IMS Health (Danbury, CT) is a giant in the healthcare data field, best known for its comprehensive reporting on global pharmaceutical prescribing and sales, but now complemented with a growing array of software analytics and consulting services. It re-entered the public arena earlier this year with a successful IPO and is now listed on the New York Stock Exchange as IMS. Founded in 1954, the company boasts around 10,000 employees worldwide, and gathers data from 100,000 suppliers covering 45 billion healthcare transactions annually.

IMS Health is organized into nine regional business units, plus IMS Consulting, Clinical Trial Optimization Solutions, Government and Payer Provider Solutions, and Real-World Evidence Solutions. Seyed Mortazavi is President, US.

 sat down with Mr. Mortazavi recently; here’s what he had to say.

1. Many people know IMS Health for its data services on pharmaceutical sales but the company has been going through some changes and now describes itself as a healthcare technology company; what’s been going on?

			Without a doubt, many people know us for our data and analytics and we’re tremendously proud of this heritage. It’s still core to what we do but the reality is the healthcare industry has become exponentially more complex: new stakeholders, an explosion of new data sources and, of course, the Affordable Care Act. On top of all of this, clients are still working hard to cut costs. The IMS Institute recently completed a study showing that the largest 17 multinational pharma companies will have to reduce annual operating cost by $36 billion from their 2012 levels in order for that margin level to be maintained in 2017—while also maintaining current levels of R&D activities. Our clients need help. So we’ve been busy investing in new capabilities to address the complexity and provide practical solutions to assist them as they transition to where healthcare is headed in the future&mdash;demonstrating the value of medicines.

			The transformation of our US business, which mirrors the rest of IMS Health, is in three key areas: New data sources, an intelligent technology infrastructure and the expansion of our service capabilities across the broader healthcare industry. We believe this delivers tremendous value to our clients. In fact, at our recent client conference in June, we presented and demonstrated these new capabilities to hundreds of our customers and the feedback was very positive. Across the board, our clients see IMS Health as a strategic partner providing information, technology and services across the healthcare industry.

2. Part of the transformation is the expansion of your services across the broader healthcare landscape like healthcare insurance companies and healthcare providers. Should life sciences clients expect to benefit from this broader focus? And is there a potential conflict of interest here?

			Historically IMS Health focused on pharma customers, primarily in the commercial space, offering data and analytical services. As the industry converges and seeks answers to common questions it made sense for us to expand our business into the payer and provider space. We made a couple of acquisitions along with significant organic efforts in RWE, and we now sit squarely at the intersection of these healthcare stakeholders. There are no conflicts of interest because all stakeholders are asking the same questions and redefining their relationship around value instead of volume. We see value manifesting itself in the form of improved outcomes, lower costs, better quality and risk reduction. For instance, payers, increasingly under cost constraints, want to understand the real-world performance of treatments and the true cost and quality of providers. Providers and hospital systems (IDNs) are forced to take on risk, and also need to understand cost and outcomes of treatments. Payers are holding providers accountable and we help them measure, benchmark and track physician performance. As payers transfer risk to providers, we help providers better segment and profile their patient populations and understand fully costed patient pathways.

			Life sciences companies also want to control costs and provide greater value. To address these areas we’ve made significant investments in our Real World Evidence practice to understand the real-world performance of drugs and prove their value. For example, we can help clients make better R&D pipeline decisions; plan more efficient clinical trial recruitment; address payer demands for comparative effectiveness; develop outcomes-based reimbursement models; and improve patient drug adherence.

			In essence, we are helping to show how each stakeholder connects with each other—providing insights to help address their fundamental questions.

			In fact, during our June Client Conference we had a four-person panel of health systems and payer experts discussing how pharma and hospital systems can better collaborate, sharing real-world evidence to improve the value of their decisions and ultimately the performance of the healthcare system. It was one of the most popular presentations of our two-day meeting.

3. IMS Health has made several acquisitions over the past year including the recent announcement of Cegedim’s Customer Relationship Management and Information Solutions Businesses. Is there a common element to all of it? What should IMS Health clients expect from this?

			Over the past few years, we have continued to invest globally in technology and services to bring our information and analytics closer to decisionmakers and make it more actionable. This is a large part of our transformation plan. Last year, we introduced IMS One—our intelligent cloud-based technology platform. This was a direct response to our customers’ need to improve their commercial infrastructure.

			Around the world, many life sciences companies are adapting their commercial models to address today’s demands, but often face fragmented and incomplete data that can’t provide the business intelligence and insights needed to stay competitive. Many customers also struggle with legacy systems and processes that can’t accommodate today’s substantial data and analytic requirements. The reality is that their commercial functions often operate in silos, leading to colossal inefficiencies. IMS One brings together massive amounts of data in the cloud: IMS Health, third party data and client’s data, into a consistent, orchestrated manner to create a “single version of the truth” for sharing, analyzing and reporting information across commercial functions. The result is better, faster insights and more cost-effective operations. Our customers welcome any solution that will help them reduce costs and improve efficiency.

			Clients can also connect all of their disparate applications through IMS One, giving them shared access to common sets of data. So when information changes in one application, those changes are reflected throughout all of the applications connected to IMS One.

			To enable clients to gain even more value from IMS One, IMS Health developed and acquired a number of Software-as-a-Service (SaaS) applications and formed an interoperable suite we call the Nexxus Commercial Application Suite. To address the unique needs of Life Sciences companies, such as compliance and transparency and the unique, complex data relationships, all of these applications have been built solely for our industry.

			In the spring of 2013 we acquired Appature, a company offering clients an innovative and patented cloud-based relationship marketing application to enable the measurement and optimization of relationship marketing programs across channels. This novel application has become the basis for our Nexxus Marketing application. We made several other strategic acquisitions rounding out the Nexxus Application Suite. They include Nexxus Social Media, a robust set of cloud-based tools that automate the collection of healthcare-specific social media content, providing real-time monitoring for reputation and opportunity management and delivering extensive insights into consumer and physician behavior and sentiments. Nexxus Sales, a cloud-based multi-channel CRM and closed loop marketing application along with incentive compensation, data management and business intelligence applications for more effective, results-driven sales operations. We also have a set of performance management tools called Nexxus Performance, which we developed from the ground up by ourselves. The tools provide a consistent set of key performance indicators across geographies and departments. We just introduced what we call the Mobile Sales Edition as part of Nexxus Performance. This allows clients to take their national strategies and make them actionable at the local level. Reps, using their tablets, get nearly instant access to relevant market data so they can adjust their marketing mix to drive better decisions with their clients on a daily basis. This application received a lot of praise from clients at our recent client conference.

			In early July we announced our intent to acquire Cegedim’s CRM offering including OneKey, a leading healthcare professional database. We believe this proposed transaction, once completed, will accelerate our ongoing transformation, bringing together complementary businesses to extend our information and technology services capabilities for our clients. This intended acquisition will create more choice and reduce operating costs for our customers. These solutions used by life sciences organizations in 80 countries, would become part of our Nexxus Commercial Application Suite and connect to IMS One, our intelligent cloud. As a result, IMS Health market information would be readily available within the CRM system, streamlining processes, simplifying implementation and driving savings for clients.

