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Pharmacy Outlook: Chip Davis, HDA

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The health care supply chain has entered a critical phase.

Chip Davis

From the White House to the kitchen table, supply chain disruptions have been on the minds of many Americans. But while the COVID-19 pandemic revealed the limits of operating within a global marketplace, the pharmaceutical supply chain was largely immune to bottlenecks. Consumer goods shortages have challenged us recently, yet pharmacies, health systems and physicians’ offices, more than 180,000 across the country, remain stocked with the life-saving medications and vaccines patients need. That didn’t happen by accident.

Two years into living and working in a pandemic, the nation’s health care supply chain, anchored by the logistics expertise and innovation of the Healthcare Distribution Alliance’s 37 distributor members, has remained resilient and reliable. Throughout COVID-19, distributors worked closely with private- and public-sector partners, putting into practice the “three key Cs” — communication, coordination and collaboration — to maintain a steady flow of medicines.

This time last year, HDA members were navigating the pandemic in many vitally important ways. From serving as centralized distributors on behalf of the federal government for both vaccines and therapeutics, to working with states and public health departments to move products to dispensing sites, to serving as network administrators in the Federal Retail Pharmacy Program, HDA members have played and continue to play an essential role in combating COVID-19.

While vaccine administration may have lagged a bit in the early days, distribution did not. Pharmacists were indispensable in closing this gap — and as always, distributors were proud to partner with and support them every step of the way. With antivirals as well as next-generation therapeutics and vaccines coming online, distributors will continue to collaborate with private- and public-sector partners to find the most efficient methods of getting these products to the front lines.

The continued pandemic response will fuel important discussions in the months and years to follow. One immediate finding, however, is that the private sector is a vital and effective partner to government in times of calm and in crisis. HDA distributors have the infrastructure and expertise to do even more, especially as the Biden administration as well as federal and state lawmakers look to reinforce our country’s readiness and response capabilities, to include supporting private and state emergency reserve systems and the Strategic National Stockpile.

Importantly, distributors did all this while fulfilling Americans’ daily health care needs. In fact, according to the latest HDA Factbook, distributors continued to deliver approximately 93% of the nation’s prescription medicines and health care products throughout the waves of the pandemic — and they did so safely and reliably.

Maintaining these high service levels is a testament to the hard-working individuals behind the scenes every day — and the inspiration for Health Delivered, HDA’s award-winning, multiyear campaign. Launched last spring through our first national television ad, Health Delivered raises awareness about the critical role of distributors as well as the savings and efficiencies they bring to the health care ecosystem, patients and their families.

With increased responsibility and awareness of our industry comes the expectation for action. Given the pressures reverberating across the health care ecosystem, let me assure you that HDA and the distribution industry are doubling down on our ability to do more. Here are a few of the issues we will address in 2022:

  • Healthcare Affordability and Access — Promoting patient access to essential and affordable medicines remains a seminal issue for federal and state policy makers. Distributors share that goal. Our industry operates on the slimmest margins of any other entity in the supply chain to move more than 10 million medicines, health care products and supplies each day — from the biggest cities to the smallest towns, including economically marginalized communities. In doing so, HDA members ultimately save the health care ecosystem between $33 billion and $53 billion annually.

The U.S. health care supply chain is complex, but also one of the most sophisticated, efficient and secure operations in the world. HDA distributor members are proud to partner with nearly 1,500 health care manufacturers that are pushing the boundaries of innovation every day. Policy makers should be cognizant of the market realities that led us to the system we have today; a legislative overcorrection may hinder the revolutionary cures and treatments of tomorrow.

Further, it is important that policy makers understand the clear distinction between distributors’ central role in the physical handling and distribution of essential medicines in the supply chain, versus the financial services of pharmacy benefit managers within the payment chain. Accordingly, HDA and our members will be working to educate lawmakers about the distinct roles and deliverables associated with each sector as the debate on access and affordability evolves.

  • Supply Chain Sustainability — According to a December 2020 Health Affairs study, our health care system is responsible for 10% of U.S. greenhouse gas emissions — and it produces more than any other nation. Protecting the health and well-being of people starts with the health of our planet; we all need an environmentally clean, safe place to call home. That is why I am proud to serve as co-chair of the supply chain working group on the National Academy of Medicine’s Climate Action Collaborative, which will mobilize the full spectrum of actors and institutions in the health community to reduce the health sector’s environmental impact.

The health care distribution industry is naturally optimized toward a reduced carbon footprint — efficiency is at the core of everything HDA members do. Protecting the environment presents another opportunity for HDA members to protect the health of the communities our members serve, and the industry is making important strides in integrating decarbonization and other important climate change-related measures into their organizations.

  • DSCSA Implementation — Supply chain stakeholders have less than two years to comply with the federal pharmaceutical traceability law, the Drug Supply Chain Security Act. As the industry moves toward interoperable exchange of serialized data and product by November 27, 2023, HDA and our members are collaborating with industry stakeholders to work through implementation challenges, while sharing our sector’s perspective and expertise with FDA and other stakeholders.

As highlighted by HDA Research Foundation data, some trading partners report they are deferring DSCSA-related investments. Further, few companies are prepared to share transaction data via GS1’s Electronic Product Code Information Services (EPCIS), a necessary component for interoperability. Dispenser knowledge of requirements, meanwhile, is reported to be low.

The state of readiness is concerning; the FDA asserts it does not plan to extend the 2023 implementation deadline. Waiting on the agency is a risky proposition, given the complex requirements needed to achieve compliance in just two years’ time.

The health care supply chain has entered a critical phase. HDA calls on all trading partners to engage with their distributors now to prepare for compliance, commit to adopting EPCIS and determine a plan for sharing data. Redoubling efforts now will help protect the continued flow of medications to providers — and ultimately patients — in 2023 and beyond.

  • Supporting the Pharmacy Community — Pharmacists are some of the most accessible and trusted health care professionals in their communities. As mentioned, their role has never been more important, and appreciated, than during COVID-19. HDA members are proud to support the pharmacy community through a range of services, particularly in rural communities where fewer provider options exist.

According to Avalere Health, approximately 80% of independent and small-chain pharmacies in the U.S. choose to work with a Pharmacy Services Administrative Organization (PSAO). PSAOs are administrative service providers; some HDA members offer PSAO services as a value-added option for community pharmacies to ultimately allow more time to be spent on patient care.

PSAOs serve a distinct, administratively focused function, and should not be confused with sectors like insurers or PBMs. That is why we will be working within the states to advocate against any legislation that would hinder PSAO operations and blur the lines between PSAOs and those entities. By doing so, we will protect the value-added services to help pharmacists make a difference in the health of their customers and neighbors.

  • Delivering Health Today and Tomorrow — In 2022, HDA and our members will lean into our role as conveners and drive efforts to bring together industry experts, policy makers, thought leaders and other key stakeholders to explore common goals and relevant health care issues as the supply chain innovates for the future.

Chip Davis is the president and CEO of the Healthcare Distribution Alliance.


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