clinical trials through customer delivery and returns, it has
become imperative to validate that logistics providers have
comprehensive quality and risk management programs in
place. Pharmaceutical companies must consider all logistics
capabilities and permitting required to preserve product
integrity, including management of import and export, strategic routes, compliant packaging and storage conditions,
and adherence to standard operating procedures and good
Product safety and supply chain security continues to be
one of the most significant industry risks. Despite efforts
from watchdog agencies, diversion and drug counterfeiting
have continued to plague the supply chain, putting patients’
lives at risk. The World Health Organization estimates that
the global market for falsified medicines is $77 billion dollars, having doubled between 2005 and 2010. Parallel trade
can also be problematic as the practice involves product
transport and repackaging in the language of the importing
country, potentially opening the door for the inadvertent
entry of dangerous adulterated and counterfeit drugs into
legitimate distribution chains and markets.
NEW LEGISLATION IN THE US:
RAISING THE BAR ON COMPLIANCE
The Drug Quality and Security Act (DQSA) and the related
Title II of the DQSA, the Drug Supply Chain Security Act
(DSCSA), signed into US law in November 2013, is one of a
number of policies designed to protect consumers by raising
the bar even further on compliance vigilance. To prevent
falsified product, the DSCSA gives the FDA new regulatory
authority in supply chain security and operational activities.
As a result of these laws, manufacturers will need to focus
on authenticating their products, integrating disparate systems across supply chain partners and updating storage,
facility equipment and information technology.
By requiring product authentication, these laws are a major
step forward in preventing dangerous substandard and counterfeit medicines from being introduced and sold. All supply
chain partners will need to be hyper-diligent in all steps of
the distribution process, from coordinating and standardizing
data transmission to moving product securely and continually
authenticating at each level of the supply chain.
ASSESSING RISKS & OPPORTUNITIES
Here are 10 steps your organization can take to mitigate
supply chain risk and manage business continuity:
1. Qualify. Develop clear processes and governance for qualifying and managing your portfolio of suppliers, establishing clear standards, and collecting and evaluating in-depth
background information on their financial stability, compliance standards and business ethics.
2. Review sourcing risks. Identify all ingredients, compo-
nents, and equipment required in production. Identify
any sourcing risks and implement controls, policies and
processes to eliminate avoidable risks and
mitigate unavoidable risks.
3. Understand your suppliers’ networks. Confirm your primary suppliers have solid business continuity programs,
including redundant supply, transportation, equipment and
4. Maintain service-level agreements (SLAs). Establish financial incentives with material and equipment suppliers and
appropriate penalties for sub-performance.
5. Collaborate. Leverage network collaboration across sites
to optimize supplier relationship management, network
assets and spend, reduce costs, negotiate improved service levels, and achieve operational efficiencies.
6. Review equipment and packaging processes. Identify key
production equipment, laboratory needs, building and environmental infrastructure, utilities and systems with critical
dependencies that have a high impact or potential for failure. Develop a network wide plan to manage equipment and
systems, suppliers, spare parts, and equipment maintenance
and repair capabilities. Establish SLAs to confirm adequate
response times for mitigating potential disruptions.
7. Create redundancy plans. Develop on-site and in-network
equipment redundancy for critical production equipment
that may not have back-ups. Identify alternative equip-
ment to be validated for production to provide back-up
and reduce recovery time should equipment malfunction.
8. Confirm adequate stock. For key products and supplies,
make sure stock and safety stock levels are sufficient to
maintain supply continuity in a disruption.
9. Guard against counterfeiting and diversion. Put in place pol-
icies, procedures and security safeguards to prevent your
company’s products from being counterfeited or diverted
from the regulated supply chain. Identify and invest in au-
thentication technologies and packaging technology like
holograms and security codes, to minimize the impact of