			OneKey would join our complementary information assets available through IMS One and deliver insights on nearly 14 million healthcare providers across the globe.

			Each component solves specific industry problems and together, as part of the Nexxus Commercial Application Suite, they give clients greater consistency, integral insights to improve decisions and lower operating costs.

4. IMS Health also stands out for its global perspective and you mentioned that most of your technology acquisitions are global in nature. What’s your take on the commonality of issues inside the US as compared to the rest of the world?

			While each global region has its own set of market challenges, there are more commonalities than differences across countries because at some level, every health system is tackling issues of affordability, access and quality.

			Across the world we’re seeing pharmaceutical companies looking for new ways to cut costs. They’re turning to IMS Health for help to streamline operations to improve the bottom line without impacting R&D, market focus and the delivery of medicine.

			Healthcare companies also want to create new approaches to their commercial strategies so they have better access and engagement with their own customers. This is where our investments in real-world data and technology acquisitions are helping to give clients the information they need, when they need it and how they need it.

			Lastly, security of information and privacy remain paramount concerns across the global healthcare community. We are dedicated to protecting individual patient privacy and only utilize anonymous healthcare data to deliver real-world disease and treatment insights. It’s these insights that help our customers identify unmet treatment needs and improve overall health outcomes around the globe.

5. IMS Health had a successful IPO in April 2014. Give us an overview of what the IPO means for your customers and how it may have impacted your focus as a company.

			Becoming a public company again is a great recognition of how far we have come over the last four years. It is an acknowledgment of our leadership position as a leading worldwide provider of information, technology and services dedicated to making healthcare perform better. Our customers were not affected by the IPO; going public changed our capital structure but not our day-to-day operations or the way we interact with our clients—it’s business as usual. We remain focused on our customers, delivering value while expanding our technology and services footprint to help clients drive cost savings and operational efficiency.

6. You’ve had a lengthy career at IMS Health, and before that, additional involvement in healthcare information. From your vantage point, where is healthcare headed in the US? What have the major turning points been over the past couple of decades?

			In terms of significant, transformational changes impacting our clients, you have to start with the Affordable Care Act of 2010. The ACA is fundamentally changing the US healthcare landscape, which affects a fragmented group of stakeholders—from physicians, patients, insurers and health exchanges to value-based care delivery entities like integrated delivery networks (IDNs) and accountable care organizations (ACOs). The growth in complexity isn’t just a US phenomenon, it’s global.

			In the more than two decades I’ve been working in this industry, blockbuster drugs carried the day, but that’s coming to an end. Today our customers need to understand the nuances of their markets and the interdependencies and interactions among customer segments. One size no longer fits all, so they need to be able to deliver the right messages to the right audiences at the right time and more efficiently run their businesses. For instance, targeted therapies and a focus on improving the efficiency of R&D are motivating life sciences organizations to invest in innovative new technologies. During the past 10 years, targeted therapies have dramatically increased their market share, especially in mature markets. The focus on more efficient clinical trial enrollment has led to the emergence of specialized organizations such as our own Clinical Trial Optimization Solutions (CTOS), which is designed to identify patients for enrollment based on a specific geographic area. This helps accelerate the results process, while eliminating time and expense from the entire trial.

			As I noted earlier, the changing healthcare stakeholder landscape in the US is actually part of a global phenomenon that IMS Health has observed for some time, and we believe we’re in a unique position to help. While the US market is bigger, more competitive and complex, the changes being ushered in by the Affordable Care Act in some ways are analogous to my experiences in the late 1990s in the UK, with the emergence of primary care organizations. PCOs that were highly sophisticated had the greatest level of success in terms of driving decisionmaking and realizing better patient outcomes. And by sophisticated, I mean they set up common IT systems, established centers of excellence and efficiently worked with multiple stakeholders to outline optimal treatment paths. We’re seeing the same thing today in the US. The more sophisticated IDNs are the ones taking advantage of technology, EMR systems, and new sources of data like real-world evidence and treatment protocols.

			Pharmaceutical companies have to adapt to this changing landscape. That’s where IMS Health comes in to play: advising customers on the new stakeholder landscape and how to interact with it, guiding them to better information and insights, helping them operate efficiently, and allowing them to leverage sophisticated and centralized data and common IT systems.

Articles

Pharmaceutical Commerce sat down with Mr. Mortazavi recently; here's what he had to say.

A conversation with Seyed Mortazavi, IMS Health

		A new front is opening up in the ongoing debate over biosimilars and how they will enter the market in the US: activist investors. “Activist” might be too strong a word, because these investors are the institutional managers of trust funds, mostly for labor- or union-related organizations who manage benefit funds for retirees. The lead group is the UAW Retiree Medical Benefits Trust (Detroit); 18 other groups, representing $430 billion in assets, are members of the coalition.

		This coalition wrote an “Investor Statement on Oversight of Biosimilar Issues” in August (available at 

), requesting that the boards of 25 leading pharma companies “ensure that information provided to policymakers on patient safety is balanced, investor dollars used for political lobbying [are] aligned with shareholder interests, and disclosure on significant business partnerships is transparent.” These principles sound like good governance for any board, but the detailed language makes clear that these investors want biosimilars on the market sooner rather than later, and want pharma manufacturers to be more forthright in their dealings with FDA and the public on the safety and efficacy of biosimilars.

		“The information that is being disseminated in the state and federal policy debates related to the dispensing, naming and oversight of the biosimilar market is imbalanced,” the statement reads. “Companies seeking to downplay the patient safety record of European biosimilars have also challenged the capacity of the FDA to promulgate rules and determine when biosimilars may be substituted for biologics.”

		The investor statement is pointed at the current campaign among several pharma companies to push state governments to mandate different nonproprietary names for biosimilars (when matched against the branded originator drug).

		Already, Novartis and Amgen have agreed to be signatories to the statement. The coalition is now pushing the 23 other pharma companies to do the same. Not coincidentally, those two pharma companies have active biosimilar-development programs going on; Novartis’ Sandoz subsidiary has filed the first FDA application under the so-called 351(k) rules for filgrastim, the biosimilar version of Amgen’s Neupogen.

		Roche/Genentech has told the coalition that it will not sign the statement, according to a report from WSJ Pharmalot.

		There’s a clear set of conflicting interests on the part of the institutional investors; on the one hand, they have funds invested in the very same biotech companies whose biologics pricing and patent-protection policies they are challenging. On the other hand, the disbursements from these funds go, in large part, to paying for the health benefits of their retiree members. That might be the reason that the statement says nothing about divestiture from pharma companies who don’t sign the document.

		For its part, FDA has generated several draft guidances on biosimilar evaluation and regulation, but none of them has been finalized. Even when such guidance does become available, it’s easy to predict that its details will be argued over by the biotech manufacturers.

