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How Does the Pharmaceutical Supply Chain Work?

Pharmaceutical Supply Chain

Pharmaceutical Supply Chain Work?

How Does the Pharmaceutical Supply Chain Work

A supply chain is the process by which pharmaceutical products are moved from one location to another. It is comprised of a number of different entities such as PBMs, distributors, and suppliers. All of these entities work together to ensure that products are delivered to the patients on time. In addition, they also have to be able to mitigate any potential threats that may affect the products.

Distributors

Pharmaceutical distributors are an important part of the pharmaceutical supply chain. They handle orders from thousands of manufacturers and hospitals. Aside from delivering medications, they also provide financial services to help ensure access to medicines.

Drug distribution is a challenging business. Manufacturers have to maintain their inventory levels, as well as meet demand. Changes in the market can lead to price adjustments and delays.

Pharmaceutical wholesalers make profits from distributing brand-name products. But they also face challenges with generic drugs and over-the-counter (OTC) products. Some distributors specialize in a particular type of product.

In recent years, drug distribution has changed with the introduction of new technologies. These innovations include automated replenishment systems. Inventory tracking systems help distributers store and track medication. The increasing complexity of the supply chain means that pharmaceutical distributors must respond to an ever-changing landscape.

Maintaining high stock levels is a challenge for pharmaceutical distributors. It is also an expense, and the costs of carrying extra inventory can outweigh the benefits.

One of the most common replenishment challenges is order frequency. Distributors have to create rules that allow them to fulfill each order quickly. For prescription drugs, it’s especially important to have fast service. Chronically ill patients, for example, need their medications regularly.

Distributors are changing the way they do business as they strive to deliver more value to their customers. They’re developing new services to accommodate emerging customer types. Their goals include reducing operational costs, maintaining continuity, and providing patient-focused services.

While pharmaceutical distributors have been driving the industry for decades, they are constantly adapting to a changing landscape. They use innovative technologies and new business models to ensure that they offer the highest quality service to their customers. Ultimately, their goal is to make sure that the healthcare system is able to stay safe.

Whether they’re delivering medicine or providing financial services, distributors are exceptional logistics partners. Increasing competition has made their job even harder. However, their hard work has helped them keep pace with the shifting landscape.

To stay on top of the market, pharmaceutical distributors must balance the needs of suppliers, retailers, and consumers. They must be able to respond rapidly and efficiently to changes in the pharmaceutical industry.

PBMs

Pharmacy benefit managers (PBMs) are important players in the pharmaceutical supply chain. They are a critical hub that interfaces between pharmacies, wholesalers, and health insurers. Their role is complex and diverse, influencing a wide range of stakeholders.

PBMs are important for a number of reasons, including their ability to steer patients toward less expensive medications. However, their business practices can have unintended consequences, such as diverting resources to unnecessary administrative tasks and causing uncompensated costs.

The pharmacy benefit manager has a reputation for being a shadowy, opaque organization. But, in recent years, states and consumers have taken more interest in how PBMs impact the pharma industry. Several states have introduced legislation to address this problem. Some of the most recent bills are related to rebate transparency, the value of a prescription, and how PBMs influence drug pricing.

The Federal Trade Commission recently announced an inquiry into PBMs large vertically integrated operations. The Trump administration has also eliminated a safe harbor from federal anti-kickback laws. This could affect the financial position of major health insurers, such as CVS Caremark and Express Scripts.

A number of state attorneys general have launched investigations into the ways that PBMs and other pharmaceutical entities have affected patient care. Among the most common claims are that PBMs were responsible for prescription drug price increases. Meanwhile, some health insurers have attempted to defend their positions.

In addition, a VP of Pharmacy at a large nonprofit system in the South found that providers had written thousands of prescriptions for brand-name ointment, even though the generic version of the same treatment would save them hundreds per pill.

