Tackling drug shortages with data, AI, legislation, and more

Every quarter since 2014, roughly 150 to 300 drugs have been in short supply in the U.S. The drug shortages list has included injectable morphine and other painkillers, anesthetics, antibiotics, cancer drugs, medications for mental illness, and much more.

In June 2018, a bipartisan group of 31 U.S. senators and 104 members of the House of Representatives wrote to then-FDA Commissioner Scott Gottlieb in hopes of addressing the nation’s drug shortage crisis. The Food and Drug Administration’s analyses had shown that the number of ongoing drug shortages was increasing, some lasting longer than eight years. Later analysis done by the FDA in early 2020 found that while there have been incremental improvements, drug shortages continue to be an ongoing issue.

Drug shortages can have profound adverse consequences: economic, clinical and, humanistic. For specialty manufacturers that produce life-creating fertility drugs, lifesaving cancer drugs, or drugs that combat chronic diseases, shortages have a very direct impact on patients’ well-being.

To begin chipping away at drug shortages, there are several different processes that must be augmented or updated. The FDA’s updated 2020 report recommends legislative proposals in President Trump’s 2020 budget, but goes on to say that, given the complexity of the problem, there will be no single solution. The FDA does, however propose a handful of solutions to get the industry on the right track. These include:

• Offering education to supply-chain stakeholders and legislation around the impact of drug shortages on patients and the factors contributing to them.
• Developing a rating system for product quality to incentivize drug manufacturers to focus on quality management for their facilities.
• Creating sustainable private-sector contracts to ensure a reliable supply of medically important drugs.

While these are all solid foundational solutions to a much larger problem, better supply-and-demand forecasting among all parties along the pharmaceutical supply chain is an important first step for easing the negative outcomes associates with drug shortages.

Here’s what I mean by that: When a shortage occurs, drug manufacturers are faced with significant challenges that can affect their bottom lines. To manage a shortage, a company must hire expensive temporary workers, halt previously scheduled production orders, rush to produce more of the drug that’s in short supply, and make urgent and expensive shipments to get the products to patients. Moving drugs made in one part of the world, like India, to another part of the world, like the U.S., can be incredibly costly and often difficult to coordinate on short notice.

Pharmaceutical companies have traditionally predicted the demand for drugs based on multiple sources of data, including previous information related to sales data, supplier input, and historic transaction volumes. There is often a lag time for collecting this information, leading to outdated and inaccurate forecasts into medicine availability and whereabouts in the supply chain.

To more accurately forecast demand, companies must gain greater visibility into where their drugs are in the supply chain — all the way down to the patient. Instead of predicting units of medication sold during a quarter and comparing that forecast against actual sales during the period, what if pharmaceutical companies could gain real-time knowledge of drug consumption at hospitals, pharmacies, and clinics?

That type of end-to-end visibility would be a boon for companies and patients, but it would require more collaboration throughout the entire supply chain and a means of sharing information without compromising privacy or confidentiality.

More precise supply-and-demand forecasts could save pharmaceutical companies hundreds of millions of dollars a year by not having excess drugs on hand and avoiding costs related to expedited shipments.

Due in part to track-and-trace requirements resulting from the Drug Supply Chain Security Act (DSCSA), more data about drugs in the pharmaceutical supply chain now exists than ever before. This act, which is aimed at keeping the drug supply chain safe, requires that each salable unit of a drug include a serial number or unique identifier so it can be traced through the supply chain.

But even with the data generated from DSCSA’s serialization requirements, the life-science supply chain is still several steps away from gaining true end-to-end visibility into product movement — and fighting drug shortages.

To accomplish this, drug manufacturers need to leverage advanced technologies, like artificial intelligence, to share data signals with upstream suppliers of raw pharmaceutical materials and downstream partners like distributors and health care systems. That would allow supply chain leaders to proactively make fast, real-time decisions on inventory and medicine availability.

Say, for example, that we could monitor spikes in flu activity during flu season. If supply chain stakeholders could more easily share information about supply and demand, real-time signals could be shared to indicate regional upticks in demand for flu medicines. They would then be able to quickly pivot and rapidly increase the shipment of flu medicines to that region, allowing them to adequately meet patient health demands before the flu spreads even further. Today, it takes weeks or months for this kind of information to reach drug manufacturers, leading to shortages.

By leveraging the foundation and technologies already put into place through serialization and track-and-trace requirements, the pharmaceutical supply chain is on the path to better visibility and data insights that will help combat the current drug shortage crisis that the nation is facing.

Identifying the root causes of drug shortages and devising workable solutions for them will require a multi-stakeholder effort with more accountability and greater agility than we’ve seen in the past. To improve patients’ access to essential drugs, all entities in the pharmaceutical supply chain must work toward increased collaboration, data sharing, and transparency.

Shabbir Dahod is the CEO of TraceLink.