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Transparency in the Supply Chain

Wed, 04/10/2013 - 1:29pm
Mike Rozembajgier

The U.S. Department of Homeland Security (DHS) continued its efforts to stop counterfeit pharmaceuticals and other goods from entering the marketplace during Fiscal Year 2012.

According to a recent U.S. Customs and Border Protection (CBP) report, 5,139 parcels containing counterfeit, substandard or unapproved drugs were seized in 2012 from the international mail system. These types of products made up nine percent of all seized commodities last year.

An increase in the number of Internet pharmacies distributing pharmaceuticals to consumers online and heightened public scrutiny have led authorities to pay close attention to the issue of counterfeit medications. And already this year, the U.S. Food and Drug Administration (FDA) has issued a health care provider alert warning about an unapproved, counterfeit cancer medication that was distributed in the U.S.

Unfortunately, it’s safe to say that FDA will likely issue more of these types of warnings to physicians and consumers throughout 2013 and beyond. In fact, the National Association of Boards of Pharmacy estimates that counterfeit drugs generated $75 billion in revenue in 2010.

Whether due to a lack of active ingredients, insufficient ingredients or quantity, the wrong ingredients, or even false packaging, counterfeit drugs are a growing threat not only just in the U.S., but also worldwide. And those within the pharmaceutical industry cannot rely solely on the federal government to fight this battle.

Some drugmakers have chosen to fight back. 

Most major pharmaceutical manufacturers have teams, some made up of former law enforcement agents, that regularly share information across corporate boundaries. With the threat of counterfeit medications making their way into the U.S., this type of collaboration and transparency within the pharmaceutical industry is now more important than ever.

The complex and intricate supply chain allows countless amounts of people access to the products before they reach consumers. With so many hands involved in the production and distribution process, there is plenty of opportunity for contamination, adulteration, and mislabeling - whether it be an accident or intentional.

Even though it is impossible to know the exact size of the counterfeit medication trade or its lethal impact, some estimates are as high as 700,000 deaths globally each year.

Importance of Transparency Along the Supply Chain

Quality and safety are not new concepts to the pharmaceutical industry.

In order to ensure both are maintained throughout the production and distribution process, drugmakers must have procedures in place to not only detect potential lapses, but also to effectively respond should a potential issue appear.

This challenge is further amplified when drugmakers utilize subcontractors and other third-parties around the world in their manufacturing and distribution processes. Managing these types of complex relationships can be difficult and exhausting when procedures and processes are not laid out beforehand. 

Being able to physically locate any drug within the supply chain and provide a detailed record of every control point it encountered along its global journey from production to patient is vital to successful management. And with consumers, federal agencies and companies demanding more details about supply chain functions, this type of transparency is imperative in terms of keeping all stakeholders satisfied.

Reverse Logistics and Transparency

Even the slightest breakdown along the supply chain can result in the contamination of products available in pharmacies or on store shelves. Should a potentially defective product land in the hands of consumers and cause them harm, it is only a matter of days before a company’s reputation is destroyed if the issue is not handled efficiently.

Effective recall management relies heavily on a company’s ability to accurately identify, locate and remove all affected products from the marketplace in a quick and efficient manner. If a business’ recall response is not properly executed, the event may lead to lost revenue and possibly irreversible damage to a brand.

It may seem like a lot of work upfront to keep records of where each drug originated and which parties along the way were responsible for processing, packaging and distribution, but when a recall hits – this information is vital.

The fact of the matter is that recalls are inevitable. All companies will experience a recall at one time or another, but not all companies can respond to an event in a way that enhances confidence. Transparency along the supply chain before, during and after a recall can aid a company in its response.

Detailed record-keeping can also help companies avoid pulling unaffected product off of the market. The ability to only recall those specific contaminated products or ones affected by a compliance issue can significantly limit recall exposure and save a company’s bottom line. If consumers are made aware that a company is keeping track of each product at every stage of production and believe the recall is based on informed decisions, one recall will not destroy a brand. Not being able to accurately obtain this information can prove time consuming and costly.

 

The Future of the Pharmaceutical Supply Chain

As the pharmaceutical industry becomes more complex, traditional supply chain management will not provide the necessary transparency and record keeping needed to track each item throughout the process. And the need to improve transparency has been a topic of debate in the U.S. for quite some time.

Just last fall, Florida and California worked to pass legislation aimed at preventing counterfeit drug risks. Florida was one of the first states to implement a detailed drug pedigree requirement, while California has proposed a similar pedigree/track-and-trace requirement which could have a large impact on the pharmaceutical industry when it becomes effective in 2015.

But before the California law is implemented, it is likely that the federal government will replace the state requirement with a national standard.

In the meantime, pharmaceutical companies should not sit and wait for regulations to be passed. Instead, they should take action themselves and work aggressively to fight back against counterfeit drugs from entering the supply chain. Securing the supply chain not only will have a positive effect on a business’ bottom line and brand, but it also will ensure the safety of what matters most, the public.

 

About the author

Mike Rozembajgier is Vice President of Recalls for Stericycle ExpertRECALL™. Rozembajgier is responsible for all aspects of recall service offerings, including development of strategic recall business initiatives and, product enhancements. He has more than 10 years of experience in the healthcare industry. Prior to joining ExpertRECALL, Rozembajgier held various management positions at Guidant Corp. (now Boston Scientific) and at Deloitte in the Strategic Consulting practice

 

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