Drug prices remain a major concern for Americans. This is one reason that the Senate has stalled PBM-focused bills. And lawmakers have introduced dozens of other bills to increase transparency and enhance consumer knowledge.

Although PBMs do not operate directly in the physical pharmaceutical supply chain, they are a key player. They negotiate with manufacturers, wholesalers, and health insurers for lower prices on behalf of payers. While the practice has its pros and cons, they can help patients access medications, especially specialty medications, at a lower cost.

Cyber attacks and trade disputes

In the pharmaceutical supply chain, there are a number of risks. The most common of these is a pandemic outbreak. But there are also location risks, such as explosions at logistics hubs, fires at production sites, or strikes.

Supply chains can be vulnerable to cyber attacks, too. For example, a ransomware attack can be used by states as part of intelligence activities.

A cyber attack that affects a supplier’s supply chain can cause massive financial damage. A company can reduce the risk of a supply chain disruption by diversifying its sources and by mapping its suppliers. It can also improve its visibility and response time.

A more comprehensive approach is needed, especially as the number of supply chain attacks continues to increase. The number of attacks quadrupled in 2021. And with more than half of all companies having an exposed remote access platform to the internet, the impact of a successful cyberattack on a pharma company can be devastating.

For example, the NotPetya ransomware attack in June 2017 affected a variety of organizations around the globe. It was released by Russian military intelligence to paralyze computer networks of Ukrainian organizations. Initially targeted by the Ukrainian government’s tax reporting software, the malware spread through subsidiaries of global firms.

As a result, the NotPetya cyberattack caused a $10 billion economic loss. The impact was significant enough to make the White House call Russia’s action a “wake up call” for the industry.

Companies that are vulnerable to a cyberattack need to understand the risk factors associated with their own and their suppliers’ supply chain. This is a critical first step in building resilience. Once a company has an understanding of the risks, it can then begin making changes to its supply chain.

While many firms are focused on improving the security of their supply chain, they must also be aware of the other risks involved. Some of these include geopolitical espionage, corporate espionage, and economic espionage.

The most important thing to remember is that the best cybersecurity strategy is one that is fully utilized. That is, it must be used by all members of the organization to prevent the risk of an attack.

Mitigation tactics

When a supply chain goes down, it is important to use mitigation tactics to avoid a disruption. These strategies can help companies identify the most critical risks and ensure that all stakeholders are prepared to respond in the event of a crisis.

There are two main types of mitigation tactics that companies can take. One involves reducing uncertainty at the source. Another is to manage system risk. A heat map of the probability and impact of the threat can reveal the most significant risks.

Companies can improve their ability to mitigate risk by mapping their supply chain, developing a business continuity plan, and improving visibility. They can also enhance process control and traceability. This will help them prioritize activities and allocate resources.

The pharma industry is particularly susceptible to supply-chain disruptions. Trade disputes, natural disasters, and cybersecurity breaches are all potential threats. In addition, companies must have an effective emergency response plan.

Supply chain vulnerabilities can have devastating effects. They can result in hundreds of millions of dollars in recalls and intellectual property losses. Some pharma companies have been forced to close production plants after accidents occurred at supplier plants.

One of the most common sources of supply-chain failures is supplier bankruptcy. If a supplier goes under, the whole supply chain can be shut down. Suppliers are also under pressure to expand their supply networks and invest in more capacity.

Managing risk is more complex in the pharmaceutical industry than in other industries. There is an abundance of proprietary knowledge and global data flows. Consequently, it is essential for suppliers to provide detailed data packages and enable process predictability.

While many pharma companies have a strong understanding of risk management, a quarter of respondents cited a lack of visibility into their suppliers’ risks. It is critical for manufacturers to share basic information with suppliers, such as chemicals used in manufacturing, batch requirements, and molecule names.

Pharmaceutical companies should consider using a collaborative, strategic approach to supplier and manufacturer partnerships. Such relationships can have many benefits, including better communication and more effective change management.