Walgreens (Deerfield, IL), which celebrated its centennial in 2001, began as one store owned by Charles Walgreen, Sr., in Chicago’s South Side. While it boasts a long string of retailing innovations, its prescription-filling operations have always been the heart of the business. In the past decade, the company has targeted three key trends: becoming a provider of basic healthcare services in-store (through its Take Care Clinics); providing health and wellness services alongside prescription dispensing; and collaborating with life sciences companies and with healthcare providers to provide higher quality health outcomes. Last year, the company acquired Drugstore.com, one of the leading online pharmacies, to complement its own online services. Pharmaceutical Commerce sat down with Jeffrey Berkowitz, Senior Vice President, Pharmaceutical Development and Market Access (and also member of the Pharmaceutical Commerce Editorial Board), to talk about the pharma-facing side of Walgreens. Here’s what he had to say.

First, let’s get the big picture of Walgreens, which is well-known as the largest retail pharmacy chain in America. How does Walgreens position itself as a business, and as a healthcare services provider?

	Walgreens is the largest drugstore chain in America, with nearly 8,000 stores at the most convenient locations, including the most 24-hour and drive-thru pharmacies of any national chain. The scale of the company is extraordinary, with more than six million people a day, 45 million per week walking into our stores for their prescription, health and daily living needs. They appreciate our convenient locations, focus on personal service, wide array of healthcare services and commitment to being more than a drugstore—we’re a helpful part of their lives.

	The changes in our healthcare system have placed a premium on low-cost, high-efficiency innovations. The company has made an absolute commitment to being more than a drug store by providing a broad array of health and wellness services that offer appropriate, cost-effective and time-efficient alternatives, which help address the need for greater access to primary care. A few particularly relevant aspects of our network come to mind:

		We operate more than 350 in-store Take Care Clinics across the nation. These clinics offer a wide range of convenient, affordable health services, providing patient access to appropriate healthcare as an alternative to emergency room care or when the primary care physician isn’t accessible. Take Care Clinics treat patients, 18 months and older, seven days a week, including weeknights, with no appointment necessary, and our clinicians focus on preventing, treating and managing a broad variety of conditions.

		Walgreens provides flu shots and health-testing services that include blood glucose, A1c hemoglobin levels and blood pressure (Walgreens is the nation’s largest provider of flu shots in America after the US government).

		We are an industry leader in home infusion and specialty pharmacy services, providing cost-effective solutions for patients, payers and manufacturers across all core therapeutic areas. We are the No. 1 home infusion provider in the country and the No. 3 specialty pharmacy.

		Walgreens operates hospital pharmacies, serving more than 135 health systems nationwide, plus more than 350 worksite health and wellness centers on employer campuses.

		Walgreens Prescription Savings Club can help patients save money on prescription needs if they are uninsured or underinsured. Members save on more than 8,000 brand-name and generic medications commonly prescribed to treat a wide range of medical conditions, such as high blood pressure, cholesterol and diabetes.

	As pharmacists have begun to play an expanding role in the delivery of care management services, Walgreens is proactively creating new care delivery models, with pharmacists as essential providers of that care. We call it “practicing at the top of the pharmacists license.”

	My bias as a pharmacy executive at Walgreens is clear—we believe in the value of community pharmacies in advancing health care and controlling costs through the role our pharmacists and healthcare providers play at more than 7,800 locations throughout the United States. We recognize the value of cost-saving innovations, such as 90-day supplies available at both community pharmacies and through mail order service, and offer those services. As the largest employer of pharmacists in the world (nearly 30,000), we are committed to the important role that community pharmacists can play in advancing healthcare across chronic and specialty care through our national footprint and expanding range of interventional services. We also know&mdash;from our experience&mdash; that the human touch provided by community pharmacists can play an even greater role in advancing patient outcomes and cost-efficiency.

Walgreens has been on a roll the past couple years, with high growth in earnings and dividends to stockholders. Is this a recovery from the Great Recession, or is something else going on?

	It is definitely far more than just a recovery from the Great Recession. It’s really the realization of an important new strategy in healthcare. Walgreens has had an incredible legacy from a financial and investor perspective, and has been long considered one of those iconic “good to great” companies. Like all businesses, back in 2007, things changed from an industry perspective and from a financial perspective, allowing the company to re-think its core strategies. The company determined to slow store growth, which had been accelerating at a rate of a store opening every 16 hours, and focus on its core healthcare strategy. We are transitioning from a company focused on location, location, location to one focused on experience, experience, experience.

You’re SVP, Pharmaceutical Development and Market Access. Is that an operating unit of Walgreens? What does it do?

	The role actually represents five operating units within the company. Walgreens originally sought out someone with large pharma experience because they truly believed that the company could leverage its assets to the strong benefit of pharmaceutical manufacturers.

	One of the first things I did when I arrived was set up an account management and operational team that would translate the Walgreens value proposition in a way that would specifically resonate with pharmaceutical companies. Within the first year of operation, that team fundamentally changed the game and perceptions of Walgreens and reset the relationships with our pharmaceutical company suppliers.

	The role is much broader, however. It also encompasses all of our pharmaceutical procurement, including brands, generics and our inventory management on the Rx side. In addition, I have responsibility for three divisions that focus on our reimbursements for the pharmacy services we provide to a variety of stakeholders, such as large employers, managed care organizations, PBMs, etc.

	The first piece of that is our contracts and pricing division, which addresses how we price and contract for our services, whether they be at a retail pharmacy or our relationships with employers around our Take Care Clinics and everything in between. The second piece is our payer marketing team, which is responsible for capturing our value proposition and making it pragmatically relevant to the key stakeholders that we call on, including pharmaceutical companies. The final piece is the managed markets sales team that harnesses the work that the contracts and pricing team and the payer marketing teams bring to bear, and communicates that to our myriad stakeholders. It is amazing to attend a meeting whose attendees had pre-conceived notions as to what Walgreens was, and their positive reaction to our potential impact in healthcare and the wide variety of our capabilities and services.

So, you negotiate directly with pharma manufacturers and their wholesalers. Price is undoubtedly one of the main negotiating topics. What is helpful or unhelpful in the positions that manufacturers take when sitting down with Walgreens? Is it possible to characterize how negotiations go with pharma manufacturers as a group, as compared to the consumer-goods supplier negotiations that Walgreens carries out?

	For Walgreens, there are really three aspects that come into consideration when we think about our negotiations related to purchasing. Price is certainly one factor, but quality and supply are equally, if not more important. Walgreens will fill close to a billion prescriptions in 2012, representing approximately 20% of the retail pharmacy market. With six million people walking through our doors every day, we must assure that we have adequate supply, and more importantly, quality is non-negotiable. The real opportunity now is for pharmaceutical companies and wholesalers to see Walgreens as much more than a purchaser. Consumer-goods suppliers have always seen Walgreens as more than a purchaser, and work closely with Walgreens to maximize their presence in our stores through marketing programs, awareness campaigns and other avenues.  Now pharmaceutical companies can work with Walgreens in similar and even more substantive ways.

	Retail pharmacy can and will play a much greater role through relationships with manufacturers to help them educate, activate, and retain patients, and help patients acquire and adhere to their medication. As we build broader strategic relationships across all key segments, including brand, specialty, vaccine and generic drug makers, we believe that manufacturers will come to see the pharmacy as a key asset as a marketing channel for their products.

	One example of what pharma and pharmacy can do together is promote adherence. Medication adherence services, counseling, and other assistance lower medical costs by improving outcomes. Some of Walgreens services include: a monthly adherence call to inform patients about critical upcoming blood tests required to continue therapy; next-day home delivery for medications; access to co-pay assistance programs to help patients minimize risk resulting from economic circumstances that may interfere with compliance; and alerts for missed doses, at-risk patient behavior, or serious adverse side effects that are communicated to a prescribing physician.

