Supply Chain in the Pharmaceutical Industry

Strategic Influences and Supply Chain Responses

Rob Whewell

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9781032837772
• eBook ISBN:
  9781317048336
• Topic: Business
• Subtopic: Business General
• Index: Business

The pharmaceutical and healthcare industry is hugely complex because it involves so many markets, products, processes and intermediaries. It is also heavily regulated, global, and used by everyone at some stage in their life. No wonder the supply chain for delivery of healthcare services is often fragmented and understood only in discrete sections. Changes in one area impact upon the others, and environmental factors such as pricing, regulatory change or actions by competitors impact the whole supply chain in ways that are not easily understood or managed. Accelerating technology, the commoditization of healthcare, increasing demands from ageing populations all influence the approach that suppliers of pharmaceutical products and services worldwide need to take if they are to design and manage an effective supply chain that will be capable of: exploiting their intellectual property in a sustainable way; providing safe and continuous provision of drugs or devices; and sustaining with resilience, yet still be flexible and cost efficient. Supply Chain in the Pharmaceutical Industry offers the basis for organizations to develop their own blueprint for managing the opportunities and threats to the pharmaceutical supply chain. Using examples from companies and markets across the world Rob Whewell offers a very vivid picture of the developing trends for pharmaceutical companies; the customers and markets they serve and points to some of the elements that underpin sustainable pharmaceutical strategies. The current global banking and financial crisis illustrates the important role played by regulation. The healthcare industry is similar in scope, and complexity, yet the implications of error are worse - life threatening. This review of key industry parameters will provide senior executives in the industry and policy makers in healthcare with a broad perspective of the issues and illustrates an understanding of the task at hand.

1
The Role of Technology in the Supply Chain

Technological progress has been crucial to, and is the reason for, major advances in healthcare; it is often when multiple technologies are juxtaposed that the most dramatic, breakthrough results are achieved. These interactions mean that the processes through which healthcare is delivered are complex, requiring careful design and management. The shape that healthcare processes take has a crucial impact not only on the quality of the resulting service provision but also on the way in which suppliers of healthcare products will need to operate to make the most of their opportunities.

In this initial chapter we identify some of the advances in technology that have either directly or indirectly resulted in a step change in the healthcare environment, as well as the availability or the capability to provide and deliver improved services.

Historical Review

Throughout history the development and application of technology has enabled progress in healthcare provision. The major technology platforms that have advanced healthcare may be grouped under four main headings:

1. Environmental improvements.

2. Pharmaceuticals and chemicals.

3. Diagnostic technologies.

4. Medical devices.

All of these categories have been essential to the continuation of progress in healthcare provision. They are interrelated. Treatment of an infection with advanced antibiotics is likely to be fruitless if the patient returns home to living conditions that are unsanitary.

Without proper diagnostic tools, choice of appropriate therapy is an art, not a science. Improvements in the devices and techniques used to administer drugs and healthcare improvements have arguably been as important as improvements in the drugs or devices themselves. Devices such as dentures, prosthetic limbs, dialysis equipment and contact lenses have had a profound impact on the lifestyle and well-being of patients.

Environmental Improvements

Technology has enhanced healthcare by improving environmental and social conditions in such a way as to prevent disease from occurring or spreading. Civil engineering has played a much more central role in improving health than might be suspected at first sight. General housing and living conditions support and complement any treatment that patients receive in hospital or at clinics. While living in unsanitary conditions, not only is the patient likely to relapse, but also the infection is highly likely to spread. It is generally accepted that, with regret for the loss of life, the Great Fire of London in 1666 could be considered a long-term benefit from the point of view that it destroyed the slum dwellings that had formerly incubated the plague.