Absence of agreed-on FDA guidance keeps biosimilars off the US market even as their use grows abroad

Investor group calls on biotech manufacturers' boards to be more forthright on biosimilars

		It’s almost becoming an annual summer rite of passage: the release of formulary exclusion lists by the major pharmacy benefit managers (PBMs). Both CVS Caremark and Express Scripts have added to their lists—CVS Caremark’s is now 95, up from 72 the year before, and Express Scripts’ is 66, up from 48 in 2013 (the new lists are for the coming year, 2015). Roughly half of prescriptions filled by Americans are contracted for by the two of them.

		Formulary exclusion means that, for health plans managed by these PBMs, the drugs are not available, with some exceptions, for the prescribed conditions indicated, unless the patient covers the full cost: a key market-access issue for manufacturers. Some major brandnames are now on these lists: AstraZeneca’s Symbicort, Amgen’s Aranesp and Epogen. Lunesta (which went generic this year) is excluded from CVS Caremark but not Express Scripts. And, although the lists are presented with a general sense that clinical efficacy is the driver, some interesting contradictions crop up: Express Scripts drops Novo Nordisk’s Victoza while recommending AstraZeneca’s Byetta, while CVS Caremark does the exact opposite.

		According to Adam Fein, president of Pembroke Consulting (Philadelphia) and a 

 Editorial Board member, plan sponsors (payers) get better rebates and/or lower plan costs when they follow the formularies; Express Scripts will provide $1 billion in savings across its millions of members with the exclusions in place.

		Many analysts look on the exclusion lists as PBMs’ way of exerting market forces—including playing off one manufacturer’s similar product to another’s&mdash;on drug pricing. Amgen told Reuters that its erythropoietin-stimulating factors, Epogen and Arenesp, are mostly sold to hospitals and clinics and dialysis centers; the pricing through the PBMs is incidental.

		Besides wheeling and dealing on discounts to the PBMs, manufacturers’ other important tactic is to build a body of clinical knowledge for specific conditions, as opposed to general categories like diabetes or high blood pressure. The PBMs note that drugs are often offered for multiple conditions and different evaluations result.

, has generated enormous friction in healthcare circles for its cost—$84,000 for a 12-week regimen. CVS Caremark says that “Evaluation and identification of drugs requiring prior authorization for medical necessity will be made upon approval of the new hepatitis C agents;” while Express Scripts says inclusion “to be determined after FDA approval” (which has already occurred in the case of Sovaldi).

PBM formulary exclusion lists continue to grow

	Catalent Inc. (Somerset, NJ), spun out of Cardinal Health back in 2007, has now taken the “next step in our growth journey” by going public, at CTLT on the New York Stock Exchange. Blackstone Group, the private investment firm which acquired most of the business, will retain majority ownership. The money raised will be used primarily to retire debt the company has undertaken in the past few years.

	Catalent’s financial filings indicate the company grossed about $1.8 billion in 2013, in three business segments: Oral Technologies (about 66% of revenue), Medication Delivery Solutions (about 12%) and Development and Clinical Services (about 22%). That makes it a leader in clinical development and manufacturing organizations (CDMOs) globally. The oral technologies group has 14 manufacturing and development plants, located globally. Recent investments include expansions in its Softgel and clinical supply business in China and Brazil, a new Biologics Center of Excellence in Madison, WI, and an expansion of its oral technologies manufacturing site in Winchester, KY.

Blackstone Group-owned CDMO nets over $800 million

Catalent goes public in a successful IPO

	The World Preview 2014 from EvaluatePharma (US HQ: Boston) totes up current worldwide pharma sales, assesses pipeline products, and projects industry growth to 2020. According to Paul Hills, head of operations, the “quality” (i.e., projected market value) of new drugs approved by FDA in 2013 increased by 43% over the previous year; this marks a “step change in innovation and output for the industry since 2009.” Nine of the top 10 introduced that year (led by Gilead Science’s Sovaldi) will be >$1-billion blockbusters, and the 2013 approvals are expected to add over $24.4 billion to total US drug sales by 2018.

	More good news: as calculated by net present value (NPV), the industry’s pipeline has grown by 46%, to $418.5 billion; “this is the largest figure we have published since the first edition of the World Preview in 2008,” Hills writes. EvaluatePharma is very bullish on Bristol-Myers Squibb’s nivolumab oncolytic, projecting 2020 sales of the product of $6 billion. (Nivolumab, a “programmed death-1” pathway product, is currently in Phase III development; the PD-1 pathway is also being explored by Merck, Genentech and GSK, among others.)

	EvaluatePharma projects a 5.1% CAGR for the industry between 2013 and 2020. 2014 sales are projected to come in at $749 billion, up 4.4% over the prior year, and growth will accelerate through 2016, when 5.8% CAGR will be seen. Meanwhile, $24 billion is expected to be lost to patent expiries in 2014, continuing a downward trend from the peak “lost sales year” of 2012, when $38 billion was calculated to have been lost. Patent expiries will be in the $12—19-billion range annually through 2020. Over that span, biotech products (biologics and vaccines) will increase their market share globally from 22% in 2013 to 27% in 2020, says EvaluatePharma; however, the report is sketchy on the effects of biosimilars.

	Worldwide R&D spending is on a 2.4% CAGR trend through 2020, going from $137 billion in 2013 to $162 billion (based on top 500 companies). The 2013 leaders, in order, were Novartis, Roche, Sanofi, Pfizer and J&J.

After patent expires, 'The industry has turned a corner'

EvaluatePharma forecast: 2020 global pharma sales of $1.107 trillion

		Siren Interactive, a relatively small agency specializing in rare-disease therapies marketing, is taking some big steps forward as its business continues to grow. The company has hired Suzanne Tsuchiya, an industry veteran formerly with the agencies AbelsonTaylor and closerlook, as president; also Neil Rubenstein, a 15-year veteran of the agency business, as senior manager, media and analytics. Two other appointments were also announced. Wendy White, founder of Siren, remains as CEO; this year she is also the president-elect of the Healthcare Businesswomen’s Assn., and member of the board of the Global Genes Project. At the same time, the company is moving from Oak Park, IL, to downtown Chicago.

		Siren Interactive performs many conventional services for pharma manufacturers, including strategy, digital marketing and agency-of-record status. But the company has also spearheaded activities that dominate rare-disease therapy development: patient advocacy; community engagement; and even patient recruitment programs. Its latest service offerings include: patient advocacy landscape assessment, early stage patient engagement, influencer mapping, and clinical study recruitment acceleration.

		One of the hallmarks of the rare disease category (which is traditionally defined as diseases that affect fewer than 200,000 patients in the US, but includes “ultra-orphan” diseases with a few hundred or few thousand patients) is that drug developers have learned the value of working closely with patient-advocacy groups both to develop suitable drugs and to manage what for many is an intense, chronic condition. Rare diseases are also an environment where some patient-advocacy groups play a leading role in funding development programs and even commercializing some drugs. At the same time, manufacturers have identified rare diseases as a market opportunity where competition is less intense, FDA approvals can be streamlined, and drug pricing can be robust. Rare-disease therapies accounted for a third of FDA drug approvals in 2012.

