Supply-Chain Systems' Role In Battling BioterrorismSupply-Chain Systems' Role In Battling Bioterrorism

As the nation comes to grips with the reality of bioterrorism, questions arise about the preparedness of the pharmaceuticals industry, the government, and hospitals. Supply-chain systems will be key threads in tying together efforts to support the quick delivery of vaccines and antibiotics for anthrax, smallpox, and other diseases to affected populations.

Tommy Thompson, secretary of health and human services, has called for enough antibiotics to quickly treat up to 12 million infected people over a span of 60 days. Bayer Corp. revealed Thursday it would consider seeking help from competing drug companies in its efforts to manufacture 200 million tablets of the anthrax-fighting antibiotic Ciprofloxacin. In the past month, Bayer has shipped 50 million Cipro tablets, more than twice its monthly average of 20 million tablets. Bayer, which plans to triple production, says it will keep pricing stable during this time of heightened demand. The cost to the government is $1.89 per tablet for a 500-milligram pill and $4.67 per tablet to wholesalers. Sales of Cipro reached $1.45 billion in 2000.

Health-care facilities are wasting no time ensuring they have the resources to combat bioterrorist attacks. Detroit Medical Center's IT system is helping the chain's 10 hospitals prepare for a possible biological attack, says Mike Gruich, supply-chain project manager. On one side of the supply chain, hospital personnel make rounds to every floor of each hospital about every four hours to count supplies.

This data is recorded by a handheld computer connected to a dedicated PC in each hospital and sent via electronic data interchange to Chicago medical supply vendor Allegiance Corp., which books the order and routes it in real time to a Romulus, Mich., warehouse that handles fulfillment. Allegiance maintains a large stock of every item the hospital orders at that warehouse and can quickly replenish its own stock from other warehouses around the country, Gruich says. That lets the hospital maintain a small inventory of supplies while remaining confident it can get what it needs in an emergency.

One of the greatest challenges to the supply chain is adjusting to the spikes in demand that have already been created by anthrax-contaminated mail, Gartner analyst Karen Peterson says. Hospitals, drugmakers, and medical-supply vendors have been moving toward vendor-managed inventory models for the past couple of years and have been deploying warehouse-management, supply-chain, and logistics systems that are "an absolute requirement" for vendor-managed inventory, she says.

Thompson says the government has vendor-managed inventory contracts with drugmakers and medical-supply manufacturers to manage 400 tons of medical supplies in eight warehouses around the country.

On the supply side, several companies in the Pharmaceutical Research and Manufacturers of America industry consortium have created a task force to address emergency preparedness in their industry. The task force, which includes execs from Aventis, GlaxoSmithKline, and Pfizer, will work closely with federal agencies such as Health and Human Services and the Centers for Disease Control and Prevention to address public health concerns created by bioterrorist threats.

Pharmaceuticals companies in general have begun to pay more attention to supply-chain issues during the past year because of harsh economic conditions, says Roddy Martin, an AMR Research service director. Pharmaceuticals companies are grappling with where to find the money to launch and market multiple products. One way to fund the next miracle drug is to eliminate waste from the supply chain, Martin says. But this may change if excess inventory is needed. "In a situation where we have the potential for an outbreak, the most critical thing is for these companies to have the right amount of the right product at the right place at the right time," he says. "The cases of anthrax provide the pharmaceuticals and health-care industries with a burning platform to make changes and galvanize a sense of urgency."

PeopleSoft Inc. supply-chain evangelist Bob Reary, who worked for pharmaceutical companies for more than nine years before joining the software vendor, says the industry is facing an unprecedented challenge. Today, a drugmaker must test and certify the quality of each batch of a drug before it's shipped, which can mean an eight- to 12-week delay between production and delivery to a physician.

Drugmakers will likely have to pump up their inventory-management systems so they can ship medications as soon as they're manufactured, mark them as quarantined at the warehouse, then notify the government when the testing is complete and the quarantine can be lifted. "That can cut time between production and release of the drug for use from 12 weeks to four or five weeks, and it looks like that will be required in these times," Reary says.

"The health-care system has responded well" to the outbreaks, says Arthur Reingold, a professor of public health at the University of California, Berkeley, and head of the California Emerging Infections Program, a joint program with state and local health departments. "The public agencies have generally done a good job. But the outbreak has been small. Nobody would be able to do a good job if Los Angeles or New York were blanketed in anthrax. That would be an unmitigated disaster. We can be much better prepared than we are now."