Pharmaceutical Supply Chain

Question 1

Supply Chain

Answer 1

• network between a company and its suppliers to produce & distribute a specific product to the final buyer
• interconnected journey that raw materials, components, and goods take before their assembly and sale to consumers
• a system of organizations, people, activities, information, and resources that provides products to consumers

Question 2

How does a drug flow to patient?

Answer 2

1. Raw material sourcing
2. Manufacturing (fill finish)
3. Distribution & Logistics
4. Dispensing

FINITE SUPPLY CHAIN

Question 3

Complexity of Supply Chain

Answer 3

• many players in getting the drug to the consumers
• for example, PBM and GPO are involved within the supply chain but do not actually touch the drug
• GOVERNMENT HAS OVERSIGHT OVER ALL THE SUPPLY CHAIN

Question 4

Class of Trade (COT)

Answer 4

• type of distribution channel by which pharmaceutical products flow into the consumer market
• no standard definition for COT
• limits “type” of consumer

Question 5

Aspects that Dictate COT

Answer 5

• product type
• drug reimbursement
• patient location
• utilization
• market segment
• prescriber control or ownership

Question 6

Who determines COT classification?

Answer 6

Manufacturers

Question 7

Overview of Pharmaceutical Companies in Supply Chain

Answer 7

Pharma is not just 1 company; many different subsidieries and companies under them

Question 8

4 Classes of Categorization of Pharmaceutical Spend

Answer 8

Generic injectables
- generics with 1 or more source
- hit the hardest by drug shortage

Generic non-injectables

Branded non-contract
- no therapeutic alternatives –> nearly all customers pay same price
- Ex) biosimilars

Branded contract
- therapeutic alternatives motivate suppliers to protect and grow market share

Question 9

Which pharmaceutical spend category spends the most for OOP & insurance?

Answer 9

Generic injectables
- 10-fold more expenditures

Question 10

Which pharmaceutical spend category represents the largest opportunity for contracting?

Answer 10

Generic injectables
- hospitals have highest demand and more competition with generics

Question 11

What happens to a brand price when exclusivity runs out?

Answer 11

• drug manufacturers will increase the cost of their product right before exclusivity runs out to compensated for the decrease in volume associated with another manufacturer releasing drug

Question 12

GPO

Answer 12

Group Purchasing Organization
- aggregated and leverage purchase VOLUME to negotiate with manufacturers and distributors
- GPO never takes possession of the product

POWER IN COMMITMENT
POWER IN COMPLIANCE

Question 13

Can you have more than 1 GPO in healthcare?

Answer 13

No; legislation stops you from price fixing

Question 14

Examples of Data that can be leveraged in the supply chain space?

Answer 14

Usage Data & Allocation
- determine where the demand for a certain product is and leverage with that space to provide the product their

Question 15

Types of Supply Chain Analytics

Answer 15

Descriptive (what happened)
Diagnostic (why did it happen)
Predictive (what will happen)
Prescriptive (what should I do)

Question 16

Comparison of Actual BCG vs Projected

Answer 16

• current market is only producing 69% of the estimated BCG need
• many patients are at risk of not receiving treatment

Question 17

Estimated Drug Price Inflation Rate

Answer 17

3.8%

Question 18

Ideal Vs Current Data Flow

Answer 18

Ideal State
- data flows upstream and downstream between different vendors

Current State
- data sharing is minimalistic with limitations to requirements
- only basic or contracted data sharing occurs

Question 19

Causes of Drug Shortages in 2023

Answer 19

1. Unknown/would not provide
2. Supply/demand
3. Manufacturing & Business decision

Question 20

Drug Supply Chain Security Act

Answer 20

FDA delays enforcement of saleable returns requirement by 3 years for wholesalers & dispensers