Because management of the pharmacy supply chain directly affects not only on public health and safety but also the affordability of health care, its proper implementation is of significant concern to governments and populations around the world. The pharmacy supply chain is also a lifeline for retail pharmacies, which reportedly dispense more than 85% of prescription medications in the US, making its proper functioning critical for the many companies involved.
While improving the performance and efficiency of medical supply chains has long been a priority of the organizations that depend on them to do business, its resilience, or lack thereof, is now a major issue for the patients that depend on it to get their medications. The crisis of COVID-19 has shown that a more resilient pharmacy supply chain is needed in order to prevent drug shortages and ensure that consumers have affordable and sustainable access to medicines.
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Stakeholders and activities involved in the pharmacy supply chain
The pharmacy supply chain is one of the most complex and opaque supply chains. It is a complicated value chain that encompasses pharmaceutical manufacturers, wholesale distributors, and retail and nonretail dispensers as well as entities that never actually handle pharmaceutical products such as pharmacy benefit managers (PBMs), group purchasing organizations (GPOs), and pharmacy services administrative organizations (PSAOs). It involves the activities of drug manufacturing, wholesale purchasing and distribution of drugs, and a multitude of drug supply management tasks in the pharmacy ranging from drug procurement and receipt to inventory management and ensuring adherence to regulatory requirements around pharma serialization and traceability.
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Tools used to more efficiently and effectively manage the pharmacy supply chain
To streamline and automate the many time-consuming tasks involved in pharmacy supply chain management—including, procurement, contracting, inventory management, and compliance, both retail and nonretail pharmacies are now leveraging a variety of digital tools and technology. They are using procurement platforms to simplify and enhance accuracy in the ordering process, RFID tags and smart cabinets to ease inventory management and improve order response times, and advanced data analytics tools for tracking KPIs, benchmarking performance, and obtaining actionable insights that they can use to inform decision making and optimize inventory. With the right set of pharmaceutical supply chain solutions, including digital supply networks and multienterprise supply chain applications, they can find more ways to reduce costs, proactively prepare for disruptions in supply, and minimize the impact of shortages on the patients they serve.
The impact of COVID-19 on the pharmacy supply chain
The outbreak of COVID-19 exposed multiple flaws in global medical supply chains and left healthcare organizations and pharmacies scrambling to cope with stock outs and shortages in medications and other critical medical supplies. Due to sudden spikes in demand, lockdowns in many regions of the world, and restrictions on international air travel, the pandemic revealed longstanding weaknesses in US pharmacy supply chains. These include insufficient or inflexible local manufacturing capacity, drug shortages, and a lack of supplier diversity.
Creating a more resilient pharmacy supply chain with the digital supply network
The pandemic was a catalyst, motivating healthcare providers and pharmacies to invest in new forms of digital supply chain technology like digital supply networks and multienterprise work management software. TraceLink's Digital Supply Network is a powerful platform designed specifically for the supply chain management and now connects over 280,000 organizations across the pharmacy supply chain via the cloud.
The digital supply network facilitates seamless communication and real-time information flows across trading partners up and down the supply chain. It provides member organizations with end-to-end visibility into the supply networks on which they depend, allowing them to detect dysfunction or potential disruption early and resolve issues fast. Multienterprise work management applications enable firms to orchestrate shared workflows with their trading partners, thereby enhancing coordination and fostering collaboration, both of which are critical for increasing operational efficiency and resiliency. Used together, these technologies can help healthcare providers and pharmacies mitigate shortages, minimize waste, and build a more efficient, resilient, and robust pharmacy supply chain.
Pharmacy Supply Chain FAQs
What is a pharmacy supply chain?
The phrase "pharmacy supply chain" refers to all of the entities involved in the production and delivery of medications to patients. This includes active pharmaceutical ingredient (API) suppliers; pharmaceutical manufacturers, or companies that produce the medications; and the wholesalers that purchase, warehouse, and distribute them to health system or retail pharmacies, the organizations that are authorized to dispense medicines to patients. It may also include entities that never actually handle pharmaceutical products but have a significant influence over their distribution to consumers. In the US, this includes health insurers, pharmacy benefit managers (PBMs), group purchasing organizations (GPOs), and pharmacy services administrative organizations (PSAOs).
How does the pharmacy supply chain work?
Medications are produced by pharmaceutical manufacturers that deliver them to wholesale distributors. Wholesale distributors typically supply them to dispensers.
How does the DSCSA impact pharmacies?
Some of the DSCSA requirements for pharmacies include ensuring you only do business with authorized trading partners; accepting covered prescription products only if accompanied by product tracing documentation—transaction history (TH), transaction information (TI), and transaction statement (TS) —collectively referred to as the T3; receiving, storing, and providing the T3 for no less than 6 years. DSCSA also requires pharmacies to investigate and properly handle suspect products and illegitimate drugs, including quarantining and notifying the FDA and trade partners they purchased the drug from in the event the product is deemed illegitimate.