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Hope Is Not A Disaster Plan: Risk Management Within The Pharmaceutical Supply Chain – Insights Of A Third Party Logistics Provider

business man with his head buried in the sand

 

 

OVERVIEW

Risk management is an important component of pharmaceutical third party logistics.

Risk management is an important component of pharmaceutical third party logistics.

Third party logistics providers play an important role in assuring pharmaceutical drug products move efficiently within the supply chain from their point of manufacture to their final dispenser.

That’s a big responsibility.  According to the Healthcare Distribution Alliance (HDA), a healthcare industry trade group, 4.3 billion prescriptions were filled in the United States during 2015, the latest year figures are available.  The quantity of prescriptions filled has increased consistently over several years.

Each prescription a patient successfully receives is due to several functions preceding the final transaction including manufacturing, packaging, storage, handling, distribution and transportation.  These operations share a common component called Risk Management.

Risk Management involves the evaluation of financial risks together with the identification of procedures to avoid or minimize their impact.

WDSrx, a third party logistics provider specializing in healthcare, places a high importance on Risk Management.  There are five (5) main areas where Risk Management affects client service in third party logistics operations:  procedures, licensing and accreditation, security, insurance and culture.  According to WDSrx President Adam Runsdorf, “Risk Management is a key factor in many decisions made on a daily basis that maximize positive outcomes for clients.”

PROCEDURES

Procedures are detailed in Standard Operating Procedures (SOP) documents that are precisely executed.

Work tasks are detailed in Standard Operating Procedures (SOP) documents that are precisely executed.

Pharmaceutical drug products require specialized storage, handling and transportation to assure the right product safely reaches the correct destination at the proper time.  To minimize risk from any potential operational problem, specific procedures and processes are put in place that the WDSrx team follows with deliberate precision.  Specifications for every task involved in the receipt, storage and distribution of medications are developed into Standard Operating Procedures (SOPs) based on cGMP (current Good Manufacturing Process) guidelines enforced by the Federal Food and Drug Administration (FDA).  Accurate and complete documentation is required to comply with these regulations and to continue operations.

Erika Salamon, WDSrx Manager of Regulatory Compliance and Quality Assurance, states “Following the same rules in the same order for every task increases safety by clearly defining individual responsibilities.  For example, when one warehouse technician selects items to be included in an order, the items are always checked by a different technician for accuracy before being approved for packaging and shipping.”  Pharmaceutical warehousing procedures for cGMP change regularly and require periodic staff training sessions.  Ongoing development enables technicians to become familiar with new policies, to improve efficiency, minimize risk and increase safety.

COMPLIANCE, LICENSING AND ACCREDITATION

Licensing with governmental and regulatory authorities must be maintained to continue business operations.

The complex requirements for the receipt, storage and handling of pharmaceutical drug products must be carried out in approved facilities that possess the proper licensing and authorizations from State, Federal and other regulatory bodies.

WDSrx is authorized to conduct business in every State and U.S. territory.  The licensing process is time-consuming and capital intensive.  Manufacturers with incomplete licenses are limited to shipping products only to those states where they have current licenses.  Manufacturers rely on WDSrx to increase efficiency with their ability to transport pharmaceutical drug products anywhere within the country.

The Federal government through regulatory authorities including the U.S. Food and Drug Administration (FDA), Drug Enforcement Agency (DEA), the Environmental Protection Agency (EPA), the Department of Transportation (DOT) and most States set pharmaceutical compliance requirements for third party logistics providers that must be met and maintained to continue business operations. WDSrx maintains DEA licenses for Over-The-Counter, Prescription and Controlled Substance (CII-CV) pharmaceutical drug products. WDSrx is also licensed by the DEA as a Distributor, Reverse Distributor, Importer and Re-Packager.  “There are over 135 separate licenses held by WDSrx that enable us to legally operate throughout the country on behalf of our clients.  Each license requires regular renewals to maintain legal status,” explains Runsdorf.

Legal requirements for labeling, shipping and receiving pharmaceutical drug products are changing significantly due to the Federal Drug Supply Chain Security Act (DSCSA) which became law in 2013.  The DSCSA is designed to minimize diverted and counterfeit drugs from entering the supply chain by closer monitoring of pharmaceutical packaging.  The new system, called “serialization” calls for upgrades to equipment, procedures and technology at every stop within the pharmaceutical supply chain.  Third party logistics providers including WDSrx are affected.  WDSrx packaging and warehouse operations are expected to be serialization-ready before the November 27, 2017 deadline imposed by the FDA, which administers the DSCSA.

