Articles

Pharma Serialization: First Experience, Best Practices, Future Direction

Remember Hurricane Katrina? Remember the Louisiana Superdome, and the thousands of people looking for food and relief, and the dire issue of getting needed medicines to patients? Now, today, you didn’t hear about unmet medical needs like that as floods overwhelmed large parts of Louisiana this fall, or Hurricane Matthew piled into the North Carolina coast.

One of the reasons news like this didn’t make headlines in 2016 is because players in pharmaceutical distribution have become more organized around emergency relief. One of the key newer participants is Healthcare Ready, a nonprofit that, among other things, works with members of the Healthcare Distribution Alliance to bring in the heavy artillery (i.e., 18-wheel trucks loaded with medical supplies) into disaster areas. You would think that in an advanced industrialized society like the US, emergency relief happens as a matter of course, but the reality is that medical supplies are too often at the bottom of a long list of more immediate needs (putting out fires, rescuing stranded persons in flooded streams or from the rooftops of buildings, etc.). With the recent disasters, Emily Lord, executive director of Healthcare Ready, tells of supply trucks turned away from a flooded area because local police didn’t understand why the truck was on the road. Or that, because many local pharmacists are dealing with personal crises of their own, a special effort had to be made for permission from a state board of pharmacy to allow pharmacists licensed in a neighboring state to pitch in to the relief effort.

To be sure, there are many governmental and private agencies ranging from FEMA to the American Red Cross that have expertise in disaster relief. But, to the extent that the pharmaceutical supply chain is different from supply chains for, say, food, building materials and other essentials of modern life (and we would contend that these differences are critically important), there needs to be dedicated resources for medicinal products relief. This coordination has involved active support from manufacturers, distributors and retail pharmacies (both chain and independent) as well.

If anything, the needs for international medical relief are even more dire than the domestic needs. As this issue was going to press, the AmerisourceBergen Foundation announced a grant to Partners in Health, an international charity, to build a modern healthcare-supply facility in Haiti—needed in the aftermath of Hurricane Matthew, but also necessary for upgrading medical services in that country. In past issues of Pharmaceutical Commerce, we’ve reported on emergency relief efforts following the Ebola virus outbreak, earthquakes in South America and more. Pharma companies themselves have been active supporters, using the international relief agencies to send donated supplies, almost as a matter of routine.

Back in the US, a not-widely-noticed recent mandate from CMS will require a multitude of healthcare providers (hospitals, clinics, long-term care and others) to have 

emergency management plans in place by November 2017

 to continue to be qualified as Medicare facilities. Organizing their plans for medical supply continuity will be a big issue for them in the coming year. Healthcare Ready’s Lord expects many phone calls—and some of those queries will be coming to pharma distributors as well.

The medical crisis that didn’t happen

Patheon is one of the leading contract development and manufacturing organizations (CDMOs) in the world, having come together through a merger of the same-named company (at the time privately held by JLL Partners) and the pharma manufacturing assets of Royal DSM N.V. in 2014. This past summer, it had a successful IPO, returning to the public-capital market and currently has a market value of around $4 billion. Both before and after the IPO, it has held discussions to acquire additional manufacturing sites; there are 24 sites in North America, Europe and Asia currently.

Jim Mullen, CEO, joined the company in 2011, coming from the CEO position of Biogen Idec, and SmithKline before that.

 sat down with Jim to learn about the outlook for contract services to pharma; here’s what he had to say.

Patheon has recently successfully completed an IPO, becoming a publicly traded company again. What can you say about the IPO process, and what should Patheon clients expect from the company as a result?

There were two primary purposes for the IPO: First, as we get larger and have more strategic conversations with the large pharma companies, having transparency of financial health is increasingly important to those customers. Second, we still have significant ownership represented by the private equity firm JLL and by Royal DSM, which contributed significant assets to the company a couple of years ago. Both companies view this as a financial investment—that’s what private equity does—but also for Royal DSM, they need a pathway over time to monetize this asset. A tertiary benefit is simply the capital that is now available: we have been acquisitive in the past and we intend to continue to be acquisitive going forward. Being public gives us one more tool toward that end.

There was some luck in the timing of going public; in theory we were ready to go last fall, but it was a horrible environment, and not much better in Q1-Q2 this year. But this summer, we had the kind of company that investors were more comfortable with—there are earnings, there’s growth and a valuation that will trade on fundamentals such as earnings per share.

We started the process a while ago, educating potential investors about our story. The good news is, most of the people we were talking to understood that this story was not brand-new and were able to get their arms around it. We were met with enthusiasm; in the end our book was oversubscribed 12X, and that led to a successful IPO.

What is that ‘story?’ How does Patheon position itself in the industry today and going forward?

Our contention is that there ought to be bigger players in the pharma development and manufacturing space. One of the things that has hindered the industry growth of CMO space is that very few companies have the necessary breadth of offerings and scale. When we talk to customers, whether the big guys or the medium guys, a common refrain is, “My supply chains are too complicated and getting too hard to manage. I’d like to consolidate my supplier base.” But these customers run into a math problem: there are not enough big guys. We think two or three companies need to emerge out of today’s environment. We’re one of the bigger players, and we think the industry is at a tipping point. With the right kind of scale, pharma companies can now engage in a more strategic conversation about where they are going with their supply chains. In 2011, when I came to the industry, all the conversations were very transactional—product-by-product. Now it will make more sense to have a strategic conversation.

The legacy of the pharma industry is that it was a very vertically integrated business; outsourcing was a relatively new concept to the industry, although most of today’s companies are quite experienced now. So it’s time to look at the pipelines that pharma companies are working on today and what will be required to commercialize their products. The future doesn’t look like the past, and internal manufacturing networks are going to have to be significantly modified over the next number of years.

Second, the industry is seeing more pricing pressure and more pressure on the entire P&L statement—return on capital from manufacturing assets is about zero. Pharma doesn’t get paid for their manufacturing assets; they get paid for IP, clinical insights and great commercial capability. What I call an ‘asset heavy’ model is moving toward an ‘asset light’ model that is more capital efficient. Being asset heavy is what we have to be—that’s our business model—but do these guys really need the heavy assets that they have beyond R&D?

Here’s the big-picture perspective: our industry is around $40 billion today, very fragmented with many specialized players, and most successful companies growing in the low single digits. Our breadth of services is relevant to about $30 billion of that market. The contract research organization (CRO) space is about the same scale, with the leading players each owning 10-15% share of the market. Our long-term goal, if you will, is to be at that scale, which is 2-3 times what we are now.

If at least some of that growth will come through acquisition, what assets are you looking for now?

We have done technology acquisitions to fill in our portfolio. One area of interest is small molecule formulation and production. It’s pretty clear that a majority of products coming through pipelines will require specialized formulation technology. There are not too many simple white pills that you granulate, blend, compress and take to market. Having a full suite of formulation technologies is essential, so we’ve filled that in.

In biologics, we’re one of a few companies that runs every platform that’s used in biotech—perfusion, batch fed, a variety of formats, we have made strategic investments in this area. Biologics pipelines continue to increase both in absolute numbers and as a percentage of pipeline. And the sterile or aseptically filled parenteral products market is very tight. We continue to invest in our own facilities, but if we could find another parenteral or biologics facility that’s high quality, we’d be interested. Geographically, we’re strong in North America in oral solids, while in Europe we are not so strong in oral solid dose capacity. We’d like to expand our footprint in Europe.

Patheon has an unusual range of clients, from Big Pharma to small biotech startups. What can you say about the complexity of handling such a wide range—and globally—of clients successfully? What are the problems of working with emerging companies as opposed to established ones? What’s the typical onboarding process for a client?

Our clients range from Big Pharma to small startups, but there is a common theme to the onboarding process: tech transfer. While we have every one of the Top 20 firms as clients, a core part of our strategy is that 80% of new molecules are held by small and emerging companies. Our strategy is that if you get involved early, it’s a very sticky business. We like you to start here in the developmental phase and then commercialize for you—that’s a fundamental part of our strategy.

Onboarding starts by getting customers into a room with the people who are actually going to do the work, technical people who understand the business from the other side. If we can’t get them to come to us, we go to them. We pride ourselves in tech transfer, with business and project managers responsible for all the big-picture things and all of the details that go into tech transfer. We’ll do more than 100 of these this year, two-thirds from outside to inside, and the other third from our development scale to commercial. This is core to being effective in this business. We like to say, if you can draw the molecule, we can figure out how to make it—synthesis pathways, scale-up, process design.

