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Click the title above for a link to open the Pharmaceutical Commerce October 2023 issue in an interactive PDF format.

Pharmaceutical Commerce - October 2023 Issue (PDF)

's October issue highlights the publication's second installment this year in its dedicated cold chain coverage, which focuses on emerging temperature-controlled practices and technologies. In his 

, Editor Emeritus Nick Basta provides a 2023 state of the cold chain industry-type overview, detailing pharma's move toward new cloud-based visibility systems. Real-time tracking is not a new concept, he notes, but the internet of things (IoT) influence is gaining more and more traction, especially given the growing availability of communications devices that can collect signals automatically. Expounding on these concepts, Richard Ettl, SkyCell’s co-founder and CEO, adds in his 

 that real-time monitoring is essential in order to preserve temperature integrity. He notes that “automation technologies can help in quickly resolving any issues or disruptions in the cold chain, ensuring that pharmaceuticals reach their destinations in optimal conditions.”

Speaking of supply chain challenges, specifically product security, Alf Goebel of Advanco dives into an issue that continues to plague the life sciences industry: 

. He points to findings from the Pharmaceutical Security Institute that show the incidence of counterfeit drugs is increasing—nearly 6,000 pharmaceutical crime incidents were recorded in 2021, up 38% from the year before, and making it the highest amount since records began 20 years ago.

” column, Ed Schoonveld raises the question of how the American government should choose between covering increasing healthcare necessities and the needs in the other two largest US budget items—social security and defense—all while shouldering a large proportion of healthcare costs. As for Bill Roth of IntegriChain, he continues his "

" series of articles by exploring how pharmaceutical products—at least in certain segments—are reverting back to a cash pay system. Roth observes that "some retailers are running at the opportunity, and others are trying to slow the trend."

It’s hard to believe that this issue marks the official beginning of Q4; a subtle reminder perhaps of industry's efforts—and ours in covering all the twists and turns—to power through and finish this year strong. Thanks for reading.

— Mike Hennessy Jr., President and CEO, MJH Life Sciences

October's issue continues its dedicated coverage surrounding the cold chain.

Taking Pharma's Temperature

I was reflecting on my career thus far here at 

 when I realized that this month marks my three-year anniversary with the publication, having been brought on as an associate editor at the height of the COVID-19 pandemic in October 2020. 

’s parent company, MJH Life Sciences, was hiring and had just completed the acquisition of the magazine a few months prior. I was “thrown into the fire,” as the saying goes, and began a new chapter of my career under the tutelage of Mike Christel, now our group managing editor.

Throughout my time here, I have continued to make brand recognition a top priority, especially when on the road at trade shows and conferences. After all, an argument can be made for the invaluable benefit that these events provide. At August’s Healthcare Distribution Alliance (HDA) Traceability Seminar, which is covered in great length in this issue’s “

,” I was able to chat with Gregg Gorniak of
newly-named Cencora (formerly AmerisourceBergen)—and a past guest of the 

—about other potential ways that we could collaborate in the future. 

In fact, many of our subscribers may be reading this at LogiPharma USA in Boston early this month. In my experience, this event has been a magical place for networking and establishing long-term professional relationships (this year’s show marks my second on the American front after attending France’s LogiPharma Europe in April).

's editor emeritus and founder, was the face of the brand for many years, and industry vendors and editorial contributors alike have long associated him with the publication. As we evolve the brand forward, now three years on, I plan to continue to stress our development.

In fact, behind the scenes, we have been in the midst of a rebrand, working closely with our talented colleagues in creative and sales. The main focus is on providing both a cleaner and fresher look to not only the print issues, but the website as well. If I were to describe what we have in the works, it would be bold. Once these updates go live, I look forward to receiving your feedback to help us further improve and "enhance."

I hope you enjoy this month’s issue and I look forward to meeting many of you at LogiPharma USA!

A reflection on my time with Pharma Commerce thus far, and a plan of action for moving the brand forward.

All About the Journey

 team spent extensive time reporting live from the Healthcare Distribution Alliance (HDA)’s annual Traceability Seminar, which was moved up a few months ahead of its normally scheduled date. This marked the second HDA event Pharm Commerce attended this year, with the first being March’s Distribution Management Conference and Expo in Indianapolis.

The matter at the top of the docket was Drug Supply Chain Security Act (DSCSA) legislation. As previously reported by 

, via Section 582(g)(1) of the Federal Food, Drug, and Cosmetic (FD&C) Act, FDA “does not intend to take action to enforce” rules on exchanging product transaction data, reporting such data to regulators, or verifying salable returns against transaction data (apart from existing methods of verification) until Nov. 27, 2024.

