Drug distributors reap benefits of tech investment

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Yet regulatory challenges remain, including implementation of DSCSA

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ARLINGTON, Va. — The rapid adoption of new technology is making the drug distribution industry healthier than ever.

The sector’s investment in new systems and ability to quickly get them up and running is giving it unsurpassed accuracy and efficiency, said John Gray, president and chief executive officer of the Healthcare Distribution Management Association (HDMA).

The industry’s high fill rate would be outstanding in any logistics field, he said. And distributors are achieving that rate whether they are large public companies or smaller, independent firms.

The phenomenon has been especially notable the last few years, as distributors have implemented “extraordinarily high-end logistics technologies” in their warehouses, Gray said. “If you ever have a chance to tour some of these facilities you will be blown away by their sophistication. It’s no longer about a box on a 48-by-40 pallet with a forklift. It is far more complicated than that.”


John Gray, HDMA president and CEO

Regulatory challenges persist, however, including the ongoing multiyear implementation of the transformational Drug Supply Chain Security Act (DSCSA). As of May 1, when the Food and Drug Administration ended its “enforcement discretion” — as HDMA recommended in late 2014 — of the law’s Jan. 1 deadline for manufacturers and distributors to pass transaction information, histories and statements, this information exchange was well under way.

The next deadline, July 1, is for pharmacies to be able to receive the same information. To prepare them, HDMA has hosted three webinars on their obligations under the law.

The entire rollout of DSCSA, through 2021, will revolve around education, said Gray. In light of that, HDMA has released a tool kit of guidelines for electronic data interchange, typical transaction scenarios and other documents, and will hold its annual traceability seminar in October.

“A lot has happened,” he said with regard to the new law, “[And] the industry’s done a good job of collaborating since October in trying to get this initial phase up and running.”

As to congressional oversight of the sector, Gray praised the House’s passage of the Ensuring Patient Access and Effective Drug Enforcement Act of 2015 (H.R. 471). He says the bipartisan legislation will help unite the pharmaceutical supply chain and regulators, such as the Drug Enforcement Administration, in their common goal of seeking to reduce prescription drug abuse and ­diversion.

HDMA now advocates passage of companion legislation in the Senate, S. 483, “in the hopes of promoting greater transparency in the fight against drug abuse and diversion.” The bill is awaiting a Judiciary Committee hearing, which the HDMA is optimistic will cast it in a favorable light. Momentum for the legislation has been generated by media coverage in Florida, and a Government Accountability Office report citing the DEA’s ineffective management of the quota process for controlled substances.

Also, new attorney general Loretta Lynch said during a Senate hearing on the Department of Justice budget that she would look into concerns about the lack of guidance for the DEA’s “suspicious order monitoring” requirements.

“We’re cautiously optimistic, between a new attorney general and a new head of DEA coming in, that there will be a fresh look at polices,” said Gray.

In the meantime, HDMA remains an active member of the Alliance to Prevent the Abuse of Medicines — a coalition comprising the American Medical Association, Cardinal Health, CVS Health, Kaléo Pharma, Millennium Health, Prime Therapeutics and Teva Pharmaceuticals — which last year released nine recommendations aimed at reducing prescription drug abuse.

“This industry consortium is keeping an eye on this issue,” Gray noted.

On the global front, HDMA will be a host of the second annual International Pharmaceutical Distribution Conference (IPDC), at the Steigenberger Wiltcher’s hotel in Brussels on Nov. 12 and 13.

The organization will cohost the event with the European Association of Pharmaceutical Full-line Wholesalers (GIRP) and International Federation of Pharmaceutical Wholesalers (IFPW). Based on HDMA’s annual Distribution Management Conference (held annually in March), the IPDC brings together distribution and manufacturer executives from around the world to learn about technologies and business practices designed to safeguard patients, enhance security and achieve efficiencies in the international arena.

“As many pharmaceutical distributors and manufacturers look outside the U.S. to expand their portfolios and gain ideas to strategically build their businesses internationally, HDMA is continuing its efforts to bring together supply chain leaders from around the world to understand the opportunities and challenges of an increasingly globalized industry,” said Gray. “Following on the success of our inaugural IPDC in Beijing last year, we are pleased to work with GIRP and IFPW to present a timely and relevant program for health care supply chain executives engaged in the global marketplace.”

The program for 2015 will include such topics as: pharmaceutical traceability and verification systems, the impact of international trade agreements, and building collaborative supply chain partnerships. The conference also will provide discussions with a variety of European and American distribution and manufacturer executives on the challenges they face in an ever-changing industry.


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