Pharmacy News: Pharma must rethink manufacturing, says PwC
Pharma must rethink manufacturing, says PwC
The pharmaceutical industry needs to undertake a radical overhaul in its approach to manufacturing which at present is “inefficient, under-utilised and ill-equipped to cope with new medicines”, according to PricewaterhouseCoopers.
The latest instalment in the consultants’ Pharma 2020 series notes that drugmakers have invested little effort in modernising their manufacturing and distribution processes to date, focusing instead on issues such as R&D productivity and marketing challenges.
“By 2020, many of the medicines the industry makes will be specialist therapies that require totally different manufacturing and distribution techniques from those used to produce small molecules,” says the report.
For example, biologic drugs are generally more susceptible to impurities during production and damage during shipping than chemical drugs and have shorter shelf lives, and this difference becomes even more stark with gene- and tissue-based therapies.
PwC suggests this will mean new medicines may have to be finished near the patient, for example at the pharmacy or point-of care.
A shift in the way medicines are licensed away from a binary approved/rejected model towards ‘live licenses’ – in other words initially limited registrations that can be broadened as experience with a medicine grows – will also have an impact.
Peak sales will be reached over a longer period, so companies will need to build a supply chain that adjusts according to demand and avoids a large upfront investment. Pharmaceutical manufacturers will therefore need to develop adaptable cost structures “that preserve gross margins at each stage of the product lifecycle”, according to PwC.
Health reforms – and a movement towards outcomes-based measures of a drug’s success – will demand that pharmaceutical manufacturers distribute products alongside diagnostics, data and support services. Meanwhile, greater use of electronic health records, e-prescribing and remote monitoring is driving a preference for self-administered medicines delivered in patients’ own homes and communities.
As a result, “pharmaceutical companies will need real-time information to manage wider distribution networks and demand-driven manufacturing and distribution processes”, says the report.
Added to the mix is the opening up of emerging markets which require understanding of patients’ needs and preferences, as well as greater public and regulatory scrutiny of medicine quality that is bringing issues such as traceability to the fore.
Overall, PwC is predicting three major changes to pharmaceutical manufacturing and distribution over the coming decade: the supply chain will become more fragmented, with different models used for different product types and patient segments; distribution and manufacturing will be a differentiator in the marketplace and source of economic value; and information will flow both up and down the supply chain.
“The most successful pharma companies will be those that recognise the underlying value locked in their supply chain and can leverage it as a value and brand differentiator rather than just a cost,” commented Steve Arlington, global advisory pharmaceutical and life sciences leader at PwC.
“Companies that recognise information is the currency of the future, will be those that go the final mile and stand out by 2020.”
Independent pharmacies must unify to fight PBM industry
The independent pharmacy industry needs to unite and develop an internal public relations campaign to mobilize pharmacy store owners and patients to fight for their prescription rights. This was one of the suggestions made during a PBM Discussion Panel for Independent Pharmacy, a live discussion from the 2011 PDS Conference in Orlando, Fla., on Friday.
In recent years, independents have lost ground to the pharmacy benefit management (PBM) industry despite lobbying efforts to regulate the practices of pharmacy benefit administrators, according to Dan Benamoz, RPh, CEO and owner, Pharmacy Development Services Inc. (PDS), the sponsor and moderator of the PBM discussion panel and author of a white paper about how to combat PBM abuses, such as manufacturer rebates, spread pricing, repackaging, and the development of PBM-sponsored mail-order programs that compete directly with retail pharmacies. The white paper is posted at www.pharmacyowners.com/preservepharmacy.
“Over the course of the past decade, retail pharmacists have spent tens if not hundreds of millions of dollars on Capitol Hill, lobbying Congress unsuccessfully to classify pharmacy benefit managers as fiduciaries [persons to whom property or power is entrusted for the benefit of another] or at a minimum, for government regulation of this industry,” wrote Benamoz in the white paper. “Under the ‘watchful eye’ of these unregulated guardians of the United States healthcare system, prescription drug costs have escalated over the last 15 years at such an unprecedented rate that basic healthcare is rapidly becoming less and less affordable for individuals and corporations alike.”