These, sadly, are not just historical occurrences. The biggest threat to the human population of New Orleans after the devastating floods of September 2005 caused by hurricane Katrina was infected water. Water supplies were contaminated with oil from damaged refineries, sewage from treatment plants and the rotting corpses of animals and humans floating for days in the putrid floodwaters. Similarly in Pakistan after the massive earthquake that made millions homeless later in the same year and laid waste to tens of villages and hundreds of homes, the immediate concerns for relief agencies were to deliver shelter, in the form of tents, fresh water, by way of portable desalination equipment; and chlorination materials, food supplies and basic medicines.

The following are examples of technologies that have played a key role in health improvement over the years:

• In the home, improved drainage systems and appliances such as lavatories, in particular the U-bend trap, have allowed much higher levels of hygiene to be attained with relatively little effort. In the clinical setting sophisticated air conditioning and the emergence of High Efficiency Particulate Air Filters (HEPA) allow medical procedures to take place in a sterile environment. In this context we should note, however, that technology is not sufficient on its own; it must be used in the context of appropriate processes.

• The prevalence of methicillin-resistant Staphylococcus aureus (MRSA) in hospitals shows that even in environments equipped with the latest technologies, infection can spread if basic cleanliness is not maintained. Education in basic hygiene is considered to be the main variable parameter here. Washing hands properly with soap (for example after using the toilet), washing or disposing of contaminated clothing or bedding, and sterilising equipment prior to use are all basic and essential factors. The World Health Organization (WHO) believes that growing levels of drug resistance threaten to erode medical advances of recent decades. In the USA, nosocomial MRSA infection rates have nearly doubled to over 60 per cent since around 2000. Unless antibiotic resistance problems are detected as they emerge, and actions are taken to contain them, the world could be faced with previously treatable diseases becoming untreatable. According to the United States Food and Drug Administration (FDA) ‘about 70 percent of bacteria that cause infections in hospitals are resistant to at least one of the drugs most commonly used to treat infections’.

• The engineering of the water supply has been critical to reducing infection. In the nineteenth century, cholera outbreaks were common in cities such as London until it was realised that they were triggered by contamination of the water supply with sewage. The technology that was needed to prevent this contamination was relatively straightforward once the cause was understood. The development of the flush toilet and of sewage systems played a large part (see Panel 1 and Figure 1.1).

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PANEL 1: THE DEVELOPMENT OF THE FLUSH TOILET IN BRITAIN

It seems to be a myth that credits Thomas Crapper with the invention of the modern toilet, although an entrepreneurial plumber of that name did play a part in commercialising one nineteenth-century predecessor of the technology we know today, incorporating a siphon-based flushing mechanism.

The remains of several ancient civilisations, including Minoan, Roman and Indus, show evidence of flushing toilets. The technology was, however, lost (at least in the west) and for centuries prior to the rediscovery of the flush toilet the prevailing methods of waste disposal were chamber pots emptied into cesspits, earth closets or ‘water closets’ containing a seat over a cesspit.

All these methods required manual intervention to remove the accumulated waste and therefore posed a health hazard to residents if not frequently cleared, and regularly to those who had to clear it! Care would also be required to ensure that upon removal it did not contaminate the local drinking-water supply. Only when the waste could be emptied into a sewer were these problems significantly reduced. Until the nineteenth century, gutters and rivers tended to serve as sewers – hardly an improvement on the cesspit system from the health point of view. Even where there was a cesspit, in early nineteenth-century England it could have been shared by dozens of people and would have frequently overflowed into the surrounding streets. During the cholera epidemics that were common in London at that time, sewage tended to pile up in the streets. This created a vicious circle of infection.

By the eighteenth century more hygienic alternatives had started to appear, though they were not in widespread use. Earlier, Queen Elizabeth I’s godson, Sir John Harington, is credited with inventing a predecessor of today’s flush toilet with a valve and a manually initiated water flow. Alexander Cummings devised a valve-based flushing mechanism called the S-trap, which used water in the bend to prevent the return of air from the sewer. Contemporaneously Samuel Prosser took out patents for a ‘plunger closet’. This plunger had two actions: it got rid of waste and also sealed the outflow. Joseph Bramah patented a ‘crank valve’, another method of sealing the base of the toilet, and also a valve-based flushing mechanism.