Siren Interactive hires more executives, moves to downtown Chicago

Agency rides the rare-disease wave

The increasing concern for patient safety in addition to increased quality and regulatory requirements have contributed to the evolution of improved drug delivery. Choices for primary containment and delivery systems can impact time to market, and more importantly, patient outcomes. A poor choice for primary containment can increase risks for long-term drug stability, and may contribute to ineffective dose delivery, recalls and increased patient risk. Incompatibility between the drug product and its containment or delivery system can result in particulate and leachables formation, poor device performance and can negatively impact patient compliance to prescribed therapeutic regimens.

		To achieve the best possible patient outcomes, pharmaceutical companies developing complex and sensitive biologic or biosimilar injectable therapies must consider how the drug product will interact not only with the primary container, but also with the delivery system and the patient to help ensure compliance to prescribed regimens.

		By partnering with a component manufacturer early in the drug development process, pharmaceutical manufacturers can identify and mitigate many of the risks associated with poor containment selection. Flexible containment solutions use the same materials for drug contact, but in a variety of configuration options that aid in stability and delivery from discovery through commercialization and through drug lifecycle management, may help achieve better patient outcomes.

		In a recent draft guidance, “Immunogenicity Assessment for Therapeutic Protein Products,” the United States Food and Drug Administration (FDA) called attention to issues commonly associated with container closure systems, including:

			denaturation and aggregation of proteins at glass-air interfaces

			glass delamination and particulate formation in certain drug formulations

			protein aggregation associated with silicone-lubricated containers

		These issues may affect the therapeutic activity of the drug product, and the recommendations come at a time when such issues have led to an increase in the number of recalls. For instance, in 2011, 10 drug product recalls were caused by glass particulates in the drug product solution. The pace continued in 2012 with recalls of 19 lots of four different injectable oncology products caused by the discovery of glass particles.

		To help solve fundamental incompatibilities that may exist between a drug formulation and its primary container, manufacturers are exploring and adopting alternative materials of construction, such as cyclic olefin polymers, that may help assure stability during a drug product’s shelf life.

		Another consideration in this process is the need to integrate primary containers into drug-device combination products. As patients take a more active role in their individual healthcare, and the administration of injectable drug products moves from physicians to caregivers and patients, there is a greater need to provide an easy-to-use delivery system or combination product that assures safe and reliable administration. This may include the use of prefillable syringes, which help to assure dose accuracy and minimize errors when compared to a vial and disposable syringe format. There is also an increase in the use of disposable auto-injector systems (Fig. 1), which aid in dosing convenience, reduce patient fear because the needle is hidden and include safety features that hide the needle before and after injection. Finally, there is a trend toward new systems that allow for even greater patient convenience. These cartridge-based systems include the use of pen injectors for frequently administered products, as well as large-volume electronic wearable injector delivery systems that can offer either less frequent administration or conversions of products from intravenous to subcutaneous administration.

		In order to ensure drug product integrity, containment materials must be compatible with both the drug product itself and the delivery system. The selection of the proper containment system will aid the drug by reducing potential extractables and formation of leachables, or other interactions with the product, including glass delamination and protein aggregation. In turn, that containment system should be suitable for use and function properly within the final delivery system.

		As noted in Fig. 2, companies with drug product lifecycle strategies seek to move the product to market quickly, which often means that the product will arrive on the market in a vial and syringe format. As use increases, the delivery system may transition to a prefilled syringe system, and finally a delivery device such as an auto-injector or a wearable patch injection system. However, if the drug is in a highly competitive therapeutic drug class, companies will launch with a prefilled syringe or delivery device format. Selecting a primary containment material, such as a cyclic olefin polymer, as well as components that enable efficient delivery and functionality with the device or system, may aid in patient compliance and efficacy of the drug product through accurate dosing and ease of self-administration.

		Prefillable syringe systems may increase compliance through ease of use and decrease errors through precise dosing, provide caregiver safety through use of safety devices, and a lifestyle preference when combined with an auto-injector because of self-injection convenience.

		Proper material and design selection for components, including the barrel in a prefillable syringe must consider requirements such as long-term drug compatibility, dimensional tolerance and fit for container closure integrity, the force required to remove the tip cap or needle shield cover—which may be an issue with those suffering from limited dexterity&mdash;breakloose and extrusion for optimized injection forces and needle size. Components must be matched to meet the requirements over the intended shelf life of the drug product and under all conditions of storage and use.

		When selecting proper materials for a specific drug product, the following questions should be considered:

			How does the container closure system interact with the drug product? Is the material chemically stable and inert?

			Is the primary container system suitable for use in an auto-injector or patch injection system?

			Will the drug product require sterilization or low-temperature storage?

			Will the presence of metal ions—which are often a potential extractable from materials or even residuals left behind after processing&mdash;cause issues such as protein degradation or particle formation?

			For a prefillable syringe, is the combination product fit for manual injection and automatic injection?

			Is the drug compatible with silicone oil, which can induce particulate in many drug products?

		Many biotech and sensitive drug products have unique requirements, and polymer systems provide key solutions for patient safety and compliance. There are a variety of products on the market that can help mitigate these risks, including barrier films for elastomer components that help to reduce potential extractables and leachables formation. For materials that are sensitive to glass, cyclic olefin polymers can be molded into a variety of shapes and sizes to accommodate not only the drug product, but also large-volume doses. In addition, cyclic olefins can be molded to suit innovative delivery devices, offering differentiation in the market. An insert needle prefillable syringe, such as the Daikyo Crystal Zenith® 1mL Insert needle syringe, may be required for a drug product with metal and silicone oil sensitivities.

		While the primary focus of most pharmaceutical companies is on the drug product itself, early collaboration with a packaging and/or device partner during the lengthy development stages can result in a delivery system that meets the needs of both the drug and the patient. Research and development for a biologic drug product can typically last as long as 15 years and cost as much as $1.2 billion. [1] So when the drug product reaches the market, the originator may have only a few years remaining on the patent. Often, the delivery system is only thought of during the final stages of development and not fully considered during primary container selection. If the drug product cannot be stored effectively or reacts chemically to the containment materials, or if the system does not function well with a high-viscosity drug or is not a good fit for the intended patient population, it can be a costly issue for the manufacturer. Considerations relating to dosing volume, delivery technique and frequency, and if the drug product will be delivered in a system such as an auto-injector, should all be taken into account at an early stage to ensure optimum speed to market and opportunity for success.

		As noted previously, there is a strong trend for biologic delivery to move from its original containment system, such as intravenous delivery, to formats like subcutaneous injection via a prefillable syringe system or auto-injection device. Pharmaceutical manufacturers have several options for drug delivery solutions, but for some, compromises may be required.

		Select an off-the-shelf system — while this selection may work for many drug products, it may require re-working for specific drug products and adaptation costs may be considerable. Functionality challenges may remain throughout use.

		Increase existing device complexity — often highly expensive and complicated, this option may extend time to market.