Rather, a “stabilization period” lasting until that time will be enacted, which is intended to provide the pharma supply chain with more time to implement and troubleshoot their systems and processes.

In terms of this show’s editorial coverage, I, with assistance from Associate Editor Don Tracy back at HQ, covered several sessions, including:

“Implementing DSCSA and Expectations for 2023 and Beyond”

“FDA Update: Enforcement Policies and Guidances”

“Exceptions Handling: Mitigating Data Errors to Keep Products Moving”

“DSCSA Implementation: A Phased Approach and Other Industry Recommendations”

“Onboarding the Industry: A Status Update and Call to Keep Moving”

“GS1 Updates on Implementation Guides”

Being that they were all equally impactful, it’s difficult to pinpoint one specific session that resonated with me the most. But in my opinion, the seminar’s first session, “Implementing DSCSA and Expectations for 2023 and Beyond,” was the perfect way to kick off the event.

The presentation aimed to “review DSCSA implementation and expectations for trading partners to achieve interoperable, electronic tracing of products at the package level,” while also taking a look at recent industry guidances that are pertinent to supply chain security.

FDA was clear in noting that this additional time does not signify that trading partners should delay preparation to comply with 582(g)(1); rather, organizations should continue forward as they were, while now allowing extra time to improve their aforementioned systems.

Next on the “Conference Connect” list of coverage is LogiPharma USA, taking place Oct. 4-6 in Boston. For all our conference coverage, including articles and videos, please visit 

pharmaceuticalcommerce.com/latest-conference.

Pharma Commerce converges on Nation's Capital for HDA Traceability Seminar.

Drilling Down On Distribution

Advances in technology, aging of populations, and unhealthy lifestyles have contributed to rapidly rising healthcare costs. Healthcare affordability is a large issue for governments, insurers, employers, and patients today, but there is concern that it could become a much bigger issue tomorrow. How do we deal with that?

Cardiovascular diseases and cancer have a large impact on patient lives. New technological solutions have helped to alleviate the humanistic burden but have also increased the healthcare bill. Many unmet needs remain in almost all therapy areas. Technical advances will likely produce new medical and pharmaceutical solutions that will come with tough budget choices. How should government payers choose between covering increasing healthcare necessities and needs for the other two largest US budget items, social security and defense? Let’s consider two disease areas with different challenges.

Without any effective interventions, Alzheimer’s disease alone, it's been reported, can 

 due to long-term care needs. Recently approved Leqembi, made by Eisai and Biogen, showed modest effectiveness in terms of delay of onset of cognitive symptoms. The drug offers hope that the amyloid plaque avoidance strategy may ultimately lead to improvements and avoidance of the debilitating effects of the disease. High treatment costs will add to the healthcare bill, but it will be offset by savings due to avoidance of long-term care needs. Any effective and safe drug treatment will attract a high volume of patients that need preventative treatment for many years. With the current generation of drugs, one could make the argument that improvement of patient and caretaker lives and system savings will be limited. However, it is critical to continue investments to hopefully at one time cure Alzheimer’s disease and avoid impending healthcare system bankruptcy. 

Recent evidence of the weight loss and cardiovascular health benefits of Ozempic and Wegovy have garnered plenty of social media attention and hype. With 

 of the US population being obese and an additional one third overweight, according to the NIH, a question arises on what the appropriate use of these drugs is. How should we incorporate weight loss drugs in our lifestyles? There is a broad spectrum of need across the population, ranging from morbidly obese patients that are in need of new solutions to otherwise healthy individuals to maintain a nourishing lifestyle. Ballooning sales of these drugs poses some
fundamental questions for our society and the industry. Will we get to a point where most of the population takes drugs to control weight for the rest of their lives, and should we work harder to encourage maintaining a healthy food chain and lifestyle?

Which healthcare innovations should be covered by government and private health insurance? Should health insurance premiums vary depending on body mass index, fitness, or even gene map? That raises many ethical and fairness questions, particularly since some of these factors are beyond our individual control. As the government shoulders a large proportion of healthcare costs, how should it choose between covering increasing healthcare necessities and needs in the other two largest US budget items, social security and defense?

Narrowly focusing on drugs as a solution to weight problems opens up concern as to what the role of weight loss drugs should be, for which populations, and how it fits with tighter control of our food chain, personal lifestyle responsibilities, and interventions such as bariatric surgery. This question can only be solved by a tighter collaboration between the pharma sector, medical community, FDA, and the health insurance industry.