	Consider also the benefit of pharmacist interventions on clinical outcomes for patients managing diabetes and other chronic diseases. In one study, we established that diabetes patients who participated in a disease-management program, leveraging face-to-face interactions with a pharmacist, demonstrated high levels of engagement (more than 90%), and significantly improved clinical outcomes.

	We are essentially creating P&L-based relationships with our pharmaceutical company suppliers. In many instances we are their largest purchaser and distributor of product. For the large multi-national branded companies, we often have relationships across several divisions that add up to billions of dollars of sales. Generic drug manufacturers appreciate our 20% market share and the reach that provides, while specialty pharmaceutical companies can leverage our capabilities with limited distribution networks, REMs and patient support programs. We are even starting to work with drug companies around clinical trial design and enrollment and delivery.

	Pharmaceutical companies are all struggling with limited access to physicians, compliance and adherence issues, spiraling costs of clinical trials, and they are beginning to see the importance of retail pharmacy and the role of the pharmacist, and how it can impact their business positively. As it relates to other stakeholders, such as managed care organizations and pharmacy benefit management companies, the dialogue is getting much more complex, and the way it works best is when organizations are working collaboratively on the complex issues associated with the delivery of healthcare in the United States today, and even more so, with a view toward what it will look like in the next five to 10 years. As a result the architecture of negotiations needs to change. Negotiations can no longer take place every three years with a black hats/white hats, win/lose mentality. The dialogue has to be ongoing and productive as marketplace dynamics continue to evolve.

You’ve indicated that there’s more going on at Walgreens drug-dispensing than picking up prescriptions at the local pharmacy. What will that experience be like in the future?

	Take a walk through one of our new “Well Experience” pharmacies, and you realize immediately that Walgreens is not your mother’s drugstore anymore. Walgreens has become a destination for health and daily living. In our new store designs, we have fully integrated our front end and our back end. In the pharmacy, we have taken pharmacists from behind the counter to a space out front where they can regularly interact with patients. There is a private consultation room where a pharmacist can counsel a patient on a drug, provide injection training or inject a vaccine. There is a community education room, which can be used for educational purposes around disease states, such as asthma or diabetes, and there is a Take Care Clinic for primary or urgent care. These are all capabilities that can be leveraged by pharmaceutical manufacturers.

Before Walgreens, you worked at Schering-Plough and Merck. How do you look back on your manufacturer days?

	I look back on my pharma days with great nostalgia. I started my career as an attorney at a large law firm and then moved into Schering-Plough as a lawyer. After years in the law department, I moved over to the business side of things during a time of great change. Schering-Plough had become the subject of a consent decree and a corporate integrity agreement, and as a result had a brand-new CEO and management team. It was a wild ride from 2003 through 2009 as leadership was turning around the company, and I was proud to be part of that turnaround. Schering-Plough was a very entrepreneurial and globally focused organization, which allowed forward thinking and innovation. When my team and I saw the trends around market access and reimbursement as being one of the most impactful on the industry, executive management supported us to stand up a first-of-its-kind division focused on market access and value and connecting those issues globally.

	We realized quickly that bringing a product to market was no longer about just safety and efficacy, but about whether or not anyone would pay for it. It was also a very customer-focused organization as well. I really appreciated the opportunity to go to executive management with solutions and get their backing if it made good business sense. When Schering-Plough got acquired by Merck in one of the largest transactions ever in the pharmaceutical industry, I made the transition to Merck to lead a global division and take a role on the Global Human Health and Emerging Markets leadership teams. A year after the merger, I realized that big pharma was going to be an extremely challenging environment, particularly at that scale, and I began to explore other opportunities to leverage my experience, but in an entirely new industry.

In joining Walgreens, you moved into an entirely new industry, with a new team in a new city. How has the transition gone?

	Moving over to Walgreens was a bit of a shock to the system. I have always prided myself on agility in my career, having moved from a law firm to pharma, and then from law to the business side, and then taking on global responsibility, in differing businesses and managing large teams. Moving from large pharma to retail pharmacy has been a humbling move. It’s a very different, dynamic business operating at much thinner margins in a complex ecosystem. After 13 years at Schering-Plough and Merck, having built a strong team of trusted and known leaders, I was on my own in a new city, in a new industry and with new teams. The only thing I could do was dive right in and roll up my sleeves.

	I think the team was surprised at first, at the level of detail and review that I was seeking, but it was the only way to learn the business quickly. I walked right into the issues around our relationship with Express Scripts, which really forced me to learn the business on my feet. While I was taking on responsibility for some established divisions, I was also starting up a new division focused on the pharmaceutical company sector and needed to quickly bring in talent and skills that didn’t exist within the organization. Finally, with Walgreens being such an iconic organization with such a rich history, I really had to take the appropriate time to listen and learn and earn people’s trust so that I could leverage that heritage while driving new thinking and building new skills.

	As an officer of the corporation, I really enjoy being able to weigh in on a variety of strategic initiatives outside of my areas of expertise, and it has stretched me in many ways. I am becoming a true retailer, and have a hard time driving past a Walgreens in any town that I am in to do a quick run-through and ask the manager and staff how things are going. At Walgreens, working in a store, even as an executive, is a critical component of what we all do. Everything we do has to translate to those 8,000 points of service and the 45 million people who walk through our doors every week. Everything needs to be seamless.

	It is busy to say the least. I always tell people, I have two things in my life, work and my family. If I am not working, I am with my wife and three kids (two boys 14 and 12 and a daughter, 9). We try to create some balance with the demands of work, by traveling extensively as a family. We have just recently returned from Costa Rica and Iceland. Iceland was a great way to reconnect and do something unique and memorable. Just within a long weekend in Iceland, we chased the Northern Lights, hiked on a glacier with crampons and pickaxes, went snowmobiling and swam in a geothermal pool atop a volcano. We plan ahead so we have something to look forward to, and we have already plotted our next adventure to the Galapagos Islands this August.

Articles

The leading chain pharmacy steps up its role as healthcare provider and partner to pharma

A conversation with Jeffrey Berkowitz, Walgreens

	“Controlled substances” are those that are regulated by the Drug Enforcement Administration (DEA). While most attention is paid to illegal drugs such as heroin or cocaine, the DEA is also intimately involved with regulating the distribution of legitimate, medically necessary drugs produced by the pharmaceutical industry. Over the years, the DEA has established a system of monitoring the prescribing and dispensing of these drugs; their manufacture; the raw materials for their production; and how the finished products are stored and transported.

	For manufacturers, distributors, and those who store or transport these drugs, the DEA has specific mandates for warehouses or storage rooms. Generally speaking, Class III, IV and V controlled substances require a wire cage with limited access as opposed to Class I and II drugs, which require a solid-walled vault, also with limited access. DEA specifications allow for multiple uses of vaults and cages, covering, for example, both storage of outgoing product and incoming returns or reject materials. Manufacturers can decide to store both finished goods and bulk raw materials, some of which are also regulated as controlled substances. Therein lies a common regulatory/business problem: how to design and operate commercially necessary facilities, while meeting these strict regulatory requirements.

	CustomVault (Bethel, CT) and WireCrafters, Inc. (Louisville, KY) are two leading suppliers of secured-storage materials, engineering and construction services. This article explains the details of DEA-compliant storage and the operational considerations that go into this compliance.

	  The relevant DEA requirements for controlled substances storage are found in 21 CFR 1301.72. In summary form, they mandate:

	  1) Vault walls and ceilings of reinforced concrete or “substantial” masonry

	  2) Vault doors and frames providing 30 “man minutes” against surreptitious entry, up to 20 “man hours” against lock manipulation

	  3) Vault doors outfitted with daygates that are self-closing and self-locking

	  4) Alarms, and monitoring devices such as sound accumulators or ultrasonics

	  5) Cages with walls of not less than No. 10 gauge steel fabric, mounted on steel posts set in concrete or installed with pinned or brazed lab bolts; with mesh openings not more than 2.5 in.

