Ghada Ashkar, PharmD, Associate Chief, Ambulatory Pharmacy, UCLA Health
Jessica Daley, PharmD, Chief Pharmacy Officer, Premier
Esteban Santos, Executive Vice President, Operations, Amgen
Moderator: Geoff Colvin, Senior Editor-at-Large, FORTUNE

Brainstorm Health 2023 - Strategies For Solving Supply Chain Challenges

Conferences

Ghada Ashkar, UCLA Health
Jessica Daley, Premier
Esteban Santos, Amgen
Moderator: Geoff Colvin, FORTUNE

Strategies For Solving Supply Chain Challenges

Next topic is a kind of a hot topic. A US Senate Committee reported last month that drug shortages in the United States could pose a national security threat. The report said that at the end of last year, drug shortages reached a five year high of 295. The number of factors to blame it says including economic drivers over reliance on foreign suppliers and poor supply chain visibility and that's what we want to talk about today. The supply chain, everybody's had to deal with these problems but in different ways, the pandemic highlighted just how our, how fragile our whole supply chain situation was and that was for all kinds of things, not just medical things, but when it comes to medicines and medical supplies, supply chain problems have lives on the line. Uh So how can companies reimagine and reconfigure to deal with all of this? Well, we're happy to have with us three leaders on the front lines of health and wellness. Uh Gada Ashkar has a Doctorate of pharmacy and his associate chief of Ambulatory Pharmacy at U C L A Health Jessica Daly, who also has a Doctorate of Pharmacy is Chief pharmacy Officer at Premier and Esteban Santos is Executive Vice President of Operations at Amgen. Please welcome them to the stage. All right. So let's start with the here and now. Uh Esteban, what shortages are you dealing with right now? So, fortunately, we are not dealing with any shortages from the perspective of us bringing medicines to the patients that we serve and, and that is a testament of our company's desire to continuously invest in the capabilities to ensure supply. So at Amgen, uh a company founded in the idea of innovation and pioneering biotechnology, we have a simple mission which is to serve patients. And we know that innovation is critical to certain patients. But also we have learned that the ability to supply is as important to bring, you know, that innovation to the people that need them. And we have made significant investments to be able to have a resilient supply chain. Now that doesn't mean that it comes easy to do that. And certainly over the last several years, uh the challenges of that we all have seen in the supply chains has impacted our ability to acquire raw materials that perhaps impact our ability to make products in the, with our original plants. I think that uh we have been able to manage and ensure supply for those medicines, but it's been certainly a lot of work to be able to make that happen. Yeah, and we're gonna come back to talk about how you've done it because everybody has had to make up their own solutions. It seems, and it's valuable to hear what they, what they've been. Jessica. Same basic question. Uh, what are you dealing with right now? Well, what are we dealing with right now? Um, the interesting thing about drug shortages, Jeff is that this is not something that is new in the market. So we have as pharmacists as clinicians been dealing with critical drug shortages for decades. I think it's one of the reasons when the pandemic hit, um supply chain really struggled to get some of the basic supplies that we needed to manage patient care. They called pharmacists. We brought us out of the basement and we became part of the care team and we had some very valuable information to share because we deal with this. We live this every day. The biggest challenge that I think that we're seeing here in this space is that there's not one simple reason why we see drug shortages. There's not one group or one stakeholder that alone can make a difference. This really is a multi factorial issue where we have to come together to create and design innovative solutions that allow us to continue to help support patient care across the country. And just to be clear when the pandemic arrived, did it get worse for you or was it just more of the same? No, it absolutely got much worse. We see in, you know, one of the challenges that you had shared with the Senate report was that we have many different reasons for drug shortages. One of which was just where many of these products you, you talked about Esteban for, for some of our brand pharmaceutical supplies. We very rarely see a drug shortage at the patient level. You may have trouble getting some of your raw materials, but we very rarely see the shortage of the actual medication in the in the market. The biggest problem from a drug shortage perspective are the low cost generic medications that have been here and we've used to treat and support patients for many, many years. The problem with that market is it has become commoditized. So it's very difficult for, for us as providers as, as health care delivery organizations and even as suppliers to have appropriate demand signals to be able to afford to manufacture those products here on us soil. So we saw a significant impact of the drugs that we needed, especially to treat COVID patients, right? Propofol, some of the sedatives, the things that you have to use to keep a patient intubated, many of those products and others are coming from outside of the US, coming from China and from India. So as the world was shutting down, it became very difficult to get those products here to the United States, right? At UCLA Health first, the pandemic is largely behind us. What are you dealing with right now. Well, while the pandemic is behind us, drug shortages are still not at the level that they were at pre pre pandemic. So we're really still, uh, managing that problem on a day to day basis. And like, um, she said, while pharmacists were used to deal with, uh, drug shortages, it became more and more exacerbated to a point where now when we're making our drug budget for next year, because think about it this way when a drug goes short, although it's a cheap, typically, like they said, it's the cheaper drugs that, I mean, Saline Des, right. These are like drugs that really like, you shouldn't