Ed Schoonveld is a value and access consultant, and author of The Price of Global Health.

The debate continues as to how government payers should weigh covering
healthcare needs versus other budget items.

Affordability: Who's Responsible?

People living with life threatening, chronic, and rare diseases are often prescribed medications with high out-of-pocket costs. Due to these high costs, many patients turn to third-party financial assistance programs to help afford their medications. Unfortunately for patients who are enrolled in private health insurance plans with copay accumulator programs, the value of these third-party contributions—such as the value of manufacturer coupons—does not count toward patients’ deductibles or annual out-of-pocket limits. Copay accumulator programs are harmful to patients and in our opinion, must be banned. 

To better understand how these programs harm patients, let’s consider a patient named Mary, who is living with a chronic illness. She has an annual deductible of $2,500 and a $500 manufacturer copay coupon for her medication.

If Mary’s plan does not have a copay accumulator program in place, the $500 coupon will count toward her annual deductible, leaving her responsible for $2,000 before reaching her annual limit.

If Mary’s plan does have a copay accumulator program in place, the $500 coupon will not count toward her annual deductible, and she is asked to pay the full $2,500 before satisfying her annual deductible.

Most notably, copay accumulator programs:

Expose patients to large, unexpected costs, and disproportionately impact patients living with chronic conditions, especially individuals with low income and people from marginalized communities.

May push more patients into medical debt.

Interrupt needed treatment due to affordability issues, which drives down medication adherence and results in more costly health issues.

Undermine patient protections in the Affordable Care Act (ACA) related to high out-of-pocket costs, particularly for those with pre-existing conditions.

Despite ongoing efforts from the patient advocacy community—including the All Copays Count Coalition—to encourage the US Department of Health and Human Services to ban copay accumulator programs through their Notice of Benefit and Payment Parameters (NBPP) rule, action has not been taken. And while 19 states, the District of Columbia, and Puerto Rico currently have legislation banning copay accumulator programs, these state-level policies do not apply to self-funded employer plans or large group plans. They also don’t stop plans from determining that items and services, like specialty medications, are non-essential health benefits. 

This is why federal legislation is needed. We recommend Congress act sooner rather than later to pass the Help Ensure Lower Patient Copays Act, or the HELP Copays Act (H.R.
830 and S. 1375). The bill is a two-part federal solution that will:

Update the ACA’s definition of cost-sharing to require that all out-of pocket payments be made by or on behalf of a patient count toward their deductible and out-of-pocket limit. This would end copay accumulator programs in marketplace exchange insurance plans.

Stipulate that any item or service covered by an employer health plan is part of the essential health benefits (EHB) package, and therefore, the plan must count any cost sharing toward patients’ annual limits. This would end the ACA’s EHB loophole that allows plans to deem certain categories of drugs as non-essential.

A bipartisan group of members introduced H.R. 830 in February, with its companion Senate bill, S. 1375, introduced in April. Most recently, the bill has been offered and withdrawn as an amendment in markups in the Senate HELP and House Energy and Commerce Committees. With about
150 patient and provider organizations supporting the bill, the time is right to pass the HELP Copays Act. This legislation makes good on Congress’ commitment to lowering costs and improving drug access. While Congress considers pharmacy benefit manager reform this year, we urge them to include this bill in a final package.

Kevin L. Hagan is President and CEO and Amy Niles is chief advocacy and engagement officer, both at PAN Foundation. 

These programs can negatively impact patients trying to reach their deductible.

Time to Ax Copay Accumulators?

Thanks to the reemergence of cash pharmacy, the two primary funding sources for medications in the US—patients and plan sponsors—now have more visibility than ever to what is driving their out-of-pocket expense for therapies. This trend will continue to challenge our industry to innovate the models that have worked over the last three decades.

Let’s start with the history. Before there were pharmacy benefit managers (PBMs), consumers took their prescription to their corner drug store and paid cash. It wasn’t until the 1980s that the first PBM to negotiate discounts for plan sponsors, Express Scripts, entered the picture. With the arrival of PBMs negotiating for pharmacy benefit products, the average cost of pharmaceuticals grew from approximately 1% of the US wage income to more than 5% by the end of the 2010s. Yet it isn’t fair to simply state that PBMs had the only hand in this: the 1990s ushered in the arrival of specialty products for oncology, immunology, and neurology, and the 2000s and 2010s brought products for orphan and rare disease and cell and gene therapy, with more innovation on the way.

