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Supply chain: greater protection

With counterfeit drug incidents rising worldwide, the EU directive on falsified medicines will be implemented consistently across Europe to strengthen security and patient safety
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The ready availability and safe supply of medicines is something that all people, as consumers, take for granted. However, often they do not realise just how complex the pharmaceutical supply chain is. Today's distribution network involves many different players and a drug can change hands and ownership many times before it reaches the patient.

The tragic episode of a faulty batch of Heparin in the US in 2008, which killed over a hundred people due to a contaminated raw material, highlights the need to have a robust recall process in place throughout the supply chain. In this incident, suspect Heparin was returned from some hospitals only to be sent back out by the same wholesaler rather than being quarantined.

Significant legislative changes
Today, there are significant legislative changes underway in the European pharmaceutical supply chain that seek to prevent incidents like this from occurring. These changes will be challenging, but also present opportunities to secure the supply chain and improve patient safety.

All suppliers will need to recognise that the status quo of current drug delivery processes will be significantly altered in future. Despite an already complex and costly supply chain, it is critical that change is embraced and suppliers seek to obtain benefits from the situation rather than resisting change.

Increasing commercial pressure
The increased financial pressure on pharmaceutical companies due to price reductions and patent expiries means that all areas of the business are under the spotlight to reduce costs and the supply chain is no exception.

Having high amounts of finished goods stock to ensure that no stock-outs occur is no longer acceptable. However, pharmacists require extremely high levels of customer service. Few other industry sectors offer a same-day delivery service if the product requested is not in stock.

Multiple daily deliveries of pharmaceuticals are expected, as the inability to fill a prescription could mean adverse health effects for the patient if he or she misses a dose. In the UK, deliveries are made, on average, twice daily by wholesalers, while the number of deliveries in other countries is even higher, with up to seven per day in some markets.

Breakdown of the retail price of medicine – who receives what (2009)

supply-chain
Note: Non-weighted average for Europe (average estimate for 20 countries)
Source: EFPIA member associations



Building tension
Tension is starting to occur between the need to meet patient demand and the cost to supply. The European Federation of Pharmaceutical Industries and Associations (EFPIA), using its Pharmaceutical Industry in Figures: 2011 Update, calculates that, on average, approximately 36 per cent of the retail price of a medicine does not revert to the manufacturer but goes instead to distributors (pharmacists and wholesalers) and the state. This margin, calculated using EFPIA's ex-factory sales value for Europe of €149bn, equates to €82bn across Europe. This margin has prompted many pharmaceutical companies to consider different supply chain distribution approaches to try to recover as much of this margin as they can.

All companies are looking harder at how to manage their costs within the supply chain. However, the new EU medicines directive, aimed at preventing falsified medicines from being inadvertently supplied to patients, will add further challenges to the cost and complexity of supply.

Law by January 2013
With a growth rate of 10-20 per cent per year of counterfeit medicines in the legal supply chain and as much as 58 per cent in the illegal (internet) supply chain, the European Commission (EC) has reacted decisively to protect patients across Europe with the passing of the Falsified Medicines Directive. This legislation will become law in all member states by January 2, 2013.

It aims to block opportunities for counterfeit medicines to enter and exit the supply chain and will require systems to verify the authenticity of medicines throughout the supply chain process, particularly at the time of dispensing. The objective of the legislation is to ensure that the levels of quality are maintained throughout the supply chain network without any adulteration, so that safe supply of medicines to patients can be consistently achieved.

Importantly, the EC has recognised that, for an approach to be effective across Europe, it must be implemented consistently in each member state. European legislation is often adapted by member states to varying degrees. However, with this directive, a Delegated Acts process will define exactly what needs to be done to implement the legislation. Crucially, this will need to be followed exactly by each member state, removing the opportunity for countries to 'interpret' how they may adopt the legislation, so that no weakness exists between one country and another.

Delegated Acts
The Delegated Acts are currently being written and, once published, there will be a fixed period of three years for implementation. There are several important facets that the legislation aims to introduce:

  • Safeguards for the manufacturer of active product ingredients (APIs)

  • A security logo for legal internet pharmacy sites

  • Tamper-evident seals

  • An item-specific barcode to be applied to each medicinal pack so that it can be uniquely identified.

Breaking open tamper-evident seals will be immediately obvious to any supplier … Placing the code on the tamper-evident seal will create a highly effective barrier

In light of the Heparin case mentioned, the legislation calls for a more substantial recall process that will, within 24 hours of a product being suspected of presenting a serious risk to public health, permit notification and retrieval from any affected patient. This system needs to be in place in each member state by July 22, 2013 and unique coding will assist pharmacists and regulators to retrieve packs more effectively.

Furthermore, considering the recent case in the UK where blister packs of Nurofen Plus tablets appeared to have been deliberately sabotaged and replaced with an anti-psychotic drug, tamper-evident seals offer a vital preventative barrier.

Impact
While these requirements will have an impact on each actor in the supply chain, including pharmacists, regulators, wholesalers, distributors and manufacturers, the EC is in no doubt that these are critically important for the integrity of supply.

More efficient recalls
While the forthcoming falsified legislation and increasing commercial pressures present challenges to the industry and other supply chain actors, it is easy to concentrate on the difficulties and not see that there are benefits to be gained too. The current recall process is costly and hazardous for all concerned.

For example, in one UK recall, the Medicines and Healthcare products Regulatory Agency (MHRA) stated that 40,000 affected batches of counterfeit medicine remained missing and it was not known if they were consumed by patients. With more robust systems in place that can monitor the volume of packs unsold in the market and retrieve affected packs before they are sold, the recalls process will become more efficient and cost-effective for all concerned.

Pharmaceutical companies will be looking at the financial cost of unique coding and the associated systems to verify authenticity. However, it is important not to lose sight of the reasons why the legislation was introduced in the first place.

Increasing problem
It is a well-documented fact that the level of counterfeit drugs is on the increase worldwide. Not a week goes by without an incident reported somewhere in the world, affecting patients whose lives are put at risk through the actions of criminals intent on making themselves rich.

Unique coding of medicines and tamper evidence will prohibit the vast amounts of money that can be made from counterfeiting medicines. Factory-loads of fake medicinal packs will no longer be sold into the supply chain, as once the number is verified, any copies or 'false' numbers will be detected straightaway. Breaking open tamper-evident seals will be immediately obvious to any supplier. Taking the further step of placing the code on the tamper-evident seal will create a highly effective barrier.

Conclusion
The challenge is to find ways to implement the legislation in a cost-effective manner with minimal waste and disruption. The legislation highlights the need to ensure that the cost impact of verification measures on particular actors in the supply chains are proportionate. It is important that stakeholders work together, helped by authentication experts, to ensure that loopholes are not accidentally made and any approach is cost-effective.

It is right and proper that all possible efforts are made to secure the supply chain and prevent risk to patients. This can be best achieved by planning ahead to meet the challenge, looking forward to a future where European consumers can be fully confident of the quality of their medicines supply.


Graham SmithThe Author
Graham Smith is senior vice-president of business development at Aegate

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18th October 2011

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