Patheon promotes “OneSource” as a new and better way of engaging with a CDMO. Doesn’t this model go against the strategy of contracting with best-of-breed providers in distinct service stages?

This question comes up all the time. The history of the industry was that there weren’t companies from which you could obtain APIs, develop commercial services or provide finished dosage forms. We’ve chosen to build our business not where the industry is today, but where it is going to be. Our customers keep coming back to the problem of supply chain complexity, which we offer to reduce by putting the process in the hands of one company.

By the way, if we need to access specialized services from a third party, we do that too. We can manage that whole process. Take the example of an emerging customer that found an API supplier in China; well, fine, but why should they do that activity when they have only one or two products, and managing that sourcing is a distraction for them? We source API for 700 commercial products; we have relationships everywhere. We have the ability to manage import and export and all that it entails. They shouldn’t be bothered with the things that we do every day, all day for our clients.

Think of us as a general contractor in a construction project. Customers ask us, can you manage this for me? And we’re happy to do that.

You’ve commented on parts of Patheon’s business being capacity-constrained. What can you say about capital investment in Patheon going forward, in API, development or commercial production?

Our capital investments are aimed at areas that are growing rapidly and have strong future growth. Today, this is in aseptically filled injectables, whether in vials, lyophilized prefilled, cartridges or drug-device combinations. The good news for us is that we have a lot of ability to expand capacity in this area. To my surprise, capacity is very tight for small-molecule API capacity in North America and Europe. For years, this capacity has been moving to Asia; but as the chemistry has become more complex, and the production scale has shrunken, manufacturers are more at ease locating their capacity closer to home in the West. So we have made incremental investment here.

We are also expanding in what we call our “condo” capacity. This started with some sterile-fill products, and now is becoming popular with biologics. The concept is straightforward: every year, there are a handful of projects that require highly specialized equipment or manufacturing processes, and the drug owner wants a high degree of control over production. So, we offer to locate that equipment in one of our facilities. We can help build, validate and run it, and the owner can choose to manage the production himself, or to have us run it. The advantage is that the facility is surrounded by all the other infrastructure—utilities, warehousing, quality control—that needs to be validated and approved, which is already in place in our facilities.

Another broader approach is flexible manufacturing. Time and again, we sit down with a client to do a forecast of their product volume, and the forecast is inevitably wrong, but I know from my experience on the other side that these forecasts are inherently inaccurate. In the face of uncertain forecasts, Patheon has the facilities, equipment and process technology expertise needed for operations and risk management, in essence flexing to meet forecast fluctuations. We encourage some clients to, in effect, take out an insurance policy by reserving capacity, paying us the opportunity cost, and then benefitting if their forecast was too low. Conversely, if the forecast was too high, they pass the excess capacity back to us, and we put it to use elsewhere. A related aspect of this insurance is to address business continuity concerns. If you currently have a sole source production arrangement, you’re only one fire or flood away from a bad day.

A final aspect of how we look at capital and where we invest is the internal networks of our customers. At today’s Big Pharma firms, their internal networks are great for the products that they have, but not necessarily for the future. The question is, can we help them migrate their network in a responsible, cost-effective way that maintains business continuity? This could be everything from selling us some of their capacity, or having us optimize their capacity, closing some things down and moving products around, or any variation on that theme. I call this the “hotel model”: hotels like the Ritz-Carlton are typically not owned by them, but they manage the property for the actual owners.

Overall, we encourage our clients to look at their business in new ways, and to take what are fixed costs and variabilize them. For example, I’ve had a discussion recently with a client at a good-sized company with a dozen products in development, who was challenged on what resource levels and skill mix he needed. But on our side, we had 500 such development programs in 2015—for us, it’s not that much of a variable. With so many programs, we don’t have to deal with the peaks or valleys in commercialization. His problem of great volatility isn’t a problem at all in our network. This was a win-win situation for both of us.

I’m assuming downstream manufacturing—encapsulation, fill & finish, packaging, etc.—are lower-margin businesses for Patheon. Will you be investing in this area? In particular, does Patheon have a program for enabling serialization/traceability on its packaging lines?

We have a platform that makes it as easy as possible for a client to go from a developmental program to commercial shipments—draw me a picture of the molecule, and tell me what package you want, and we’ll take it from there. The fact is, for packaging alone we’re the No. 2 or 3 contract packager in the US today. It’s an important core service we offer. All of our capabilities have different margins, but if you can run them at scale, you can make an adequate margin.

It’s still early days on serialization; I think we are going to see a version 2.0 or 3.0 as everyone converges on the market. Nevertheless, we are actively putting serialization capabilities on more and more of our packaging lines. In global context, we had to be ready for early adopters like Turkey, where serialization is required today.

Serialization is an interesting data management problem. For us as a contract packager, the challenge is that each customer has a slightly different vision of what they think they need. I absolutely believe that eventually, it will be a source of insights into commercial channels, but that’s yet to be seen. Besides the compliance requirement, the value will be to tap into your computer and find out where your package is—that will be valuable for inventory management as well as field recalls and sales data.

You’ve seen many changes in the pharma industry overall, and the CMO business specifically, during your career. What do you see in the future, given the growing criticism of pharma profits and drug costs on healthcare systems and consumers?

I’ll cite three vectors of change that I see. One is the importance of innovation in pharma and the ability to create value. New products with patent protection, great clinical outcomes and the ability to support these products commercially is what will make pharma successful in the developed world. Pharma should focus on the things that create value, and outsource to providers like us, CROs and other world-class suppliers for the rest.

A second vector is what is happening in the developing world, where most of the market need is filled by products that we would consider to be generics here in the US. In those markets, pharma looks more like a consumer-goods industry, where brand is most important. For example, GSK is doing a great job in India today; many people there think of GSK as a domestic company. People there and elsewhere don’t look for product brands like, say, Tylenol or Advil; they look for the J&J or GSK corporate brand, and make their purchasing decisions accordingly. Here in the US, the opposite is true; the product brand is more important than the corporate brand. A third vector is the pricing pressure being experienced in most of the developed world. Really, the only free-pricing market left is the US, and I don’t know how long that’s going to last. New pricing models, based mostly on outcomes and value to payers and providers, are going to evolve. The availability of big data on the payer and provider side from data collection systems will drive this. That’s the route for pharma to get paid for innovation. We don’t need more fiascos like what’s been seen recently over price hikes for longstanding products.

A conversation with Jim Mullen, Patheon

Despite advancements in, and the proliferation of, other drug delivery platforms, oral solid dose (OSD) drug delivery–a category that comprises both capsules and tablets–remains the most popular delivery method in use today. In fact, six out of the 10 most widely prescribed pharmaceuticals are OSD. Reinforcing this continued dominance, the US FDA Center for Drug Evaluation and Research’s (CDER) annual list of novel drugs, indicates that 24 of 45 such innovative new products approved in 2015 are OSDs. This market predominance is predicted to continue, even with the emergence of new delivery options such as transdermal applications.

The expansion is predicated, in part, by expanding OSD technologies such as semi-solid and powder-blend, which enable more challenging and potent APIs as well as modified release specifications, such as sustained and controlled release. Oral disintegrating tablets are yet another technology that is driving OSD growth. However, innovation often has complications: these new valuable, highly specialized technologies can–perhaps even more so than traditional capsules and tablets–result in products that face significant stability challenges, especially from moisture, oxygen, hydrocarbons and other gases, or a combination of these. Among other unfortunate aspects, this instability can also come from reactive impurities, such as formaldehyde and formic acid, which has been implicated in the degradation of drug products and also cross-linking in gelatin capsules.

These advanced delivery technologies have created the need for new and specialized active packaging solutions that adequately address the formidable stability challenges that have arisen simply through the march of pharmacological progress. Market demand is growing for solutions that not only protect products from unwanted moisture and oxygen ingress, but also proactively remove moisture and gases within the package headspace as well as reactive impurities and off-gassing from increasingly sophisticated—and, correspondingly, costly and valuable—OSD products.

The age-old argument: bottles vs. blisters

Bottles and blisters are, of course, the OSD package options of choice, with each facing its own headspace management challenges. These challenges stem from the headspace at the time of production, as well as ingress over time and in various, often widely differing, environmental conditions. While bottles have long dominated the US market (not the case in the EU), there is growing demand for blisters, from both existing and new drugs, driven by both consumer preferences and regulatory requirements. However, this is creating headspace management issues that have limited solutions.