By the 1990s, PBMs were fully responsible for negotiating and paying for pharma products on behalf of their plan sponsors. Medicare, as an example, didn’t have a pharmacy benefit until the Medicare Modernization Act was implemented in 2006.

The rise of the PBM was complemented by the rise of generics, which grew 19% of prescriptions in 1984, according to IQVIA (IMS Health), to now a staggering 92% of all prescriptions dispensed from a retail pharmacy in 2023.1

In my early career, I managed one of the largest generic buying portfolios, offering a great view into the economics associated with both brands and generics. When coming to market, a generic would price at 90% to 50% of the innovator price. Wholesalers and retailers went from making 3% to 5% on the brand to 20%+ on the generic. Back then, a generic would capture ~30% of the market in the first few months. By the end of the 1990s, a generic would capture 90% of a brand’s market share in the first month, benefiting PBMs, retailers, and wholesalers. This also benefited patients and plan sponsors, as patients would transition from paying $25 or $50 for the brand to $5 to $15 for the generic, and plan sponsors typically paid roughly 35% less for the generic than the brand. Everyone won, except for the brand manufacturer.

Enter the original shift back to cash pay in 2006: Walmart announced its $4 (30-day supply) and $9 (90-day supply) generics programs, stunning the industry. This was made possible by a plunging net cost of the product roughly 18 months after the initial generic launched. Typically, the net price of the generic sunk as low as 5% of the innovator depending on drug class, competition, and payer pressure, with a bottle of a 100-count pricing out as low as $1 to $2 per bottle. Walmart’s list of generics grew over time, and many pharmacies followed suit.

As it turned out, cash pay wasn’t ready for prime time yet; it had its fair share of headwinds. In most situations, the cash payment amount didn’t apply to a deductible, and consumers weren’t savvy about what copay is and what cash is. Pharmacies had gag-orders by PBMs not to discuss financial options with the consumers. Even today, it can be opaque for the typical consumer.

The next big evolution came in 2011 with GoodRx. Seeing both the insurance price and cash pricing allowed consumers to price shop. But this new movement to cash pay is not a positive trend for PBMs, retailers, and wholesalers that benefit from an inflated “covered” price. Personally, a medication I take has a $393 copay for the brand, $207 copay using insurance for the generic, or $18 cash price for the exact same product and manufacturer. Reports like this are ubiquitous on the internet.

In response, some retailers are running at the opportunity and others are trying to slow the trend. For retailers that rely on large PBM and insurance plans, the movement to cash is a significant threat to their business. For nearly all retail pharmacies, brands are now loss leaders and generics are the only products on which pharmacy makes money. Recent reporting shows some retail chains have abandoned programs like GoodRx, but this will not stop the trajectory. Cash pay pharmacies are growing as well as discount programs, such as Blink Health, Pharmacy Checker, Optum Perks,SingleCare, RxSaver, WellRx, America’s Pharmacy, Costco MPP, SaveonMeds, RxSavings Plan, FamilyWize, ValpakRx, Choice Drug Card, InsideRx, AARP Prescription Discount, and others.

From a financial and logistics perspective, the movement for generics to cash is the most simple and straightforward view of discounting. The dollar flow is very easy to follow because the pharmacy typically buys it at low net cost, marks it up, and sells it. Even when insurance is applied, there are no rebates to PBMs, little to no price increases after 2017, and the entire market runs on arbitrage by what the PBM charges the plan sponsor, what the retailer charges the PBM or government agency, and how the manufacturer prices to the pharmacy either directly or through a wholesaler. There is dramatically less complexity compared with brands and specialty products.

With 90%+ of prescription products being available generically and at consumable price points, whole new markets have opened for cash. Ecommerce/telehealth entities—Hims, Hers, Roman, and others—launched to focus on niche options for certain therapeutic regimens. In 2018, Amazon bought Pillpak. While seeming benign and just another expansion, this move clearly incorporated the concept like a GoodRx but embedded within the concept of a classic retail pharmacy.