		Simplify an existing device — excluding features of a system that is prone to breakage, such as a spring-driven delivery device, has always posed a risk of incomplete injection.

		Market in a prefillable syringe system only — this will require significant adoption, compliance and adherence on behalf of the patient, and many barriers, such as needle phobia, may exist.

		Create a new device — By working with a packaging partner that has experience in contract manufacturing, a device can be created using the same materials throughout the drug product’s lifecycle while providing differentiation in the market, and ensuring ease of use for the patient.

		Even with these challenges, there are opportunities to improve the patient experience via formulation and delivery device technologies. By partnering with packaging and delivery systems companies, drug companies can optimize treatment regimens through initiatives such as:

			Formulating drugs to higher concentrations, to reduce dosing frequency

			Using higher-volume delivery systems to deliver a larger volume and reduce dosing frequency

			Using higher-volume systems to allow for more diverse formulation options that may not be possible if the dose is limited to a small volume

		Collaborating with a single partner with diverse expertise in primary packaging, delivery systems, custom design and analytical testing early in the drug process can help at a variety of stages. For example, packaging manufacturers who also provide analytical laboratory services can offer product recommendations to the latest alternative technologies and provide prescreen stability work early in the process to ensure that the containment materials do not react with the drug product. Many biologics, by their very nature, do not respond well to glass containment, which can result in higher levels of extractables and leachables, protein aggregation or the risk of glass delamination. Cyclic olefin polymers (COPs) offer an alternative to traditional glass and, since COPs can be molded to a variety of shapes, they can provide containment throughout the drug product’s lifecycle. Such choices early in development may also aid decisions later in the manufacturing cycle. COPs also offer improved dimensional tolerance and design flexibility, so innovative container/device combinations can be considered to help optimize overall system design based on the needs of the patient. Companies challenged with multiple containment needs during drug development and lifecycle strategies can work closely with the partner to match technology, collaborate during development and ensure the primary container is compatible with the drug and device for best patient outcomes.

Lifecycle solutions: aiming for better patient outcomes through high-quality prefillable solutions

		The US Food and Drug Administration (FDA) faces a challenging schedule for implementing the Drug Supply Chain Security Act (DSCSA), enacted on Nov 27, 2013. The DSCSA revamps the requirements for securing prescription drugs throughout the supply chain, and mandates that an interoperable electronic system for tracing prescription drugs to the package level be put into effect in phases over 10 years. Among the DSCSA’s requirements are new verification obligations imposed on manufacturers, distributors and pharmacies regarding “suspect” and “illegitimate products,” designed to identify and eliminate counterfeit and diverted prescription drugs from the supply chain. By Jan 1, 2015, all parties in the supply chain must have systems in place to comply with these verification requirements. How FDA interprets the interlocking and sometimes ambiguous obligations that the DSCSA imposes may have a significant impact on the contractual obligations among trading partners and on the relationship among parties in the supply chain.

		On June 11, 2014, FDA announced the availability of a draft guidance entitled “Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification.” This guidance is the first of many FDA is required to issue under the statutory mandates included in the DSCSA.

		The draft guidance provides practical suggestions for how trading partners may identify suspect products, such as to be skeptical of prices that are “too good to be true,” and to closely examine the package and transport container for signs that the product has been compromised. The document also recommends that trading partners “discuss with each other any observations, questions, or concerns they have related to the status of a drug as a suspect product to aid them in determining whether the drug should be considered a suspect product,” and that trading partners “contact regulatory authorities, law enforcement, or other available resources to aid in that determination . . . .” (see draft guidance p. 6) The draft guidance does not clarify which party has the final word, however, nor resolves certain other ambiguities about the interlocking responsibilities of the parties involved. These ambiguities include:

 - The DSCSA obligates manufacturers, wholesale distributors, dispensers, and repackagers, upon determining that a product in their possession or control is a suspect product or upon receiving notice that the Secretary has made such a determination, to quarantine the product and investigate, “in coordination with trading partners, as applicable,” to determine whether the product is an illegitimate product.” The statute does not impose a corresponding duty on trading partners to coordinate regarding suspect product not within their possession or control. Nor does the statute dictate what happens when trading partners disagree. FDA’s draft guidance does not address that ambiguity.

 - The DSCSA also imposes an additional duty on manufacturers, not imposed on other parties, to notify FDA and certain trading partners if they determine—or are notified by FDA or a trading partner&mdash;that there is a “high risk” that one of the manufacturer’s products is illegitimate. The statute does not provide a comprehensive definition of what products are at such “high risk,” but makes clear that the manufacturer’s duty applies to product not within the manufacturer’s possession or control, and to product “purported” to be manufactured by the manufacturer. Therefore, a manufacturer necessarily must rely on trading partners to cooperate in determining if the product is at high risk of being illegitimate, as well as for the initial notice about the product.

			Yet, the statute does not explicitly impose corresponding duties on the manufacturer’s trading partners. Nor does it clarify what criteria the trading partners are to apply (except for listing scenarios that could increase the risk of a suspect product entering the supply chain), or whether manufacturers are bound by a trading partner’s determination or may make its own determination. FDA’s draft guidance does not resolve these ambiguities.

 - Unlike for the prior two categories, the DSCSA does impose an explicit duty on manufacturers, wholesale distributors, dispensers, and repackagers to “take reasonable and appropriate steps to assist a trading partner to disposition an illegitimate product” not in its own possession or control. The statute also requires each trading partner, upon determining that a product in its own possession or control is an illegitimate product, to “notify the Secretary and all immediate trading partners” that the party has reason to believe they may have received “such illegitimate product” of such determination not later than 24 hours after making such determination.

			The statute is ambiguous about whether “such illegitimate product” means only the particular package or unit of the product, or more broadly includes other units within the same shipment, the same lot, or even the same product category as the illegitimate product. FDA’s recent draft guidance does not resolve or even address such ambiguity.

Will FDA resolve the ambiguities in time?

		The agency requests comments by Aug 11, 2014. Whether the final guidance will address these ambiguities and will be issued before the Jan 1, 2015 implementation date—let alone in time for affected companies to put systems in place necessary to comply with these and other DSCSA obligations&mdash;remains to be seen.

		As of July 30, FDA had received only two comments on the draft guidance and had not posted either. Absent timely FDA interpretation, parties subject to the DSCSA’s verification requirements will need to resolve these issues and other ambiguities regarding their mutual obligations themselves. Prudence suggests that the parties review their internal policies and the contractual obligations governing their relationships, and engage in explicit conversations among themselves to try to resolve these ambiguities to the extent possible. Otherwise, the gaps left open may create situations in which counterfeited or diverted products are not adequately investigated and disposed of because parties may assume another party is taking responsibility for investigating and handling the product.

	Mike Druckman (mike.druckman@hoganlovells.com) is a partner at Hogan Lovells who counsels life sciences companies and organizations on FDA law and regulation. He formerly worked for seven years in FDA’s Office of Chief Counsel, first as Associate Chief Counsel for Enforcement and then as Associate Chief Counsel for Biologics.

