GOVERNMENT/LAW

Wholesalers called weak link in pharmaceutical supply chain

Wholesalers are the vulnerable link in the drug supply chain. That was the consensus at the recent TRAX Pharmaceutical Supply Chain Summit, held in Washington, D.C. Mike Kaufmann, senior VP of the pharmaceutical division at Cardinal Health, said, "Wholesalers are the critical link in the supply chain."

Kaufmann noted how careful Cardinal Health is with purchases from the secondary marketplace, saying that there are some drugs that the company would purchase only from manufacturers themselves, given the prevalence of counterfeiting with many drugs of high street value.

Reinforcing Kaufmann's message was Douglas Scheckelhoff, director of pharmacy practice sections at ASHP. He outlined the main problems with the supply chain in America—including drug counterfeiting, drug diversion, drug shortages, imported drugs of questionable quality, and rogue Internet pharmacies—and targeted wholesalers as a source of concern.

Scheckelhoff said pharmacists have "put themselves and ultimately their patients at risk" for receiving counterfeit stock by purchasing from "disreputable suppliers." He called on pharmacists to use the Healthcare Distribution Management Association's (HDMA) Recommended Guidelines for Pharmaceutical Distribution System Integrity to evaluate wholesalers, saying, "We are suggesting that pharmacists consider them for evaluating secondary wholesaler purchases when they [are dealing with] a new company and have no previous business relationship."

In later remarks on the use of the HDMA guidelines, Scheckelhoff said, "It may not be practical for pharmacists to demand all the background checks and additional steps, but the guidelines offer guidance." He also suggested that pharmacists "check the wholesaler's status with their board of pharmacy at a minimum."

Benjamin England, former regulatory counsel to the associate commissioner for regulatory affairs in the Food & Drug Administration and moderator of the summit's morning session, was surprised by Scheckelhoff's call for pharmacists to use the HDMA guidelines. The guidelines, he said, were designed "for wholesaler-to-wholesaler relationships," but noted that the evaluation was a good thing. "It's the pharmaceutical industry looking upstream [at the wholesalers], asking, 'Can I trust you?' "

On cost and communication

Kaufmann also spoke about the importance of communication between wholesalers and pharmacists because the former's cost reduction is beginning to slow. He explained that "over the past 10 years, wholesalers have been able to really drive costs down because we've been able to become very efficient. We've been able to get expenses down by 3%-5%, and we've passed most of that along to the pharmacy. However, we can't go to zero."

Kaufmann pointed out that one of the "critical things that we've got to do more of is educate the pharmacist, our customer, about what is happening in the supply chain." He said that diminishing cost reduction from wholesalers would affect future drug distribution costs. It's important for pharmacies that, as they plan their business, they don't mistakenly plan for too much reduction in delivery charges, he cautioned.

Mark Lewis

The author is a science writer based in Arlington, Va.

Mark Lewis. Wholesalers called weak link in pharmaceutical supply chain.

Drug Topics

Aug. 23, 2004;148:66.