OM in the News: Scramble to Produce Covid Vaccine Derails Supply of other Drugs

The unprecedented effort to manufacture Covid-19 vaccines is disrupting supplies of other critical medicines in the U.S., including treatments for infectious diseases and injectable drugs that prevent blindness. Pfizer has told U.S. hospitals to expect interruptions to supplies of four of its products — an antibiotic, a steroid and two types of testosterone — according to The Financial Times (March 19, 2021). The drugs require some of the same ingredients and manufacturing capacity as the Covid-19 vaccine that Pfizer has co-developed.

covid

Pfizer warned of “short-term supply interruptions to medicines due to increased vaccine production” and stated that hospitals should “anticipate some disruptions” in the second half of the year. The company said that it aimed to deliver approximately 2 billion doses of its Covid vaccine globally by the end of 2021.

This comes as the U.S. tries to boost vaccine supplies in order to fully reopen its economy. The government has invoked the Defense Production Act to ensure that vaccine makers get the drugs and production capacity they need. But the use of that Korean war-era powers has left a third of pharmaceutical firms scrambling for ingredients, equipment or space on production lines.

Other groups involved in medicine production and distribution are also struggling. Schott, one of the world’s largest glassmakers, warned that there was a wait of 12- 18 months for new orders of glass vials. That shortage is affecting almost every type of injectable drug in the U.S., including chemotherapy, insulin and other medicines that are found in crash carts in ERs, ICUs, and surgical suites in hospitals.

Catalent, a contract manufacturer working for the vaccine makers Moderna and Johnson & Johnson, is also prioritizing large orders of injections over other treatments, meaning thousands of patients have had to do without Tepezza, a treatment for thyroid eye disease.

Classroom discussion questions:

  1. Chapter 13 of your Heizer/Render/Munson text lists 5 capacity options used as aggregate planning strategies. Which could Pfizer and others employ today?
  2. What are the advantages and disadvantages of each option you named?

OM in the News: SAP, Blockchain and Drugs

SAP is working with 65 produce, pharmaceutical, tech and shipping companies on an automated blockchain-based supply chain tracking system that it believes will bolster visibility and ensure the authenticity of goods such as food and drugs, reports Computerworld (Aug. 24, 2018). The software giant is piloting its SAP Cloud Platform Blockchain with the goal of helping customers use manufacturing and supply-chain products – augmented by blockchain – to enhance transparency, safety and collaboration.

SAP is not alone in developing such a supply chain tracking system. In January, Maersk and IBM announced a joint venture to deploy a blockchain-based electronic shipping system that will digitize supply chains and track international cargo in real time.

But the pharma industry, in particular, has been under scrutiny to ensure it can trace from origin to consumer the drugs it makes and sells. Last month, the Chinese pharmaceutical firm Changchun Changsheng Life Sciences came under investigation for falsifying records related to the production and shipment of a rabies vaccine. This has led to calls for the entire pharmaceutical industry to adopt blockchain tamper-proof ledgers to track the manufacture and shipment of drugs.  There’s also the problem of drug knock-off companies, which mass produce generic drugs and flood the market with products that may not yet be approved by regulators. Having a product certified as having been tracked from manufacturing to store shelf would ensure authenticity.

Additionally, certain drugs must be transported and warehoused at specific temperatures. IoT sensors would enable that to be tracked, as well as checking the amount of vibration incurred during the shipping process, which could alert managers as to whether damage may have occurred. SAP’s “Advance Track and Trace” application is piloting the blockchain technology with pharma companies such as Merck., Amgen Merck, Glaxo Smith Klein, McKesson, AmerisourceBergen, and Boehringer Ingelheim.

Classroom discussion questions:

  1. What are the similarities between the drug and food supply chains?
  2. Describe how blockchain works.

OM in the News: UPS and its Team of Pharmacists

UPS is well-known for its army of brown-uniformed delivery drivers. Less known is that the package-delivery giant has its own team of pharmacists. At UPS’s Louisville headquarters, company pharmacists fill 4,000 orders a day for insulin pumps and other supplies from customers of medical-device company Medtronics. UPS pharmacists  log into Medtronic’s system, fill the orders with devices stocked on site, and ship them to patients, via UPS.

It is one part of the growing reach, writes The Wall Street Journal (June 28, 2012) by UPS—along with rivals FedEx and DHL—into the business of running supply chains for pharmaceutical and medical-device companies. Medtronic and other health-care companies are increasingly outsourcing logistics as they look for ways to cut costs from backroom operations and focus on product development instead (see Chapter 11). UPS’s service has allowed Medtronic to close its own distribution warehouse and see a significant reduction in the costs of processing each order. “If you’re a medical company, logistics isn’t your core expertise,” says an industry analyst.

The parcel-delivery companies are investing in megawarehouses that service multiple pharmaceutical companies at once, with freezers for medicines and high-security vaults for controlled substances. UPS got into health-care logistics in 2006 and the business has grown rapidly, with 33 health-care logistics facilities around the world, including a plant in Brazil opened last year specifically to handle the supply chain in that country for Merck.

Walgreen chose UPS to transport $9 million of donated flu vaccine—375,000 doses, to Laos in March. Fifty UPS “health care logisticians” coordinated the complicated journey. The 8,500-mile flight took five days and included four stops, ending in Bangkok, where the containers were loaded onto a truck for Vientiane, Laos.

Discussion questions:

1. What are the risks to UPS in entering the medical supply chain business?

2. Why would medical companies outsource their order systems to  parcel companies?