During any crisis, like the current global pandemic, people start to worry about having access to the essential things they can’t live without. That’s one reason we now find toilet paper in such short supply. But there is something far more essential than toilet paper—medicine. And even before the coronavirus, or COVID-19, started spreading through the U.S., concern was raised whether the drug supply chain would be impacted by the virus overwhelming China.
That’s because last year, China accounted for 95% of U.S. imports of ibuprofen, 91% of imports of hydrocortisone, 70% of imports of acetaminophen, 40% to 45% of imports of penicillin, and 40% of imports of heparin, according to Commerce Department data. Additionally, reports indicate 80% of all active pharmaceutical ingredients (APIs) are produced in China and India.
And in early March, India announced it was restricting the export of 13 APIs, due to growing concerns about COVID-19. Now as India works to stop the spread of the virus within its own country, it could lead to further disruption in the supply chain. According to Rohit Bhat, Research Analyst at B&K Securities, Indian pharmaceutical companies supply approximately 40% to 50% of all U.S. generic drugs.
So far, the FDA has only announced a shortage of one unnamed drug due to COVID-19, and the agency says it remains in contact with manufacturers about the status and safety of their supply chains. Meanwhile, several pharma manufacturers have indicated that their supply chain will be unaffected. But effects on the supply chain could still be felt further down the road, and this situation has at least highlighted a need for change.
“In the long term we have to look at incentives to be able to be less vulnerable, whether that’s changing manufacturing sites so that we have some backup capacity here in the U.S. or we try to figure out other ways of getting these raw ingredients or changing the ingredients,” says Stephanie Kennan, Senior VP, McGuireWoods Consulting. “However, changing ingredients would be really hard for some because you would have to go through the whole process of making sure that it was safe and effective because essentially it would be a different drug. But this is not a new issue. Congress and the FDA have been working on how to figure out what to do about drug shortages. It’s just that no one anticipated this kind of disruption.”
The Trump administration agrees with this long-term need and is working on an executive order to help relocate medical supply chains to the U.S. One incentive being considered for the order is offering companies “100% expensing” to move their operations from China.
But right now, manufacturers are working hard to continue to get medicines to the patients that need them. However, the origin of those drugs and their APIs has led some parties to ask questions. In a press release, Gary McWalters, President of TGaS Advisors, a division of Trinity, said, “In some cases, payers are requiring manufacturers to provide information regarding product sourcing, safety stock levels, and any concerns regarding continuity of supply.” Additionally, some pharma companies are also preparing their call centers to handle questions from patients and HCPs regarding the product sourcing of medications they are taking or looking to prescribe.
And to answer all of our own questions about COVID-19’s potential impact on the supply chain, PM360 turned to AmerisourceBergen, which has 27 DSCSA-compliant distribution centers that it uses to supply products to 95% of U.S. hospitals, 34% of U.S. retail pharmacies, and over 65,000 community practices. PM360 conducted an email interview with Erin Horvath, President, Distribution Services at AmerisourceBergen, asking her about how they are preparing for drug shortages and what they are doing differently during this pandemic.
PM360: What safeguards are you working on with manufacturers in instances where drug shortages arise?
Erin Horvath: AmerisourceBergen continues to be highly engaged during the ongoing spread of COVID-19 and work alongside health agencies and monitor government guidance about the spread of the virus. We take our responsibility to protect the global pharmaceutical supply chain while serving our customers and patients during this global healthcare issue seriously. Our role in these foundational elements of healthcare delivery is vital each day, but their necessity is significantly amplified as care providers battle a global pandemic.
As you can imagine, customers—including hospitals, pharmacies, and providers’ offices—across the country are increasing inventory for a number of reasons, not the least of which is to accommodate increasing patient influx or longer-term fills such as 90-day prescriptions. We are in constant communication with manufacturers to buy in-demand inventory as quickly as possible to meet increased orders from customers, while also ensuring supply chain stability for future patient needs.
We are increasing our own inventory for high-demand products as quickly and responsibly as possible while working collaboratively with manufacturers. In early March, we increased DOH (days on hand) for IV fluids, generic injectables, and related products for acute care providers, as well as essential medicines in other classes. In fact, we are taking broad action to lift inventory across the board. It’s important that customers understand it’s better for patients and the security of the supply chain for us to increase inventory, at the distributor level, rather than concentrate too many resources at any one site of care—this will maintain the supply chain’s flexibility and responsiveness that allows us to support patients not only every day but also in times of crisis.
As I said, the work we do daily to support and protect the pharmaceutical supply chain only becomes more crucial during times of extreme circumstance—like the spread of COVID-19—and we are prepared to navigate these unique challenges. We have plans for extreme events, and we are executing those plans.
What measures are you taking to ensure the workers who need to work in-person and the facilities they work in are safe and less in danger of passing the disease between themselves or any of the materials or drugs they ship out?
We have associates who are on the front lines of caring for patients. Whether that’s in the form of a warehouse associates, patient-facing nurses, or pharmacy staff, the work our teams do every day is not easy, which is why we’re taking steps to protect our front-line associates, so they can continue their essential work. During this pandemic, that includes strongly encouraging other associates who can work remotely to do so, helping to eliminate the chance that front-line workers could get sick. We’re providing protective clothing for drivers who are managing deliveries of medications to patients’ houses and those workers handling cargo and shipments of medication.