Since they offer individual unit-dose compartments, blisters are preferable for situations where safety and patient compliance are of paramount concern. Blisters offer patients easy verification and indication that a dose has been taken, and also offer ease of portability. In addition, blisters typically feature tamper evidence superior to bottles and, by removing the need for a bulk container, they eliminate the traceability gap by providing improved track and tracing in pharmacy, hospital and research (i.e., clinical trial) settings.

Reduced possibility of accidental misuse is another check in the pro-blisters column, as is superior adaptability of the unit dose for clinical trial needs, which often include the need for expanded label content, high visibility, and built-in track and trace features. Each of these factors and more showcases why, when compared to bottles overall, blister packaging best addresses regulatory concerns pertaining to supply chain security, clinical trial reliability and hospital traceability.

Since each dose is housed in an individual package until its use, there is an inherent advantage compared with bottles. Still, challenges exist. Most relevant to the topic at hand is a question that is seen as an obstacle to using blisters: How can blisters offer effective and efficient product protection from oxygen, moisture and off-gassing? This is particularly important in extreme climates, such as Climate Zones III (hot and dry) and IV (hot and humid).

Blister packaging’s headspace challenge

Despite the larger amount of headspace, bottles have a simpler solve than blisters for headspace management. Unlike blisters, bottles can easily incorporate sachets and canisters to provide desiccant and/or scavenger capabilities; adding barrier technology to the actual bottle material can further mitigate degradation. Advanced protection solutions for blisters, outside of barrier technology, are less apparent, are often non-standard, impact product and supply chain costs, and can add steps to the customer experience.

Although the headspace within individual blisters may be small, it is nonetheless more than enough to significantly impact shelf life. In order to reduce ingress, aluminum foils and high barrier thermoforms are used, but headspace moisture, gases and impurities can persist.

Nitrogen purge is a popular headspace management option but can be difficult to validate, requires additional monitoring in production, and does not protect against off-gassing. In addition, since it does not protect against ingress, it must be paired with high barrier materials. Secondary (so-called “tropical”) packaging comprising sachets and fishbone designs with desiccant pucks are active solutions that address the shortcomings of purging but add size and complexity to the packaging, which in turn adds production and shipping costs. Similar to purging, tropical packaging does not protect against off-gassing.

And here lies blister packaging’s desiccant and scavenge challenge: How can blister applications address headspace management efficiently and effectively to enable the growing customer and regulatory demand for this application?

Smart packaging can be divided into two distinct areas: active packaging, which provides proactive functions such as moisture and oxygen absorption; and intelligent packaging, which communicates product changes and other information. The latter communicates something, while the former actually does something.

For the purposes of this article, let’s limit our discussion to those situations requiring active packaging–specifically, when pharma products need more than just protection and instead require the proactive removal of moisture, oxygen, hydrocarbons and reactive impurities such as formaldehyde, etc.

This past year saw the introduction of a promising packaging solution offering a novel approach to headspace management for protecting sensitive OSD pharmaceuticals from moisture, oxygen and other gases, as well as impurities from the capsules and tablets, themselves. Branded as Activ-Blister solutions, the innovation controls the internal atmosphere of each blister cavity, allowing for better product performance and shelf life, without the use of purging or secondary packaging. The patented and proprietary technology provides desiccant and scavenging capabilities to traditional and existing blistering films and designs.

Specifically, an extruded polymer a mere 0.3 millimeters thick, die-cut to fit within any blister shape and size, is adhered to the blister’s lidding via heat-staking just prior to sealing, sitting beneath the capsule or tablet and completely within the sealed space of the individual blister. The process uses no adhesives, which themselves could generate the sort of additives the technology seeks to remove; adhesive cost also is avoided.

This type of active blistering can be made suitable for any OSD packaged on thermoform-fill-seal and fill-seal equipment; it is also compatible with child-resistant and cold-form designs. Using silica gel or molecular sieve (two substances widely used for their scavenging properties) technology, outfitted blisters can be customized to absorb tailored amounts of water vapor. Using scavenger technology, blisters can absorb oxygen or targeted gases and impurities, to levels lower than those achieved by purging. Greater still, these extruded polymers can be engineered to provide combination management of moisture and gas. All options can be produced in shapes and sizes to accommodate nearly any tablet and capsule size.

For pharmaceutical manufacturers and contract packagers, the cost of incorporating such active scavenging blister solutions is, typically, more than offset by alternative measures taken to best ensure premium moisture protection, especially when compared to purging and secondary packaging. Further, Activ-Blister solutions may allow a product to move from larger cold-form packages to a thermoform that offers a smaller footprint (up to a 40-60% size reduction) and provides visibility of the capsule or tablet for the customer.

Extending shelf life, reducing returns and optimizing package design is important to any OSD application. All of these challenges are magnified in Climate Zones III and IV, making a truly global packaging and supply chain operation extremely difficult to serve. Many factors must be taken into account, including headspace at the time of packaging, ingress, and off-gassing from API and excipients. Often, there is a pile-on effect that happens throughout the product’s production, shipping and shelf life, and all of these issues can be exacerbated even further in the high humidity climate zones.

Simulated modeling can examine the impact of Activ-Blister solutions with various blister materials and designs. Attractive options can then be examined through prototyping and shelf life testing to determine both the drug product and the desiccant or scavenger performance. This process can provide relatively quick iterations and data to optimize package design.

Plus, experience has shown some unexpected benefits of Activ-Blister technology. In one example, impurities were seen in an HDPE bottle application and persisted even in a cold form blister. More interesting, scavenging oxygen and other gases also did not impact impurity levels. Surprisingly, it was ultimately found that Activ-Blister technology using a molecular sieve (MS) desiccant was able to sufficiently reduce the impurities. Even better, this performance was achieved in a thermoform design, providing capsule visibility and minimized footprint capsules. (Fig. 2.)

Utilizing new packaging solutions that actively scavenge for moisture, oxygen and other gases—as well as degradation products such as VOCs—in blister headspace, products that are normally packaged in bottles with desiccant sachets can now be thermoformed into blister cards without sacrificing protection. This move from bottle to blister can effectively eliminate the added costs associated with gas flush/purge and secondary packaging with sachets, etc.

Active blistering technology enables pharma manufacturers to achieve headspace management comparable to existing bottle options. It can extend the shelf life of alu alu and thermoforms by reducing, and in some instances eliminating, moisture and gases in existing headspace and from potential ingress throughout the supply chain. Use of this groundbreaking technology also reduces packaging complexity and costs by eliminating the need for purging, secondary and fishbone packaging. Moving from cold form to thermoform also reduces material costs and results in a smaller footprint, and its adhesive-free heat-staking helps eliminate associated off-gassing and expense.

Craig Voellmicke is VP of Business Development for CSP Technologies, Inc. (

), which focuses on pioneering new packaging technologies and designs that ensure product protection and enhance brand recognition. The company’s services include custom product design, development and manufacturing. Its portfolio of products falls into four categories: vials, films and blisters, molded components, and specialized packaging solutions.

New technologies offer improved shelf life for moisture- and oxygen-sensitive oral solids

Active packaging protects oral solid formulations

An unusual pairing of capabilities has been announced by Havas Health, part of the global communications agency Havas Group, and Vencore, a US-based IT vendor. The joint venture, HVH Patient Precision Analytics, is targeting the problem of identifying undiagnosed rare-disease patients in the near term, but both companies have expertise in additional areas of healthcare, such as healthcare communications tailored to the needs of specific prescribers. The partnering between the two firms had been announced earlier, and now it has been formalized with the choice of a CEO, Steve Costalas from Vencore, and Jeff Ceitlin from Havas Health as chief commercial officer.

Vencore has decades of experience in managing both the systems integration of high-volume data services, and advanced analytics (including machine learning and other techniques). It has already demonstrated its ability to identify undiagnosed patients of rare diseases, which potentially can cut years off the time it usually takes for such patients to be properly diagnosed.

Ceitlin tells Pharmaceutical Commerce that while there are a growing number of firms providing analytics for healthcare applications, few have the expertise that Vencore has demonstrated in large-scale data processing and analysis. This expertise will be blended with another recently organized unit within Havas Health, called xigxag, to provide consulting services to pharma marketers. Patient recruitment for clinical trials is another application that the j.v. will be pursuing.

Identifying undiagnosed rare-disease patients is a near-term goal

Havas Health links up with a government contractor for predictive analytics

A flurry of announcements from American Type Cell Culture (ATCC; Manassas, VA) signal a major commitment to new resources and capabilities in providing cells and cancer “models” (a term that refers to cell lines with particular genomic characteristics) to academic and commercial researchers. ATCC, a nonprofit, has been for years a repository of human cells, bacteria, yeasts and viruses; it also develops standardized materials and protocols for working with these biological materials in drug development and research.

