Nicholas Basta, Editor Emeritus

On the surface, the US pharmaceutical supply chain is fairly quiet. Every day, some 10 million prescriptions are delivered to patients via clinics or pharmacies, usually through the efforts of the wholesaler sector. Wholesalers’ trade association, the Healthcare Distribution Alliance (HDA), says that its 39 members (up several from a couple years ago) are responsible for 95% of primary distribution—i.e., taking delivery from over 1,500 suppliers, and ownership of the drugs, to be distributed to some 300,000 locations around the country.

But underneath, there are some disquieting trends, and new responsibilities that the wholesaler community is taking on. Of gravest concern is the growing number of drug shortages, which has caught Congressional attention, as well as the ongoing efforts by FDA to reduce them. Another concern, interwoven with the responsibility for compliance with the Drug Supply Chain Security Act (DSCSA), is the intrusion of counterfeit products. DSCSA also figures in the ongoing efforts by several states to import drugs from abroad (specifically, Canada) as a cost-cutting measure; the difficulty of doing so while maintaining DSCSA compliance has most states flummoxed.

All these issues and more are keeping HDA, and its CEO Chip Davis, on their toes. “Coming out of the pandemic, it’s been generally recognized that wholesalers were well prepared to manage the extraordinary situation we were confronted with,” says Davis. “I became HDA CEO the same month (March 2020) that the pandemic restrictions took hold, and there were supply chain shortages all over the country. But we were able to keep pharmacy shelves stocked throughout, which was a measure of the wholesaler community’s resilience.” Going forward, he says, will require “more transparency” in the supply chain as shortages and regulations are addressed, and “more coordination” with public institutions for pandemic preparedness and other new challenges.

US drug distribution remains dominated by the Big 3—McKesson, Cencora, and Cardinal Health—and their financial statements are dominated by their primary drug distribution business. However, each of them has made forays into neighboring parts of the healthcare ecosystem. McKesson has its own specialty pharmacy, Biologics, to address specialty pharmaceutical delivery and dispensing. Cencora acquired a specialty logistics provider, World Courier, several years ago and has aligned that with clinical trial services, especially in the booming cellular and gene therapy space. Cardinal has made recent expansions to build out its “at-Home Solutions” business to provide medical products to patients in their homes; this also includes plans to build a new 350,000 square-foot distribution center in Greenville, SC. Each of the Big 3 has a substantial patient-support business, providing hub services for prescription authorizations, reimbursement, and adherence. Finally, as noted ahead, each also has a third-party logistics (3PL) service to deliver drugs without taking ownership of them.

The topic of drug shortages has been ongoing for years, but has recently garnered new attention from the pharmacy community and regulators.

The range of causes is almost as broad as the number of drugs available, going from the intense demand for GLP-1 weight-loss drugs (which has led to the presence of counterfeits, a boom in compounded semaglutide formulations, and patent litigation by GLP-1 patent owners), to an ongoing problem of producing carboplatin oncolytics at an Indian manufacturer.

According to data published by the American Society of Health-System Pharmacists (ASHP), there are currently 323 drugs in shortage in the US. But according to FDA’s annual Drug Shortages report, there were 123 documented shortages as of the end of 2023. Part of the gap between those two numbers is that ASHP-reported pharmacy shortages are reported as they are encountered at individual sites, and not as a measure of a nationwide shortage. FDA, in its annual report, noted that it had “resolved” 236 shortages through a combination of manufacturer support, regulatory discretion, and, in some cases, authorizing foreign deliveries.

An IQVIA report on shortages from last autumn noted that one of the issues that attracted attention a decade ago—the problem of sole-source providers of generics—is less of an issue today; while 17 drugs in shortage were single-source, so were nearly 100 with multiple sources of supply. “Single-source generic medicines are much less common today than they were in 2011, largely as a result of sustained efforts by the FDA and industry to increase generic approvals for previously single-source drugs,” it concludes.

Still, shortages persist. This is where HDA’s Davis notes that “more transparency” is a palliative. Wholesalers, with their thousands of distribution points, put their customers on allocation when notified of a shortage. Manufacturers are currently obligated to document upcoming supply disruptions; FDA and Capitol Hill legislators are making efforts to better predict new demand (the source of about half of shortages). S.2364 (the MAPS Act), currently in Senate committee, seeks to use data analytics to “map the entire United States pharmaceutical supply chain, from inception to distribution ... to identify supply chain vulnerabilities and other national security threats.” Notably, this would include not only finished products, but active pharmaceutical ingredients as well as “key starting materials.”