	  6) Cage ceilings with similar construction (lighter gauge steel mesh in some situations), or cages that are secured to the ceiling of the storage facility

	  7) Self-closing and self-locking doors for cages; alternatively, for occasional access to the cage, a 24-hour/day monitoring service.

	Another set of relevant regulations originates from the General Services Administration (GSA) of the federal government: these specify “TR/TL” (torch and tool) ratings that measure how resistant the panels are to forced entry.

	Manufacturers and distributors with warehouses need to be able to handle capacity changes as new drugs are approved, distribution patterns change, or warehouse floor space is reconfigured. WireCrafters provides standard wall panels with a maximum length of 10 ft., and are made of 2 x 1-in. opening 10 gauge steel wire mesh (Fig. 1). The panel frames satisfy the requirement for horizontal reinforcement every 60 in. CustomVault offers both MegaVault™ panel systems utilizing precast concrete; and LightWeight™ panel systems composed of aggregate in thicknesses of 4 to 17 in., spanning lengths up to 30 ft. These modular panels are positioned and secured within a heavy-duty steel framework (Fig. 2, left). Alternatively, preconfigured cages or vaults like CustomVault’s MPB™ can be supplied with preset door and locking mechanisms, interior racks, and ventilation and alarm systems. The MicroVault™ is a step-in, modular vault suitable for smaller volumes or laboratory settings. Minimum capacity is 93 cu. ft.

	A common practice is to design a vault for Class I and II controlled substances within a larger cage where Class III, IV and V drugs are stored (Fig. 2). This has the advantage of shared utilities and security systems.

	DEA also specifies rules pertaining to the ceilings of the cages or vaults, allowing either for ceilings constructed along the same lines as walls, or to have the vault or cage be built flush with the ceiling of the warehouse itself. CustomVault recently had an application where a 57 x 43x 29-ft-high WireCrafters cage was required for the Schedule III, IV and V substances. In addition, a vault was required for Schedule I and II substances. The vault was situated within the parameters of the cage, so the cage was designed to go up and over the vault for added value and security.

	The current trend in the pharmaceutical industry is to “go high” in response to limited distribution/warehouse space (Fig. 2, right). This limits the vault footprint and takes advantage of existing warehouse elevations. CustomVault led this ‘up not out’ movement by creating its HighBay™ vault solution, which can top out at 40 ft. inside clear elevation; and accommodates any rack configuration, typically six levels high. Double-leaf vault doors accommodate resulting traffic patterns.

	Quite often tall cages, 15 or more feet high, require cutouts for overhead beams and joists. In these instances, WireCrafters can make panels with cutouts to fit around these obstructions. Or, based on the installer’s preference, the uppermost wall panel can be supplied in a way where cutouts can be made during installation. Either method provides the end user with a professionally finished secure enclosure. In designing these high-elevation structures, care must be given to how forklifts or pallet jacks will interact with the storage racks and driving lanes. Doors must also allow for vehicle entrance and exit.

	Other operational considerations for managing controlled substances storage and distribution involve worker certification and training, passing DEA design and operational reviews, and specifying monitoring systems and services. In the final analysis, a good cage/vault design will provide the necessary protection, while factoring in the operating costs and efficiencies of the space available, and the inbound and outbound material handling practices.

	Mike Elliot is executive vice president and cofounder (in 1984) of CustomVault. Since then, he has built an international reputation as the industry’s leading expert in high-security modular vault design and construction. He is a graduate of Ohio University.

	Milt Tandy is director of sales at Wirecrafters, Inc., where he has worked for the past 31 years. He specializes in developing DEA-approved cages for pharma manufacturers and distributors.

Good design of vaults and cages for DEA-regulated materials calls for meeting regulatory requirements while accommodating operational practices

Storing controlled substances safely and efficiently

	The management of temperature during shipping pharmaceutical products is undergoing a quiet revolution today. In recent years, the handling of “cold chain” products (those that require refrigeration) has become much more tightly regulated across the entire pharma supply chain. Now, industry quality managers and governmental regulators are paying closer attention to “controlled room temperature” (CRT) products. Historically, cold-chain products received some type of specialized service, while CRT products could be shipped with standard packaging, in standard logistics processes; now, both are receiving specialized services, geared to the temperature ranges listed on the product label.   Nevertheless, there are, and will be, significant differences in managing the logistics of the two classes of products. The three most notable distinctions:  

	   1) “Cold chain” means, almost universally, a 2-8°C temperature range. CRT is a mixture of many different storage and shipping temperature ranges, as identified on the product label (see Fig. 1).

	   2) Control processes for cold chain have been established over time that are well understood, reliable and optimized. CRT shipping has had little or no control to date; control processes are just now being established.

	   3) Possibly the most difficult difference to contend with is the use of refrigerants. Cold-chain refrigerants have been either water-based (a material that has a phase change at 0°C, which is close to the 2-8°C range), or phase-change materials (PCMs) engineered to operate at the 2-8°C range. CRT shipping (say, in the 20-25°C range) does not have widely available PCMs; PCMs are costly and difficult to handle; and water-based refrigerants do not have the same utility.   

	  This article will discuss the three challenges—and potential solutions&mdash;including process development and optimization, validation (Operational Qualification, OQ; and Performance Qualification, PQ) and routine monitoring. Common mistakes will be pointed out. Finally, the factors that go into shipping outside of label claim will be discussed.

	As of the end of 2011, there are more than 30 government regulations worldwide pertaining to Good Distribution Practices (GDPs) that have been issued or updated. Most recent updates are:

	   1) Health Canada’s reissuance of 0069 (These are their GMPs that include supply chain controls.) Health Canada is actively auditing wholesalers and manufacturers regarding these requirements.

	   2) Irish Medicines Board’s reissuance of its GDPs (Oct 2011) - Release of shipments into Ireland need to have hard copies of temperature records for products to enter commerce. Stability data is required for any temperatures recorded outside of label claim.

	   3) EU update to GDP and request for comments on supply chain temperature management.

	   4) Saudi Arabia’s mandate to ship all pharma products temperature-controlled and monitored.

	   5) Israel’s requirement (no published regulation) to ship all pharma temperature-controlled and monitored.

	   6) Many other countries are enforcing supply chain temperature management processes. It is expected that most national Ministries of Health (MoH) will follow suit in that if a storage temperature is specified on the product label, then the product will need to be shipped under controlled and monitored conditions.

	Controlled shipping (in any temperature range) can be categorized as passive or active. Passive systems rely on a source of energy (ice or other refrigerant) and insulation; the “cold” contained in the system gradually dissipates during the shipment. Active systems employ batteries or other sources of power to generate additional cold (and, in some cases, heating for low-temperature conditions). Active or passive systems give additional options for both CRT and cold-chain deliveries.

	Traditional passive shippers utilize water-based refrigerants which change phase (freeze/melt) at 0°C, which can be efficiently and cost-effectively used to maintain frozen or refrigerated temperatures during transit. The challenge of utilizing these same materials for CRT applications is the reliance on the specific heat (the energy required to raise the temperature of a unit mass by one degree) instead of the latent heat (the amount of energy absorbed or released during a phase-change process) of water to control the temperature inside the shipping system.

	Generally speaking, latent heat energy available in refrigerants for cooling pharma products is greater than energy available from specific heat, but the disparity between the phase-change temperature of water-based refrigerants (0°C) and the higher temperature requirement for CRT products (e.g., 20°C) makes them less suitable for CRT applications. As the temperature range of CRT products widens, the use of water-based refrigerants becomes more effective. There is a tradeoff between the amount of temperature protection needed for the shipping system and the weight/cost of the solution. Therefore, shipping CRT products in a 20-25°C range can be cost-prohibitive as compared to a 2-30°C range.