In July, the National Cancer Institute announced the formation of the Human Cancer Models Initiative, which brought together NCI with Cancer Research UK, the Wellcome Trust Sanger Institute and the foundation Hubrecht Organoid Technology. Together, these organizations will “generate new models of cancer that more accurately represent human tumors,” according to an NCI statement. Of particular interest is the development of “organoids,” which are three-dimensional organ-buds, grown in vitro, that show realistic micro-anatomy. That technology itself is only a few years old. NCI contracts with a company called Leidos Biomed to manage a biorepository in Frederick, MD, said to be one of the world’s largest. Leidos, in turn, is subcontracting the management of the facility to ATCC.

Under a separate contract, NCI has chosen ATCC to manage the intake, authentication, production marketing and distribution of the cancer models. These models “will be generated using tumor tissue from patients with a variety of cancer types, including rare and pediatric cancers, and will include a complete genetic analysis and anonymized clinical information about the patients and their tumors, including their response to treatment,” according to ATCC.

And in May, ATCC renewed a multiyear contract with the National Institute of Allergy and Infectious Diseases to manage a repository of those biologic samples and compounds. This contract work has been ongoing since 2003.

Finally, ATCC announced a collaboration with BioAgilytix, a leading bioanalytical testing laboratory specializing in large molecule bioanalysis. Together, the organizations will develop new and custom cell lines, with ATCC providing reagents and cells complementing the bioassays BioAgilytix develops. The technology is said to “establish the potency and stability of therapeutic products and help establish their safety and efficacy profiles.”

On its own, ATCC maintains a 126,000-sq. ft. facility in Manassas that contains 200 freezers, including vapor-phase nitrogen freezers, mechanical freezers and cold rooms. Some 3,400 cell lines are maintained there.

ATCC broadens its resources for cell lines to research cancer

Market expectations of service and quality are continuously advancing. The health product consumer of today seeks and expects more service, more safety, more value and more customization. For this to happen requires enormous, and continuous, efficiency improvements on the part of the manufacturer.

However, productivity dividends are, like many things, subject to the law of diminishing returns. Supply network optimization offers a clear route to meeting the escalating requirements of the market while securing the long-term profitability and market respect of the participating organizations. Among the industry’s more savvy organizations, the efficiency battleground is moving from the factory to the supply chain with huge potential for efficiency gains, cost savings and competitive advantage.

Research by Accenture has indicated that, by implementing global strategies to optimize freight-related spend, shippers can lower transportation costs by up to 25%. Similar levels of savings have been recorded in other studies of pharma logistics rationalization. The bottom line is that major pharma shippers, especially those with multinational manufacturing and marketing interests, have it within their grasp to extract orders-of-magnitude improvements in value if they are prepared to support collaborative delivery models that go right down to the industry’s grass roots.

The new Team-Up initiative operates as a shipper-driven, single-focus ‘best practice’ group specifically promoting strategic partnering between all players in the pharma-logistics process. With this in mind, the Team-Up program came out of exploratory discussions at the LogiPharma 2016 Conference in Montreux followed by a roundtable consultation with key stakeholders. The idea behind the consultation process was to bring a senior representative from each of the main pharma-logistics stakeholders around a table to explore the potential for genuine end-to-end collaboration.

In the case of pharmaceutical manufacturing, the processes concerned are generally under continuous efficiency review and, as a result, most of the “low-hanging” productivity gains are quickly picked up. In contrast, pharma-logistics operations tend to be relatively comatose, often escaping root and branch analysis by pharma producers on account of their ‘non-core business’ status, and the anticipated cost and disruption of change.

However, it is becoming increasingly difficult to reconcile the growing demands for reduced costs with those for improved performance. Logistics companies are having to negotiate an ever more intricate labyrinth of regulations, performance standards and shipping routes while maintaining the profitability necessary for innovation, business development and shareholder return.

These logistical challenges are particularly acute in developing regions where there may be additional risks associated with infrastructure limitations, tax, duty and regulatory complications, poor market data, ramp and handling inefficiencies, language barriers, and a lack of trained manpower.

Team-Up is seeking to emulate the radical supply-chain re-engineering that is a recurring feature of many other logistics-intensive industries such as automotive, retail, aerospace and construction.

A preliminary portfolio of Team-Up goals includes:

Realigning the corporate culture of pharma logistics to better support integrated working.

Sharing collaborative best practice and providing the industry with practical advice and tools in order to standardize partnering methodologies and facilitate the assembly of integrated supply networks.

Providing shippers and logistics providers with a recognized accreditation status for exemplary collaborative working and to promote these credentials to all sector stakeholders.

Strengthening the business case for integrated supply networks by building an evidence-base from pilot programs and other evaluations.

Team-Up operates independently of any existing bodies and movements, and is not associated with any vested interest groups or particular segments of the supply chain. This makes it relevant to the entire pharma-logistics sector, including all modes of transport—air, ground and ocean. The Team-Up approach is of universal validity and has no geographical barriers—local, national or international. Furthermore, the Team-Up approach has been designed to foster the collaborative working practices that are implicit in partnership-dependent programs, such as IATA’s CEIV program, the Pharma.Aero group and other industry collectives.

Planning sessions are being held in late 2016 with a formal kickoff slated for early 2017. We invite all interested parties to contact the Team-Up organization and play an active role in its development. Contact us via 

Alan Kennedy is a collaboration consultant and executive director of Team-Up. A pioneer of integrated supply chain working, Alan first got involved in the practical implementation of collaborative working methods in supply chains while working with the Electrolux Group in the 1980s. More recently, he has been involved in bringing best-collaborative practices to the pharma-logistics sector. He has presented at many conferences and published numerous papers on the subject of supply chain collaboration and integration. He can be reached at a.kennedy@team-up.global.

Team-Up seeks to bring manufacturers and logistics providers together

A new approach to pharma supply-chain collaboration

2017 is going to be a busy year for traceability initiatives in the US and abroad, as manufacturers and packagers get more experience under their belts in installing the necessary serialization equipment, and wholesalers and other trading partners are making initial forays into actually using the data that traceability mandates are generating. In the US, the deadline is late November 2017, when—by law—all US-packaged pharmaceuticals are to have a “serialized numeric identifier” (SNI) in place, at the unit-of-use level. This is one of several upcoming deadlines under the 2013 Drug Supply Chain Security Act (DSCSA). China, South Korea and India are wrestling with their own internal systems, while Brazil has put a hold on its program until next year.

In Europe, the Falsified Medicines Directive (FMD), an EU-wide mandate (with several other European countries—including Great Britain post-Brexit—also complying) has an early 2019 deadline for a first stage of compliance. Several European trade associations have already organized as the European Medicines Verification Organisation (EMVO), and the initial stages of a European Hub for transmitting serial identification data among member countries have been taken, with early 2017 as a target for operational capabilities of the Hub to be in place.

So far, so good. Despite such mandates, FDA is months overdue in producing guidance documents based on DSCSA. In a presentation at an FDA DSCSA public hearing in mid-October, Anita Ducca, SVP of regulatory affairs at the Health Distribution Alliance (formerly HDMA), voiced concern that this overdue guidance is gumming up some basic documentation processes for DSCSA. “The lack of federal licensure regulations [is leading to] state inspectors and state boards developing different interpretations and requirements that are inconsistent with the DSCSA and with each other. And once the federal regulations do issue, states will have to go back and amend what they’ve just changed, creating additional stresses for the states’ limited resources, as well.”

Meanwhile, the FMD, which is supposed to combine serial item data with product master data (that is, a description of what it is that has been serialized) is dependent on a different program, the Identification of Medicinal Products (IDMP), which is being managed as an effort of the International Standards Organization (ISO). That effort is proceeding on its own timetable, and EMVO says that its availability when the FMD is supposed to be in place remains “to be determined.”

Two other operational standards bear mentioning: at press time, the GS1 organization (a nongovernmental organization whose participants are most of the barcoding users and suppliers in the world) was about to release version 1.2 of its EPCIS standard. EPCIS provides the definitions and coding procedures for how traceability and identification information are to be shared among trading partners and government agencies. Peter Sturtevant, senior director at the GS1 US organization, notes that this EPCIS v1.2 will have 152 examples of exception management (unaccounted-for disconnects between the flow of product through supply chains and the flow of identification and transaction information that is supposed to accompany it), given clear evidence of how complicated pharmaceutical distribution is about to become. GS1 Healthcare has a process for certifying compliance with the EPCIS standards, but this measure of performance is only sporadically being followed by vendors in the field.