The Drug Supply Chain Security Act creates uncertainty about which trading partners have responsibility for product verification

Legal uncertainties in the DSCSA

“Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them.”

, the defining moment came when the artificial intelligence known as HAL refused the spacecraft commander’s orders, saying, “I’m afraid I can’t do that, Dave.” It was then that Dave knew he’d been outgunned—at least temporarily&mdash;by his computer.

		Ever feel like Dave? Throughout history, humans have been tool-using animals. From sharpened sticks to artificial intelligence, our tools have adapted to the demands of our work. Today, our work is more complex than ever, and our tools have progressed the same way. CRM, CLM, MLR, analytics, multi-channel marketing, compliance, logistics, business applications and other software systems are robust and interconnected. They have to be, for our people to do their jobs effectively.

		Say you’re a small startup pharma that’s launching a CRM system. You manage to get it off the ground with marginal success, but then the new releases start rolling—a never-ending schedule of upgrades, bug fixes, new functionality. Your high performers figure it out but their less tech-savvy colleagues aren’t as adaptable, and adoption starts to slip. Your two-person IT team is too busy answering help desk calls to provide any real relief, and senior management just wants a quick and manageable solution.

		“I can’t do that, Dave.” The system has taken control… A bad end to a big investment.

		Here’s another story: A large company introduces its salesforce to a new CLM system. They go the traditional route, pulling teams from the field for multiple days for a huge deployment. The cost due to lost business? Hundreds of hours of field time and potentially hundreds of thousands of dollars. And when the software is upgraded, they’ll do it all over again.

		What’s the common denominator? Failure to realize that change is constant. The only way to maintain control? Stay on top of the changes. But everyone is too busy for that.

		Tech tools are here to stay, and so is their complexity. But you don’t have to be subordinate to them. Here are four tips to ensure your people push the technology, not the other way around.

 Only good initial training can do this. How? By helping people see how their tools will work for them. If they believe the tools are valuable to their daily work, they’ll want to use them and they’ll look forward to improvements down the line. Don’t underestimate this first step.

 By definition, your initial deployment will be big and disruptive; you’re introducing a tool that changes the way people work. After that, training should not interfere with operations. A training vendor that offers Training as a Service (TaaS)—my company is one&mdash;will anticipate new system iterations and structure training in small bites to mirror those upgrades. (Bonus tip: Don’t save them up and do another mammoth training. Unless you’ve got time and money to burn.)

 Typically, one-third of the training budget is wasted on non-training expenses such as travel costs, repeated RFPs, and resource ramp-up. A TaaS training partner can eliminate those expenses so your training dollars are actually spent on training.

 Taking your people out of the field for training leaves an opening your competition is only too happy to fill. A good training partner will offer virtual delivery options that reduce time away from the field. Through the miracle of inexpensive technology, it doesn’t take a $20,000 media room to bring the classroom to where your people are. Stop sending more people to training and start sending more training to people.

		More and more pharma companies are seeing the benefits of this approach firsthand. For one company that needed to train a salesforce of 400, it allowed them to reclaim hundreds of hours of sales time for their field force. By restoring one sales day per month per rep (4,800 days), they realized the equivalent of 23 additional sales reps. That’s a return on investment they couldn’t afford to do without!

		Unlike space travel, it’s not rocket science. But it does require rethinking… about the inevitability of change and the role of training in managing it cost-effectively.

		Bob Cannan is CEO of Eagle Productivity Solutions (

). Eagle designs and delivers custom training solutions to serve the critical needs of bio/pharma companies, including 18 of the top 20 companies, for whom it has trained every major hardware and software platform. Eagle has trained in more than 40 countries and 20 languages and has offices in the US, UK and Spain.

Modern training technologies make the prospect of days-long training courses an obsolete practice

Is tech running you? Four ways to retake control

That there are better and broader data sources available to analyze how products will enter the marketplace, or how existing products can compete effectively, is not news to the pharma industry. But evidence cited by IMS Consulting (New York), the advisory arm of IMS Health, shows that all too many brand teams are still locked into traditional analyses based on physician-panel inputs. The impact of consumer-driven healthcare, and the influence of payer stances on drug availability, are still only hazily being addressed.

		That’s the subject of a newly published white paper from IMS Consulting, “A New Foundation for Designing Winning Brand Strategies.” Lead author Maneesh Gupta, senior principal, brand and commercial strategy, says that overall, not only are pharma companies still grappling with the concept of a “patient journey” from initial symptoms through to treatment and maintenance, but that there is a need to combine that journey with the perspectives and impacts of the physician and the payer (aka market access issues). “For a long time, it’s been said that the pharma industry is behind consumer packaged goods (CPG) manufacturers in their approach to the market, and that’s still true today,” he says. “Many brand managers are still basing their initial marketing efforts on the results of a survey of physicians. That no longer works.” Only one out of 10 brand teams have what IMS Health considers the state of the art in analyzing the patient journey, resulting in “sub-optimal brand performance.”

		The patient journey (see figure) as a concept has been around for a long time: origination; awareness/presentation; diagnosis/referral; treatment; etc. There is ample information now available from the growing array of datasets pouring out of social media, claims data, longitudinal patient data and other sources to fill in the details of this journey. But, even for the few companies that undertake this analysis, says Gupta, the problem is that the analysis is done piecemeal by different groups: sales, health economics, market access; and others. “Companies are spending more than they should, repeating analyses already done, and not getting the full value of their investigations,” he says.

		The better approach is to address key questions, and with a coordinated, integrated approach. Among these questions are the following:

			What is happening at each step of the patient journey?

			Why are decisions being made along these steps?

			Figuring out where the manufacturer can add value to the decisionmaking (for example, introducing a copay card)?

			Measuring progress against objectives along the journey.

		IMS Consulting, of course, is positioning itself to provide this guidance, and is banking on the inputs of the newly acquired assets of IMS Health in social media, online campaign development and the yet-to-be-consummated acquisition of Cegedim Relationship Management. But whether a brand team uses IMS Health Consulting as a single-source provider, or as one of several providers, Gupta says that the industry needs to raise the level of its game.

		The paper is available at this address: 

Real-world data sources can provide new dimensions to marketing plans

Pharma brand teams need to reset  their patient-journey analysis, says IMS Consulting

The annual update from ZS Associates (Chicago), a consulting firm on sales and related practices in life sciences, finds that 51% of physicians were considered “accessible” this year, as compared to 55% in 2013. “Though this year’s drop was less precipitous than in previous years, it reflects the steady decline in access over the past decade,” concludes the report. Data are based on call reports for over 200 pharma sales teams, meeting with approximately 325,000 prescribers. “Accessible” means those who were not either “access restricted” (who met with 31—70% of the reps who called on them) or “severely access restricted” (those who met with 30% or fewer). Access to so-called “rep friendly” specialties like dermatology or gastroenterology also declined, by double-digit numbers.