WDSrx maintains VAWD accreditation at facilities in Boca Raton, FL and in Sugar Land, TX. VAWD is an intense examination of warehouse facilities, operating procedures, licensure verification and screening administered by the National Association of Boards of Pharmacy.  VAWD accreditation prevents counterfeit drugs from entering the marketplace and protects the public from contaminated, diverted or counterfeit drugs.

SECURITY

Multiple layers of security protect products, personnel and property.

Multiple layers of security protect products, personnel and property.

Any discussion of Risk Management involves procedures and strategies to secure property, products and personnel both under normal operating conditions and also in the event of natural disaster.  Key factors include building construction methods and materials, fire and security systems and disaster recovery protocols.

When evaluating a third party logistics provider, make a site visit to conduct a physical inspection and to inquire about building construction methods.  Concrete and steel structures are safer than wood or other materials in case of natural disaster.

Proper fire protection helps secure people and property.  Check to confirm the facility has an active sprinkler system on the ceiling and adequate coverage for racks.  Fire protection at WDSrx facilities includes Early Detection Fast Response (ESFR) fire suppression systems that are programmed to extinguish, rather than control a fire.

Pharmaceutical drug products are valuable commodities requiring heightened security protocols to monitor and protect inventory.  Warehouse space dedicated to pharmaceutical storage often includes protected areas with vaults for Controlled Substances (Schedule CII) and cages for Controlled Substances (Schedules CIII-CV) and quarantined products.  Intrusion alarms as well as sensitive monitoring equipment measuring temperature, humidity and movement minimize risk as medications are stored and moved within the pharmaceutical supply chain.  Passive and active security systems at WDSrx facilities meet or exceed UL Listing specifications.  “A layered security approach is critical to the protection of private facilities that handle valuable products like pharmaceuticals,” said Joe Oliveri, vice president and general manager, Tyco Integrated Security. “Technologies including access control and video surveillance ensure unauthorized parties are kept out of areas where they don’t belong. TycoIS has integrated security solutions that tightly regulate access to the carefully controlled substances at WDSrx, and provides regular contact and maintenance for a smooth partnership.”  Tyco IS provides comprehensive security solutions and support services for healthcare and other industries.

When normal operating parameters are interrupted due to natural or man-made disaster, reputable third party logistics providers plan in advance to initiate disaster recovery protocols that may include back-up power generation or re-location to pre-determined alternate facilities.  Disaster preparedness plans are regularly tested and updated to maintain efficient business operations when faced with many disaster scenarios.  These plans are in addition to daily security procedures including back-up of electronic records and digital assets at a secure outside location.

INSURANCE

Comprehensive insurance coverage protects all parties and facilities quick return to normal operation.

Comprehensive insurance coverage protects all parties and facilities quick return to normal operation.

When working with or considering a third party logistics provider, manufacturers benefit from a complete understanding of insurance requirements and types of coverage in order to protect their valuable inventory.

Pharmaceutical manufacturers, freight carriers and other parties may hold their own insurance policies.  There are unique requirements and types of coverage for third party logistics providers operating within the pharmaceutical supply chain.

“Comprehensive insurance coverage is in the interest of all parties and helps third party logistics providers to service clients more effectively,” according to Thomas Vinciguerra, Jr., Senior Vice-President of USI Insurance Services, a leader in insurance brokerage and consulting for healthcare, warehousing and other industries.  “In the event of a claim, third party logistics providers can assist manufacturers to maintain efficient operations with minimal disruption.”

The distribution of a large volume of pharmaceutical drug products transported by selected carriers to multiple destinations is a core service of third party logistics providers.  Ocean and domestic cargo insurance takes effect if products are damaged in transport due to unforeseen spoilage, consequential damage or condemnation.  “Certain cargo insurance policies replace goods at the selling price of the affected products plus ten (10) percent to cover shipping and handling charges while other policies provide reimbursement at the replacement cost,” adds Vinciguerra, Jr.  This difference may account for unpleasant surprises for manufacturers if they find their transportation provider carries inadequate coverage.

Warehouse Legal Liability coverage protects manufacturers from mishandling accidents during the receipt, storage and handling of products caused by the third party logistics provider.  Strict documentation, training, procedures and security measures minimize claims of this sort.  In the unlikely event a claim is required, all parties are protected.

In the event that disaster strikes, property insurance for buildings and contents covers fire, natural disaster, vandalism, water and wind damage.  Solid building construction materials including steel and concrete limit the amount of damage that might be inflicted on physical property.

CULTURE

The team at the WDSrx facility in Boca Raton, FL achieves excellence with positive attitudes and an understanding of the importance of their work.