We, along with our peers in the industry, are working closely with the CDC to deploy best practices to keep our distribution centers and employees safe. Our U.S. wholesale distribution center teams are being extremely diligent in disinfecting associate working areas daily. Recognizing the volume of products that are processed through a distribution center will eventually reach a patient, we are taking extra measures for sanitation. Distributions centers are conducting two to three additional thorough cleanings per day using Shockwave and BruTab 6s (powerful EPA-approved disinfectants which will kill COVID-19 on contact) through a backpack or handheld electrostatic sprayers and standard spray canisters. Safe zone areas are also being established at distribution centers, so no outside-vendors enter the building, further reducing the risk of spread.
We have also proactively implemented several measures in our distribution centers to ensure staffing continuity, such as a cross-distribution center backup program, where a distribution center can “borrow” staff from another distribution center in the region should they ever need it. We are also increasing staffing with temporary workers and additional onsite support and are providing our associates with support from our HR department to help manage through childcare disruptions and other needs.
All of these efforts will ensure warehouses remain operational and capable of distributing medicines to patients.
Have you heard of any concerns from manufacturers regarding patients and/or HCPs contacting their companies to ask about product sourcing to ensure none of the drugs they are taking or prescribing have ingredients from areas like China, which have been heavily affected by the virus? Or are you doing anything additional, or just on a normal basis, to ensure the safety of the product source for the products you are distributing?
In terms of the global supply chain, we continue to proactively solicit and monitor updates from manufacturers. Every day, we ship more than three million medications to more than 100,000 facilities including hospitals, pharmacies, physician practices, and veterinary clinics. The provision of pharmaceutical care depends upon our ability to safely deliver these products precisely when they are needed. We process thousands of orders a day with 99.9% accuracy across segments and engage in proactive monitoring and compliance activities to protect the supply chain against actions that would harm any patient care delivery.
Is there anything else you are doing differently or just to ensure the supply chain continues to operate as smoothly as possible during this time?
At AmerisourceBergen, we believe we have a responsibility to create healthier futures. Nothing could be more aligned to that purpose than the work we are doing right now. Throughout this pandemic, our primary goal is to keep our associates and the pharmaceutical supply chain safe, while continuing to ensure the medicines people need are where and when they need them; we are playing a critical role in the response to COVID-19 and will continue to do so.
We have incredible business continuity plans (BCPs) already in place, and we’ve adapted those plans through a “COVID-19” lens. Our BCPs are designed to help us to continue operation of critical business functions, such as processing customer orders, maintaining regulatory compliance and distributing goods and supplies to customers and patients. We have established a task force made up of a group of cross-business unit leaders to coordinate our enterprise-wide response and communications and, ultimately, help coordinate our global response.
Should COVID-19 lead to logistics issues, we would work with Healthcare Ready (a non-profit organization that addresses pressing healthcare issues) as well as government and health officials to continue fulfilling deliveries of medications, which is something we’ve done before.
For example, during natural disasters and hurricanes that limit our normal ability to fulfill shipments, AmerisourceBergen has worked closely with government agencies to receive clearance to deliver life-saving medications. During Hurricane Maria that impacted Puerto Rico in 2017, we established collaborative efforts with FEMA, Healthcare Ready, HDA, and Walgreen’s, along with other federal and regional officials, to work through a broad range of issues with logistics, securing government clearances, fuel deliveries, and more. We are prepared to do so again should it ever be necessary.
Is the company doing anything to help deliver products directly to patients at a time when they might not want to or be able to leave their homes due to the virus?
Across AmerisourceBergen, we are seeing increased efforts by our pharmacy and patient solutions businesses to reach patients directly. For example, many independent community pharmacies within our Good Neighbor Pharmacy network already offer free home delivery of medications, and we’re seeing others follow suit, making deliveries to patients who are unable to leave their homes currently.
We’re also seeing a number of clinical trial sponsors adjust their protocols to implement a direct-to-patient (DtP) model. This service extends a clinical trial and specialty medicine delivery program to patients at home while allowing individuals to follow the current guidance of public health officials (e.g., “social distancing,” “self-isolating,” etc.). By reducing the need to travel for treatment, patients can continue to access and benefit from novel—and oftentimes lifesaving—therapies.
World Courier, a global specialty logistics services company and a part of AmerisourceBergen, supports DtP trials and has been experiencing increased interest in this delivery model. In fact, World Courier first saw evidence of the shift toward direct-to-patient clinical trial models in China at the height of COVID-19 and are now noticing an uptick in Europe and North America as the pandemic spreads.
To ensure the safety of patients as well as our associates who are delivering and administering these therapies, we’ve arranged for contact-free deliveries and pickups whenever possible. We offer to have our driver call or text the consignee or shipper as they arrive, and transactions are arranged in ways that avoid physical contact and keeps people six feet apart. For drivers who are managing DtP deliveries, World Courier is following the World Health Organization’s advice for protective clothing for drivers. It is worth noting World Courier is also working in environments where there are restrictions of movement, and we are finding ways to manage this through special permits.
Is there anything else you would like to add about the impact you have seen on the industry due to the virus or what your company is doing as a result?
As COVID-19 continues to expand its reach globally, AmerisourceBergen is also putting money, time, and resources toward organizations that support efforts to combat this pandemic. For example, The AmerisourceBergen Foundation made a $75,000 grant to Direct Relief in support of their COVID-19 response. Direct Relief is a long-term partner and provides essential medical resources for people affected by poverty and for communities impacted by emergencies. Additionally, we will be using our Associate Assistance Fund in the coming weeks and months to provide financial assistance to AmerisourceBergen associates and their families who are facing financial hardships due to the effect of COVID-19 on their families.