		Pratap Khedkar, managing principal at ZS, writes that even though the likelihood is that rep ranks will be rising in the near future (due to the growth in new drug introductions), pharma companies need to pay more attention to alternative channels of communication. Reps need to become “orchestrators” who first and foremost find out what channels physicians prefer for communication. ZS itself is planning to introduce a new service, the ZS AffinityMonitor, to gauge physician preferences for Internet, email and other channels.

		ZS, which regularly monitors the sales activities and resources of pharma companies, calculates that the count of reps has declined from 101,800 in 2005—its peak&mdash;to 63,000 today. “There will always be room for reps,” says Khedkar, “The pipe won’t be eliminated, but the diameter will shrink. Companies need to use other channels&mdash;not only must pharma reps live with the other channels but work with them, coordinating all sources of information.” 

Latest ZS AccessMonitor asks, 'Who are physicians listening to?'

Pharma rep access: down, down, down

CVS/pharmacy, the Woonsocket, RI, chain with over 7,600 stores nationally, has been granted the first “community pharmacy” accreditation issued by URAC (Washington, DC). URAC, in turn, is a standards-setting body for healthcare providers, pharmacies and other parts of healthcare delivery (Pharmaceutical Commerce, May/June, p. 6). Its standards, which have legal status with federal programs and most states, validate quality systems, recordkeeping and other functions; it “is a symbol of excellence for organizations to validate their commitment to quality and accountability,” according to URAC.

		The community pharmacy accreditation, which was established only in May, measures quality of service in patient counseling and education; medication therapy management; chronic disease management; adherence consultation, among other factors. A CVS/pharmacy spokesman tells Pharmaceutical Commerce that the company did not need to create new programs to meet the URAC standards, but rather to validate existing practices. CVS Caremark, CVS/pharmacy’s parent, already has URAC accreditation for four other standards: Pharmacy Benefit Management; Drug Therapy Management; Specialty Pharmacy; and Mail Service Pharmacy.

		URAC is fast becoming the mark of distinction for specialty pharmacies (a separate URAC program); now the standard might spread across many retail chains. For manufacturers interested in collaborating on adherence, chronic care and other high-touch patient services, the accreditation might become a competitive advantage for pharmacy partners.

First to gain newly established program reviewing therapy management and chronic care

CVS/pharmacy earns URAC accreditation for 'community pharmacy'

Fig. 1. State Medicaid invoices are growing… ...but outsourcing contract administration can reduce processing costs; Fig. 2

		It’s no secret that managing the basic billing, payment collection and reconciliation of the pharma industry is more complicated today. Even before Obamacare (which is expanding both the number and complexity of billing entities), pharma finance departments were dealing with a bewildering array of federal and state programs, and more complicated fee-and-chargeback arrangements with wholesalers. Add to this the variety of patient-support programs, analysis of coupon programs and other financial arrangements, and the overall picture becomes ever more obscure. Nor should the trend toward more—and bigger&mdash;penalty settlements in government programs be overlooked.

		Compliance advisor and outsourcing contract-administration provider Compliance Implementation Services (CIS; Morrisville, NC) has surveyed the landscape among the clients it serves. Through the end of 2012 (see Fig. 1), the number of invoices to be reconciled in just state Medicaid programs, and just for one labeler code (i.e., one type of product) has zoomed from a few tens in 2006 to nearly 175. Other data from CIS suggests that current Medicaid activity is running at 68 invoices per quarter for its clients, which include emerging biotech companies with essentially one product.

		“Even though this invoice volume is growing, and even though many contracts have gray areas that leave contract terms open to interpretation, all too many companies still run this process off spreadsheets,” notes Karen Brown, marketing VP at CIS. The other choice is to implement complex—and expensive&mdash;dedicated software systems, with the attendant IT and staffing requirements. CIS’ offer is to manage the contract administration with its dedicated, proprietary IT system, and deliver results to clients via cloud-based applications. Among CIS clients in the $50-million to $1-billion annual revenue range (Fig. 2), the reduction in staffing and IT expense can be from nearly $5.5 million to under $3 million, or 40—50%. A white paper on the topic is available from the firm.

Outsourced contract-administration provider highlights growth in invoicing and financial stewardship burdens

For pharma, it's getting harder and harder to follow the money

		The active-powered unit-load device (ULD) for shipping temperature-controlled products was pioneered by Envirotainer (Upplands Väsby, Sweden) years ago, but its use by air carriers has been limited to flights originating outside the US because it lacked FAA approval. Now, the company has been granted FAA approval for its RKN unit, putting it in direct competition with CSafe Global (Dayton, OH), whose RKN unit has been approved by both FAA and the European Aviation Safety Agency. The wider use of the Envirotainer ULD won’t be immediate; the company says that a technical-acceptance process will be carried out with airlines over the next 2-6 months. And the company says that it now has a “baseline” for quicker approval of its newer RAP unit, which is sized to accept up to four pallets of product.

		But in a tit-for-tat action, CSafe recently announced that its RKN unit has been approved by FAA for use in both the upper and lower decks of air freighters. “In the last six years, we’ve seen an increase in conversions to narrow-body aircraft for freight service,” said Brian Kohr, CSafe CEO, in a statement. “After consulting with our key global partners, we sought FAA approval for use of the CSafe RKN on the upper deck.” That capability enables shippers to transport products originating from closer to the ship location and the receiving location, reducing road transport and speeding up deliveries.

		RKN units are metal boxes sized to contain a pallet of product (which, if the entire trip is maintained under temperature-controlled conditions, obviates the need for cartons to have their own insulation and cooling). There are “passive” designs that employ dry ice, wet ice or a phase-change material as a coolant, and then the “active” units either have a fan to circulate cool air and coolant, or contain batteries, compressors and refrigerants—essentially, an insulated box with a refrigerator inside. Power cables enable the active units to be recharged in transit by connecting to a vehicle’s electrical system, while passive units need to be recharged with dry ice on extended or delayed trips. An active unit can also provide heating to protect products harmed by sub-freezing conditions.

		Envirotainer and CSafe aren’t the only games in town: Lufthansa Air Cargo has a unit of its own, and UPS has made use of the PharmaPort unit from Cool Containers LLC (Marietta, OH). Even so, Envirotainer is generally considered the largest vendor (based on the number of ULDs in use), and will be adding 400—500 RKN units, and 100–150 RAP units, by the end of this year. The company also touts its “open” network of carriers and Envirotainer-certified maintenance centers globally (“open” in the sense that other carriers can join in).