One problem that took some time to solve was the need to produce enough water pressure and flow to clean the bowl. This was not easy to solve with valves alone. In the early nineteenth century a solution emerged based on a cistern placed above the bowl together with a siphon that delivered the full contents of the cistern in a single, forceful flow. In 1819 Albert Giblin patented such a siphon-based mechanism and it was this technology that in the 1880s found its way into Thomas Crapper’s products, some of which were adopted in Queen Victoria’s homes.

Another breakthrough came with Thomas Twyford, a ceramics expert who in 1885 constructed a one-piece, trapless toilet made of china, using a flushing mechanism designed by J.G. Jennings. It was this invention that made the technology more generally affordable. Public health was revolutionised by the combination of flushing toilets and the development of efficient sewage systems in major UK towns, starting with that engineered in London by Joseph Bazalgette in the mid-nineteenth century.

A flurry of activity in the second half of the nineteenth century led to the emergence of toilets similar to those in use today. Later improvements to the siphon mechanism allowed the cistern to be placed just above the bowl instead of several feet up the wall. More recent research in this area has focused on the development of motorised toilets to reduce the amount of water used, or to facilitate the disposal problem by liquefying waste matter.

These developments in Britain were paralleled in the US, although the solution to the flushing problem that emerged in North America was a different one, based on ‘flapper valves’. While flush toilets and sewage systems are now the rule in industrialised countries, they are still far from ubiquitous in the developing world.

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Figure 1.1 Diagrammatic illustration of the sewage treatment process

• The treatment of natural water supplies from rivers and lakes is also crucial to the delivery of a safe, clean, domestic water supply. Water treatment plants make it possible to do more than simply purify the water. For example, after it was identified that people in areas with high natural levels of fluoride in the water supply had fewer dental problems, adding fluoride to the water supply in other areas seemed like a natural consequence. Fluoridation does, however, have its opponents, with some people seeing it as an invasion of their rights and as mass medication without consent.

In addition to technological initiatives targeting specific aspects of health there have also been broader schemes to improve the overall living environment of given groups of people. One example is the model village movement (see Panel 2). Municipal slum clearance projects, for example in Glasgow or the East End of London, can be viewed as attempts to achieve artificially – and in a much more caring and managed way – a similar effect to that of the Great Fire of London outlined previously.

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PANEL 2: MODEL VILLAGES

In the nineteenth century the UK saw a range of philanthropic projects that aimed to take workers out of unsatisfactory housing and provide them with healthier accommodation in planned housing developments known as ‘model villages’. These were carefully laid out in locations where the air and water were believed to be healthy, though usually conveniently located for the philanthropists’ factories. The villages usually included amenities such as laundries and leisure facilities. The consumption of alcohol was sometimes discouraged.

An early example was Saltaire, built by Titus Salt, a Yorkshire textile magnate. Better known perhaps are the villages created by the Quaker chocolate manufacturers Joseph Rowntree and George Cadbury: New Earswick near York and Bournville near Birmingham.

How successful these initiatives were in promoting physical health is not well documented, but recent evidence suggests that well-designed model villages may improve psychosocial well-being. Recent research by the Joseph Rowntree Foundation at Bournville suggested that it is still regarded as one of the UK’s most agreeable places to live. An unusually mixed demography, as well as the physical characteristics of the spot, appears to create social cohesion.

Source: ‘Neighbourhoods that work – findings’ <www.jrf.org.uk/sites/files/jrf/733.pdf>.

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Pharmaceuticals and Chemicals

The most obvious area in which technology has enhanced healthcare provision is through the development of pharmaceuticals, vaccines, bio-pharmaceuticals and chemicals to treat and prevent disease. This technology, coupled with the environmental improvements discussed in the next section, has allowed us to develop effective responses to infections against which we were hitherto powerless.

