Pharma distributors adjust to the Covid-19 pandemic

Pharma distributors have learned, through painful experience, how to deal with natural disasters that shut down healthcare resources across a region; Covid-19, obviously, is different. “We are accustomed to moving assets from other regions to the impacted one to respond to a disaster,” says Nicolette Louissaint, executive director of Healthcare Ready. “This one represents a need felt by all, all at the same time.”

Healthcare Ready came together in the aftermath of Hurricane Katrina (2005), embodying a collaboration among the leading pharma trade associations (PhRMA, BIO and AAM), the Healthcare Distribution Alliance (and its leading members McKesson, AmerisourceBergen and Cardinal Health), the National Assn. of Chain Drug Stores, the biomanufacturer Amgen and the health system Northwell Health. It also cooperates with state and national emergency-response organizations. The main goal is to act as a communications clearinghouse during an emergency.

One of the issues that Healthcare Ready has already helped in addressing, notes Louissaint, is to ensure that the drivers and delivery personnel involved in moving healthcare products are exempt from the “shelter in place” rules now covering more of the US (as of March 21, New Jersey has joined California, New York, Connecticut and Illinois with these rules). Healthcare Ready is also advising the pharmacies and health systems that receive products to set up staging or handoff areas for deliveries to enable a form of “contactless” delivery. “Drivers need to be protected,” she says.

One “novel solution” that has percolated up recently, says Louissaint, is for pharma companies that have extensive R&D labs to donate stocks of personal protective equipment (PPE) to hospitals and healthcare workers that need them. (There has been extensive press that construction workplaces could give over the N95 facemasks often used at construction sites; extending the pharma-lab idea, one could think of semiconductor fabs and other microelectronic manufacturing facilities that might be able to do the same.)

[22 March update: On this day, Merck announced that it had sent 500,000 masks to New York City Emergency Management. In a similar fashion, PG&E, the Northern California utility, has donated 480,000 N95 masks and 470,000 surgical masks to the CA Office of Emergency Services. "The company maintains a supply of several types of masks to protect utility crews working in construction zones or responding to wildfires," it said.]

Big 3 declarations

The Big 3 wholesalers (as well as some of the smaller ones) have extensive experience in disaster recovery; as logistics experts, they’re accustomed to such practices as alternative sites of delivery and business continuity planning. Which is not to say that the Covid-19 crisis is a matter of routine.

McKesson issued a statement saying that “Although we are allocating products, all current allocations have been set at more than 100% of historical product usage. McKesson will make every effort to provide our customers with a minimum of 100% of their historical usage as long as the product is available.” (It is probable that some clients have been asking for multiples of 100% of historical usage, given the surge in demand occurring.) Allocation—filling part but not all of incoming orders—is a standard way of addressing high demand and to minimize hoarding. McKesson goes on to say that it has been restricting PPE orders to only current customers and monitoring the amount they’re ordering; and that for drugs, it is allocating antibiotics, statins, antivirals and nebulizer solutions and respiratory medications.

AmerisourceBergen, which updates its website every few days, said on March 17 that “In order to maintain support for current and potential future Covid-19 patient treatment, we have increased days-on-hand inventory of IV fluids, generic injectables and related products for acute care providers.” Also, “In terms of the global pharmaceutical supply chain, we have been notified of a small number of drug shortages due to Covid-19, and all impacted products have therapeutic alternatives available.”

Cardinal Health says that “Many of our suppliers have confirmed they hold several months’ worth of Active Pharmaceutical Ingredient (API) and finished dose safety stock. During times of increased demand, Cardinal Health implements a fair share allocation process to ensure all primary customers have access to supply of the available products on hand.”

To a broader degree than the other big wholesalers, Cardinal Health has an extensive hospital-supply business, which unfortunately was dealing with a product recall of surgical gowns and related PPEs just as the coronavirus was hitting US shores. One of its Chinese suppliers had been sourcing its product from an unapproved site, which then called into question the sterility of the products. Cardinal issued a recall on Jan. 25; ceased sourcing with this supplier; and was evaluating alternative suppliers.