Imagine being in a terrible car accident with injuries that have led to organ failure. You’re in the hospital and in the capable hands of a medical team who will do everything in their power to save you. Now imagine that team needing to decide whether or not you should get a dose of sodium bicarbonate, the lifesaving drug needed to prevent acid buildup in your blood, because they’re currently rationing their very limited supply.
It sounds like a nightmare scenario, but that shortage actually happened in the recent past thanks to a product recall of vials that had a possible microbial contamination. And it’s far from the only example.
This type of drug shortage—of which most Canadians are unaware—is an ongoing issue with a wide range of causes and an even wider range of repercussions. It’s a big enough problem that in 2012 the federal government created a Multi-Stakeholder Steering Committee on Drug Shortages (MSSC) to bring together all participants in the supply chain so they could work on solutions. And while a lot of progress has been made to manage drug shortages over the past decade, everyone involved agrees that collaboration will be the key to taking the next step and actually mitigating these shortages beyond the pandemic.
“Drug shortages are a serious problem in Canada that no one single stakeholder can solve on its own,” says Kevin Mohamed, Hospital Business Unit Lead at Pfizer Canada. “And pharmaceutical manufacturers play an important role in building resiliency in the drug supply chain. We want to partner with stakeholders to tackle some of the challenges to create a more predictable market for both suppliers and purchasers. Both sides recognize that we need to fix this and there is a willingness to co-create solutions.”
Drug supply chain basics
While we’ve all had a crash course in supply chain logistics over the past few years, the majority of Canadians are likely unaware of how critical drugs end up in hospitals ready to be administered to patients. The drug supply chain in Canada can be divided into four stages: approvals, manufacturing, procurement and distribution, and frontline delivery to patients.
At the approval stage, the main stakeholders are our federal regulatory body (Health Canada), pharmaceutical companies, and manufacturers that produce drugs and run clinical trials as they develop new ones. The manufacturing stage involves the same stakeholders looking at the quality of ingredients and manufacturing practices and ensuring the final products meet Canadian regulatory standards. Drug procurement and distribution can happen through wholesalers and distributors that sell directly to pharmacies, but a large proportion of the drugs used in hospitals is handled by group purchasing organizations (GPOs), which negotiate bulk buying contracts for regional health authorities and hospitals in order to get the best prices.
In the past, getting the best price for a drug was of the utmost priority since the federal and provincial governments (and therefore taxpayers) were paying. The resulting contracts were often with only a single drug company for a given drug, which meant if there was any kind of supply problem, everyone was left scrambling. Fortunately, much has improved since the MSSC convened ten years ago to solve this problem.
Christine Donaldson, Vice President of Pharmacy at HealthPRO, Canada’s largest GPO, acknowledges that progress. “We’ve really come a long way since we had a major crisis in 2012 with a large injectable supplier in Canada that had some quality issues,” she explains. “When, for the first time, we really had to work in a different way to solve our issues with drug shortages.”
Balancing drug supply and demand in Canada—particularly injectable drugs like sedatives, chemotherapeutic agents to treat cancer, and various other treatments given intravenously—is a constant tightrope walk. Acquire enough of Canada’s most essential drugs, or rely on a single source for them, and an unforeseen surge in demand or drop in supply (due to manufacturing or ingredient issues) will result in shortages. Overstock that same inventory and a huge amount of waste can occur if those drugs expire before they can be used.
Of course, the impact is felt most acutely by those in that final stage of the supply chain, frontline delivery. The cost isn’t just the difference in drug prices when a shortage hits; it’s employee hours spent looking for alternatives from different suppliers, as well as the stress it places on the country’s already overwhelmed healthcare workers.
“There’s a lot of human resources involved when you’re looking at managing a drug shortage at the hospital level,” notes Christina Adams, Chief Pharmacy Officer of the Canadian Society for Hospital Pharmacists. “When I was a manager at a hospital pharmacy in Ontario, I could spend two or three hours of my day dealing with a drug shortage at times.”
That’s why there’s a growing conversation around value-based drug procurement. Securing the lowest cost for a critical medicine doesn’t mean much when the indirect costs—whether that’s time spent searching for alternatives or purchasing replacement drugs—for managing a single-supplier shortage can alter the price significantly.
Drug Supply Chain
Drug companies/manufacturers conduct research and clinical trials, then submit new drugs to the federal regulator (Health Canada) for review.
Drug companies/manufacturers source and store the active pharmaceutical ingredients (APIs) and chemical base, then batch produce the final product, which involves testing, quarantine, filing, labelling, packaging, and quality control.
Health Canada oversees the entire process and monitors for regulatory compliance.
Group purchasing organizations (GPOs) use bulk purchasing from drug companies to get the best prices on behalf of hospitals and regional health authorities.
Distributors/importers/wholesalers may sell directly to community pharmacies, as well as manage warehouse inventory and product delivery.
Hospitals/pharmacies purchase drugs and healthcare professionals deliver drugs safely to patients.
Community retail pharmacies purchase drugs and provide face-to-face patient guidance.
Patient (End User)
Added to that is the fact that Canada is competing against other countries for the same active pharmaceutical ingredients (APIs) that go into these products. Our global pharmaceutical consumption as a country is just 2 percent, compared to the United States’ 44 percent.
“Policy from the federal government or the provincial governments has to be developed to incentivize the companies,” says Adams, “to make their ROI worthwhile so that they want to invest in our country and in our population.”
One positive to come out of the pandemic is a shift in that type of policy, one that’s meant to protect Canada’s drug supply from depletion due to other nations’ drug policies. What started as a stopgap measure specifically tied to potential COVID-19 drug shortages has since been recognized as a valuable step toward mitigating shortages long after the pandemic has waned.
“I really want to give a shout-out to Health Canada, and how they used some of the lessons learned from the pandemic,” notes Donaldson. “They put forward interim orders in 2020, and just this past November , they expanded those orders to make them amendments to the Food and Drug Regulations.”
GPOs like HealthPRO, for their part, are diversifying the drug supply by awarding split contracts so that they have options if one company experiences manufacturing problems and can’t fulfill orders. They’ve also introduced a scorecard system that allows them to screen suppliers for both product and service quality.
There is more to be done, however, to create a robust, resilient drug supply chain. And it will require ongoing conversation and collaboration between everyone involved.
“Fixing this problem will take a willingness to change from both public and private sector partners,” notes Mohamed. “It will also take the motivation to share risks and the acknowledgement that some investment will be required by all sides to create a more stable and resilient health system for patients.”
This supplement was made possible by Pfizer