As of mid-summer, the wholesaler community (as should everyone else in the pharma supply chain) are focused on Nov. 27: the day when full DSCSA compliance comes into force. Although FDA has already given some regulatory discretion to small pharmacies (those with less than 25 full-time employees will have until 2026 to comply), it has also stated, multiple times, that it is not extending delay beyond Nov. 27.

In practice, DSCSA compliance means that trading partners will exchange data, on a unit-of-sale basis, for all pharmaceuticals being shipped from manufacturer to dispenser. This puts wholesalers squarely in the heart of the system, as they have to receive (and verify) data from the manufacturer, while conveying accurate information to their downstream partners. All this is to be done electronically, with items held in quarantine when the data can’t be confirmed.

Following a 12-month “stabilization” period (November 2023-November 2024) that the FDA provided to meet DSCSA mandates, the wholesaler community has tried to wrangle both its manufacturer suppliers and its pharmacy customers into compliance. Success is not yet complete. “We’re connected to and able to receive data from almost all of our ~500 manufacturing partners, and we’re seeing between 80% to 95% of our purchase orders have the data,” says Gregg Gorniak, VP of manufacturer operations and data services at Cencora. “However, ~25% of shipments from those manufacturers sending data are still coming in with missing or incomplete data. If that remains the case come Nov. 27, we wouldn’t be able to receive those products, or we’d need to wait until we get the data. That equates to a disruption of about 300k units a day.”

Cencora’s situation is likely to be above average among HDA members; HDA’s 2023-24 Factbook reported that 87% of manufacturers were sending the necessary data as of late 2023. Despite wholesalers’ best efforts—and the prodding from FDA—there will likely to be poorly documented shipments arriving from manufacturers after Nov. 27; a worst-case scenario would be that this will exacerbate the already painful drug-shortages situation.

Gorniak’s assessment highlights another issue—data that is sent, but is not complete. Industry experts, including the vendors of software systems for DSCSA compliance, have anticipated this: the situation calls for “exceptions management” to quickly resolve the inaccuracies. “Exceptions come in a multitude of types: technical errors, data errors, physical errors, etc.,” notes industry experts from NNIT, a pharma IT company that acquired DSCSA systems integrator Excelis Health. “A common thread across all exceptions with a trading partner is having the capabilities to capture and communicate needed details of their exception with the appropriate information. Emails have become the initial vehicle with varying degrees of the necessary information needed to align and resolve the exception."

Individual emails for each data exception is, in a word, a suboptimal solution. Various DSCSA solution providers, such as TraceLink, LSpedia, and rfXcel, offer modules that automate some aspects of exceptions management, such as checking syntax of the various codes needed.

A scramble similar to that of manufacturers—only worse—is expected for retail pharmacies and hospitals come Nov. 27. Their obligation is to verify the DSCSA data coming in with drug deliveries, and notify upstream partners and FDA of discrepancies. There is a general consensus that while the major chains, and major health systems, are more or less ready, there will be problems for smaller chains, hospitals, and independent pharmacies. As mentioned previously, many of these organizations will have a grace period after Nov. 27, but that period will end eventually.

“We’ve been supporting their onboarding and compliance by having their data available through our portal or by sending the data to them for well over 12 months,” says Cencora’s Gorniak. “In fact, we were the first major wholesaler that could do this. We continue to leverage our investment in analytics and relationships with the HDA to ensure we’re doing the ‘right’ thing for the patient come November and beyond.”

A less-recognized aspect of DSCSA is that it brings wholesalers and other participants in the pharma supply chain—specifically, 3PL providers under FDA licensure and qualification.

The major wholesalers each have their own 3PL businesses, as well as the major carriers such as UPS, FedEx, DHL, and others. FDA has been collecting submissions from wholesalers and 3PLs for several years, and has issued a proposed regulatory system that would involve “authorized organizations” to perform site inspections. However, a final set of rules is still pending, and FDA has indicated that this will be a multiyear rollout. The DSCSA rule will supersede licensure rules that many states have already established.

“The transition to the federal rules is expected to create some hurdles, as states with existing regulations, or those that lack regulations entirely, adapt to the new federal requirements,” according to a recent posting at IQVIA’s State Services business unit. “Further, this transition will likely not come without costs, and the road to compliance will involve financial implications and a need for robust operational infrastructure to meet the new standards.”

A quasi-regulatory program, well established in Europe but followed only partially in the US, is that of good distribution practices (GDPs). GDP, as described by an EU standard (2013/C 343/01), involves ensuring that drug products are stored and conveyed safely, with meaningful documentation of processes, and with designation of an “authorized person” who is both knowledgeable of, and responsible for, compliance within each supply chain participant. Most US manufacturers and wholesalers are GDP-compliant (even if there is not a regulatory system in place), but compliance falls off as 3PL contractors come into the supply chain.