Much of the value of cash pharmacies depends upon the knowledge of the consumer, which is gaining speed. According to a 2022 Avalere Consulting study, cash was approximately 5% of the market in 2019; by 2022, it had shot up to 9%. In a 2022 article,2 the Advisory Board Company, now a business unit of Optum, called the growth of the cash pharmacy wave behind them. But then in 2022, a Prescryptive Health report3 indicated that 61% of consumers surveyed had paid cash prices for prescriptions even though the drugs were covered by their health insurance, and 50% living in urban markets said it’s less expensive to pay out of pocket than to use insurance. Clicking into this report demonstrates that consumers know they don’t count toward the deductible or minimum out-of-pocket caps. In addition, 22% of the consumers polled paid cash because the drug wasn’t covered on their PBM formulary, and 29% used cash pay because their preferred pharmacy was not in-network.

The trendlines are clear: fueling this new wave are higher list prices, cost-shifting and sharing, high-deductible plans, 

and the growing number of formulary restrictions; according to IQVIA, NDC blocks have grown to over 450 by 2021.4 This has grown to such a fever-pitch that in January 2022, Mark Cuban jumped into the game with Cost Plus Pharmacy, epitomizing the business model of buying generic product at wholesale prices and charging a rough 15% markup, $3 dispensing fee, and a $5 shipping fee. In early 2023, Amazon Pharmacy announced RxPass for Amazon Prime members, which applies a $5/month charge and an unlimited amount of prescriptions.

Brands and specialty pharmaceuticals have entered the fray. Building on the back of the PBM employer cards that have been used for many years, consumers can tag onto a PBM net contract with discount cards that results in paying the same cash price as a pass-through plan sponsor. Many Wall Street analysts now use the discount card vendors to assess an estimated rebate from the manufacturer to the PBM. As of the publishing of this article, Mark Cuban’s Cost Plus pharmacy had generic Gleevec for $13.40/month compared with the list brand price of $10,996/month, according to an ASCO publication in February 2023.5 Even two of the recently launch biosimilars for Humira report cash pay prices that would have an annual course of therapy less expensive than the cost of some average deductibles.

What has been especially astounding is retail pharmacy’s view of branded pharmaceuticals. A group of us at Blue Fin Group were told in a recent interview with a prominent leader in the industry: “Tell your manufacturer clients three things:

If branded manufacturers think they have a problem now, wait until Jan. 1, 2024, when the direct and indirect renumeration fees are shown to pharmacy on the front-side of a claim.”

A sizeable regional chain said, “Our pharmacy changes out roughly 90 of the 100 branded prescriptions we receive. We view ourselves as patient advocates, and the doctor doesn’t know the cost to the patient when the prescription is written. If a generic is available in the drug class, it is better for the patient and better for the pharmacy.”

There seems to be three distinct models across generics, brands, and specialty products, and it’s easy to get confused by the flow of the dollar being unique for each. This year, Caremark and GoodRx announced the Caremark Cost Saver, which suggests that cash pay will begin to apply to the deductible. And in August, Blue Shield of California appeared to break up the bundle when announcing its unique program with Mark Cuban’s Cost Plus and Amazon while still using CVS Health for specialty.

The pharma industry started as a cash business and at least for generics and some brands, it appears to be returning to that. The days PBMs telling plan sponsors not to pay attention to a single product but rather point to the discount off of average wholesale price (AWP) or comparing per member per month spending is in trouble. Consumers, pharmacies, and plan sponsors have caught on.

The ripple effects from a decline in generics as a percentage of total sales are likely to be exacerbated by the rise of the cash pharmacy, significantly impacting the entire industry given generics subsidize almost everything due to the nature of how business models bundle their pricing arrangements with one another. Specialty and brand pharmaceuticals might have to pick up the tab for this change, and it might play out poorly for many, as there likely won’t be time to properly think it all through. This will significantly impact PBMs, retailers, and wholesalers, and brings much complexity to our industry. Manufacturers must think about the implications to gross-to-net, government pricing and forward supply chains so that it all fits together.

This is what it looks like when you “put the genie back in the bottle.”

Bill Roth is the SVP of IntegriChain’s consulting business, which includes Blue Fin Group, a strategic consulting company he started in 2001, and the existing IntegriChain operational consulting business.

https://cen.acs.org/articles/92/i39/30-Years-Generics.html

2. Why 'Cash' Pharmacies are Booming—and What it Means for Healthcare. Advisory Board. August 24, 2022. 

https://www.advisory.com/daily-briefing/2022/08/24/cash-pharmacies

3. Rewriting the Script: Independent Pharmacy Trends. Prescryptive. 2023. 

https://prescryptive.com/2022-pharmacy-study-opt-in/

4. Greenwalt, L. Payer Controls: Goodbye, Old Assumptions for Access and Uptake. IQVIA blog. September 28, 2021. 

https://www.iqvia.com/locations/united-states/blogs/2021/09/payer-controls-assumptions-for-access-and-uptake

5. Kantarjian, H.; Welch, M.A. Influence of the ‘Mark Cuban Effect’ on Cancer Drug Prices in the United States: Focus on CML. 

https://ascopost.com/issues/february-10-2023/influence-of-the-mark-cuban-effect-on-cancer-drug-prices-in-the-united-states-focus-on-cml/

The trend is continuing for brands and even for some specialty products.