Meanwhile, competitor CSafe Global broadens its containers' usability

Envirotainer wins FAA approval for its cold-chain containers on US air freighters

		Sales was, is and always will be the driving force in the pharmaceutical business (as opposed to pharmaceutical science, which is shared among private companies, academia, the medical professions and governments). And while the pharma sales profession is 

under duress in terms of employment numbers

 and core functions, we’ve consistently asserted that the often-heralded “death” of the profession is a figment—there will always be a need for a sales function, and people to perform that function in the industry.

 would appear to be at some distance from content relating to pharma sales. We’ve got our 

, a comprehensive source of vendor and service offerings for the industry, along with several articles on logistics and supply chain security. And there’s a report on the vastly undervalued function of 

. Here’s how they relate to pharma sales:

		With cold chain, the first thing to understand is that the field is gradually shifting from that specific function—keeping certain products in a refrigerated state&mdash;to one of ensuring the overall integrity of the supply chain. That, in turn, links to the directive the entire US industry is now under (catching up with many parts of the rest of the world) to tracking pharmaceutical shipments and ensuring that they are coming from, and going to, authorized entities. It’s often been remarked that this tracking process, in turn, is a deep window into overall movement of products in the marketplace, and now you’re close to a basic sales function of making sure that products are on hand when needed. (It’s still true that the pharma supply chain, from API ingredients to finished, packaged products on pharmacy shelves, is one of the longest, time-wise, of any industry.)

		With MDM, there appears to be a quiet revolution going on that’s about to get quite a bit noisier. MDM got a boost (from a supplier or IT services provider perspective) by the Physician’s Sunshine Act, which the entire industry has been busy complying with since about a year ago. (At presstime, CMS was sticking to its guns that the database of reported spending by industry on healthcare providers would go public around Sept. 30, but as the article points out, the medical professional societies, among others, are calling for a postponement).

		MDM always has been intimately connected to sales—its historic function has been to help reps locate and qualify the physicians they hope to visit. Today, however, the picture is changing rapidly. MDM providers are fast at work clarifying the affiliation relationships among physicians&mdash;which hospitals, integrated delivery networks and other business relationships they have. Why? For the simple reason that as more and more prescribing gets influenced by formulary plans and payer policies, these relationships become more important to recognize in the sales process.

		An even bigger transformation in MDM is the merging of physician identity and affiliation data with professional practices, including communication preferences, social media activity and prescribing trends. The pharma industry is in the early stages of being able to understand their key clients—physicians&mdash;in the same ways that consumer marketers are delving into the preferences of consumers.

	The next stage of this transformation—understanding patient habits and preferences&mdash;is already started, and MDM techniques will accelerate that change.

Converging the pharma business with its logistics and data functions

Click to view the digital edition of the 2014 Cold Chain Directory

Our annual compilation of key vendors and service providers in this vital component of pharmaceutical distribution, together with a preview of the IQPC Cold Chain Forum and more late-breaking news

2014 Cold Chain Directory

Cardinal Health Specialty Solutions transportation network. 

		For years, manufacturers have been challenged to lower the cost of moving pharmaceuticals from Point A to Point B, while keeping them safe every mile of the way. These challenges are more pronounced today than ever before, as manufacturers address three ongoing issues. First, there is the mounting cost pressures resulting from the ‘patent cliff’ that began in 2010, with one of the biggest waves of drug patent expirations in history. [1] As the patent expires for one top-selling drug after another, lower-priced generics are taking market share and profits away from manufacturers every day.

		The second challenge is the waste that’s inherent in pharmaceutical transportation, particularly of cold chain products. If carried by unrefrigerated trucks, these products need to be transported in coolers, which creates excess packaging and increases costs. Imagine a tiny vial requiring a large cooler filled with gel packs, and you begin to see the problem.

		Finally, there is the challenge of product security. While the cargo theft of pharmaceuticals in the US continues to fall according to the Pharmaceutical Cargo Security Coalition (PCSC), it remains a constant concern of transportation managers and requires ongoing vigilance as part of an overall cost and risk management strategy. [2]

		Shared-resources logistics is a creative solution for addressing all three of these challenges. In fact, other industries—such as consumer packaged goods&mdash;have already used this approach to significantly cut costs. For example, in 2010, Kimberly-Clark teamed up with Colgate to co-load freight and share truck capacity. The goal was to help offset rising transportation costs as they both delivered to the same locations: a limited number of CVS Caremark retail stores. According to Kimberly-Clark, the collaboration cut total truck miles by 10% and line-haul and fuel-haul costs by 18%. [3]

		By sharing resources—from warehousing to truck capacity to shipping lanes&mdash;manufacturers can optimize their transportation operations, eliminating the high cost of less-than-truckload shipments and empty back hauls.

Sharing resources in pharmaceutical distribution

		In 2007, we began to develop our own approach to shared-resources logistics at Cardinal Health Specialty Solutions. At the time, we were transporting products for approximately 80 pharmaceutical manufacturers. Through an in-depth analysis of ordering and shipping data we identified key locations where the vast majority of products were being delivered.

		With the understanding that comingling these products would save manufacturers money, we worked with our carriers to develop a new shared-logistics solution. The result was the Exclusive Pharmaceutical Transportation Network (EPTN), which combines the best practices of shared-resources logistics: consolidating warehouse space, comingling freight from different manufacturers and creating more efficient shipping lanes to common destinations.

		What sets EPTN apart from other shared-logistics models is that it’s the first and only 3PL network in America that is dedicated exclusively to the pharmaceutical industry, covering 70% of all trade volume shipped. Other logistics providers offer some pharma-only services—such as warehousing. But EPTN is the only comprehensive solution, providing both warehousing and transportation services for all types of pharmaceuticals, including brand names, generics, over-the-counter and specialty.

		These drugs arrive at their destinations in 48 hours or less via eight routes that deliver to the East, South, Midwest and Colorado. All deliveries are point-to-point ‘milk runs’: once a product is loaded onto a truck it stays there, without being sorted or removed until unloaded at its destination. Currently, there are nearly 40 of these destinations: a mix of wholesale, specialty distribution and retail relocations.

		The network is not exclusive to Cardinal Health distribution centers and products and is open to the entire US pharmaceutical industry, from manufacturer to wholesaler to point-of-sale. EPTN can accommodate any size of load, from a single package to a pallet. Manufacturers pay only for the space needed on the truck.

		By consolidating shipments from multiple manufacturers, EPTN lowers transportation costs for manufacturers an average of 10—15%. The savings are in addition to regular discounts from Cardinal Health contracted freight rates. Also, because EPTN has regular routes, there’s less need for expediting shipping and the related, higher costs.

		After narrowing the shipping lanes to eight, we began to look at the trucks themselves to create more efficiency and cost savings. Turning to data analysis once again, we identified the common destinations that different types of products have, from controlled to ambient to cold chain. Instead of using a separate truck for each product type bound for the same destination, we wanted to combine all three onto a single truck.

		The solution was to build an entire fleet of trucks refrigerated to 40°F (regardless of the temperature outside), accommodating cold chain products without the need for special packaging and handling. Each truck is calibrated and quality monitored to ensure temperature control. Ambient products can safely travel at 40°F for the 48-hour or less length of the network’s routes.

		The final cost management measure was to ensure the safety of products from warehouse to destination. Because of EPTN’s shared-resource, point-to-point delivery, there are zero third-party touches. Unlike traditional LTL shipping, products are handled less. And that minimizes the potential for damages and claims, as well as product shortages and losses. So the root cause for product write-offs is eliminated.

The drive for lower costs, safer products

Pharmaceutical Commerce - September/October 2014