HDA is stepping into this gap with a voluntary GDP compliance program, as organized by Chuck Forsaith, an HDA VP for its Pharmaceutical Cargo Security Coalition (PCSC). “For several years, many in the pharmaceutical supply chain have called for a program in the United States that adheres to the GDP standards of the European Medicines Agency,” he says. “This program is a natural extension of HDA’s mission, and I am proud that the PCSC is helping to lead the industry to create a new set of standards that ultimately enhance the safety and security of pharmaceutical products.”

Since its announcement in April, about 10 companies have started the application process, and one—DeSpir Logistics—is already involved in the details of accreditation. HDA has engaged with a UK firm, ASC Associates, to provide the training. Ultimately, says Forsaith, a library of resources will be made available to enable participants to keep current with industry practices.

The overall pharmaceutical delivery and dispensing system is intricate and controversial, with debates over the uncomfortably high prices of branded drugs, and uncomfortably low prices for some generics. Add to that the wrangling over federal reimbursement policies, the impact of pharmacy benefit managers, and the ongoing battle for drug importation from abroad, which would sidestep US distributors. At the same time, there is a bid for manufacturers to go direct-to-patient as exemplified by Eli Lilly’s Zepbound GLP-1 product; Lilly will even provide the physicians to write the prescription for the drug.

Nevertheless, US wholesalers have navigated these currents well, and their prospects remain positive. As Adam Fein, president of the Drug Channels Institute puts it: “Many people have predicted the demise of pharmaceutical distributors. But having studied the industry for longer than I care to admit, these businesses remain among the most resilient in the US healthcare system.”

— Nicholas Basta is Editor Emeritus and Founder of Pharmaceutical Commerce.

Articles

Even as pharma technology evolves, and payers argue over reimbursement 
practices throughout healthcare, drug wholesaling is a thriving business.


US Drug Wholesaling 2024: Staying the Course

Image Credit: Adobe Stock Images/DeemerwhaStudio.com

Veeva, a provider of customer relationship-management (CRM) software to the life sciences industry, updated its customers on the unusual transition it is undergoing as an enterprise software provider. Because it wanted to leave its platform technology originally licensed from Salesforce.com, it announced at last year's event that it would undertake rebuilding its CRM system with its own platform, now called Vault CRM. The changeover is not trivial; it is expected to take until 2030 for all of its hundreds of pharma clients to complete the transition, which also involves significant upgrades as Veeva clients. A handful of new clients are currently implementing Vault CRM; older Veeva clients will have "migration kits" along with Veeva consulting to affect the transition.

In return, Veeva offers a growing number of new apps—such as a new campaign manager that will streamline and synchronize data into separate sales and marketing databases—as part of an overall effort to bring all HCP data together. "The average Big Pharma company has between 100,000 and 400,000 ‘pieces’ of content in diverse databases," says Paul Shawah, EVP at Veeva. "We will bring all of that together in Vault, and make it quickly available to users."

Some of the biggest buzz at the meeting involved artificial intelligence (AI) applications, an area that Shawah says the company will support with new APIs to make commercial data available to AI apps; the company also announced an AI Partner program to engage with AI developers.

The first signup to this program is Odaia, originally a spinout from the pioneering AI program at the Univ. of Toronto, now focused on "customer science" for commercial pharma applications. Odaia's Maptual system hoovers up patient data, claims data, HCP interactions, and other data sources, then uses generative AI to provide a ready-to-use summary into the hands of field reps. Philip Poulidis, CEO, emphasizes that the AI elements of Maptual are not open to users, thus protecting against the errors that generative AI is known for; it also has a mathematics module to handle numerical analyses (something that word-based generative AI struggles to do). In working with Veeva, Odaia will be able to plug directly into Vault databases, providing fast response.

https://www.veeva.com/events/commercial-summit/

Company's annual Commercial Summit updates Veeva Vault CRM status, along with AI partnerships.

Veeva Rolls Out New Features While Transitioning Its CRM platform

Addressing the needs of the life sciences industry for reliable, cost-effective cold chain solutions remains fertile ground for developing new technologies. Even after a decade or so of advances in insulation, refrigeration techniques, and packaging innovation, new challenges are arising: chief among these are better visibility (via data generation and transmission) of real-time actions in the transportation process; the need for comprehensive capability of ultra-low temperatures for cell and gene therapies (CGTs) and vaccines; and an emphasis on sustainable environmental practices in transportation and materials management.