Another industry-led initiative, the Open Serialization Communication Standard, or Open-SCS, now has two more members (Arvato Systems and TradeTicity) in addition to the 13 it had in August, when a press release updating its activities was issued. (The 13 members onboard then were Abbott, Advanco, Antares Vision, OCS Checkweighers, Omron, Optel Vision, Roche, Pfizer, SAP, Systech, Teva Pharma, TraceLink and Werum IT Solutions.) Open-SCS is an effort to address interfacing issues among the equipment used for serialization: machine vision systems, case-packing machinery, labeling devices and the like. Like EPCIS, Open-SCS seeks to establish a common interfacing protocol for serialization (at least at the packaging line level), but it’s an open question whether the standard will be in place before the bulk of packaging line equipment has been put on order by manufacturers.

Given the complexity of all these efforts, it’s no surprise that when industry experts looked at the California e-pedigree rules that were supposed to go into effect in 2009 they were pushed off to (at that time) 2015. When the DSCSA federal law was passed in 2013, its full implementation was to be staged year by year through 2023. The industry, FDA and the various nations taking on this task will be hard-pressed to have a functioning system by the early 2020s.

Which is not to say that the pharma industry is standing pat on serialization and traceability. Some 15% of the 10,000 (or more) packaging lines for pharmaceuticals have been fitted out with the barcoding and data-collection systems, according to informal polling of industry insiders. Systech, Optel, Antares Vision and others that supply the line-level machine vision systems have all expanded over the past year, and the battles among the vendors is going hot and heavy right now. Some reports of months-long delays in getting the necessary machinery are already beginning to crop up as the November 2017 deadline in the US approaches.

The big question before packaging and manufacturing engineering teams at the moment is whether to install so-called aggregation equipment at this time. Aggregation addresses the realities of how pharmaceuticals are shipped—generally, in cases that hold 24 to 100 or so units of the drug product. As each unit has its own serialization number, and as DSCSA requires pharma trading partners to verify that those specific serial numbers have been received, wholesalers and others are concerned that, without an aggregation step, they will be obliged to open each case and manually verify its contents. With an accurate aggregation, wholesalers want to be able to infer the contents of the case. However, aggregation/inference is not mandated by DSCSA.

An excellent example of a packaging line with aggregation was 

 this summer for an unnamed pharma client (packaging and labeling vendors Domino, Cognex, Omega Design, ESS Technologies and Weiler Labeling Systems were also involved). The 24 pill bottles that make up a bundle of product are each barcoded on their bottoms with a “helper code” linked digitally to the actual serial number on the sides of each bottle. These helper codes are read with the assistance of a Fanuc robotic arm that picks up the bundle, presents it before a camera, and then places several bundles in a case. According to industry experts, such systems can double the cost of a serialization project on a packaging line. Mindful of the capital expense of such systems, and mindful also that many pharma packaging lines run at fairly slow speeds, serialization equipment vendors have also developed manual case packing stations: An operator manually loads a batch of cartons, records the serial numbers digitally with a scanner, and then generates a case label that contains the identified serial numbers. For their part, wholesalers are telling pharma manufacturers that they will insist on aggregation to accept deliveries; in the final analysis, however, drug shipments still have to go through to meet patient demand, so some workarounds will eventually be established.

Packaging and manufacturing engineers, with a boost from automation experts, will work out the details of implementing serialization in coming months. A pharma manager concerned with DSCSA compliance, however, has to pay attention to the IT systems that take the packaging-line data, add the EPCIS event information, and then make it available to trading partners and others. Third-part logistics providers (3PLs), contract packagers play a role as well, depending on how the pharma brand owner assembles its network. As products move down the supply chain to pharmacies, hospitals and other dispensers, these organizations need enterprise-level data management as well. This level of data management is a hotly contested business arena as well.

By some measures, TraceLink is pulling away from the pack of traceability vendors. The company is not shy about broadcasting its project wins and customer base—currently at 105 pharmaceutical and contract manufacturing organizations, plus more than 300 downstream customers. It is operating in both the US and Europe, as well as several Asian countries.

A key to TraceLink’s rapid adoption was its early decision to build it traceability platform in the cloud, with a true, multitenant architecture running mostly on Amazon Web Services. Pharma companies and distributors have been encouraged by TraceLink to file account information with it (whether or not they are TraceLink customers), and more than 240,000 users have done so, says the company. The cloud-based account provides ready access for up- or downloading serialized data; subsequently, those users may opt to have TraceLink’s Life Sciences Cloud manage serial-data records.

Also charging into the market is SAP, which announced the Advanced Track and Trace for Pharmaceuticals (ATTP) platform a year ago. ATTP updates an earlier SAP traceability platform built on SAP’s Object Event Repository. Currently, SAP says that many of its clients have opted for an on-premise implementation of ATTP. This fall, word came out that it is tailoring ATTP to a cloud-based format, with Deutsche Telekom among its cloud-based providers.

As traceability business in pharma ramps up, more players are crowding into the arena. Longtime participants such as Axway, with its Global Trade Manager platform, Frequentz, with its Information Repository and Intelligence Server (IRIS), rfXcel, with its Compliance Management offering, have won pharma distribution business. Verify Brand, a participant in earlier stages of pharma traceability, is building out a services team and has substantial serialization business outside pharma. Systech, which has a large base of customers for its packaging line technology, has revamped the formerly named Systech Guardian and Sentry software as UniTrace. New players, such as TrackTraceRx, based in Orlando, FL, have appeared.

A growing number of vendors based in Europe, where serialization projects ranging from pharmaceuticals to wine and other consumer goods have been undertaken, are also competing for global business. Among these are Adents and TradeTicity. Recently, Systech announced a partnership with Servicepoint Oy, an automation vendor in Finland. Arvato Systems, the IT arm of the Arvato group, a major distributor in Europe, is marketing a traceability platform based on its experience in developing some of the software used in Germany’s SecurPharm project (Germany’s approach to FMD compliance).

Mention should also be made of companies that put an emphasis on warehouse or related “edge” systems that are designed to carry serialization data from the packaging line through to warehouse inventory and beyond. Two companies in this space, ROC IT Solutions and Acsis, have been winning pharma business.

Yet another category of service providers are IT systems integrators or consulting firms that assist pharma companies building out their traceability platforms. Navitas, a New Jersey-based systems integrator, is working with Axway on implementations. Movilitas, a European-based firm, has a close relationship with SAP, while Xyntek, based in Pennsylvania, is the North American distributor of Antares Vision software and hardware. Excellis Health Solutions, a strategic consulting firm, has been guiding corporate-level planning and runs a regularly scheduled meeting, Global Track & Trace, for industry participants. Another company, Vantage Consulting Group, announced a consulting service specifically for contract manufacturers and packagers in September.

While TraceLink is exclusively a multitenant system, most of the other traceability IT vendors offer either on-premise or cloud-based single-tenant systems.

TraceLink maintains that a multitenant system (where any software upgrade affects all users more or less at that same time) provides a better guarantee of interoperability and lower cost of ownership, because the exercise of reconfiguring the software is avoided. Its competitors, however, argue that a single-tenant version has a higher level of security for individual customer’s data and more control over access to that data. Arguments on both sides of this question are compelling, although the growing use of TraceLink’s solution is pointing in the multitenant direction. To some degree, SAP is straddling the tenancy question by developing a platform, PharmaNET, that will offer trading partners a means of exchanging information speedily.

Haris Kamal, SVP at Verify Brand, makes the point that multitenant solutions reduce the user’s configuration control, and create complications when that user wants to customize the platform for specific needs. And while mutitenancy and interoperable industry standards like EPCIS are supposed to make exchanging information relatively straightforward, the reality is that many traceability implementations have custom modifications of one sort or another. This variability might dissipate as more systems are deployed and as EPCIS, Open-SCS and governmental guidances become more established; that’s a question the industry will be resolving for years to come.

The full implementation of DSCSA will require the active participation of retail pharmacy and hospital-based health systems, who are obligated to verify the authenticity of the products they receive from distributors in their own systems. The major wholesalers are offering to do this as a service to their retail pharmacy clients, especially the independent pharmacies; but little is being heard from the major drug chains.

On the health system front, however, 2016 saw significant progress by hospital pharmacy directors eager to deploy traceability as a means of managing their internal flow of drug products. Here, TraceLink has racked up several clients, including some major group purchasing organizations who, in turn, recommend TraceLink to their members. RfXcel and a new company, The Forerunner Group, have been similarly recommended by Premier, Inc., a leading GPO.

