into CMOs’ operations can help pharma companies evaluate their performance and reduce potential for human error. For example, TraceLink reports having witnessed a top pharma company and their CMO adopt collaboration tools in the quality process which provided a decrease in batch record and deviation event review cycle time of 20 to 25%, due to better information flow and coordination. “Virtual quality team members can now see current review status in a concise dashboard, look at an integrated audit trail of all documents and communications for a specific review, and get notified immediately when information has been viewed or modified,” Daleiden explains. “Using this capability, they can diagnose where in the review cycle is value-add time spent and where there are unnecessary wait states.” 

Enterprise resource planning (ERP) systems are utilized in pharma to store batch and quality information as well as data relating to good manufacturing practices. These systems have traditionally been transactional in nature and not tailored to enable brand owners to manage their CMO network, Accenture’s Mooraj observes. While ERP systems typically focus on a few indicators such as on-time deliveries, they tend to not enable collaboration in a cost effective and efficient manner. 

“ERP vendors have not lived up to the promise of collaboration within an outsourced environment,” he says. “As a result, you have a number of vendors trying to build solutions to extend ERP collaboration capabilities in contract manufacturing.” 

An integrated ERP system with a supply chain visibility product such as CDC Software’s Ross ERP and CDC TradeBeam’s suite of supply chain visibility and collaboration tools is said to provide near-real-time collaboration between contract manufacturers and trading partners. “The traditional ERP system is great at extending visibility internally,” Childers says. “And extending that visibility into the cloud with a proven supply chain visibility solution such as TradeBeam adds instant ROI benefits to further reduce and remove the more traditional supply-chain hurdles.” 

By utilizing operational excellence tools to improve supply performance and efficiencies, pharma companies and CMOs are working together to meet marketplace demands for quality products when and where patients need them. These relationships are expected to evolve even further through integrated collaboration. Says Childers: “As with all business cycles, when margins become tighter, an increase in collaboration across the supply chain will remain the defining factor for competitive advantage.” PC

The long-recommended practice of shared data and plans between biopharma companies and their contract manufacturing organizations (CMOs) is beginning to take hold

Brand Owner-CMO Collaboration Is Growing--But Is Far From Mature

The implementation of new labeling laws is challenging pharmaceutical companies to put in systems and processes to ensure compliance. But the task is easier said than done, industry members say, as product labeling content is often duplicated in multiple documents for various product strengths, dosage forms and presentations, resulting in a large set of data difficult to manage and synchronize. 

“The more regulated label practices get, the more important it is that vendor and client work closely together on finding the ideal customized solution,” says Gene Dul, president of Schreiner MediPharm U.S. (Blauvelt, NY), a specialist pharmaceutical label company. “Though the label has to carry a lot of information and combine user friendliness with patient safety—which demands a high level of sophistication&mdash;it still has to be easily integrated into the production processes at the pharmaceutical manufacturer and run smoothly on the dispensing machines.” 

The labeling laws, implemented the past four years by FDA, aimed at forcing pharma companies to capture a physician’s attention to the most important pieces of drug information before a product is prescribed. Among the most significant changes was requiring drug makers, for the first time, to submit prescribing and product information to FDA in an electronic Structured Product Labeling (SPL) format and update package inserts (PIs) annually. SPL is designed to provide accurate, updated information using standardized medical terminology in a readable, accessible format while PIs provide important information for the safe and effective use of the Rx drug. 

“Before the implementation of SPL, labeling updates were literally at the mercy of the supply chain,” notes a senior labeling specialist at a major pharma company who declined to be identified for this story. “Even a safety update acted upon immediately, and getting pushed through artwork creation, printing, and manufacturing in as little as two to four months, may sit six months to a year in distribution centers and on retail shelves before reaching a customer.” 

With SPL, new labeling information—such as updated warnings and precautions&mdash;can be published literally overnight. The SPL system works through an electronic gateway that feeds directly into the U.S. National Laboratory of Medicine’s (NLM; Bethesda, MD) DailyMed Web site. Earlier this year, FDA launched the FDA Online Label Repository, which also contains SPL data, providing another source for updated information. “This additional SPL repository ensures that the public has yet another resource to be utilized to access the up-to-date safety information available in SPL format,” says Karen Mahoney, an FDA spokesperson. 