Market data quantifies the growing emphasis on pharma cold chain practices. The 2024 IQVIA Global Use of Medicines report projects a 2.3% compound annual growth rate (CAGR) for 2024-28. By contrast, biopharma market growth is estimated at 15.2% CAGR by Emergen Research; multiple other market surveys are in the double-digit range. (Nearly all biopharma products are cold chain ones.) A Visiongain report from January measured the global pharma logistics market (all pharma, not just cold chain) at $93.3 billion in 2024 and forecasts a 7.5% growth rate through 2034. A ResearchandMarkets.com report from 2023 projects a 5.26% CAGR for global pharma cold-chain logistics specifically and predicts a $27.7-billion market by 2028. Looking at the CGT market exclusively, a December report from InsightAce Analytics says the current “supply chain/logistics” CGT market (which would include patient identification through to biobanking and hospital administration) was worth $1.23 billion in 2022, rising to $3.12 billion by 2031—an 11.2% CAGR.

The year 2024 is proving to be a pivotal one for pharma’s evolution. Last year saw the end of US exclusivity for Humira, AbbVie’s blockbuster biologic that ended 2022 with a record-breaking $21 billion in annual sales (2023 sales had slumped to $14.4 billion)—more or less signaling the emergence of biosimilars in the world market. There are now 45 biosimilars approved in the US, competing against 14 originator products (most of which are monoclonal antibodies). An additional 20 originator products “have biosimilars approved or in clinical development in the US,” according to a 2023 report from IQVIA. That source also notes that “the introduction of biosimilars frequently leads to higher utilization of the molecule, as lower costs offer increased access to patients.”

Biosimilar distribution is expected to slide smoothly into existing cold chain practices, notes Alex Guite, SVP and GM at World Courier, the Cencora division that handles clinical trial logistics and related services. “We’ve been working all along the way to approval of biosimilars, in Europe and the US; for us, commercialization will be ‘business as usual.’”

A somewhat mixed message arises from the CGT segment. The CGT sector experienced some cutbacks, with companies laying off employees and new ventures finding it harder to get financing (a booming stock market in early 2024 is already changing that picture). Still, the Alliance for Regenerative Medicine (which covers tissue engineering as well as CGT) counted 1,894 clinical trials going on globally (down from 2,022 trials in 2022) and the list of CGTs going from research projects to commercialization continues to grow. The vast majority of CGT work involves not only the cold chain, but the lowest, cryogenic temperatures that necessitate liquid nitrogen storage and some shipping.

“We weren’t happy with flat revenue in 2023, but you have to recognize that this is still a nascent industry, and it will not have straight-line growth from year to year,” says Jerrell Shelton, CEO of Cryoport, which provides comprehensive services to the sector. “We’re in the early stages of how the practice of medicine is changing,” he adds, noting the recent approvals of therapies for Duchenne muscular dystrophy and sickle-cell disease.

Meanwhile, events are hardly standing still in the rest of pharma. The takeup of the relatively new GLP-1 drugs (which require 2-8°C handling) reached a crescendo during 2023 as their utility as a weight-loss drug became known. At the beginning of this year, Eli Lilly announced the “Lilly Direct” program to self-distribute Zepbound, its weight-loss GLP-1 version. Earlier GLP-1 versions, including that of Novo Nordisk, were intended for diabetes patients, which itself is a huge market. Research is going on to expand GLP-1 drugs for cardiovascular and even anti-addiction therapies. Just about any form of this drug requires cold-chain delivery; Lilly packages its drug in an injectable pen that needs to be kept refrigerated. There are other direct-to-patient drug-delivery practices (usually by specialty pharmacies using mail-order), but the sky-is-the-limit aspect of these drugs will expand the cold chain market.

Mostly as a result of the new vaccines that addressed the COVID-19 pandemic, but also because of the growth of the CGT sector, there are a growing number of options for “frozen” (0 to -20°C), “deep frozen” (-20 to -80°C ) and cryogenic (below -80°C ) containers for transporting biological substances. In 2023, Tower Cold Chain announced the Evolution 1600 Universal Shipper Pallet, for air or ground movement (see below). The “universal” moniker refers to its range of cooling options, from ambient to deep frozen, based on the choices of phase-change materials (PCMs) or dry ice. 

Tower Cold Chain’s Evolution 1600 Universal Shipper Pallet

Similarly, CSafe, a longtime supplier of active (powered) and passive shipping containers, announced new -20°C capability for its active RKN pallet shipper. The company also offers parcel-size passive containers for the same temperature range.

