Pharmaceutical Supply Chain Needs Reform for Transparency, Access

The US pharmaceutical supply chain must be remodeled to address long-standing conflicts and achieve a delivery model marked by transparency, affordability, and access to care, according to an expert committee.

The committee, convened by Business Group on Health, includes employers, health plans, pharmacy benefit managers, pharmaceutical manufacturers, health systems, consultants, retailers, wholesalers, and other key stakeholders.

The group worked to develop consensus-driven, disruptive solutions for a more patient-centered and financially sustainable pharmaceutical ecosystem. The ecosystem is officially known as the Pharmaceutical Supply Chain Leadership Forum. 

“To a great extent, the contractual arrangements and business practices of stakeholders along the pharmaceutical supply chain have contributed to unaffordable and unsustainable drug prices, prompting calls for market- and policy-based reforms, including possible government intervention to regulate drug prices,” Ellen Kelsay, president and CEO of Business Group on Health, said in the release.

“By drawing upon their deep expertise and working in consensus, forum members identified potentially disruptive, yet necessary changes,” Kelsay continued. 

The Business Group developed the Pharmaceutical Supply Chain Leadership Forum over two years to study challenges within the supply chain and organize key stakeholders who participate in the delivery of pharmaceuticals.

The forum aims to examine the inefficiencies of the current model and develop potential solutions for a more patient-centered and financially sustainable pharmaceutical ecosystem. 

So far, the group has gathered 70 specific reform recommendations. 

Most of the proposed recommendations focused on increased transparency, including therapeutic alternatives and out-of-pocket costs. But the committee also agreed on four key points to guide the development of the specific recommendations.

First, individuals should have access to the right drug, in the right place, at the right time, and at an affordable price. Individuals should also have access to information on therapeutic alternatives, price, and out-of-pocket costs.

Second, financial incentives must be refocused across the supply chain to prioritize consideration of lowest-cost options to the system when clinical outcomes are similar which will decrease artificial price inflation and discard conflicts of interest, the group explained. 

The committee also said that benchmarks for drug prices should be published by a transparent and independent third party from a cost-effective analysis and validated by real-world data evaluations. 

And lastly, policymakers should promote policies that boost competition within the pharmaceutical drug market, allow market-driven reform, and mitigate overall cost. 

In June, the White House, the HHS Office of the Assistant Secretary for Preparedness and Response (ASPR), and FDA released policy recommendations to protect the pharmaceutical supply chain. 

The White House, ASPR, and FDA highlighted that Congress should focus on two priority objectives to address the overall reliability of the supply chain. 

The first objective is to improve supply chain transparency and incentivize resilience. Policies should seek to provide increased transparency to distributors and purchasers of the sources of drug manufacturing and the quality of the facilities that make them.

And the second objective is to increase the economic sustainability of US and allied drug manufacturing and distribution.

This includes predictability in production costs, pricing, and volume sold, and increasing government and private sector flexibility in contracting and sourcing finished drugs.