According to Mahoney, NLM recently informed FDA that the DailyMed website receives 10 million visits per month. “This number of visits is indicative that the public not only has access to, but is viewing the up-to-date safety information included in many of the tens of thousands of unique SPL files posted on DailyMed,” she says. “In addition, NLM has added a feature which will allow consumers/patients to more easily print the medication guide as a separate document.” 

Pharma companies have reportedly invested a significant amount of time managing product labeling documents such as PIs, Summaries of Product Characteristics (SmPCs), and Core Data Sheets (CDSs). FDA recommends SPL document authors select specific codes (Logical Observation Identifiers Names and Codes, or LOINCs) to identify the medication guides and patient package inserts (PPIs) in SPL files. “Inclusion of the LOINC codes specific to medication guides and PPIs presents the opportunity for consumers/patients to rapidly navigate the SPL file to locate the medication guide or PPI, if present in an SPL file posted in one of the publicly available SPL repositories,” Mahoney says. 

	The SPL initiative has reportedly led pharma companies to leverage modern information technology to provide better reporting data to consumers and healthcare providers while enhancing patient safety. For example, a smartphone can be used to access the DailyMed Web site, even while at the doctor’s office or waiting in line at the pharmacy. “A patient is given the increased ability to be aware of side effects, contraindications, and drug-drug interactions,” the pharma company source says.

 Smartphone applications have demonstrated new ways to improve effectiveness and efficiency of established approaches to managing chronic diseases by helping patients record and manage their medication in real time. A case in point is the National Centre for Hereditary Coagulation Disorders (NCHCD), based at St. James Hospital (Dublin, Ireland), where more than 2,000 patients have bleeding disorders. There hemophlia patients are utilizing a user-friendly application from Crimson Tide which is fully compliant with the GS1 bar code track-and-trace system and extends the management of bar-coded medication into the patient’s home, according to a published report. 

Studies show patient outcomes improve when they actively participate in their own care. Many tend to think of SPL solely as a means of communicating the prescribing information, or product use information. While a valuable communication tool, SPL impacts the safe use of drugs in many more ways. “SPL includes all of the active and inactive ingredients, places of manufacture or processing for each major step, including API manufacturing, importer information, and several other data elements,” the pharma company source says. “All this information is set up in a standardized process which enables automatic and robust processing into databases for further use.” 

FDA wants to ensure meaningful information is included on PIs for healthcare professionals and patients while pharma companies are being more careful in providing details on Rx drug benefits/risks so they are better protected against potential liability. “There is a tendency to include more information with the help of extended content labels that contain all crucial information to help improve patient safety,” Schreiner MediPharm’s Dul says. 

To that end, FDA, NLM, the National Institutes of Health, drugmakers, and drug information companies are collaborating to improve the safe use of drugs by increasing access to updated data. Drug product information is now required to be uploaded as SPL files for use on Web sites, computer systems and other processes to make it accessible to healthcare providers, patients and the public. Prescribing and product information in the SPL format can be electronically managed, allowing users to search for specific data, such as indications, dosage and administration, and warnings. 

“Since 2005, FDA has responded as soon as possible to requests related to the improvement of the content of labeling in SPL format to ensure that the labeling is clearer and more user friendly,” Mahoney says. “For example, to ensure that computer screen readers utilized by visually impaired persons are able to ‘read’ the information about images, FDA requires that SPL document authors include descriptive text which will permit the computer screen reader to provide a description of the content of the image file to visually impaired persons.” 

There are solutions providers who specialize in enabling pharma companies to create and manage their labeling and drug listing information, NDC Labeler Code Requests, and Establishment Registrations in an SPL format. For instance, Glemser Technologies (Bethlehem, PA), a designer, developer and implementer of content management solutions for life sciences companies, offers xmLabeling for SPL which enables clients to do just. Glemser reports that its OnDemand Conversion Services allow companies to author MS Word-based product information documents and utilize Glemser products and services to convert these documents for submission to health authorities. 

Nosco (Waukegan, IL) offers a system which allows pharma manufacturers to provide prescribing and product information directly to the company. “Nosco works directly with them to design the copy to fit their and the FDA’s needs,” explains Kregg Albrecht, VP, solutions engineering. “Since Nosco is providing all of the printing and converting of the packaging and labeling materials, coming directly to Nosco reduces cost and complexity for the pharmaceutical manufacturers.” 

	The latest products from carton and label providers have enough space to accommodate more useful information while removing any obstacles additional components would have on packaging line efficiencies. Methods of artwork layout, including color schema and visual structure, are being targeted to help reduce medication errors, observers say. 