	Specialized phase-change materials (PCMs) can be more efficient than water-based refrigerants because they utilize the latent heat for temperature control. They can also be tailored to specific temperature ranges so as to match the temperature requirements for the product. These materials are typically significantly higher in cost and can be difficult to condition in a distribution operation. Some designs may call for a 22°C PCM to be used in a liquid phase, which could require the material to be heated prior to use since many warehouses may have an ambient temperature of 15-22°C. While refrigerators and freezers are common in many warehouses, warmth-generating incubators typically are not common.

	Pharma products requiring CRT conditions vary from small, liquid-filled vials to bottles of capsules or pills. The wide disparity between the thermal mass of these product types can affect the type of packaging solution needed for thermal protection. Smaller thermal-mass products will require proportionately more packaging protection to maintain the same amount of temperature protection as a larger thermal-mass product. This can also be seen when comparing small parcel vs. pallet load solutions.   Fig. 2 is an example of a 5-30°C passive shipping solution payload comparison.

	As can be seen, the payload to outside dimensions (OD) ratio goes up as shipping size goes up and cost per unit drops.

Operational and performance qualification (OQ / PQ)

	In meeting the regulatory requirements for OQ/PQ, it is standard practice to choose a representative product sample to test and qualify procedures. Choosing an unrealistic minimum thermal-mass product can result in an over-engineered and high-cost solution. Conversely, choosing an advantageous product load could result in real-world failures during shipments. The best approach is to bracket the lowest and highest thermal-mass products, as well as analyze your shipment history to begin with appropriate test material.

	Ambient temperature profiles for CRT shipments can be more challenging than other temperature-sensitive products—there might be little documentation of prior practices or conditions. If the shipments are going general cargo (nonperishable), then more severe ambient temperature profiles should be considered for transportation. Some countries (e.g., Saudi Arabia) can experience temperatures up to 50°C; conversely, Canada can see -20°C during transportation. Designs for special handling or packaging can be used for these harsh-environment distribution lanes, as well as to offset these extremes specifically. However, the overall approach is to optimize the supply lane in line with the development of the passive shipper.

	As with frozen or refrigerated OQ/PQ testing, determining the proper placement for temperature monitoring devices is important. Placement on an external wall of the product (between the product and insulation) can result in temperature readings that don’t accurately reflect the product temperature, and likewise, placing the temperature monitor too close to the refrigerant can also give erroneous temperature readings. As part of the OQ, temperature monitor placement needs to be established and specified for routine shipments.

	Employee training is essential when undertaking CRT procedures, both for employees with experience in cold-chain shipping and with those who have not handled any sort of temperature-controlled shipping. If the employees are familiar with packaging temperature-sensitive products, they may feel uncomfortable using refrigerants with new conditioning requirements. There may be an erroneous perception that refrigerants should be placed in the freezer or refrigerator, but CRT materials may not need any special conditioning.  If the employees are not familiar with thermal packaging, implementing any additional steps to the packaging process beyond shipping unprotected corrugated cases can be a challenge. A proper training program must be thought out and implemented to include at minimum proper conditioning of packaging components (refrigerants and shippers), pack-out procedures to include temperature monitor locations (under change control), and any logistics considerations.

	Even the simple availability of packaging materials can be a challenge where cold-chain distribution has not been performed previously. Warehouse managers will have to pay attention to the inventory of packaging materials, and to allocate necessary space for them. Some type of just-in-time delivery from the packaging materials supplier might be called for.

	Most temperature excursions occur during transitions between transport modes (truck to truck, tarmac to airplane belly, etc.). Either the packaging needs to be robust enough to handle these situations (e.g., over-engineered passive shipper) or special logistics measures (e.g., shipping perishable vs. general cargo) need to be taken. Both options can increase cost.

	Overall, adding any thermal packaging protection adds cost in various areas:  packaging materials, labor, and increased freight per unit (more shipments and heavier/larger packages). A well thought-out approach to proper CRT product management needs to be developed. The more restrictive the temperature range specified, the higher the costs.

	Supply Chain Integrity (SCI) optimization

	All of the above issues should be tied to a holistic approach to Supply Chain Integrity (See WHO GDPs). The four main pillars of GDP/SCI are:

	   4)  Distribution Control Systems (DCS includes track and trace, e-pedigree, serialization, etc.) 

	All four of these pillars of the GDP process have to be integrated. An example of a non-integrated process is a temperature-management PQ that does not take into effect the importation requirements that can extend the supply chain process by 48 hours. So, for example, a passive shipper is validated vs. an adequate ambient profile for 72 hours; however, the import paperwork is not fully complete and the broker or freight forwarder is unaware that the product is under a restricted operating range. So due to the incomplete import paperwork, customs (or the MoH) holds the shipment up past its “qualified” 72-hour shipping time, and even though the shipment gets release by the customs group or MoH, the incoming temperature requirement has been violated.

	As stated earlier, CRT storage temperature labels are very varied, within companies, within product families and across country borders. However, many existing CRT products are more robust than the stability data initially filed. Many CRT products have a 25°C/60%RH (relative humidity) requirement for full shelf life (done initially and annually) or a 30°C/65%RH requirement, and accelerated conditions of 40°C/75%RH (for 1-3 months), as specified per the International Committee of Harmonization (ICH) stability requirements. Unfortunately, since it has been assumed colder temperatures slow down chemical degradation, stability studies on CRT products at temperatures below 15°C are not normally performed. An optimal process for a company to adopt for CRT products is to perform temperature cycle studies up to 50°C and freeze/thaw studies down to -15°C (return to 25°C). It is recommended to use these data to have a standard CRT label of: (ref PDA TR 53):

	   ¥  Ship at -15° to 40°C (up to three months)

	   ¥  Excursion permitted up to 50°C for two weeks

	If the data don’t support the above recommended standard label claim, then the product has to be labeled differently, and appropriate testing and stability studies need to be performed.

	There are various options available to control CRT products during transit. The options include:

	   ¥  Standard refrigerants (water-based) and insulated containers

	   ¥  Specialized refrigerants/PCMs and insulated containers

	   ¥  Insulation only (i.e., insulated container or pallet cover)

	   ¥  Temperature-controlled ocean containers

	   ¥  Pallet and parcel size containers (i.e., RKN units)

	While there are many factors to consider when choosing the correct option, including cost, shipment size (pallet or parcel), duration of shipment (overnight vs. ground transit) and ease of use, the on-label temperature required (shipping range) during transit is the most important aspect to consider (e.g., ship 15-25°C vs. 2-30°C). Fig. 3 lists some common shipping temperature ranges for CRT products and the associated level of temperature control. Usually, the more restrictive the temperature range, the higher the cost per shipment.

	Fig. 4 summarizes the various options available for CRT product shipment, aligned with the relevant selection criteria. Most active systems typically offer a high level of temperature control (as long as the system has been fully qualified) and are relatively easy to use, but can be costly and normally require larger shipment sizes. Passive systems can be used for any shipment size and are typically less expensive than active systems (on a comparable shipment size basis), but the level of temperature control varies greatly depending on the type of design.

	Fig. 5 shows some general cost ranges for common shipping options: active vs. passive, and for various temperature ranges. Regardless of the system selected, the size of the shipment has a great effect on the total cost of the shipment. Smaller shipments that require a more restrictive temperature control will be the most costly, while larger shipments with less restrictive temperature control the most economical. Therefore it is advantageous to ship large loads with supporting stability data to allow shipping outside of the label claim. Provided that there is relevant stability data to allow for temperature excursions, shipping larger loads is more cost-effective, has fewer excursions (because of the larger thermal mass), and presents fewer operational problems. Implicit in the cost effectiveness is greater energy efficiency (less energy consumed per unit of shipment), thus providing “green” benefits as well.