One company that might have a beeline into retail pharmacy DSCSA compliance is ValueCentric, which has been collecting and analyzing distribution data, based on conventional EDI records, for years for pharma and distributor clients. The company claims a DSCSA compliance capability that will meet pharmacies’ coming deadlines, and has worked closely with Walgreens in the past on data collection and reporting.

Another traceability theme that has arisen during 2016 is the applicability of blockchain technology to pharma traceability. Blockchain, also known as distributed ledger technology (DLT) is the underlying technology for bitcoin, the currency not based on any national treasury. At its heart, blockchain is a method of distributing the validation of a record or transaction across many data-storage systems, none of which are connected directly to another. In effect, the network itself is the validation of a record.

For pharma traceability, blockchain could do two things: relieve the dependency of one centralized data repository where all records would be maintained (which is the driving principle of the national authentication systems under Europe’s FMD); and, with the appropriate data-access controls in place, enable companies who are not direct trading partners of each other to verify transactions and, ultimately, drug authenticity. (It bears mentioning here that the driving force for passage of DSCSA was to prevent the distribution of counterfeit products, and FDA is most focused on protecting the US supply chain from those counterfeits.)

FDA has left open how DSCSA data is to be communicated up and down the supply chain when the system is fully established after 2023. A central repository is conceivable (although who would run it is an open question); another is a so-called federated system of repositories that could communicate with each other. (At the moment, each originator of package serial numbers is keeping its own data stored, and sharing it with trading partners it deals with.) The original architecture of GS1’s EPCIS standard included the concept of a “discovery service,” whereby queries about the origin of a particular drug package could be handled, but the implementation of this is still in the concept phase.

Most serialization participants Pharmaceutical Commerce queried during late 2016 scratched their heads about blockchain: the work at hand on existing technology implementation is so intense, and the focus on DSCSA compliance so close, it leaves little time for anything else. However, the topic got some momentum when the Office of the National Coordinator (ONC), an arm of the White House that is directing healthcare IT standards nationally, set up a competition for papers on “Use of Blockchain in Health IT” earlier this year, and announced winners in late September. Most of the papers were focused on blockchain for managing patient records, healthcare reimbursement processes and collecting clinical research data; the competition also demonstrated that heavyweight IT consulting firms like Deloitte and Accenture are looking closely at the technology.

Robert Celeste, a former GS1 Healthcare manager who has set up his own consulting firm, RC Partners, is also organizing a Center for Supply Chain Studies, and has targeted the potential use of blockchain in pharma traceability as a research topic. The company is currently running seminars on the topic, and hopes to organize a member-driven study during 2017. More information is available at 

The tempo of project work is accelerating to meet deadlines in 2017 and beyond

Pharma traceability: year in review

Relative to other disease states, like cancer, diabetes or cardiovascular, ophthalmology is both smaller and less contentious. A relatively small number of pharma companies have significant franchises in it, namely, Allergan, Alcon (a subsidiary of Novartis) and Bausch + Lomb (a subsidiary of Valeant). With overall drug expenditures in the US of around $20 billion, the field doesn’t light up the radar screens of many payers looking for ways to clamp down spending.

Ophthalmologists admit few patients to hospitals, and their surgeries lack the high technical and facility fees hospital administrators seek in full-time employees. Nor has the specialty shown much interest in healthcare reform pursuits, such as transitioning to value-based reimbursement or joining accountable care organizations. The result is a workforce whose worldview remains pretty much unchanged since the 20th century: independent; prone to DIY clinical solutions; and, with less outside review, quick to embrace innovation.

However, the times are changing. A relative shortage of ophthalmologists (there are about 18,000) has led to “co-management” with optometry practices; optometrists (depending on state regulations) write nearly as many prescriptions as their physician colleagues. (1). Everyone is getting busier as the US population ages; eyecare expenditures for the over-65 demographic are nearly nine times as high for younger demographics. Meanwhile, a wider array of eyecare conditions—many of them qualifying as rare diseases—are now targets of drug development. One company—Shire Pharma—is gearing up to be a major player in the field; another is Akorn Pharma, which added three branded ophthalmic products from Merck to its portfolio in 2013. Growth rates of 5%/year are being predicted for the category.

Yet one more factor differentiates the field, and one that constrains some pharma industry growth: the widespread use of compounded pharmaceutical products. Ophthalmologists are, in fact, one of the leading medical professions supporting wider access to compounded products.

Enter newcomer Shire Pharmaceuticals (Dublin, Ireland), with bold plans to compete at almost every level of prescription ophthalmic drug therapy, and hopes to revitalize an entire industry. “There are really only a few companies that have a major presence in this space, so I think that has really, from a standpoint of Shire as a new entrant into the space, allowed us very quickly to build up our awareness and make some significant inroads,” Robert Dempsey, head of Shire’s Ophthalmic Products business unit, tells Pharmaceutical Commerce.

Shire’s portfolio consists of rare disease and specialty pharmaceuticals, mostly in gastrointestinal, internal medicine and neuroscience spaces—but until recently no eyecare drugs. When Flemming Ornskov became CEO in 2013, he knew from his years as an executive at Bausch + Lomb that the sector contained a great deal of patient need. He also knew much of that need took the form of rare diseases. For example, the retinal pigment epithelium alone can be the site of more than 200 rare maladies, most of them incurable. It seemed a perfect fit for Shire. Within a year, he had appointed Allergan veteran Robert Dempsey to head up the newly created Ophthalmic Business Unit.

Since then, the company has been laying groundwork, cooperating with professional organizations, sponsoring medical education and grants, working with key opinion leaders, and making a strong commitment to ophthalmic R&D. By the end of 2016, Dempsey estimates that Shire will have spent about $850 million on the ophthalmology move, even before launching a single drug.

This summer, the company received its first ophthalmic FDA approval, for Xiidra (lifitegrast), a dry eye drug. The launch of Xiidra will be closely watched, as it challenges Allergan’s dry eye blockbuster Restasis (cyclosporine), which generated $1.3 billion last year. There are an estimated 16 million dry eye patients in the US, many undiagnosed. The potential market might be big enough to allow Xiidra to achieve blockbuster status without encroaching much on Allergan’s market share, some forecasters believe.

In addition, Shire has investigational products for other conditions in various stages of development, including glaucoma, retinal disorders and infectious conjunctivitis (pink eye). Promotional materials indicate the company hopes to target “the anterior and posterior segments and rare ophthalmic diseases,” or, in other words, pretty much everything ocular.

Taking a page from Allergan’s Restasis launch strategy, Shire is planning a comprehensive direct-to-consumer advertising campaign. It recently signed Jennifer Aniston as a celebrity endorser. Few remember it now, but Restasis was not an instant success when it launched in 2002. Former Allergan employee Denise Sheehan, who now serves as the global marketing lead for retina at Santen, recalls that “it was not until after Allergan made some strategic investments in direct-to-consumer advertising, also with a celebrity endorser, that the brand really took off.”

The consumer choice element in dry eye is unusual for ophthalmology, which tends to be dominated by specialty drugs marketed to physicians. Currently, the most dynamic area here has been in the retinal field, driven by the success of anti-VEGF therapies. (Anti-vascular endothelial growth factor is a component of treating eye conditions as well as reducing tumor growth in cancer.) Anti-VEGF therapies effectively treat a number of serious, vision-threatening retinal conditions, including age-related macular degeneration (AMD), diabetic macular edema (DME), and central retinal vein occlusion (CRVO) among others.

Developed by Genentech (San Francisco, CA), the first highly successful agent, Lucentis (ranibizumab), arrived in 2006 (Fig. 1). Before that, however, ophthalmologists got wind of the promising trials and began using a similar Genentech product purchased through compounding pharmacies, Avastin (bevacizumab), off-label (Fig. 2). Avastin produced similarly positive outcomes and costs only $50 per dose, compared to more than $1,000 for Lucentis. When the company took steps to limit Avastin’s availability to compounding pharmacies, ophthalmologists cried foul. Eventually, the company backed down, but the lingering animus within the profession actually resulted in the heightened popularity of the off-label option, many observers say.

To this day, despite the addition of Eylea (aflibercept) by Regeneron Pharma in 2011, Avastin remains a staple among retinal surgeons, who may use it when other options fail or in cases of financial need. Occasionally an insurance plan will require Avastin as a first-line therapy, but for the most part, prescribing decisions have been left to clinicians. One reason is Avastin’s off-label status for eyecare. “While compounded Avastin is lower cost, it does require manipulation of an injectable product which will ultimately be injected into the patient’s eye,” explains Andy Behm, VP of clinical evaluation and policy at the pharmacy benefit manager Express Scripts. “It’s challenging to mandate if the prescribing physician is uncomfortable with the product or the dispensing pharmacist has little to no experience in compounding it.”

