Strategies have built greater resiliency and saved Premier members nine percent on average
While the pandemic emphasized pharmacy’s vital role in frontline patient care, it also demonstrated the urgent need for industry-wide transformation.
In a world of still-rising COVID-19 cases, increasing margin pressures and greater value-based incentives, many pharmacy leaders continue to grapple with pervasive drug shortages as well as a lack of access to meaningful data and intelligence on medication supply, usage and outcomes.
Today’s – and tomorrow’s – world demands new, innovative operating models and greater resiliency to deliver better, safer care at an affordable price.
Here we highlight three key ways Premier members are charting the course and driving pharmacy innovation for the future.
1. Managing Risk and Preventing Shortages
COVID-19 exposed U.S. overreliance on foreign nations for drug manufacturing. A recent report found that less than 5 percent of large-scale manufacturing sites for generics raw materials are located in the U.S. – the majority are in India and China.
Unfortunately, neither this overreliance nor drug shortages are new phenomena. But over the years, Premier and our members have developed progressive, forward-thinking capabilities to mitigate risk and help eliminate shortages once and for all.
An increasing number of U.S. providers are now leveraging aggregated demand via a “buyers’ club” strategy – giving drug manufacturers proper demand signaling, predictable revenue and the surety needed to ramp up production or enter new markets. Through the ProvideGx (PGx) program, Premier members:
- Identify high-priority shortage medications;
- Enter into long-term contracts with licensed, vetted and geographically diverse manufacturers to produce them;
- Engage with manufacturers who provide transparency on product and raw materials sourcing locations, safety stock, safety records data and rapid replenishment capabilities; and
- Serve at the center of program decision-making, allowing pharmacy leaders to prioritize need and quality – and to leverage a portfolio that saves them more than nine percent annually in pharmaceutical expenses, on average.
The value of this model is on full display amid a pandemic or other crisis. Our members have weathered demand spikes of 150 percent or more since March 2020 – with limited interruptions in supply. And the program is having a long-lasting impact on the industry overall, as 15 products added to the ProvideGx program have subsequently been delisted from the U.S. Food and Drug Administration (FDA) drug shortage list.
2. Supporting Sustainable Domestic Markets
The pandemic also underscored the need for more homegrown access to healthcare supplies and drugs. And over the past 18+ months, Premier members have leveled up when it comes to incenting greater domestic production. First we tackled masks, then isolation gowns, then nitrile exam gloves. Now most recently, Premier and 11 of our members invested in Exela Pharma Sciences to expand pharmaceutical manufacturing here in the U.S.
This collaboration with Exela is intended to support a realistic, efficient and sustainable approach to U.S.-based manufacturing ─ leveraging existing domestic production capacity to more quickly provide vital medications, including shortage drugs and 503B products.
Leveraging data to identify supplies most at-risk, Premier members are investing in categories that lack adequate competition, geographic diversity or stable sources of contingency supply. These Buy-American commitments aim to inject greater, long-term competition and offer domestic options for hospitals and health systems where they didn’t exist previously.
Alongside innovative private-sector partnerships, government-backed, zero percent interest loans and tax incentives can help close the cost gap between domestic and foreign drug manufacturing sources. These incentives can be coupled with requirements for information sharing across the supply chain, including redundancy and contingency protocols, to minimize disruptions.
Overall, both U.S.-based and geographically diverse manufacturing will help reduce overreliance on any single country or region. This balanced approach is a better contingency plan for emergencies and recognizes the need for diversified sourcing to help keep costs in check and help alleviate U.S. dependence on foreign nations.
3. Leveraging the Power of Data
COVID-19 provided yet another wake-up call: real change is necessary across the supply chain information technology (IT) ecosystem, beginning with access to robust and timely data.
To start, the FDA collects information on the number of registered drug manufacturers in each country, but a blind spot is the actual volume of product that is produced by each facility. For greater visibility, the FDA should require manufacturers to disclose active pharmaceutical ingredient (API) sources and finished-product manufacturing locations to better evaluate potential risks.
Advanced technology also can enable greater transparency, collecting data from across the supply chain to assess availability and product location, as well as major gaps.
Early in the pandemic, Premier created a near real-time technology system to gain visibility into hospital inventory down to the SKU level, including stockpiles. Overlaying clinical and supply chain data has enabled both our members and the public sector to see where supplies are stocked as well as gaps in resources.
Beyond supply chain management, PINC AI technology is giving pharmacy leaders a leg up to thrive in today’s healthcare environment – with tools for utilization support, clinical decision making, budgeting and cost savings.
As one example, and with data on COVID-19 treatments still emerging, Premier members are leveraging clinical decision intelligence to help determine drugs’ appropriate use and make evidence-based care decisions that best serve patients. These tools are particularly useful in a pandemic, where clinical management of a disease continues to evolve and can outpace the initiation of new clinical trials. Influencing clinical practice change with data, Premier members are generating savings by service line while maintaining or improving quality.
The pandemic demonstrated in no uncertain terms that building healthier communities and achieving meaningful, sustainable change in pharmacy (and across healthcare) requires:
- A focus on long-term resilience
- Unique and unlikely partnerships
- Strategies to scale quickly and efficiently
- Data and evidence
I’m proud to say that Premier and our members are leading the way. Together, we’ll continue to co-develop solutions that enable pharmacy leaders – and healthcare providers – to deliver on their mission of providing the highest-quality care at a better cost.