	Anthony (TJ) Rizzo, Director of Sales & Marketing at Cold Chain Technologies (Holliston, MA), where he was previously a Strategic Account Engineer. He has been extensively involved in industry groups including PCCIG task forces. TJ graduated from Pennsylvania State University with a BS in mechanical engineering and is pursuing an MBA at the University of Massachusetts.

	     Dave Ulrich is QA Director, Distribution and Logistics, at Abbott Labs (Abbott Park, IL). His responsibilities include standardization and optimization of quality systems (cGDPs), compliance for supply chain temperature management, e-pedigree/Track-n-Trace, serialization, and import export activities. He has been at Abbott 25 years in various roles in manufacturing QA and plant maintenance, validation and engineering. Previous to Abbott he was a laboratory manager at a Chicago area hospital.

'Controlled room temperature' (CRT) shipping is being transformed from standard shipping processes to engineered, compliance-ready processes and materials

Bringing room-temperature pharma shipping under the 'CRT' umbrella

	On Feb. 9, FDA released a batch of some of the most important documents in recent memory: how it plans to regulate biosimilars. The three documents—which will have been examined an criticized in detail by the time you read this editorial&mdash;represent years of industry and agency deliberation, which started years before the Patient Protection and Access to Care Act of 2010 (PPACA), the Obama Administration's much-maligned law to open up access to healthcare. And since it took two more years inside FDA to generate merely the draft guidance, we can expect more debate in the months to come. Whether February 9, 2012 will be the red-letter date that people refer to in the future as the beginning of the biosimilar era, or whether it just becomes a footnote to later announcements, remains very much to be seen.

	One thing we can all stop talking about, though, are all the concepts floating around the biosimilar topic—"biogenerics," "biobetters" and the like. The one message that comes through most clearly on a summary reading of the documents is the stance that "FDA intends to consider the totality of the evidence provided by the sponsor to support a demonstration of biosimilarity, and recommends that sponsors use a stepwise approach in their development of biosimilar products [original FDA emphasis]." One industry commentator nearly-instantly misread this, in our opinion, to mean that FDA was opening a "Pandora's box" of biologics that might be radically different from a branded drug, but had the same therapeutic effect, and were therefore "biosimilar." We think FDA has taken the right step with the totality-of-the-evidence approach, but now the discussion will move to how much evidence is necessary.

	Even as industry examines these documents, there's one aspect of their arrival that is troubling. FDA chose to roll this out merely by posting the documents; no press conference, no speech. In Washington, these days, how you announce something is almost as important as what you announce. Picture, for a moment, a press conference led by FDA Commissioner Margaret Hamburg, with BIO's president, Jim Greenwood, on one side, and GPhA's Ralph Neas on the other (and, what the heck, PhRMA's John Castellani at the podium, too.) What would that say about industry's and government's common efforts to resolve the knotty technical issues around biosimilars? Instead (clearly indicating that the documents were in effect dropping from the sky), GPhA could only say that "will carefully review the documents in coming days" and BIO looks forward "to reviewing the drafts to ensure that they agree with our key principles." Which sounds like the drug-review ping-pong game, with FDA being batted back and forth in the middle, is about to recommence.

	We'll be following the biosimilar topic on occasion in the future, in keeping with Pharmaceutical Commerce's focus on drugs in, or about to enter, the marketplace. (And we hope that biosimilars arrive sooner rather than later.) One critical element of the change we see coming, derived from some reporting in the Wall Street Journal the day after the announcement, is within this comment: "Manufacturers expect they will have to do more than sell the [biosimilar] therapies based on price, as companies do with traditional generics. They will have to promote biosimilars to doctors, as they do for brand-name drugs."

FDA's draft documents on biosimilar regulation move the prospect one step closer

Biosimilars take a big step toward the marketplace

	The widely accepted statistic is that only about 10% of all adverse events (AEs) are reported to FDA. In 2010, that 10% equaled about 750,000 reports, which was an almost 31% increase over 2009 and the biggest year-over-year increase (as a percentage) in the last decade. The estimates for 2011 aren't due for another couple of months (per FDA), but they're expected to continue the upward trend. Pharmacovigilance experts agree that one of the main drivers of recent growth in AE reporting rates is, quite simply, increased awareness of drug safety and adverse event reporting among pharma companies, as well as healthcare providers and consumers. But new developments in pharmacovigilance will likely drive those rates higher, while others will help pharma companies manage the increasing volume.

	Besides the long-standing FDA requirement for post-marketing monitoring of the adverse events associated with a drug, and acknowledging the greater emphasis that FDA is putting on all aspects of drug safety these days, manufacturers have an additional reason to pay close 

attention to AE reporting: A year ago, the Supreme Court ruled unanimously that even a number of AEs not "statistically significant" might need to be reported to stockholders of the company as a "material" financial event. The case, Matrixx Initiatives, Inc. vs. Siracusano (Case 09-1156) was brought by investors after a Matrixx product, an OTC cold remedy called Zicam, was found to have side effects that ultimately led to the product's recall.

	As the volume of AERs increases, the number of resources needed to process and analyze them rises as well. Instead of handling pharmacovigilance activities in-house, many pharma companies outsource the process, either wholesale, as in the case of small manufacturers, or as partners (see Pharmaceutical Commerce, Jan/Feb 2011, p. 1). Some companies in the outsourced AER business are reporting double- and even triple-digit growth: Elizabeth Garrard, chief safety officer of Drug Safety Alliance (Research Triangle Park, NC) estimates her company has seen 100% growth over the past few years, while Steve Swantek, president and CEO of Prosar (St. Paul, MN), reports an average of 40% growth per year in the past two years. Meanwhile, Carole DeRoche of DDN Medical Affairs, a Dohmen company (Menomonee Falls, WI), calls her company's growth "remarkable."

	The reasons are not surprising. For one, pharmacovigilance is not a core competency for some manufacturers. But mostly, it's a matter of economics. As the total volume of adverse events being reported increases, pharma companies can outsource these functions cost-effectively, without having to build (or add to) their own pharmacovigilance infrastructure. But even when outsourcing, pharmacovigilance requires a large investment. Last year Pharmaceutical Commerce reported on a 2010 study by Cutting Edge Research (Durham, NC) that found pharma companies spend an average of $686,000 per product on pharmacovigilance activities, both clinical and commercial (see Pharmaceutical Commerce, Jan/Feb 2011, p. 24).

	Per FDA rules, there are four basic criteria that constitute a reportable AE: an identifiable patient; an identifiable reporter; a specific drug; and a symptom or effect. AEs are further categorized as "serious" and "nonserious," and "expected" or "unexpected." The AEs that get the most attention are serious and unexpected ones—these are generally not on the product label when the product is  launched, but are often added after the AEs are analyzed. AE documentation specialists use medical training and knowledge of an AE reporting structure to categorize reports; sometimes these require followup with either the reporter (e.g., a physician) or even the patients themselves.

	Garrard of Drug Safety Alliance says she's witnessed many companies that outsource these activities sacrifice quality for the sake of saving money. "They see drug safety as a commodity. There's a continuing march to the lowest-cost provider," she says, adding that usually means outsourcing overseas. Garrard cautions that there is an unrealized cost of about 20% associated with offshoring, having mostly to do with quality and oversight.

	Prosar's Swantek says he has seen pharmacovigilance activities, particularly for pharma companies with large AE case volume, go to countries like India, but that now the trend is reversing. "I'm seeing the business come back the other way," he says. "There's more to it than just cost savings. Those pharma companies that have decided to come back found additional value in working with US-based organizations."