Even so, if the profession has a financial Achilles’ heel, injectable retina drugs are it. Experts believe some form of cost curtailment could emerge from CMS rather than private payers since Medicare covers most anti-VEGF patients. “Last year Medicare Part B spent $8.4 billion on claims by ophthalmologists,” notes Kevin Corcoran, COE, a consultant in San Bernardino, CA. “Of that amount, $2.7 billion was supplies, and almost all of that money was spent on just two items: Lucentis and Eylea. So in other words, 32% of all the money ophthalmology received from Medicare was for just two drugs. And that number keeps rising every year.” In the long run, he concludes, such numbers are unsustainable.

Economists blame a small market and increased competition for recent shortages and price hikes among generic drugs. A few examples: Acetazolamide, an oral glaucoma drug, which once sold for less than $50 for a bottle of 100 pills, now costs $350. Carbachol, a drop used for glaucoma and certain eye surgeries, is no longer available. Echothiophate powder, used to create glaucoma drops, is no longer available except at exorbitant prices. (2)

Clinicians express particular ire for what happened to phenylephrine hydrochloride, a topical pupil dilator used for many decades during cataract surgery. In 2013, because of a paperwork glitch (the 70-plus-year-old generic did not have a National Drug Code number), it gained approval from the FDA as a “new” drug. Within four months, all three other makers of phenylephrine withdrew from the market. Now Bausch + Lomb sells for $115 per bottle what once cost $15.

Another area of concern is the rising cost of branded antibiotic drops prescribed to cataract patients post-surgically to prevent infection. In a professional organization’s trade journal, prominent cataract surgeon Eric Donnenfeld, MD, wrote: “Today, my patients are outraged at the cost of cataract surgery medications, and my staff is considering mutiny after fielding dozens of calls a week to resolve medication cost and insurance approval issues.” (3)

Allergan, Alcon and Bausch + Lomb have introduced coupon systems that reduce copays, but this can also be a hassle, writes Donnenfeld: “This [coupon] system has to become more seamless as my staff and I want to do what is best for patients, but do not want to be handing out coupons all day.”

As a result, ophthalmologists are increasingly opting to inject the drugs during the surgery itself. Intracameral antibiotics have been around since the 1990s—about 20% of surgeons use them today—but when reports began to surface of patients avoiding cataract surgery for financial reasons, they gained popularity. Unfortunately, no FDA-approved products exist for this purpose. Thus some surgeons are turning to compounding pharmacies to create customized, off-label injectable products. For example, the compounding pharmacy Imprimis (San Diego, CA) offers an injectable agent called TriMoxi, which combines triamcinolone and moxifloxacin.

Because ophthalmologists rely heavily on products created by compounding pharmacies, keen interest surrounds the Drug Quality and Security Act of 2013, which re-regulated the industry after NECC compounding scandal, in which allegedly contaminated, compounded steroids caused dozens of deaths and injuries. FDA has released multiple guidance documents aimed at clarifying the law, but gray areas persist.

Over the summer, in Congressional testimony regarding the latest draft guidance document, Nancey McCann, director of government relations for the American Society of Cataract and Refractive Surgery, stressed that, in addition to Avastin, clinicians need compounding pharmacies to provide fortified antibiotics for patients presenting acute corneal ulcers.

“Physicians have reported varying difficulties in obtaining compounded drugs since recent guidance has created confusion in the market among state boards of pharmacy, providers and pharmacists,” she testified. “Because these drugs are not used in practices on a regular basis, physicians generally order them in smaller quantities, which makes it less cost-effective for the outsourcing facilities to produce.” Also at issue are the proposed beyond-use dates (BUDs), which, at only five days, remain too short to keep drugs in stock, critics say.

“The regulations and DQSA guidance has resulted in consolidation of compounding services, most notably, driving the differentiation between a 503A and 503B facility,” according to Eric Sredzinski, PharmD, EVP of clinical quality assurance for Avella Specialty Pharmacy, which also offers compounded pharmacy services. “From our perspective, determining products to compound is a balance between practitioner demand, feasibility, and the investment required to compound. Avella’s focus has always been on quality and patient safety and we welcome continued standards with compounding, such as those positioned in DQSA,” he says.

In addition, retina specialists risk being impacted by potential Medicare reforms of the Average Sales Price (ASP) metric used for reimbursing provider administered injectable drugs. Under the so-called “buy-and-bill” drug acquisition model, CMS pays practices 6% above the sales price for these drugs, but CMS is seeking to change that formula. In March, CMS proposed a test of lowering the ASP bonus to 2.5% plus a fixed $16.80 payment in some geographical areas, but it is unclear whether this pilot study will actually move forward.

Retinal surgeons could avoid buy-and-bill altogether by obtaining drugs through specialty pharmacies like Avella—and some do—but most practices opt for the greater inventory control and profitability offered by keeping drugs in stock. However, the challenge here is that it strains the profession’s limited knowledge of this drug channel.

“For retina, buy-and-bill is still relatively new,” says Jennifer Waters, VP of sales for ophthalmology for the drug wholesaler McKesson. “It’s only been around since 2006 [the launch of anti-VEGF agents] that they have been doing it.” Hence her company makes special efforts to help practices with inventory management, regulatory updates and administrative advice: “We have a consulting arm that will partner with the practice and look at their managed care agreements, maybe help them negotiate with private payers. We have a team that will go in and do an in-practice diagnostic around their revenue cycle—how quickly they can get bills out the door and get reimbursed better—things like that.”

Within the subtext of Shire’s marketing pitch lurks the message that ophthalmology has been ill served by its current drug manufacturers, Dempsey says, “Some of the other companies are going through some challenges in this space. We believe we are investing in research and development, while others are divesting.”

He has made similar comments in other venues, and they could be interpreted as a criticism of Bausch + Lomb, whose parent company Valeant (Laval, Canada) has a reputation for slashing R&D budgets and artificially driving growth through steep price hikes, a practice that made headlines last year. However, in the context of vision care, one Valeant endeavor does deserve scrutiny, and perhaps not in an entirely negative light.

In his final troubled days as CEO last year, Michael Pearson struck a deal with Walgreens Boots Alliance for the pharmacy chain to sell certain ophthalmic and dermatologic drugs directly from its 8,000 US locations on a consignment basis, skipping over wholesalers. Valeant paid the pharmacy a dispensing fee regardless of whether insurance covered the drug.

For Valeant, the arrangement proved disastrous. It footed the bill for the 25% of prescriptions that payers refused to cover and saw its eye-drug sales plunge 30% in the first quarter of this year. The company’s new CEO is trying to extract the drug maker from the deal.

But where some see this as a cautionary tale, others see a potentially successful new idea poorly executed. “It’s a shame to think of this as a failure, because I do think a model like this could work,” says Kathleen Iacocca, PhD, an assistant professor at Villanova University School of Business, who has studied drug supply chains. “The issue was the insured. The company took a leap of faith without checking to make sure if insurance would actually pay. But imagine if a manufacturer could partner with a third party where pre-authorization could take place. That model would be groundbreaking.”

Iacocca added that because of its high-profit margins and relative lack of generic competition, a small specialty like eyecare would be an ideal space to test such a model.

The bigger picture points to steady growth in eyecare, if only for demographic trends. “Almost everybody, if they have enough birthdays, is going to need to see an ophthalmologist,” notes consultant John B. Pinto, president of J. Pinto and Associates in San Diego, CA. “It’s not like an oncologist or a podiatrist where only a fraction of the nation has a relationship with you. Almost everybody gets to take a turn at the ophthalmology dial.”

Gonzales AL, et al. A survey of optometrists’ ophthalmic medication prescribing. Clinical Optometry. March 2014;Vol. 6:11-15. Retrieved: 

https://www.dovepress.com/a-survey-of-optometrists39-ophthalmic-medication-prescribing-peer-reviewed-fulltext-article-OPTO

Roach L. (January 2015) “The State of Generic Drugs,” EyeNet Magazine. Retrieved: 

http://www.aao.org/eyenet/article/state-of-generic-drugs

Donnenfeld E. (March 2016) “The Eye-Q Test,” EyeWorld Magazine. Retrieved: 

http://www.eyeworld.org/article-the-eye-q-test

New industry entrants aim at expanding patient volumes even while drug compounding limits some therapy classes

Pharma seeks growth in eyecare

Many people who interact directly with an elderly person know that they often carry various kinds of daily or weekly pill dispensers with them—by one measure, an elderly person typically is consuming a handful of prescriptions or OTC products daily, and often more. Now, an inventor from Texas, Vincent Mauk, is offering a feature-laden version of these dispensers, and one specifically attuned to elderly living on their own or in assisted living, whereby a nurse or other caregiver can program the device with simple usage instructions and data-collection measures.