Return of Cash Pay for Drugs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The State of the Pharma Cold Chain

In today’s increasingly interconnected world, the pharmaceutical industry is heavily reliant on efficient cold chain logistics and management to ensure temperature-sensitive products reach their destinations in perfect condition.

A study carried out by the University of St. Gallen in Switzerland, a center of supply chain studies, found that the transport of temperature-sensitive pharmaceutical products often failed to fully satisfy the necessary quality requirements. The study showed that temperature deviations resulted in complete loss of goods in about one third of cases, leading to additional costs along the entire pharmaceutical transport chain. 

Furthermore, drug manufacturers are facing increasing challenges due to the rising value of pharmaceuticals and the growing complexity of biologics production.

To navigate these challenges effectively, biopharma organizations must prioritize three key areas:

1. The reliability of the cold chain. Ensuring that temperature-sensitive products are consistently stored and transported within the specified temperature range is paramount to maintaining their efficacy and safety.

2. Visibility. Real-time monitoring and intervention capabilities are essential for preserving temperature integrity throughout the supply chain. This means that companies need to have the ability to track the temperature of pharmaceuticals and intervene promptly if deviations occur to prevent potential spoilage or loss of product. In addition to enhanced visibility, automation plays a critical role in addressing potential risks swiftly. Automation technologies can help in quickly resolving any issues or disruptions in the cold chain, ensuring that medicines reach their destinations in optimal conditions.

3. The push for sustainability. Pharmaceutical companies need to adopt environmentally friendly practices and take steps to reduce their carbon footprint in their cold chain operations. The pharma industry has been estimated to generate around 52 megatons of CO2e annually. According to the World Economic Forum, around 40% of supply chains’ emissions could be reduced with already available solutions. Perhaps the best one is the adoption of innovative reusable containers to avoid fees for one-way systems disposal, which will be introduced to encourage environmentally responsible practices. The total cost of ownership of the future will encompass not only logistics but also factors such as CO2 pricing and disposal fees.

The majority of temperature-sensitive medications are still transported using low-tech, single-use packaging, such as cardboard and Styrofoam containers loaded with dry ice or cold bricks. Traditional methods like these have limitations in preserving a product’s integrity and efficacy, and can put goods at risk should unexpected delays occur. The impact of this is significant. Not only can it have worrying consequences for the patients on the receiving end of the medication, but any goods suspected of incurring a temperature excursion will be consigned to waste. 

When it comes to the pharma industry, the IQVIA Institute for Human Data Science notes that failures in the supply cold chain alone cost the industry an estimated $35 billion annually. To overcome these challenges and limitations of traditional shipping methods, pharma companies are increasingly turning to novel temperature-controlled solutions. Recent advancements in technology have ushered in a new wave of temperature-controlled freight tools and real-time data monitoring. 

These solutions are a big step forward in the pharma supply chain industry. They incorporate robust insulation and advanced cooling systems, capable of withstanding extreme external conditions, while maintaining the precise temperature ranges required by specific products. This significantly reduces the risk of temperature excursions and product spoilage. 

Additionally, emerging technologies like graphene energy distribution systems are pushing the boundaries of cold chain container performance. They not only extend the independent runtime but also reduce their overall weight, making them more efficient and environmentally friendly.

Real-time data monitoring is also transforming pharma logistics for the better. Integrating sensors and advanced tracking technologies within temperature-controlled containers allows companies to monitor highly critical operational parameters, such as humidity and temperature.

Constant surveillance enables organizations to promptly detect any unexpected shifts from the ideal conditions necessary for a product’s viability. This timely identification empowers them to take immediate, proactive measures. Enhancing visibility, transparency, and accountability
throughout the entire transportation process can better help guarantee the safe and secure delivery of temperature-sensitive pharmaceuticals to any point on the globe.

These monitoring solutions should only become more accurate and efficient, driven by the continuous emergence of innovative technologies. Notably, the transition from short-range Bluetooth Low Energy to long range connectivity represents a significant advancement, allowing companies to acquire data over extended distances. The shift toward low-cost embedded sensors and tracking devices operating on minimal energy will also further enhance monitoring capabilities and reach.