Meanwhile, Cryoport, which specializes in deep-frozen and cryogenic processes, is about to announce its Cryosphere, a cryogenic shipping device that gets around the age-old problem of conventional dewars that can tip over, affecting their cooling performance. The company says this shipper’s design allows for any orientation without affecting performance.

Another new packaging solution that was recently launched is Cryoport’s Elite -80°C Ultra Cold Shipper. It is targeted to support those gene therapies that are not able to be stored and shipped in a cryogenic environment. The Elite -80°C is available in two sizes, far exceeds standard industry hold times, and meets ISO standard 21973 for advanced therapies.

Having appropriate containers is one part of a successful shipment; the other is to have a network of services and providers that keep the shipment in compliance. World Courier announced recently three more “transport stations” (facilities to coordinate shipments) in Denver, Indianapolis, and San Diego, bringing the total to 17 in the US alone. Some of these stations are equipped with liquid nitrogen tanks and charging capabilities. “As more complex and sensitive pharmaceutical products enter clinical development, the demand for highly specialized logistics continues to increase,” comments Matt Virgilio, a regional VP for World Courier.

The World Courier transport-station announcement aligns closely with another unveiling the company made at the same time: a real-time location management (RTLM) solution, powered by technology from Controlant, a software developer. This will be paired with World Courier’s existing transport and inventory management systems spanning the company’s global network. “Visibility” is a catchword often mentioned in supply chain circles—there are lots of claims, but the reality is that supply chains often involve handoffs to multiple providers, and getting comprehensive data coverage is difficult. “The difference with RTLM is that we are offering it throughout our network as a standard service,” says World Courier's Guite.

World Courier is by no means alone in this effort. Not only are the major international logistics companies—DHL, Kuehne+Nagel, UPS, and others—in the game, but also many of the packaging companies and the electronic condition-monitoring providers as well. There are also collaborations, like World Courier/Controlant, coming together: Elpro, a leading provider of condition monitoring in labs as well as in transit, has partnered with Tower Cold Chain for real-time tracking and condition-monitoring communication. Envirotainer, a leading provider of air-freight cold-chain containers, has integrated what it calls “live monitoring” into its Releye pallet containers, and can further link that to a control-tower service that provides ongoing review of operating conditions.

The latest entry into this visibility scramble is AeroSafe Global, which provides reusable parcels and larger containers to pharma. The company has just announced the Cold Chain Intel Service (CCIS), which builds on its existing control tower services with enhanced, artificial intelligence (AI)-based predictive control. According to Jay McHarg, CEO, “With CCIS, a customer can easily access shipment location at any time, along with the probability of a delivery interruption and thermal battery status of shipment.” He adds that this kind of detailed, real-time information is critical for the safe and effective delivery of therapeutics, particularly as weather conditions become more extreme across the globe.

Although AeroSafe Global calls this service a “core differentiator” in the market, many other organizations are pairing supply chain software with AI/machine learning (ML) techniques, and claiming better predictive capabilities as a result. Last November, for example, Cryoport acquired Tec4Med GmbH, a German software developer that “provides next-generation pharmaceutical supply chain visibility by integrating condition monitoring, cloud, and AI solutions.” Cryoport’s Shelton says that the acquisition will complement AI/ML techniques the company is already using for its CGT clients.

Meanwhile, global logistics giant DHL is pushing forward with a variety of advanced software projects, including for digital twinning (see below), the process of building software representations of the physical actions of its vehicles, warehouses, and delivery processes. With a digital twin, it’s possible to simulate upcoming shipments and analyze risk.

“End-to-end visibility of cold chain shipments has never been more attainable than it is right now,” says Adam Tetz, a former marketing director at Peli BioThermal, a packaging provider, and now an industry consultant at Bright Sun Marketing. “The physical design for shipping containers now often includes accommodation for a range of form factors for internet of things (IoT) devices to track the shipment as shippers travel around the world via GPS, GMS, Bluetooth, RFID, dynamic QR code, etc. Since the underlying technologies are mature and the combined solutions of hardware and software are customized for cold chain pharma logistics, the use of these solutions will accelerate quickly this year.”

“A couple years ago, sustainability measures were a ‘nice-to-have’ part of client conversations; now they are table stakes,” says World Courier’s Guite. Historically, in a pharma cold-chain context, sustainability usually translated into offering reusable packaging, thus avoiding landfill costs, and doing what one could for reducing transportation emissions (such as shifting from air to ocean freight for international deliveries). For the most part, air freight, pallet-size containers are inherently reusable, and are typically leased rather than sold—but even there, an emphasis has been placed on lighter container weights and better volume utilization. Over time, packaging providers have made a compelling case that higher-performance (and more expensive) reusable containers could, with the right reverse logistics processes, result in lower overall costs.