The team at the WDSrx facility in Boca Raton, FL achieves excellence with positive attitudes and an understanding of the importance of their work.

A strong corporate culture is often overlooked concerning the contribution it makes to effective Risk Management within an organization.

Employees who are appreciated for their individual efforts as part of a trained team take pride in their work.  When everyone strives to reach clearly defined goals, people are motivated to perform to the best of their abilities.  This is particularly true within a third party logistics firm specializing in life sciences.  At WDSrx, warehouse operations are performed according to current Good Manufacturing Procedures or cGMP.  These guidelines are set by the FDA and help assure a safe work environment for people and products.

The entire organization strives to efficiently and safely deliver pharmaceutical drug products to their final dispensers.  Risk is minimized when large jobs are broken down into separate smaller tasks performed by multiple individuals.  According to Adam Runsdorf, WDSrx President, “Every team member at WDSrx understands the serious nature of their responsibilities.”

When positively motivated, each person on the team takes responsibility for their own actions and supports other team members to fulfill project requirements.

CONCLUSION

An efficient pharmaceutical supply chain depends on many processes operating cooperatively including manufacturing, packaging, warehousing, handling and transportation.  The practice of Risk Management affects each phase of the supply chain from the point of manufacture to delivery at the final dispenser.  Effective Risk Management involves anticipating expected and unexpected developments that may disrupt operations and planning to respond to situations if and when they arise.

Third party logistics providers including WDSrx play an important role in assisting clients to minimize risk and protect their investment in valuable pharmaceutical drug products.  Risk Management is an ongoing priority involving operational procedures, licensing and accreditation, facility and product security, insurance coverage and corporate culture.

Hoping to avoid disaster is not a disaster plan.  Planning for disaster will help avoid it.  When disaster strikes, comprehensive planning helps all parties recover quickly and regain regular business operations.

For further information about WDSrx third party logistics services and value-added solutions, contact Larry Hotz at lehotz@wdsrx.com or 561-998-3885 x304.

 

About WDSrx – Woodfield Distribution, LLC

Woodfield Distribution, LLC (“WDSrx”) provides integrated pharmaceutical third party logistics services and value-added solutions empowering the Life Sciences industry.  Supply chain operations include Warehousing, Storage, Fulfillment, Transportation Management, Temperature Regulated Environments, Reverse Logistics and Regulatory Compliant Product Disposition.  Value-added solutions include on-site Packaging and Labeling, Clinical Trial Support, Customer Service, Patient Assistance Programs, E-Commerce Solutions and Financial Services Management.  State licensed nationally, WDSrx operates from secure facilities in Boca Raton, Florida and Sugar Land, Texas.  Operations are licensed to meet cGMP, FDA, DEA, EPA, DOT, VAWD and Federal, State and Regulatory Agency requirements for handling of Over-The-Counter, Prescription and Controlled Substance (CII-CV) pharmaceutical products.  WDSrx DSCSA-compliant operations utilize the international GS1 barcode standard that creates a single platform to identify, capture and share authorized information with other businesses and regulatory authorities. WDSrx is a proud member of the HDA, Specialty Pharma Association, BioFlorida, BioHouston, BioNJ and NACDS.

About USI

From many great individuals USI has become one unique industry leader. USI began in 1994 with a single office of $6.5 million of revenue and 40 associates. Today, USI has over $1 billion of revenue with more than 4,400 associates in over 140 offices across the country.  USI has served over 100,000 clients meeting their property & casualty, employee benefit, personal risk and retirement needs nationwide. USI has more than 100 years of consulting and brokerage experience through acquired agencies, with local offices dating back in their communities as far as the late 1800s. USI combines industry leading national capabilities delivered through longstanding, passionate and committed local service teams. USI stands for Understand, Service and Innovate. At USI the focus is to understand the specific needs of clients, to provide an unparalleled local Service experience, and to innovate with cutting edge solutions so clients can continue to invest and grow.

About Tyco Integrated Security

Tyco Integrated Security provides video surveillance, fire and burglar event monitoring, access control, asset and people management products and services to companies in virtually every segment of the U.S. business economy, as well as governmental agencies at the federal, state and local levels. Our security solution offerings help protect hospitals, banks, educational campuses, government buildings, manufacturing and distribution centers, food and beverage facilities, pharmaceutical companies, transportation and logistics networks, and retail stores, allowing these organizations to address their security solutions as well as regulatory and compliance requirements.

Are any Controlled Substances (CII) included in your return? If so, please press "Yes" and complete the DEA 222 Request Form. You can also contact Jason Solomon at jsolomon@wdsrx.com or (561) 998-3885 x316.