Additionally, the growing adoption of software-as-a-service (SaaS) solutions means companies can effectively monitor shipments, quantify CO2 emissions, and even simulate potential supply chain risks. This technological evolution holds the potential to significantly impact how businesses track and optimize their operations, creating a more sustainable and efficient future.

The power of data in optimizing the pharma supply chain

The data-driven approach to cold chain management is reshaping the pharma industry, and it extends beyond just real-time monitoring. The integration of simulation data (S data) and real-time operational data (O data) enhances supply chain efficiency, enabling pharma companies to solve problems proactively and maintain the integrity of their products. 

S data plays a pivotal role in predicting and preventing potential issues before they arise. It enables proactive actions to be taken by solving problems before they occur. By predicting potential disruptions, identifying optimal shipping routes, and preventively addressing challenges that could arise during transit, S data can help ensure the integrity of pharmaceutical products. On the other hand, real-time O data provides immediate visibility into the ongoing status of shipments, allowing for real-time monitoring and quick reactions to problems that occur. The availability of real-time O data collected through sensors and monitoring devices is critical to preventing exposure to harmful conditions and product degradation. The use of sufficient real-time operational and simulation data in conjunction at every stage of the supply chain can help drug manufacturers enhance their processes and optimize the entire supply chain.

The future of cold chain logistics is evolving rapidly and the pharma industry is at a pivotal moment. Businesses now recognize the critical need for efficient temperature-sensitive product transportation while embracing sustainability.

Through the adoption of innovative practices and technologies, the industry can better navigate disruptions, improve efficiency, and ensure the integrity of products while minimizing the environmental impact of its supply chain.

Richard Ettl is the CEO and co-founder of SkyCell.

How recent advancements in practice and technology have ushered in a new era of pharmaceutical logistics. 

Reshaped Priorities Pave Cold Chain Path

The issue of counterfeit medicines is one that continues to blight the global pharmaceutical landscape. Despite the innovative breakthroughs made by individual drug manufacturers, and the giant advances made by the sector collectively, the damage caused by counterfeiters continues to cast a shadow—one which is killing innocent people. 

The problem is a real one. In addition to triggering a rising number of deaths, plus causing life-changing injuries to many more, counterfeit medicines threaten the very integrity of the biopharma sector. And let’s not lose sight, too, of the fact that it continues to bite into the profits of companies who are having to work harder than ever to combat these ongoing threats. This issue affects us all. All of us working for the pharma industry specifically, and the life sciences industry more broadly, are on the frontlines when it comes to the battle against the forgers. We all have a role to play in ensuring that pharma packaging is watertight when it comes to security—both literally and figuratively. Let’s examine the issue in some depth, and look at the latest trends in the fight against counterfeit medicines. 

Recent figures from the Pharmaceutical Security Institute show that the number of counterfeit medicines is on the rise.

The data reveals that nearly 6,000 pharmaceutical crime incidents were recorded in 2021, up 38% from the year before and are at the highest amount since records began 20 years ago.

The greatest number was recorded in North America (2,442) followed by the Asia Pacific (1,747), Latin America (770), the Near East (705), Eurasia (646), Europe (374), and Africa (187). This order is largely due to how well countries in these regions are effectively identifying pharmaceutical crime through law enforcement activity and inspections by drug regulatory agencies. 

According to the World Health Organization, roughly 10% of medical products circulating in low- and middle-income countries are substandard or falsified.

 In sub-Saharan African nations, notes the United Nations (UN), this share is believed to be even higher, rising closer to 19-50%.

However, the actual number of incidents of fake drugs being manufactured and distributed is likely far higher, considering the many cases where counterfeits have not been detected or reported. 

Indeed, nearly half a million people are estimated to be killed by counterfeit medicines in sub-Saharan Africa every year, which was also noted by UN data.

 Of these, 267,000 deaths are believed to be linked to falsified or substandard antimalarial medicines, while a further 169,271 are connected to falsified or substandard antibiotics for severe pneumonia in children.

Why are medicines so attractive to forgers?

There are many reasons why criminals are looking at fake medicines as a way of illegally earning money. 

One reason is the rise in online pharmacies. Unlike a physical store, drugs brought via the internet provide no physical shop to return to, and nowhere for disgruntled consumers to take the matter further. It is much easier for perpetrators to lurk undetected in cyberspace, sending out their dangerous products from an unidentified location. 