“The global service networks for reusable and rental products have some major gaps in ability to service these thermal shippers worldwide,” notes Bright Sun Marketing’s Tetz. “From company to company, there are strong regional disparities; even country by country and airport by airport.” He expects these gaps to be filled with “universally robust” networks to meet pharma demands.

AeroSafe’s McHarg is bullish on his company’s capabilities for reusable containers—something the company has been touting for several years as a “cold-chain-as-a service” approach. “Once the total cost of owners is evaluated, it is easy to see the value and cost savings with a well-managed reuse program,” he says. "The key to the success of the AeroSafe Global Reuse Program (see below) is our ability to achieve a return rate of over 98%, the highest in the industry. As emphasis on environmental sustainability continues to increase, with many companies setting ambitious sustainability goals, reusable solutions will not only be environmentally responsible but also a strategic choice to enhance patient experiences and improve outcomes.”

Some insight into industry’s current outlook on sustainability initiatives comes from a survey conducted in the fall by Worldwide Business Research, sponsors of the annual LogiPharma meetings. About 150 industry executives (mostly in Europe) were polled by the company; 85% of them said that their current supply chain practices are “somewhat sustainable.” A slight majority (55%) said that their organizations have “partially concrete goals including few defined measurable metrics.” And—watchword to service providers—51% of respondents "expect our [supply chain] partner to set auditable targets and measure progress against them” in the future.

Finally, when asked “When do you expect thermal packaging decisions to be impacted by sustainability targets?” 65% said the next 3-4 years, while 33% said the next 1-2 years. While this survey was mostly focused on packaging materials and design technology (a corporate sponsor of the survey was SkyCell AG, a provider of reusable freight containers), the overall direction seems to be clear: sustainability is a rising priority.

A mostly-US survey, just published by the Healthcare Distribution Alliance, finds similar conclusions. Of four measured criteria (on a 1-to-10 scale) of “current challenges,” dealing with sustainability was the lowest-ranked:

The study, “The Future of US Pharmaceutical Cold Chain Distribution,” noting the increased pace of cold-chain pharma introductions, recommends that the industry makes infrastructure investment in storage, packaging technology, and enhanced analytics to prepare for the coming surge.

Although time has welcomed novel advances in the space, new challenges pertaining to data and the physical technology, along with visibility and sustainability, are emerging.

The Pharma Cold Chain: More Visible, More Sustainable—and Colder

Over the past decade, the industry practices associated with delivering temperature-sensitive pharmaceuticals have undergone a rapid evolution. In the 2000s, a pharmaceutical cold chain interest group arose, almost spontaneously, among industry experts to raise up and standardize industry best practices. Vendors—including many newly formed companies developed new methods of protecting shipments with high-tech containers, new procedures for maintaining required temperatures, and new methods for tracking and recording shipping conditions. In parallel, organizations including US Pharmacopeia, the International Safe Transport Association, the Parental Drug Association, and the International Air Transport Association (among quite a few others), formalized guidances and protocols, or updated existing practices. Behind these stand the FDA and the European Medicines Agency (EMA), charged with ensuring the safety and efficacy of the drugs the industry has been delivering.

All this was put severely to the test during the COVID-19 pandemic, and for the most part, the industry came through with flying colors, even though the leading vaccine offerings required a temperature regime (-80°C) that had only occasionally been seen previously. The various service providers for pharma cold chain distribution expanded their capacity and upgraded their service levels on a near-emergency basis—and those improvements are benefiting the pharma industry today.

“The pandemic created a broader perspective compared to how cold chain distribution evolved over the past 10 or 20 years,” says Henry Ames, director, global life sciences and healthcare at Everstream Analytics, a supply chain analytics and risk firm. Traditionally, risk analysis for the cold chain involved validating packaging and trade lanes; now, it involves visibility to upstream suppliers, geography, and weather, among others. “There’s more evidence of this focus in proposed legislation in the US Congress to address resilience and visibility in the pharma supply chain," he adds.

Significantly, new technologies had been introduced to the pharma cold chain over the past several years, such as refrigerated ocean containers, dataloggers connected to cellular networks, or high-performance, reusable packaging for ultracold shipments. Now, there continues to be a flow of new and improved products, but more on a level of filling in gaps in existing cold chain practices. For example, CSafe, maker of both active and passive containers, is introducing a pallet-size air freight container rated at -20°C, complementing its existing fleet of 2-8°C RKN containers. Also:

• Sonoco ThermoSafe introduced its Pegasus unit-load device (ULD) a few years ago; in the past year, around a dozen air carriers, as well as logistics providers, have certified its use in global air freight. The ULD is notable for being a passive (non-powered) unit, rated for 300 hours in 2-8°C service, yet FAA- and EASA-approved as a component of flight equipment.

