When your patients need acute care, they can’t wait. Drug availability and shortage issues can make it difficult for your hospital pharmacy to supply the drugs needed for that care.
In this edition of Ask a Supply Chain Expert, we asked Christopher Van Norman, director of operations for McKesson, how your hospital pharmacy can use its supply chain to minimize the risk to patients.
What are you responsible for in your role at McKesson?
Van Norman: I lead our distribution center in Clear Lake, Iowa. It’s our largest distribution center in the country. We distribute drugs and supplies to about 2,500 sites daily in our market. A large portion of our customers are hospital pharmacies. I’m responsible for anything related to the entire operation as well as inventory, transportation, maintenance, compliance, security, safety and customer service.
What are some of the common supply chain challenges that you’re hearing from hospital pharmacies?
Van Norman: Drug shortages are without a doubt their number one supply chain challenge. Then I’d say drug availability. After that it would be the day-to-day challenges of managing inventory. All three have become more challenging due to hospital and health system mergers. That’s because each decision doesn’t affect just one hospital pharmacy. Each decision affects pharmacies across an entire system. There’s more at stake with each decision, so each decision must be more strategic.
Is there a difference between drug availability and drug shortages?
Van Norman: Yes, they’re really two different things. Drug availability is having the right drug in the right place at the right time in your supply chain for your hospital pharmacy to buy and use. Different things can affect drug availability at particular locations and times around the country. Things like the weather, shipping errors or other unique events can impact if a drug is accessible to your pharmacy. The drugs are available in the market, but they’re not accessible when you need them. It’s temporary, and there’s usually a way for you to work around it. A drug shortage means a drug doesn’t exist or doesn’t exist in the amount you need to meet demand. That can happen for various reasons. A shortage of raw materials. A recall. A delay in manufacturing. A discontinued product. Or an unexpected spike in demand.
How do drug availability and drug shortages affect hospital pharmacies from a clinical standpoint?
Van Norman: When a drug isn’t available through your supply chain when you need it, your pharmacy can usually find a workaround that doesn’t delay treatment to your patient. You can get the same drug from another pharmacy in your system. Or you can choose another drug that has the same therapeutic effect. A drug shortage is more serious. You don’t have the drug you need, and you may not be able to get it anytime soon—if at all. That means either delaying treatment, using another drug that may be less effective or coming up with a new treatment plan. You want everything at your disposal to get the best possible outcome for your patient. When you don’t have the drugs you need when you need them, that may not be possible.
How do drug availability and drug shortages affect hospital pharmacies from a business standpoint?
Van Norman: There’s some impact on the revenue side. If you’re not using a drug or not using it right away, you’re not getting reimbursed for it. The larger impact is on the expense side. Any time a drug is not available to you through your supply chain, you may pay more to get it through alternate channels. You’re buying it directly from the manufacturer for a higher price. You’re buying it from another distributor for a higher price. You may be stockpiling a drug that will be in short supply, and you’re tying up more of your money on inventory. Any time you buy outside of your normal channels, your costs are going to go up.
How can hospital pharmacies use their supply chain to manage drug availability and drug shortages?
Van Norman: You have little control over drug availability and have no control over shortages. But you can use your supply chain to help you with both. You need to build a proactive communication strategy with your distributors and your manufacturers. You need to tell them about your drug needs, changes in your buying patterns and anything else that will affect demand for a drug. They need to tell you when a drug that you need becomes unavailable and if it is it a short term or long-term issue. Then you can work together to reduce the clinical and financial disruption. Your pharmacy also needs to build a proactive communication strategy with other hospitals in your system. You need to know which hospital has which drugs and how much of each drug they have. Then, when there’s a problem, you can move inventory around and share drugs with other hospitals in your system to make sure patients are getting the right drugs at the right time.
What other things can hospital pharmacies do to improve the performance of their supply chain?
Van Norman: As I mentioned earlier, hospitals and health systems are becoming much larger. Most of them now have dozens of inpatient pharmacies, outpatient pharmacies and retail pharmacies all within one system. The ones that I’ve seen that have the most effective drug supply chains have found new and better ways to communicate. You’re not just talking about drug availability or drug shortages. You’re not just sharing inventory. What you’re sharing are the best practices in drug inventory, in drug management and in drug administration. What drugs are you stocking and how much of each? Are you standardizing your drug formulary? Are all your sites buying drugs from the same ordering system? Are you giving the same drugs to patients the same way?
How can hospitals and health systems facilitate the communications that you’ve just described?
Van Norman: It takes structure, diligence and planning. If you’re one hospital pharmacy or a pharmacy in a small system, you don’t really need those three things to make sure that you’re communicating the right things. But as you grow, then structure, diligence and planning become more critical to share your best drug supply chain practices. The systems I’ve seen that are effective at doing this are the ones that create a board or committee that’s above the individual pharmacies in a large system. That board or committee makes sure that those communications are happening.
What other supply chain trends should hospital pharmacies stay on top of?
Van Norman: Two should be on your radar. The first is analytics. Everything I’ve talked about needs data to make it work. You need data to tell you how to deal with drug availability and shortage problems. You need data to tell you how those two things are affecting you. You need data to track your inventory and your drug spend at your pharmacy and at all the pharmacies in your system. The second trend to watch is the growth in the number of specialty drugs on the market. Your supply chain will need to handle each drug’s unique packaging, storage, shipping and delivery needs.
How will the lives of hospital pharmacy supply chain leaders be different five years from now?
Van Norman: The entire supply chain industry is going through a data revolution right now, and the drug supply chain is no different. Technology, data and analytics will be central to everything that you do. But technology, data and analytics won’t mean much if you don’t know what to do with them. You still need to collaborate and communicate. If you do that, you’ll produce better outcomes for your patients.
What do you enjoy most about working with hospital pharmacies?
Van Norman: I speak for everyone at our distribution center when I say we feel a direct connection to patients. We know we are delivering a potentially life-saving drug to each patient at a hospital. There are times when we have an emergency order, when we have a situation in which a patient, often a child, needs a drug as soon as possible, and the hospital is five or six states away. We will do whatever it takes—drive to an airport, get the product on a plane, hand it off to a courier, whatever—to get that drug to the patient who needs it. That’s the most rewarding part of the job.
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Related: Learn more about McKesson’s pharmaceutical distribution services for hospital pharmacies