How Distributors Are Shifting To Meet Changing Healthcare Demandsadmin
The 2020 COVID-19 pandemic has made a permanent mark on the healthcare industry. Many changes have taken place, new regulations and requirements are set for future implementation, and patients are now expecting a new standard of care, particularly one that involves more remote care options.
Overwhelmingly, these changes have had a sharpening effect on the industry and its substructures by necessitating innovative framework, processes, and technology that will continue to improve efficiencies, cost-effectiveness, and, ultimately, customer and patient experience.
These channels of change interconnect with government entities, as the passing of updated regulations has required the government’s swift cooperation. The rapidity with which the COVID-19 vaccines were approved and available to the masses showed the level of expediency that’s possible. This new precedent challenges the entire industry to develop and approve new treatments more quickly across the board. Patients with rare diseases may have the opportunity to receive life-changing medications faster than ever before. Instead of waiting a decade for a new drug approval, it may become available within the year.
The societal effects of these industry advancements are far-reaching. But the road to these future outcomes has thus far not been easy. Let’s discuss recent changes to the healthcare industry and supply chain distribution moving forward.
Domestic Sourcing of PPE Becomes a Goal
A significant challenge the healthcare industry faced during 2020 was the extreme shortage of personal protection equipment, or “PPE.” The factors contributing to this shortage are complex, but they can be summarized into 4 main categories:
- Dysfunctional budget systems incentivize hospitals to prioritize minimizing cost rather than stocking appropriate levels of PPE inventory.
- The shock of PPE demands to the healthcare system in combination with a general public PPE stockpiling frenzy in the marketplace.
- Challenges with the federal government distributing and maintaining domestic PPE inventories.
- Pandemic induced disruptions to the PPE supply chain on a global level, coupled with the fact that the United States is exceedingly dependent on foreign PPE supply.
The global market’s top exporter of PPE goods is China. In contrast, the global market’s leading importer of PPE goods is the United States. The biggest driver of this has been the budget model of hospitals emphasizing low cost over sourcing location. As has been proven by the COVID-19 pandemic, it does not serve the U.S. to prioritize low cost over accessible domestic PPE sourcing. Thus, increasing domestic PPE production, and paving supply chain pathways to domestic supplies of face masks, protective visors, gloves, hand sanitizer, and other forms of PPE, has become a top goal.
A vital supply shortage is an issue of national security. History shows a previous pattern of inaction in response to past PPE shortage issues following outbreaks such as Ebola, H1N1, and SARS. But our system must adapt moving forward.
Taking an exemplary step in the right direction, Premier Inc, a leading healthcare improvement company, signed an agreement in May of 2020 with Prestige Ameritech, the largest domestic manufacturer of face masks, to purchase a portion of all face masks annually from Prestige for up to 6 years.
Healthcare Labor Shortages
Another pandemic-related challenge is labor shortages. More healthcare workers are looking to exit the system following COVID-19, and fewer new healthcare workers are coming down the pike. The Health Resources and Services Administration’s Bureau of Health Workforce estimates that by 2025, 37 states are projected to have a shortage of primary care physicians.
We are seeing trends in labor shortages due to workplace dissatisfaction, in which failed access to sufficient PPE has played a weighty role. Critical staffing shortages, a deadly pandemic, and lack of on-the-job safety made for a significantly high-stress work environment. Healthcare workers report job-related declines in mental health; many made career shifts out of the industry or retired earlier than planned. Collectively, they are wholly burned out.
COVID-19 highlighted the lack of supply chain visibility and the dire need to better assess product availability and risk.
Without proper visibility:
- demand cannot be accurately assessed
- supply surges cannot be accurately predicted
- inventory stockpiles cannot be moved to those with the greatest need
- supplier risk cannot be accurately evaluated
Streamlining Supply Chain Visibility Moving Forward
In November 2013, the Drug Supply Chain Security Act, or DSCSA, was enacted. DSCSA requires the tracing of drug packages during the distribution process. This amplifies the FDA’s oversight which increases consumer protection from counterfeit, cross-contaminated, or stolen drug products. DSCSA’s requirements aid in the removal of dangerous drugs from the supply chain. They also govern the FDA in regulatory licensing and annual reporting from wholesale distributors and 3PLs.
Most recently, DSCSA released a requirement that healthcare supply chain partners implement a new standard of interoperable exchange of data by a compliance deadline of November 27, 2023. This will mean a more visible track and trace serialization system in place during the distribution process. Instead of the current regulations, which vary from state to state, there will be nationwide licensing requirements and standardization with technology, data, and 3PLs. Having this in place will ensure industry-wide cohesiveness that breeds increased efficiencies, security, and economic growth. Although not without the anticipation of growing pains, this implementation will be a significant step in the right direction to solving the wide-reaching issue of lack of supply chain visibility.
Currently, many visibility apparatuses fail to take into account the following:
- raw material availability
- transit security
- cold chain shipping
- high inventory costs
- rigorous temperature control measures
The result is costing more than a small fortune; losses of drug products not kept within their temperature guidelines cost pharmaceutical companies billions of dollars each year.
Healthcare companies are putting faith in the possibilities of this upcoming DSCSA implementation standard, and the anticipation is one of the great expectations. Increased safety, precision, agility, and decreased excursions, will lead to an improved distribution experience across the board. This will allow for a reduction in waste and ultimately improve the patient experience.
New Distribution Opportunities Ahead
Raising the bar for supply chain distribution standards comes with exciting new opportunities for both distributors and their customers.
Distributors are rising to meet these elevated standards by investing in the following:
- New technology
- AI (artificial intelligence)
- Improved logistics management
- Increased communication with stakeholders, partners, and customers
- Reduction of shipping waste
Manufacturing company customers will greatly benefit from these improvements. Some big industry names have hired 24/7 meteorologists to advise on weather events before they can disrupt distribution routes. Other distributors are utilizing long-range drone delivery, which helps reduce emissions and shipping waste. Ember Technologies has created the “Ember Cube,” the world’s first reusable, self-refrigerated shipping box to deliver temperature-sensitive medications.
When it comes to the specialty medication space, these advancements will lead to opportunities for even more personalization and high-touch distribution service. Smaller distributors already have the competitive advantage of offering more knowledge-based support. They are experts on the specialty medications they distribute because they are small enough to have the bandwidth to become so. Now they will deal with fewer supply chain visibility issues and have more time for customer focus. Distributors being able to give even more of their personalized attention to manufacturers will not only foster growth in the industry, but ultimately improve the life of the patient at the other end of the shipment.
BioCareSD is proud to serve as a leader in specialty distribution for more than 40 years. We strive every day to deliver unparalleled service to our patients and partners and, most importantly, to provide patients across the country with fast and easy access to life-saving medications. To learn more about partnering with BioCareSD, please contact us here.