• Cryoport, which specializes in ultracold biologics shipping, usually with liquid nitrogen at -170°C, is introducing its Elite branded ultracold container rated for -80°C and employing dry ice. Another design, the CryoSphere, an LN2 dewar for deep-frozen shipping, is scheduled for release early next year. That unit will have the innovation of operating equally in any physical
orientation (most dewars require upright positioning, a common problem during shipping).

• Envirotainer, a provider of air-freight ULDs (and usually for 2-8°C service), is jumping into the ultracold space with CryoSure, a one-to-11-liter box for -70°C service, targeting the new mRNA-based vaccines and therapeutics.

• Another ULD provider, Swiss Airtainer, is introducing an active ULD for pallet shipments that is 40% lighter than competing versions; the unit is said to offer cost efficiencies for shippers due to its low weight.

Low-temperature shipping is the driver for several of these examples, pointing to the dramatic advances in cell and gene therapies (CGTs) over the past several years. A potential new direction is indicated by the German refrigeration company Secop GmbH, which last year introduced a two-stage compressor driven refrigeration unit that can achieve temperatures as low as -86°C; however, its use in shipping containers is still to be determined.

“With well-established active or passive containers and packages, as well as the growing practice of pre-qualified packages (not requiring validation testing prior to use), the packaging and datalogging/monitoring element of pharma cold chain shipping is definitely becoming commoditized,” says Everstream’s Ames. “The barriers to entry for packaging and data collection have dropped, making it easier to shift from one solution to the next” he adds, “but validation to meet the most rigorous industry standards is still a challenge.”

Another hallmark of the past decade of cold chain development has been its rapid growth relative to the pharma industry overall. Past surveys showed that pharma cold chain shipments were growing at twice the rate of industry overall, usually in the low double-digit range. There are indications that that rate has slowed somewhat: a key factor is the rate of new FDA drug approvals, which dropped from 55 in 2021 to 45 in 2022. Several CGTs that were expected to already be introduced commercially this year have been postponed or delayed as well. 

On the other hand, 2023 is a milestone year for biosimilars, at least in the US market, where Humira (adalimumab), AbbVie’s $20+-billion blockbuster, is seeing biosimilar competition in the US market. According to a January report from IQVIA, roughly 24% of the US market for biologics was accessible to biosimilars at the end of 2022—a figure that is only going to go up.

Normally, the lower prices inherent in biosimilars would lead to an expanded volume of prescriptions; however: “As biosimilars become available, most molecules have seen incremental volume ranging from +7% to +154%, but there are notable cases where incremental volume has been flat or declining, ranging from -1% to -30%,” the report notes.

Other factors come into play when considering the pharma cold chain market. The overall logistics market in the US is softer, coming out of the pandemic, but “in healthcare and pharmaceuticals, home delivery is having a big jump, and will be growing exponentially in the coming years,” says Dan Gagnon, a SVP for marketing for UPS Healthcare Logistics.

“More bulk commercial shipments will be going to small packages shipped directly to the home,” he says. That will make for more deliveries per annum.

There is a mixed bag of indicators when looking at business trends in the cold chain. On the one hand, the past year has seen some significant consolidations: Envirotainer has acquired one of its key competitors, the healthcare business of va-Q-tec (which will expand Envirotainer’s offerings of passive shipping solutions).

Last fall, UPS Healthcare Logistics acquired Bomi Logistics, a global healthcare logistics provider based in Italy. The acquisition added four million square feet of warehousing capacity to UPS’ (which now totals 15.5 million square feet), and enlarges UPS Healthcare Logistics’ footprint in Europe and South America. In the life-sciences datalogging market, SpotSee has acquired Marathon Products, another datalogging company.

On the flip side of these consolidations, the pharma cold chain continues to attract private-equity capital. Witness two deals announced this year: NewSpring Healthcare (along with existing investors) putting $43 million into AeroSafe Global, a container and logistics service provider, in June; and Lazard Asset Management taking a minority share in SkyCell AG, for an undisclosed amount, in March. The biggest deal of all, announced in mid-2022, was Envirotainer’s sale from one set of investors to another, EQT and Mubadala, for an approximately $3 billion.

Summing up, a July report from Visiongain, a UK market research company, valued the current healthcare cold chain logistics market at $17.8 billion this year, projected to grow at a 9.0% compound annual growth rate (CAGR) through 2033.