	While some see a threat, others see an opportunity in outsourcing overseas. Swantek says he envisions a hybrid approach, using domestic and offshore resources for different parts of the pharmacovigilance process. "There are components of the pharmacovigilance continuum that lend themselves to being done offshore," he says, pointing to coding and narrative writing—activities that don't require interaction with the reporter or medical reviewer. "We're in discussion with some offshore providers regarding potential alliances to provide an optimal cost savings to our customers."

	Drug manufacturers are required, under the Federal Food, Drug and Cosmetic Act, to report AEs that they know of to FDA. Before there was such thing as social media, that meant documenting AEs that were reported to them—by phone, letter, email or even the "Contact Us" form on the company website. But now that social media tools are so prevalent, an adverse event could potentially be reported via Twitter, Facebook, blog comment or online discussion.

	If Facebook boasts 800 million active users, and Twitter recently passed 100 million active accounts, just how many adverse events could be reported via social media? That had long been the question on pharma executives' minds—using adverse events as an excuse for staying away from social media. But new research suggests it's a manageable number. A white paper released late last year by Visible Technologies (Bellevue, WA) sought to pinpoint the number of adverse events reported through social media channels. Researchers analyzed branded social media posts for classes of OTC and prescription drugs to determine how many of those included reportable events.

	Of the 142,854 posts tracked in a 30-day period beginning in Sept, for prescription statins and antihypertensives, only 4,587 posts contained terms relating to AEs. Of those posts related to AEs, Visible Technologies found that only 3.27% were actually discussing AEs.  "Pharmaceutical marketers that engage in diligent monitoring of social media for mentions of their brands should expect to see some mention of AEs within this discussion," the white paper concludes. "However, the volume of AEs is not likely to exceed what can be handled through existing adverse event reporting channels established for traditional/offline reporting methods." Successive studies by the BuzzMetrics business unit of Nielsen, have found that AEs that meet the reporting criteria are generally 1% or less of the messages monitored by the company at public health websites.

	Thanks to research like this, Garrard of Drug Safety Alliance says manufacturers are finally warming up to the idea of monitoring social media for AEs. In fact, her company is finalizing details of its first social media-centered AER contract, with an unnamed client.

	Another reason companies haven't embraced using social media has nothing to do with volume, but what to do with the information. "The reports that are coming through social media are very difficult to evaluate," explains DDN's DeRoche. "I think that one reason that social media hasn't caught on as a sanctioned source is difficult to interpret. Consumers are writing whatever they think, so what you get are mostly bits and pieces of an adverse event, with no way to follow up. That makes it extremely difficult to evaluate and understand whether it's a reportable event, let alone who to follow up with if it is." DDN Medical Affairs has not received any AEs through social media.

	The Visible Technologies white paper found that of those posts containing an AE, 26% include an identifiable name, while only 14% included an identifiable full name and contact method (via email or through the website itself). "The missing piece to this puzzle is understanding what pharma will be responsible for," Garrard explains. "Is it just the ones that contain the four criteria? Or do you have to follow up on every adverse event?"

	Currently, there's a lack of clear FDA guidance on the topic. At the end of 2011, FDA released social media guidelines on responding to unsolicited requests about off-label uses of drugs, but it made no mention of adverse events. DeRoche says these new guidelines will help, but won't do enough to assure pharma companies that they're handling AEs through social media correctly.

	While drug manufacturers are required to report known AEs to FDA, healthcare providers and consumers can do so voluntarily through the agency's MedWatch form. But are they doing it? A 2011 study by PDR Network (Montvale, NJ) revealed that more than 13 million office visits a year in ambulatory care are attributable to an adverse drug event, but only about one million reports are generated.

	"I'm not sure a lot of healthcare providers or consumers fully understand the importance of reporting adverse events," DDN's DeRoche says. "But it is critical to keep these safety issues top of mind when dispensing and consuming prescription products."

	Dr. Steven Merahn, chief medical officer of PDR Network, agrees: "Prescribers need to understand that their clinical insights are incredibly valuable. Reporting actually helps the prescribers more than they think because once the data are available, there are lots of people who can extract real clinical intelligence from them, and that can reduce risks to patients and prescribers and have a beneficial effect on patient outcomes."

	RxEvent, a new initiative backed by PDR Network, aims to streamline and speed up the reporting process by allowing healthcare providers to bypass FDA's forms and submit adverse event reports through electronic health records, as well as websites of medical professional insurance carriers, medical societies, PDR Network itself and other partners.

	Merahn says the company has secured four contracts with EHR vendors already, and is in active contract negotiations with another eight. He anticipates RxEvent will reach access to 100,000 prescribers via EHRs by the second quarter of this year—an important milestone, given the rapid adoption rates of EHRs. "With EHR adoption around 50% nationally and growing rapidly, within two years the EHR is going to become the physician's primary workspace," he says. "If [adverse event] reporting systems are not on the screen in that window, they will be off the radar."

				Fig. 2. Adverse Events, Inc., identifies AEs by, among other things, their frequency among commonly prescribed drugs. credit: AE

	Meanwhile, Adverse Events, Inc. (Healdsburg, CA), a company launched last fall to clean up the data in FDA's Adverse Event Reporting System (see, 'Company Trying to Do More with Medwatch" below), has a reporting form geared toward consumers available on its website. "All of our surveys found that consumers wanted an easy way to report this information," says Brian Overstreet, president. He estimates the company has collected about 100 AERs, which are added to the company's searchable database of adverse event reports.

	FDA even recognizes shortcomings with the current reporting process. In addition to multiple smartphone initiatives for adverse event reporting, FDA spokesperson Lisa Kubaska says the "development of a ‘smart form' for adverse event reports that could provide source data would improve the quality of reports."

	From the perspective of FDA, AE reporting is a passive process: FDA accumulates AERs, checks for patterns, and then initiates some type of review. (FDA is not, of course, the only entity looking for patterns; manufacturers do so themselves, and many medical researchers have made their name by uncovering a new pattern.) An "active" system, in this context, will routinely monitor health records to uncover new or unknown signals. That's the goal behind FDA's Sentinel Initiative, mandated by the 2007 FDA Amendments Act, and now an ongoing public-private organization. Harvard Pilgrim Health Care Institute is one of the central private organizations involved; it and the other organizations who have signed on (which include insurers Aetna, Wellpoint and Kaiser Permanente) have now accumulated records on 44 million individual patients. The "data core" is a distributed database at the 17 corresponding organizations; individual records reside at the organizations, and are queried by the Sentinel coordinating center.

	The power of this distributed database was demonstrated in a paper presented last year at the International Conference on Pharmacoepidemiology (Chicago, Aug 17, 2011) by Dr. Richard Platt of Harvard Pilgrim. From initiation with an FDA request on July 5, more than 300 million patient-years of records were checked to identify one million health patients taking either Chantix (varenicline) or bupropion (Zyban, Wellbutrin) for 180 days in the 2006—2011 period. These records were then checked for incidence of cardiac events (the two types of drugs showed similar response—about five incidents per 1,000 patient-years). Preliminary results were reported on July 8, and a complete report on July 12. The study was not a directed AE evaluation, which is to say that the study was undertaken to verify a known health risk, but rather to demonstrate the speed and comprehensiveness of an active surveillance project. (It has since been expanded into a "Mini-Sentinel Model Program," including patients taking those drugs for any reason.)

	"The Sentinel System would enable FDA to actively query diverse automated healthcare data holders—like electronic health record

Company Trying to Do More With MedWatch Data

					If underreporting of adverse events is one problem, the other is finding meaning in the data contained in FDA’s MedWatch. That idea helped launch Adverse Events, Inc. (Healdsburg, CA), which puts FDA’s MedWatch data through its RxFilter, a “17-step proprietary data refinement process that standardizes and normalizes” the MedWatch database, according to the company. MedWatch itself is updated quarterly.