To be clear, this is not a criticism toward regulated, legal online pharmacies. They provide a valuable service for many people and are now established as part of the fabric of the healthcare system in many geographies. However, the modus operandi does provide criminals with the means to distribute their goods in a manner that means they are much less likely to be traced.

It is also incredibly hard to spot forgeries. The only real way to know if a drug is counterfeit is through chemical analysis done in a laboratory. Sometimes, counterfeit drugs differ in size, shape, or color, or are sold in poor-quality packaging, but they often appear identical to the real product, which makes them especially dangerous. 

Most people will not have a laboratory in their home that can be used to analyze medicines. However, if in doubt about the authenticity of medicine, there are some clues to look out for. Interpol provides the following useful checklist, one that we strongly believe people should be made much more aware of.

The medicine contains too much, too little, or any different ingredients.

Claims to have different properties or side-effects.

Has a different shape, size, taste, or color.

Is not correctly labeled or not labeled at all.

Has an out-of-date or missing expiry date.

Does not contain information on how to store the drug.

The packaging looks poorly constructed or appears to have been interfered with.

There are spelling or grammatical errors on the packaging or instructions. 

However, while it is important to make people aware of how they can spot forgery, the pharma sector also has a duty to ensure it is doing all it can to proactively act against the forgers. 

One of the main elements to controlling the number of forged drugs in the world is regulation. More countries are realizing the importance of regulating their pharmaceutical production process, and much like a snowball effect, momentum is gathering. After the EU Falsified Medicines Directive (FMD) went into effect in February 2019 and the US introduced legislation in November 2017 as part of the Drug Supply Chain Security Act (DSCSA), it’s concluded that more than 75% of global medicines were covered by some form of track-and-trace regulations by 2019. 

The growth of serialization continues. For example, traceability legislation has recently been mandated in the Middle East and North Africa (MENA) to combat the growing problem of counterfeit medicines. If MENA-based pharmaceutical companies fail to achieve compliance, they face being fined or even getting barred from product launches, which could potentially lead to significant business and financial implications.

Environmental, social, and governance (ESG) is something that most pharmaceutical manufacturers are committed to in a world that today knows much more about the damage that the collective industry has done to the world over many years. In addition to protecting the environment generally, ESG can also provide enormous benefits when it comes to the specific battle against forged medicines.

One critically important piece of legislation is the 2030 Agenda for Sustainable Development,

 adopted by all UN member states in 2015. It provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 sustainable development goals (SDGs), which are an urgent call for action by all countries developed and developing in a global partnership. They recognize that ending poverty and other deprivations must go together with strategies that improve health and education, reduce inequality, and spur economic growth, while tackling climate change and working to preserve our oceans and forests.

All drug manufacturers should be familiar with the SDGs and should be doing all they can to carry them out. It is our collective duty and one that should not be ignored. 

As an example, track-and-trace systems can help companies meet SDG No. 3: Good health and wellbeing. These tools can potentially achieve this by allowing access to genuine, safe, quality, and affordable medicines and vaccines for everyone. 

There is now a move toward local production and sourcing through the repatriation of supply chains into Europe and the US. This repatriation is a big deal for the future of the pharma sector. It signals confidence in the capabilities of Europe and the US, resulting in ongoing investment. This will result in job creation and a renewed interest in Europe and the US as a global center to produce essential pharmaceuticals. 

Added to the current shift toward a much more agile, local supply chain are the benefits resulting from digitalization. The rapid uptake of digital barcode scanning systems, combined with the very latest technology, has made supply chains increasingly secure, giving fraudsters a much smaller window of opportunity to ply their dangerous trade. 

The reality is that forged medicines will always be produced somewhere in the world. However, there is a formula which, although not a magic one, will go a long way to limiting the impact of this criminal activity. 

Regulation is key to this formula. Indeed, a blend of track-and-trace regulation, along with ESG regulation, will enable the pharmaceutical sector to launch a huge fight back. In addition, localizing the supply chain and the endless possibilities offered by new technologies, will create a powerful defense in the ongoing battle against fake medicines. 

Those who produce counterfeit drugs are directly impacting the lives millions of people. As a sector, we have a duty to combine our resources and knowledge to help protect patients. It won’t happen overnight—but by working together, we can help turn the tide. 

Questions and considerations for pharmaceutical companies in designing and
executing strategies to curb the incidence of fake drugs. 

Pharmaceutical Commerce - October 2023