The part of the pharma cold chain generating the most buzz today is in visibility: the ability to track a shipment, along with its environmental conditions, from point of origin to point of destination, in real or near-real time. The traditional practice was to include a datalogger that could record the internal temperature of the shipment. That datalogger would be accessed at the destination to confirm safe, compliant delivery. Now, between advances in telemetry, including a variety of Wi-Fi and wireless networks, and advances in software—most notably incorporating new capabilities in artificial intelligence/machine learning (AI/ML)—a new level of supply chain management and optimization is becoming clear.

Real-time tracking is not new; various vendors have used cellular communications to enable it for quite a while. What is new is the internet of things (IoT) influence: with the expanding availability of communications devices that can collect signals automatically, the data-gathering becomes a lower-cost, less effortful exercise. Making use of a cloud data-services provider is also key. One of the more promising examples of this is Amazon Sidewalk (with Amazon Web Services cloud behind it), which is building up its network of consumer-focused data collectors and communicators (such as its Ring doorbell). Amazon Sidewalk employs Bluetooth Low-Energy technology, which is short-range, but if enough devices are located
adjacently, it can provide network coverage over a wide geography. Last spring, Amazon released a map (see graphic above) that, according to it, represents coverage for 90% of the US population. 

The barriers to entry for packaging and data collection have dropped, making it easier to shift from one solution to the next.

In turn, OnAsset Intelligence, a company that has provided sensors and dataloggers for use in pharma logistics for years, has announced its Sentinel 200 device, a datalogger/communicator used by, among others, the clinical logistics firm Marken, is now compatible with Sidewalk. (On Asset already makes use of Bluetooth communications and Wi-Fi.)

Quite a few companies that specialize in cloud-based logistics communications have focused on the pharma industry as a key client. These include ParkourSC; Roambee; Controlant; FourKites; SendCloud; and others. Some of these companies provide both sensors and a cloud-based data-management system; some are software-only. Some have garnered FDA CFR Part 11 compliance and related life- sciences data validation; some have not. Most are aligned with third-party logistics providers (3PLs) and freight forwarders; some are even embedded in cold-chain containers. Among the software-only providers, the race is on to build the best AI/ML capability, thereby bringing preventive management
or supply chain optimization to the table.

All this activity is gradually being taken up by the pharma industry.

“After 35 years, AI is suddenly an overnight success,” wryly comments Jerry Shelton, CEO of Cryoport. While open to working with the sensor and software providers, his company is building out a condition monitoring service called SkyTrax.

“One example of the difficulties in this area is wireless communications," adds Shelton. "While much of the industrialized world is adapting to 5G cellular communications, Japan still operates in 2G or 3G. Our technology enables an automatic switch from one cellular band to another. That creates a seamless chain of custody.”

“I am super excited about what our company is doing, and what the supply chain software developers are doing,” says UPS’ Gagnon. “But I think the whole logistics industry is trying to figure out what can be solved with this technology and what makes an impact.” The IoT trend seems to be “a great
solution looking for a big problem” to solve, continues Gagnon.

After years of paying lip service to the concept, the pharma industry is getting serious about sustainable practices, say industry observers. In practice, this usually means looking at the carbon footprint of logistics, and paying attention to materials use and wastage in packaging and related cold chain hardware.

While there is some backlash publicly over environmental, social, and governance (ESG) ratings, especially in the US, pharma supply chain managers are fairly uniform in including environmental criteria in their request for proposals (RFPs), and acting on what is reported. 

“Large corporations have 2025 or 2030 goals for reducing their carbon footprint,” notes Amardeep Chahal, SVP of marketing at Cold Chain Technologies, a packaging provider. Cold Chain Tech approaches this task two ways: with a reuse program that, where possible, enables a circular loop of loaded packages going to a destination, and empty packages being picked up, refurbished, and returned to use. The company also touts its CCT Rx and CCT TrueTemp Naturals containers, which are “curbside recyclable” packages made primarily of paper. The company is well along on its goal of avoiding 60 million pounds of packaging from the waste supply stream. 

Most of the packaging companies have some level of reuse or container leasing going on; they vary on how broadly their networks are located. Vendors of high-performance packaging featuring vacuum panels and sturdier boxes point out that a solid reuse program helps offset the higher
unit cost (but better performance) of their offerings, thus providing a potentially more reliable shipping solution) to the industry. Chahal says that across the industry, he estimates that 15% of packages are now being reused (excluding most air-freight ULDs, which are reusable of
necessity), and the volume is growing. 

While vendors fill in gaps in products and services for the supply chain, the action moves toward new cloud-based visibility systems.