• One of the earliest breakthroughs was the emergence of antisepsis, and vaccines also appeared relatively early on the scene (see Panels 3 and 4).

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PANEL 3: LISTER AND ANTISEPSIS

Joseph Lister (1827–1912) was a British doctor who discovered the link between hygiene and post-operative health. In the nineteenth century almost half of patients undergoing major surgery died from sepsis of the wound, referred to as ‘ward fever’. Earlier work, including Pasteur’s, suggested to Lister that postoperative sepsis arose from the colonisation of the wound by micro-organisms.

It was during the 1860s, while working as a professor of surgery at Glasgow University and as a surgeon at Glasgow Infirmary, that Lister began to experiment by dressing wounds with carbolic acid, which had been shown to inhibit the spread of disease in cattle. Carbolic was also sprayed into the air during surgery.

Hospitals found that post-operative mortality was reduced by these initiatives from 50 per cent or more to below 15 per cent. In recognition of his insight, Lister was appointed Professor of Clinical Surgery at King’s College London. Initial scepticism from his colleagues was overcome by the discovery of bacteria in the 1880s.

To strike a personal note, the author has, over the past 15 years, undergone four surgical procedures; a laminectomy, arthrotomy and meniscectomy, an arthroscopic decompression of the shoulder and repair of an umbilical hernia! Given the odds prior to Lister, he would have probably expired. He is, however, very much alive and confident of the hygiene practices, clinical procedures and professionalism and skill of the practitioners that enable these life-improving operations.

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PANEL 4: JENNER AND VACCINATION

In the eighteenth century 10–20 per cent of the population would be expected to die of smallpox. In his work as a doctor in Gloucestershire, Edward Jenner (1749–1823) became aware of a widespread belief that milkmaids who had suffered from cowpox, a relatively minor disease, were immune to the much more serious infection, smallpox.

Jenner formulated a theory that cowpox infection was protective, and tested it by injecting an eight-year-old boy with pus from a milkmaid infected with cowpox. After a short bout of illness, he proved to be resistant to smallpox. Jenner had to repeat the experiment several more times before his findings were accepted by the scientific establishment and the community as a whole. It is now understood that vaccines impact on the immune system to develop relevant antibodies.

As vaccination became better understood it ousted the dangerous practice of ‘variolation’ (infecting oneself with a mild form of smallpox in the hope of preventing a more serious infection). In 1853 the British government, having already prohibited variolation, made vaccination compulsory, albeit in the face of initial public opposition. In modern vaccines the infecting agents are cultured, modified to render them harmless yet still able to stimulate antibodies that provide protection.

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During the twentieth century WHO succeeded in eradicating smallpox through the effective use of carefully managed vaccination programmes.

• It has since been possible to eliminate or greatly reduce the incidence of serious diseases such as smallpox, diphtheria and tuberculosis through the use of vaccines in immunisation. A step change represented by the introduction of a vaccine results in a completely different healthcare environment. A whole class of treatments can become redundant, and a whole new class created. Consider, for example, recent work that has successfully produced a vaccine against cervical cancer. If the products prove to be effective, a whole class of heal...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Chapter 1 The Role of Technology in the Supply Chain
• Chapter 2 Managing Supply Chain Technology
• Chapter 3 The Economic Significance of Healthcare Investment
• Chapter 4 The Importance of Intellectual Property: Its Development and Protection
• Chapter 5 The Operational Provision of Healthcare
• Chapter 6 Conflicting Goals within the Supply Chain
• Chapter 7 Diversion and Parallel Trade
• Chapter 8 Tactical Responses to Diversion
• Chapter 9 Managing Compliance
• Chapter 10 The Case for Enhanced Patient Protection
• Chapter 11 Applying Technology to Secure the Supply Chain to Patients
• Chapter 12 The Importance of Information
• Chapter 13 The Future of Healthcare
• Glossary of Terms
• Index