“I developed this to help my mother, who had difficulty keeping track of which pills to take, and when,” he says. Even remembering that a dosage has been taken can be a problem for some. The case features various slots for daily dosages, a simple datalogging device for keying in instructions color-coded to time of day and day of week, and a writing pad for recording pill consumption. A visual alarm can also be programmed to act as a reminder that a dosage is due. Interactivity via a Bluetooth connection is being planned for a next version.

Mauk’s company, Silver Magnolia Medical Products, has patents on the design, and has undergone an FDA review. He is having discussions with the medical managers of assisted living facilities, and is looking for a retailer to put it on community pharmacy shelves. It can also be purchased directly, for $145, from 

Branded as MedStation, the device gives active guidance to seniors

Putting drug administration in patient’s hands

As the graying of America continues unabated, seniors now represent 14.5% of the US population—one in seven Americans. The oldest Baby Boomers are turning 70 this year, and according to US Census data, starting in 2011 and continuing until 2030, roughly 10,000 Baby Boomers celebrate their 65th birthday each day. With advanced age comes increased consumption of healthcare services, prescription medications and increased reliance on long-term care (LTC) facilities, including nursing homes, skilled nursing facilities and rehabilitation centers.

The old are getting older, too: By 2050, an estimated 27 million people will need long-term care services and support, up from 15 million in 2000, according to CDC statistics.

These facts have been cited for many years, but what is less noticed is how trends in gerontology are changing the LTC industry, and the pharmacy businesses serving it. Speaking at an investor meeting last spring, Gregory Weishar, CEO of PharMerica, said this “sleepy little business” is evolving as the concept of “age in place” grows widespread: seniors are staying in their own homes longer (increasing the need for home health services), or moving to assisted living facilities (a business growing faster than nursing homes) and a variety of senior communities that provide a higher level of healthcare than in the past.

PharMerica, the No. 2 institutional pharmacy company serving the LTC industry, is addressing these trends by expanding its home infusion service business, and developing a sideline in specialty pharmaceutical services, primarily for oncology products. The No. 1 company in LTC pharmacy, Omnicare, has undergone its own dramatic change, being acquired by CVS Health in 2015. A year later, that action by CVS is already benefitting its bottom line profitability.

Aside from these two market leaders, there are approximately 1,200 independent LTC pharmacies, which operate in much the same relationship to the market leaders as independent community pharmacies do to the chain drugstores. In particular, the bigger firms are consolidating the industry by acquiring the independents; PharMerica alone says it sets aside $100 million annually for this purpose.

Evidence of how contested this arena is becoming can be found in the formation, in 2014, of the Senior Care Pharmacy Coalition, a Washington, DC advocacy group sponsored in part by the major wholesalers who serve the independent LTC pharmacies. It advocates for many of the same issues as independent community pharmacies, such as PBM reimbursements, federal rules on compounding and conflicting CMS guidances.

QuintilesIMS, in its annual Use of Medicines report, pegs pharmaceutical sales to LTC at $16.7 billion in 2015, up only 3% from the year before and well off the overall industry growth of 12.2% (the figure does not include home health; it also represents ex-manufacturer pricing and not the discounting that occurs with most pharmaceutical sales). A major factor in revenue growth is the increasingly tighter reimbursement policies of CMS; besides Medicare itself (which pays for most elderly pharmaceutical dispensing), the Medicare Advantage plans that many insurers offer contain the same formulary lists and reimbursement tiers that put pressure on pharmaceutical revenues for all types of patients.

Per CMS data, there are more than 15,000 skilled nursing facilities (an SNF is a nursing home certified to accept Medicare payments); many are privately held (and around 70% are for-profit), but many are also run by charitable organizations or community health services. And while Argentum, a trade association of senior living communities, counts 7,000 assisted-living, independent-living and memory-care facilities among its membership, there are some 45,000 other senior living facilities in the US.

A senior, residing perhaps at an independent living facility, is likely to go to the local pharmacy or visit a local doctor, just as in younger days. But for most SNFs, some assisted-living facilities and an undetermined number of other living arrangements, the LTC pharmacies are the main source of medications.

LTC pharmacies play a more central role, generally speaking, than retail pharmacy does for general-population healthcare. Because many nursing home residents have limited cognitive skills combined with many comorbidities, there are extensive federal regulations and professional best practices on how their care is managed. Some LTC pharmacies provide the consultant pharmacists that are required to review a resident’s medication regimen monthly, which is designed to ensure that medications are being prescribed for medically valid reasons.

“Consultant pharmacists look at the resident’s overall medication profile to ensure elements such as appropriate indication for a medication, minimization of drug interactions, appropriate medication and lab monitoring, polypharmacy issues, and proper medication administration,” says Kimberly Binaso, PharmD, VP of clinical services at Managed Health Care Associates (MHA), a group purchasing organization for post-acute care facilities. “They also serve as an educator and advisor to the facility, typically serving on various committees and conducting quarterly in-house services on a chosen disease state or regulatory topic.” As such, consultant pharmacists have a key role to validate, challenge and modify the initial drug selections made by the attending physicians and other health practitioners.

The American Society of Consultant Pharmacists (ASCP; Alexandria, VA) counts 8,000 such pharmacists in its membership, including students.

Besides these third-party consultant pharmacists, there are others involved in selecting medicines for LTC residents. These include the prescribing physician or nurse practitioner (who specify the initial prescription), the nursing staff (who are in a position to recognize symptoms that may call for a given therapeutic treatment option to be prescribed), the medical director of the facility, and the pharmacy & therapeutic (P&T) committee members who are responsible for shaping the formularies that will be used by an LTC facility.

Generics occupy roughly the same market share in LTC as in the general population—around 85%. But new therapies are having a profound impact.

“In recent years, the range of medications prescribed in nursing homes and other LTC facilities has been greatly expanded, to include more therapies that are used for the long-term management of chronic conditions such as cancer, HIV, end-stage cardiomyopathy, multiple sclerosis, inflammatory conditions, diabetes, hepatitis C, autoimmune diseases and others, many of which were unheard of in nursing home settings only a few years ago,” says Dr. Richard Stefanacci, DO, chief medical officer at The Access Group (Berkeley Heights, NJ).

While this represents market opportunity, makers of branded therapies know that gaining a foothold in highly regulated class of trade is particularly challenging, thanks to a confluence of complex factors that are at play in the LTC arena. To overcome the many barriers, manufacturers need to deliver strong messaging that underscores the clinical and long-term economic advantages of their branded product particularly with regard to generic competitors in the same therapeutic class. “You really have to sell the full value of your product over the entire episode of care,” says Frank Grosso, RPh, CEO, executive director, ASCP.

“If your brand-name drug is a me-too drug with little discernible benefit over generic, then you really don’t have a sustainable market in LTC—because managing drug costs is the predominant factor when there is no discernible reason to justify keeping patients on the branded therapy,” says Grosso. “Drug companies must demonstrate longitudinal value over the entire episode of care for a brand—that’s a very different way of marketing for pharma companies but creates huge opportunity.”

“Today, roughly 57% of those in LTC settings are Medicare, Medicaid and so-called ‘dual eligible’ patients (those who are covered by both Medicaid and Medicare), while 29% are covered by private insurance, and the remainder are private-pay patients,” says Grosso. He notes that the 57% who have Medicaid or Medicare or are dual eligible don’t have access to all of the 746 Medicare Part D plans that are in existence today. “Rather, they typically only have access to the 231 so-called ‘benchmark plans’ (a subset of the total available Part D plans on the market today),” says Grosso. “The benchmark plans are lower-cost plans with more restrictions in terms of formulary designations and prior authorization restrictions, and in the post-acute setting, the pressure is on for physicians to only prescribe through those 231 benchmark plans to avoid out-of-pocket costs for low-income beneficiaries and skilled nursing centers.”

“It’s not an insurmountable task for brand teams, but it requires targeted effort to get the product on as many of the 746 traditional Part D plans, and the 231 lower-cost benchmark plans, as well,” he adds.

The ‘age in place’ trend creates challenges for market access to seniors

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