see, like go on, on shortage. But when they go short, we either have to buy it more expensive from like alternative suppliers. So we have to plan for it in our budget or we have to make it ourselves so that more uh manpower, right to, to, to accommodate for that and pivoting and being a, to be able to, um, you know, accommodate all this is, is the big, um, process that we're having to maintain on a day to day basis and, and, and it, and it's not predictable as much as we want to predict it. It's not predictable. I mean, this sounds, yeah. Yeah. Yeah, I can tell you, I'll say something about that in a little bit, but go ahead. Go ahead, Jeff. No, no. Well, look, all I was gonna say is to an outside observer. Uh This looks crazy because you think well, in almost every other business, every other market and industry, basic market forces balance everything out and there will occasionally be shortages but not what you're talking about. However, as you were saying, part of the problem seems to be, in fact, market forces is that fair. Absolutely. That's absolutely fair. So it's market forces have um in large part brought us to where we are, right? There's there's been a significant move of, of product manufacturing outside of the United States. So one of the things that people often say is well move manufacturing back right onshore or near shore, all generic drug manufacturing, which sounds good. But who remembers Hurricane Maria, right? We lost a major manufacturing site and the ability to bring in small volume I V solution bags from Puerto Rico near shore production that led to a massive challenge in the supply chain. So what we really need to look at is how do we, how do we incentivize manufacturers to bring their production back to the US or to near shore? But then also how do we look at a global footprint? What we really want to see in the generic drug manufacturing market is a mix of at least three suppliers with geographically first supply chains. So we're really looking for, how do we create stability? How do we incentivize that stability and quality of, of production and one of the ways that, that we look at doing that is by partnering and investing with manufacturers with suppliers to improve their ability to, to be successful there. We're going to, yeah, go ahead and it's not only your drugs, right? Like we remember the problem, but now that's behind us. But now we have shortages of tubing for IV solutions and syringes and pivoting and being able to change those within the health system is a whole undertaken too well. And Esteban, she mentioned syringes, I mean, you've just opened a plant right in Ohio that uh I gather kind of assembles and packages syringes and vials. What's that gonna do for this um shortage problem that we suggest uh we haven't opened the facility, but we actually, that's one of two facilities we're actually building to strengthen the resiliency of our supply. And we're building that we, you know, believing that that capacity is going to be needed today and into the future. Uh so, but, but a couple of things that maybe, maybe are important that you mentioned, Jessica, uh you know, for us. So my most important facility is actually in Puerto Rico. And, and even though Hurricane Maria, which was, you know, one of the biggest challenges for our industry, that hurricane actually went through our site, the the the the eye of the storm, actually, a category four hurricane just went through our Juncos facility in Puerto Rico. But because we have been preparing over time to ensure that we had a resilient supply chain. Uh And we had multiple elements that you mentioned, right, we have certainly capacity which ties back to the investments we're making in new capacity in Ohio and North Carolina. Uh we had redundancy of that capacity to be in various geo geographic, we invested in the right levels of, you know, inventory levels. So when something happened, we had a chance to recover and then have robust technologies to be able to manage multiple challenges. We were able to continue to supply our medicines to patients, right? So you have extremes of, you know, selling solutions. We've had a significant level of charging for a long time. Thankfully, for us, within a week, we were up and running again and we did not miss a beat, but there were significant levels of investment that happened over time to achieve that, right? That's what strikes me. Is that ok? When this catastrophe happened, you were prepared for it and that was good for all of your customers and it was good for gen too, but you took a long term view years previously, right? Because you had to make those investments. And for me, that is probably one of the most important points and and perhaps the the silver lining coming out of the pandemic uh which could connect to the drug shortage situation is that the the growing uh you know, understanding that having ever receive and supply chain is as important as having an efficient supply chain. And the job of people in my line of work is to be able to create that right balance. Uh We are, we're fortunate that we started actually from building a resilient supply chain first. And then we found ways to make it more efficient, right? Where perhaps in other places you start with efficiency at the expense of resiliency. And I think that's something that we need to figure out a better balance for the supply chains of this industry as well as supply chains in other industries. Yeah. Well, I I'd add cost in there as well. So it's, it's a combination of cost efficiency, resiliency. One of the challenges that we see in the drug supply chain in particular and Gada you'd mentioned, we can't really predict. Well, we, we ask that question, can we start to maybe not predict when the next shortage will happen? But can we start to anticipate using data, using A I and technology to understand market dynamics better and give ourselves a window to be able to respond? It takes time and effort and development. But we've done that and we do have capabilities that we've built within our supply chain organization that don't just look at drugs. Um, I have a, certainly I'm a pharmacist. I lead our pharmacy team and I have a personal tie to the pharmacy solution that we've built. But it's something that we've been able to create using data input. So understanding better