HealthTrust evaluates pharmaceutical supply chains for mission-critical drugs to identify predictors of shortages & key characteristics

HealthTrust Pharmacy Services recently launched its first products for the Supply Interruption Mitigation Strategies (SIMS) project in order to help combat drug shortages, and their ensuing price increases, in the generic injectables market.

Mark Walsh, PharmD

“Once it was clear that shortages would be an ongoing challenge, HealthTrust analyzed whether or not there were particular market and product-specific factors that were common among drugs that eventually experienced a shortage,” says Mark Walsh, PharmD, HealthTrust’s Director of Clinical Pharmacy Strategy. “By working to identify if there were specific predictors of drug shortages, HealthTrust could then work to contract for certain mission-critical medications in an innovative way meant to address some of these particular factors.”

Walsh says that in talking through key market predictors of shortages, the terms that continued to appear were “quality” and “supply chain.”

Historically, approval from the Food and Drug Administration (FDA) was the only quality metric that mattered in the sale of generic injectable drugs. This meant that typically, the only key differentiator between like products had been a product’s price. “What this created was an incentive for the manufacturers to maintain the cheapest supply chain in order to achieve the lowest possible cost,” Walsh says. “This mentality unfortunately creates very brittle supply chains.”

Kathleen Bourget, PharmD

Last year, PGY-2 resident Kathleen Bourget, PharmD, now a Director of Clinical Member Support at HealthTrust, conducted a research project in conjunction with the SIMS project. Bourget’s project identified the ideal characteristics of partner supply chains for mission-critical drugs, in addition to evaluating common weaknesses shared across multiple products.

Bourget’s project mapped the supply chain for mission-critical drugs all the way from the manufacturer’s active pharmaceutical ingredient (API), to the provider, to where the product is actually manufactured and labeled in order to determine who could be viable partners in the SIMS program.

“Many times, when it comes to pharmaceutical contracting, price has been the main driver,” Bourget says. “Here, we’ve taken a step back and decided that for these mission-critical drugs, the quality of a drug’s supply chain should be the main driver.”

Once the supply chain maps were complete, Bourget evaluated them to identify the characteristics that were deemed favorable. The evaluation included whether the manufacturers were vertically integrated (i.e., they manufacture their own API), the location of the API supplier, whether they had redundancy in their manufacturing capabilities and API supply, and the quality profile of the identified locations. Then she looked at different steps in the supply chain—such as whether they were manufacturing these products at different facilities, on different lines, or in different countries—and evaluated how the inherent design of these particular supply chains might behave under various potential stressors. For example, if an API supplier’s warehouse burned down, how would that affect everything downstream for the manufacturers using that API source?

Bourget’s research has supported the SIMS project by helping HealthTrust determine the ideal characteristics of a SIMS partner’s supply chain and identifying which suppliers may be likely candidates to participate in the program.

“For these mission-critical drugs, if you’re just relying on price as the key differentiator between products, you may be more likely to suffer from a shortage than evaluating potential partners for the quality and durability of their supply chain,” says Bourget.

So far in 2019, HealthTrust has announced the inclusion of three mission-critical molecules in the SIMS program: heparin, propofol and cefazolin. Additional products are scheduled for announcement in Q3-Q4 2019. All HealthTrust Pharmacy members benefit from protections via the SIMS program. Members who commit to purchasing products via the SIMS program can gain additional protections, such as a dedicated safety stock.

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