More than 200 participants in the PDS Conference and more than 150 online attendees listened to the 5-member panel discuss ways for independent pharmacies to fight back. The panel included Jennifer Bacon, Esq, an antitrust attorney with Poisinelli Shughart PC; Rich Masters, partner, Qorvis Communications, a specialist in media relations; Douglas Hoey, RPh, MBA, senior vice president, NCPA; Mark Riley, PharmD, a member of the NCPA Executive Committee and executive vice president, Arkansas Pharmacists Association; and Dave Gilmore, PhD, president of KeyCentrix Inc.
“You [the independents] have all the elements of a really good campaign — a single message, an energized base, and a really good enemy [the PBM industry],” said Masters in his opening remarks. “This is your fight. You must have the will, desire, and business acumen to engage pharmacies, customers, and your communities. You have the best story to tell — go tell it.”
Getting the membership involved is probably the most difficult step, said Masters. “You need to create an environment that will get the pharmacies and patients involved. Once an initiative is started, do news events across the country, and coverage [by the media] should be funneled into the online world,” he said.
Some strategies addressing PBM practices that were mentioned during the panel discussion included state and federal regulatory efforts, the development of a super network, education of the public with talking points, and the direct engagement of small business owners who are affected by PBM practices.
In the state of Mississippi, a bill introduced in the House proposes to move the regulatory authority (over PBMs) from the Department of Insurance to the State Board of Pharmacy, which will be responsible for overseeing and issuing permits to every PBM. Fortunately, the State Board of Pharmacy understands the industry and some of its members are friends of independent pharmacy, according to a pharmacist in the audience who spoke during the panel discussion.
The NCPA has lobbied for greater PBM transparency requirements, which will be implemented in 2014 with the state health insurance exchanges established by the Patient Protection and Affordable Care Act of 2010. “We need a strong offense to keep constant pressure on the PBM industry despite the fact that they are always changing their business models and adapting,” said Hoey.
Another possible strategy is the development of a network to inform other pharmacies of the local initiatives that are taking place across the country. “Grassroots efforts are critical, and you need to demand your GPOs [group purchasing organizations] are part of this network,” Hoey continued.
Another pharmacist in the audience suggested that pharmacies recognize the value of social media in reaching out to the public. “We need talking points to inspire the public. We need to explain that these PBM practices are screwing employers, and some organization needs to spearhead this,” the pharmacist said.
“We also need to educate business owners about their mail-order programs and PBM contracts. Pharmacists need to engage them about their prescription drug program and become a sales force,” said Riley. “We need to be active messengers pushing state legislatures, city governments, and the FTC [to get the word out] about the PBM industry.”
Buyouts skew Indian drug industry
Tie-ups between Indian drug companies and multinational pharmaceutical firms, which initially received a lot of media attention, have proven to be more beneficial for big pharma than for Indian companies, according to a recent study.
The study authors found that co-operation between multinational pharmaceutical companies and Indian manufacturers had not boosted the R & D capacity of Indian pharmaceutical businesses.
They also found that there had not been any significant transfer of technology from developed countries.
In the report, Médicins Sans Frontières (MSF), a medical non-governmental organisation, describes India as the pharmacy of the developing world.
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It is not the first time that Indian officials have begun to suspect that such co-operation between drug companies is ultimately not beneficial for Indians.
When a foreign firm buys an Indian drug company, that firm inheirits the intellectual property of the foreign company.
But quite often, the same Indian companies have already benefited from patent waivers on research done by Indian technical institutes, or from Indian tax incentives.
In essence, multinational firms are benefiting from previous investments of Indian taxpayers’ money when they buy Indian drug companies.
Last year, the Indian commerce ministry said some analysts were concerned that foreign companies would steer Indian companies away from the Indian market, weakening competition and ultimately opening up a new price range for more expensive drugs, thus driving up prices overall.
The researchers found that clinical research organisations in India failed to raise their technological standards after being integrated with high-grossing pharmaceutical firms.
They found that most of the drug discovery efforts of such firms were aimed at Western markets.
While some Indian drug companies have also acquired foreign firms in the mean while, foreign firms have also bought Indian companies.
Study author Dinesh Abrol, of the National Institute of Science, Technology and Development Studies (NISTADS), said that buying domestic Indian companies would give multinational companies fewer challenges over proprietary technology.
He said that the buyouts would ultimately lead to decreased manufacturing capacity for Indian-made generic drugs.
The Indian commerce ministry said that alliances between local and global pharmaceutical companies had also been seen in Brazil, Egypt, and Pakistan.