					Once FDA updates the MedWatch database, it takes about two days for the company to cleanse the data, says Brian Overstreet, president. He says the process is about 98-99% automated, but that analysts have to manually review about 2,500 adverse event reports per quarter, largely due to adverse events reported on drugs for the first time.

					Consumers can access the drug safety data, searchable by drug name, medical condition or side effect, for free at adversevents.com, while pharmaceutical companies can pay for additional reporting and analysis capabilities, including competitive company and product tracking. The services launched last fall, and Overstreet says pharma companies are beginning to show interest. “They’re on our site and starting to use it in their workflow,” he says.

	systems, administrative and insurance claims databases, and registries—to evaluate possible medical product safety issues quickly and securely," Kubaska says. At an annual public workshop held Jan 18 in Washington, D.C., project leaders updated the public on the progress being made on Mini-Sentinel, the pilot project for the active surveillance system. Mark McClellan, director of the Engelberg Center for Healthcare Reform, which hosted the event, reported that Mini-Sentinel is expected to meet its goal of tracking and surveillance of 100 million patients by this summer. Mini-Sentinel also has begun using the system to assess medical product safety questions, and the results of these assessments are available at mini-sentinel.org. The latest explores the differential risks of angioedema associated with three types of antihypertensive medications.

	As Sentinel moves closer to application, the question will be who gets to use the Sentinel functionality and who pays for it, according to Rachel Sherman, director of FDA's Office of Medical Policy. "In a perfect world, we would like to see [pharma companies] being able to access the functionality," she explained at the public workshop.

As FDA makes progress on an active surveillance system, drug manufacturers and third-party drug safety vendors navigate their own set of challenges

Adding rigor to the adverse event reporting process

	For pharmaceutical companies in 2012, supply chains will play a major role in their ability to adapt, consolidate or refocus their core business segments. The world will continue to throw new obstacles and challenges for moving products and materials into and out of specific markets and countries. But with the right supply chain configuration and adaptability, pharmaceutical and related healthcare supply chain leaders can overcome these obstacles by using internal, external, and country-specific resources to create best practice-based supply chains.

Supply chain focus to support business strategies

	Supply chain leadership will be responsible for much of the successful execution and profitability in pharmaceutical and medical products, as strategies evolve and re-evolve through M&A, regulatory and pricing shifts, emerging market growth demands, and new product quality, as well as security and logistical challenges.

A vision for critical supply  chain planning and execution

	Due to additional pressures and uncertainties anticipated in 2012, it is important to ensure a short-planning horizon for supply chain adaptability and rapid reorganization. An integrated, adaptable global supply chain that has full visibility and shared planning is needed to achieve profitable growth.

1) Understanding Existing and New Markets and Developing a Solution for Each:

 This does not mean a unique solution for every market, but one that leverages the global infrastructure in place, works with established partners, and builds off those to service each market. Fulfilling an order in North America is much easier than one in rural China, but it must be done more efficiently in China. Is it time for you to initiate a global supply chain assessment?  

) Building Adaptability and Demand-Driven Responses into the Supply Chain:

 Risk, instability and rapid change are here to stay. As such, they challenge the validity of all planning processes: strategic planning, partnership models, contingency planning and financial planning. Being adaptive is not about having a great plan, but being able to move and change very quickly to stay ahead of the market. And via demand-driven supply chains, costs can be saved and customer satisfaction improved by responding to real demands in the market that are reported through each link of the supply chain. Now is the time to review your operational capabilities, network infrastructure and partners' capabilities, as well as gain true supply chain visibility by having a demand-driven supply chain.

 As the industry becomes more complex, the segregation of supply chains for business units increases costs. Bringing divisions from OTC, pharma, animal health, bio-tech, and medical device together enables easier market entry and better leveraging of facilities and partners, and eliminates duplicate supply chain execution efforts and costs. Facility rationalization and consolidation go hand in hand with inventory management planning.

 4) Leveraging Technology and Automation:

 In order to increase efficiency and meet all track and trace regulations, as well as security challenges, the requirement to implement the appropriate systems and equipment is mandatory. This ties into integrating supply chain facilities and leveraging your partners to create operations of enough size and volume to justify investments. In established markets, in-sourcing is much more viable than in emerging markets. Warehouse, distribution center, and operations systems upgrades should leverage operational experts, and harness the power of equipment and integration experts, to develop turnkey solutions.

Brian Hudock, a partner at Tompkins International (Raleigh, NC, 

), specializes in total supply chain projects, including supply chain network analysis and planning; manufacturing optimizations; and the design and installation of material handling systems. A frequent contributor to trade journals on the topics of material handling and warehouse operations, his expertise extends across numerous industries, including pharmaceutical and medical products.

Tompkins International's annual preview of key pharma supply chain issues

Supply chain  issues for 2012

	2012. A milestone in my professional career marking the 30th anniversary since I finished my medical oncology fellowship and started practicing in the field. Oncology is a much different place today than in the late 1970s when I was an oncology fellow in Chicago, and when I took my first faculty position at Wayne State University in Detroit in 1982. In 1988, I assumed a faculty position at The University of Texas M.D. Anderson Cancer Center, and left Houston in 1999 to join FDA.

	I remember a time when the only drug we had to treat advanced kidney cancer was the hormone, Megace... a time when the only drug to treat metastatic colorectal cancer was 5-fluorouracil... a time when the only drugs to treat chronic myelogenous leukemia (CML) were hydroxyurea and Busulfan... a time when adjuvant therapy in breast cancer was just beginning to be investigated.

	Today is a very different picture. Since 2005 FDA has approved seven drugs for advanced kidney cancer. Oncologists now have multiple options for the treatment of metastatic colon cancer, including the combinations of Camptosar (irinotecan), Xeloda (capecitabine), Eloxatin (oxaliplatin), Avastin (bevacizumab), Erbitux (cetuximab), and Vectibix (panitumumab). Patients with CML have been greatly helped with the introduction of tyrosine kinase inhibitors. Adjuvant therapy, both for breast and colorectal cancers, now has an established role in medical oncology practice, and we have moved the early use of anti-cancer drugs a step further into the neoadjuvant setting in breast cancer.

	There have been many advances during this 30-year period, including the development of curative therapies in childhood malignancies and great strides in supportive care products...

	"Cancer" is a multitude of diseases, and our current classification of cancer based on organ location ("breast cancer," "colon cancer," "lung cancer") will be transformed based on the "molecular fingerprints" of an individual's tumor. The increased understanding of cancer biology will have profound positive implications for all stakeholders with the development of drugs with greater efficacy and less toxicity.

	The future therapeutic advances in oncology will be based on our enhanced understanding of the biology of cancers É One point I discuss [in a recent television appearance] is the need for companies to take a more strategic approach to cancer drug development, and to begin thinking of their business as a "disease" company vs. a "drug" company. Successful drug development will only occur with an in-depth understanding of basic disease mechanisms. This "disease orientation" will require greater collaboration between pharmaceutical sponsors, the academic community, government agencies, and patient groups.

	I have been fortunate to work with a talented team of oncologists, pharmacists, toxicologists, nurses, and safety and public health experts to evaluate cancer drugs. Our staff understands that there are many diverse opinions in the oncology community regarding approval of oncology drugs. The balance between the immediate needs of an individual patient and the assurance of a drug's safety and efficacy for approval will always exist. When appropriate, we have permitted the use of single patient INDs, exemptions to existing protocols, and expanded access programs to allow patient access to promising, yet unapproved, drugs.

	To expedite drug development and our review of applications, FDA has approved oncology drugs on the basis of a single trial and used a variety of clinical trial endpoints -- including overall survival (the time a patient lives before death), progression-free survival (the time a patient lives without their cancer progressing), and response rates (tumor size reduction). FDA has taken advantage of regulatory initiatives for serious and life-threatening diseases, such as fast-track, priority review, and accelerated approval . . .