information about demand signals, understanding where raw materials, the active pharmaceutical ingredient is coming from where the finished dose is being manufactured. Putting all of these millions and millions of data points into an A I CAPABLE solution to find those patterns, identify those patterns. And we make that available to our supplier, partners and our health system members so that they can better plan for their contingencies and their ability to respond. I want to ask about a different thing and God, I'll start with you which is sudden spikes in demand. And of course, I'm talking about Adderall and everything that has been happening in the past year or so. How did it affect you? And what did you make of it all? How, what caused this? Well, sudden spikes in demand is, is something that we've been dealing with for a while now, I'll, I'll give you an example. Our hospitals have been on high census for especially U C L A. We've been on high census for, for I can't even remember. Usually we're on high census one or two days a month now. We're like ongoing. So that's also a sudden spike in demand for drugs and everything else we provide for for when, when those sudden spikes in demand happen, it puts the the the front line um supplier in a in a predicament, right? How do you decide which patient because supply becomes scarce Right. How do you maintain an equitable position and decide which patient gets the supply and when, and, um, and that's unfortunately a decision we're having to make and that's also adding to the strain on, on, on the stress that the front line workers are having to deal with since the pandemic. And before, before that, because how do you decide who gets it? So, yeah, it's, it's just relying on our, um, what we see in front of us and trying to stay equitable as much as possible and distribute the supply as best we can. Yeah, it's a classic dilemma. There is no right way to make the decision but the decision must be made. So you just do it, we just do it and we rely on the clinical judgment of our frontline workers. That's why we have them. Yeah. Yeah. Uh What's your experience with either the a thing in particular or big spikes in general? So let's talk big spikes because that's one of the things that can be very difficult to manage and predict. So we can see some indications and data that show when a big spike may be coming, but you can't predict everything right. There's going to be instances where clinical practice changes greatly and you're just going to see a huge spike, the challenge with some of those massive spikes in demand. And this is a challenge that even some of our brand pharmaceutical suppliers are dealing with. So I think we've talked about it multiple times today, right? The ZIC, right? Some of the weight loss drugs, the GLP ones, we're seeing a massive spike in demand. You can speak more for the brand manufacturing capacity, but in the generic world where we see generics, many of our suppliers will run a production line of a particular product for a certain amount of time and a certain portion of the year and then that line changes over to produce something else. So uh if you see that massive spike in demand, you only have one or two, maybe three suppliers in the market and they have finished that, that manufacturing run, it's very difficult to recover because they're not going to be able to come back to supply the market for a significant amount of time. So those demand spikes are really challenging for sure. I mean, uh you know, there's fixed capacity in, in the industry. But I think that um you know, the the opportunities when we look at spikes in demand and that that could impact any industry, any company. I think that uh you know, part of the challenge is, is uh do you see your ability to supply and your manufacturing capabilities as a core competency of your company? And if you do, then you do a better job in investing in those capabilities and the capacity necessary to be able to supply. Uh We, we have something in an uh called uh serving every patient every time. And if I can give you sort of a 32nd snippet on that one is when I joined the company 16 years ago, I heard that phrase, we serve every patient every time. And I said that's a very nice slogan. Very quickly. I came to realize that I was actually ingrained in the DNA of the company and we make investments and choices to ensure that we do our best to supply patients with multiple challenges, you know, and supply and demand variability. So that created a context for investments in capacity in redundancy, we invest in inventories appropriate. So there's ways for us to at least mitigate some of those risks. No one can claim that they're going to be eliminating all the risk. But there's some ways to be thoughtful about it and to make the proper investments to ensure you have a better art of success in that space. If you will look, we're just about out of time. But I want to ask each of you the same question to answer very quickly. Uh What's the advice you'd give you? You've all had intense experience with these things with supply chain problems. What's the advice you would give to others in your shoes? Um For how they can at least manage this as best, they can well use data to try to predict as much as possible, but most importantly, leverage your, your, your uh uh uh uh your your personal uh uh a acquaintances, right? Uh the the manufacturers, the suppliers, how do we work together to, to, to, to place the patient in the front of everything we do and make sure the right drug gets to the right patient, Jessica data and transparency, hugely important. Anything that you can do to invest in that capacity. But I would also say one of the most important things that we can do is help to stabilize the demand in the industry. So where you can work with an organization like premier committed purchasing on giving your suppliers the ability to plan their manufacturing capacity hugely important. And that's an area that we really want to focus on both great points. And I will add a third one, which is when you're working with your suppliers. Unit cost is important, but it shouldn't be the only measure of success, quality and reliability of supply are as important to be able to solve our decisions. Got it, Jessica Esteban. This was terrific. Thanks so much. Thank you.