Problems with medication errors are well documented and estimated to cause 100,000 deaths annually in the United States, according to the Institute of Medicine of the National Academies (IOM; Washington). Mistakes occur at different points of transition in care, ranging from admission to a hospital, transfer from one department to the next (such as from critical to general care), and at discharge from home to another facility. Further compounding matters are patient challenges in self-administration, which are numerous and include complex regiments, poor patient education and literacy. 

Rx drug labels are now clearer, more user friendly and designed to improve patient safety. For example, Nosco’s Lit-a-Sure is a product that allows for the combination of customer’s FDA required literature to be attached to the pharmaceutical manufacturer’s cartons by Nosco. ”Lit-a-Sure can be designed in such a way that it will present itself to the customer when the package is opened, making it accessible, and compliance friendly,” Albrecht says. “The literature can be designed with a combination of PI and/or PPI and include other compliance prompting features such as calendarization or patient recording features.” Up to 130 panels in a single style format can be designed, or Nosco can attach multiple folded pieces into one compact literature pack. 

Fix-a-Form (FaF) multi-panel labels are another form of labeling from Nosco that addresses the needs of the consumer for improved clarity and ease of information access. The labels provide multiple pages of copy, which are attached directly to the product or carton in an easy-to-read format. “Fix-a-Form labels keep the information at the fingertips of the consumer,” Albrecht says. “Multiple languages can also be printed on the same FaF, making access to many cultures using one label a reality.” 

A technology which holds the promise of driving life-saving innovation to drug labeling is barcode-enabled medication administration (BCMA). BCMA is used to verify all medications electronically before they are administered to patients. Healthcare providers who implemented barcoding solutions found improved patient safety through the reduction of preventable medication errors, according to published reports. 

“Barcoding is getting more and more important and there is an increasing use of 2-D barcodes which contain much more information,” Schreiner MediPharm’s Dul says. “However, there still seems to be some reluctance in implementing this widely within healthcare practice.” Industry members attribute part of the slow market acceptance to barcoding to lagging adoption of computerized physician order entry (CPOE); both the barcoding point of contact (BPOC) and CPOE are pieces of the closed-loop medication administration process. 

Two-dimensional barcode systems — which have found greater adoption in the semiconductor and aviation industries – are also being used in the healthcare industry, observers say. The issue of software is critical, due to the fact that healthcare instructions generally have outdated software systems and the fact that these systems must comply with healthcare auditing and patient privacy regulations. 

One more system also put into action in the past few years is the barcode requirement for the NDC number. This system, though at different stages of use at the dispensing level, was developed so one dispensing the drug can scan the barcode to ensure correct medication and dosage is administered. “One of the largest forms of medication error is a medication ‘mix up’—either with strength, form, drug, or timing,” the pharma company source observes. “A robust dispensing system tied into a database could not only warn the dispenser of a potential medication error, it could also be used to reduce or eliminate misadministration by warning about things such as drug-drug interactions.” 

Further developments designed to minimize the risks of medication errors involve the use of peel-off labels (POLs), an application utilized prominently in Europe. POLs provide a clear identification of the drug or vaccine and variable data pertinent to the product. These labels are said to offer a competitive advantage to manufacturers who make use of the technology, and based on market surveys, are preferred by end users and much needed in both acute and alternate settings. 

“Peel-off labels are a very useful tool as well,” Dul says, “especially when these are sophisticated solutions which combine ease of use with reliable documentation and safe tracking of the administered drug.” 

Schreiner MediPharm offers a broad portfolio of labels with peel-off parts. These labels contain all necessary product information and have one or more detachable parts which help to clearly identify the drug, all the way from dispensing to patient administration. A recent development is the Pharma-Comb SL label with self-lifting parts for multi-dose medications. 

“Due to its special construction, the detachable parts automatically rise after opening the outer label and can be easily and quickly applied to filled disposable syringes after drawing a dose from the vial,” Dul explains. “The peel-off parts contain all crucial information and can even be printed with a bar code on the backside.” POLs serve a dual purpose in providing a major barrier against counterfeiters because of the label’s complex build-up and manufacturing process. 

By providing accurate and readable information, pharma companies can help educate and involve patients in their care. Industry members say they have been working together more than ever in finding solutions to meet the needs of the customers and the changing regulatory requirements and expectations. PC 

Structured product labeling--along with more formalized methods of tracking changes--seek to improve patient safety