	Richard Pazdur, MD, is the Director of the Office of Hematology and Oncology Products in FDA's Center for Drug Evaluation and Research. These remarks are excerpted from his posting on FDA Voice (https://blogs.fda.gov/fdavoice), Jan. 27.

Begin thinking of your business as a 'disease' company vs. a 'drug' company

Cancer care in the US -- looking back, looking forward

				Chairman Dale Smith, left, and president, Chris Smith

	H. D. Smith, founded in 1954, is today the largest privately-held wholesaler in the US. Based in Springfield, IL, the company services clients nationally from seven full-line distribution centers, its specialty subsidiary, Smith Medical Partners and a dedicated home healthcare/DME distribution facility. Besides its basic pharmaceutical supply business, H. D. Smith has a growing presence into specialty, home healthcare and business solutions, to name a few. 

sat down with Chris Smith, president and COO; here's what he had to say.

ONE. H. D. Smith lives in a world dominated by the Big Three wholesalers; how does it position itself to succeed in the marketplace?

	From its beginnings as a one-person operation nearly six decades ago, H. D. Smith has grown to become the largest independent pharmaceutical wholesaler in the country. Acquisitions, strategic placement of new distribution facilities, and diversification of offerings and customer mix have positioned H. D. Smith shoulder-to-shoulder among the country's largest wholesalers. In addition to a complete line of brand, generic and specialty pharmaceuticals, H. D. Smith provides home healthcare products; durable medical equipment; seasonal merchandise; and a wide range of solutions that help customers optimize savings opportunities and manufacturers maximize reach.

	Providing exceptional service to America's independent community pharmacies is the core of our mission and our passion. During the past several years, we have also been leveraging growth opportunities within hospital systems, regional retail chains and alternate care markets Ð but as we expand and diversify our customer and product mix, we do not stray from our founding vision of providing exceptional service to each and every layer of the healthcare industry we touch.

	In a market that is changing at a fierce pace, many companies are not listening to or meeting their customers' needs -- but we refuse to run our business that way. We define "customer" as the hospitals, long-term care facilities, regional chains and independent retail pharmacies we serve, as well as the manufacturers with whom we partner. A key component of our value proposition is a true partnership with our customers.  Through these partnerships, we develop unique customized solutions that add value to the quality of patient care.

TWO. What are the most recent significant business developments at H. D. Smith? Let's talk about Smith Medical Partners, the specialty services group (there might be several subsidiary questions on this topic): how is it structured, what is its proposition to brand owners, how is it differentiated?

	Today, H. D. Smith is investing heavily in its technology infrastructure, Third Party Network, and in building a leadership team with the credentials and vision to take our company into the next era of evolution of contributing positively to patient care.

	In alignment with market shifts and the increased importance of specialty, H. D. Smith continues to invest in our wholly owned subsidiary, Smith Medical Partners, which is focused on specialty distribution and services.

	Smith Medical Partners functions as a specialty distribution company that is firewalled and separated from the parent company. It services hundreds of specialty pharmacies and thousands of physician offices and clinics. Smith Medical Partners is investing to enhance its manufacturer service offering by providing flexible and tailored services throughout the development and commercial product lifecycles. These services range from helping manufacturers procure credentialed comparator products for clinical trials to back-end telesales support for new and end-of-lifecycle commercial products.

	We recognize that new product introductions have unique needs outside of traditional wholesale. Through Smith Medical Partners, we utilize a blended distribution model that provides the opportunity for patients to receive products that will not be distributed through the traditional retail pharmacy model due to REMS requirements, manufacturer preference and/or managed care obligations.

	An evolving component of Smith Medical Partners' enhanced manufacturer service offering is third-party logistics support. What sets Smith Medical Partners apart is the ability for manufacturers to work alongside our team to co-develop solutions that offer the flexibility to build exactly what the manufacturer needs. Smith Medical Partners is an increasingly attractive option for manufacturers seeking a strategic partner because we are willing to listen to manufacturer needs and partner with them to develop something truly unique.

	Watch us for news about Smith Medical Partners! We have some developments in the works we feel will make a big difference in the specialty care market in the near future.

THREE. PharmaGen is your generics supply unit; how that operate?

	Whether we are partnering with a brand manufacturer that desires a broad or limited distribution, or with a generic manufacturer looking to ensure immediate access to the most recent launch of a new generic, H. D. Smith has programs in place.

	A benefit specific to H. D. Smith's generic manufacturer partners is our PharmaGen generic portfolio. PharmaGen is H. D. Smith's premier portfolio of quality generic pharmaceuticals, providing customers access to one of the most robust generic portfolios in the market. PharmaGen ensures customers the best possible coverage, availability, quality and value on generic pharmaceuticals. During the bid process, we identify manufacturer partners that can guarantee the best value and product availability for our customers. Manufacturers occupying a primary position earn approximately 95% of our customers' sales for that product.

	The PharmaGen portfolio consists of more than 7,500 items. H. D. Smith maintains an extensive selection of primary and secondary manufacturers to facilitate high service levels. Over the past few years, the generic industry has yielded an unprecedented number of supply chain interruptions, recalls, limited product supply and regulatory activity. Through these intervals, H. D. Smith has maintained excellent service levels through strong relationships with multiple manufacturer partners for each chemical entity.

FOUR. Is Home Health exclusively DME sales, or is there a pharma component?

	Our home healthcare offering extends to standalone DME providers, and integrates with the standard independent retail pharmacy model. Home healthcare is a fast growing and high margin segment of the healthcare industry. Accordingly, we partner with a wide range of home healthcare/DME manufacturers to ensure we are able to provide a robust product inventory to our customers, including special request and hard to find items.

	We are willing to invest in this critical segment of the market from both a product and support perspective. Our dedicated home healthcare sales specialists take the time to learn the products, understand the market, and develop customized solutions to help community pharmacies and DME providers meet patient needs.

FIVE. What's it like running a multibillion dollar family business? Can you tell us a little more about yourself?

	As the president and COO, I enjoy working for and learning from my brother, Dale, the chairman and CEO. The company was founded by our grandfather's and father's vision. The company has experienced significant growth in the past couple decades. This growth was built upon a regional wholesaler model, and is now multiple distribution centers servicing hospital and retail pharmacies in most major US markets.

	Through Smith Medical Partners, H. D. Smith is able to supply specialty products into specialty pharmacies, physician offices, hospitals or wherever that specialty medication needs to be within the contiguous 48 states. We consider the company always open to exploring additional acquisition opportunities, either in distribution or around healthcare solutions. At the moment, our plans for geographic expansion include expanding and diversifying the customer base around existing distribution centers.

	I joined H. D. Smith in 1980 as a buyer, and moved up through the ranks, including stints in operations, division management and purchasing. Our company is a member of HDMA, NCPA, ASHP, and numerous other industry organizations. We are committed to the past, present, and future of wholesale distribution and patient care.

	I attended Northwestern and the University of Illinois, and our entire family arguably represents the most enthusiastic and devoted Big 10 fan base. Go Illini!

Pharmaceutical Commerce sat down with Chris Smith, president and COO; here's what he had to say.

Pharmaceutical Commerce - March/April 2012

A conversation with Jeffrey Berkowitz, Walgreens

Storing controlled substances safely and efficiently

Bringing room-temperature pharma shipping under the 'CRT' umbrella

Biosimilars take a big step toward the marketplace

Adding rigor to the adverse event reporting process

Supply chain issues for 2012

Cancer care in the US -- looking back, looking forward

A conversation with Chris Smith, H. D. Smith

USP ventures into standards for supply chain integrity

McKesson deepens ownership in Canadian retail pharmacy