Managing Drugs Shortage – Asrar Qureshi’s Blog Post #1028

Managing Drugs Shortage – Asrar Qureshi’s Blog Post #1028

Dear Colleagues! This is Asrar Qureshi’s Blog Post #1028 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to aq.pharmaveterans@gmail.com for publishing our contributions here.

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Preamble

Drugs shortages occur due to multiple reasons, some of which we shall see in some detail. And these are not always due to disruptions in supply chain. It is also a worldwide phenomenon. 

I was reading an article in INSEAD Knowledge and quote a short excerpt here. [quote] An increasing problem in Europe and other parts of the world, drug shortages not only pose significant challenges for healthcare professionals, but they also put public health at risk by making timely, optimal treatment impossible. In worst-case scenarios, patient care is disrupted. In England, pharmacists have warned that drug shortages are at such critical levels that patients are at risk of immediate harm and even death. Key medicines for the treatment of type 2 diabetes, ADHD (attention-deficit/hyperactivity disorder) and epilepsy became unavailable in the UK in recent months. Outside of Europe, amoxicillin has been on the US Food and Drug Administration drug shortage database since October 2022. [unquote]

In Pakistan, the difference is that the concerned policy makers and regulators are least bothered with the drugs shortage. They believe it is not their job to ensure that drugs are adequately available in the healthcare system. We are unable to find out who is ultimately responsible for holistic management of healthcare. 

We shall look at drugs shortage as a problem alone and in relation to healthcare system.

Reasons for Drugs Shortage

Regulations and Policies

DRAP, FBR, and Customs are directly involved departments.

DRAP, besides registration, regulates pricing, and import of raw materials. Pakistan produces only few active ingredients and not in sufficient quantities, therefore, virtually all materials are imported, including active, excipients, and packaging. The import documents of all pharma related materials are first approved by DRAP officer and then Customs initiates clearing process. Many a times, trivial, if not silly, objections are raised, and a normal process is delayed unnecessarily. 

DRAP policy making is slow and fractured. Pricing policies are partly designed by DRAP and approved by policy boards. Major decision of price increase is done by the prime minister, God knows why. What value does the prime minister add except looking at the political side? Well, drugs availability is an effective political tool which may be used but not at the cost of patients’ health.

FBR is very fond of issuing SROs any time. They would change the procedure, revise duties, and any other thing. FBR neither consults nor considers the problems/ requirements of stakeholders because their mandate is to increase collection of revenue. Truth is that FBR staff is drowned in corruption to their necks, and the reason for less collection is that a large part of money that should go to the government is diverted to personal accounts.

Customs is also up to its teeth in corrupt practices. Charging extra money as a routine is considered a norm besides several kinds of charges which makes no logic. The government looks the other way because it is complicit.

The regulatory structure together contributes to drugs shortage.

Pharmaceutical Companies

Pharma companies are directly implicated in drugs shortage and get the flak for that as well. It would be instructive to look at Pharma supply chain to understand, however, it is a larger topic and shall be taken up in another post. 

On an overall basis, it should be understood that pharma business is like any other business. No business would like to lose revenue which it can earn easily because the demand is already there. Other than supply chain, finances and marketing are major reasons.

In today’s world, no business is cash rich, except may be Apple Corporation. Pharmaceutical companies in Pakistan are very focused on rapid growth and usually overcommit their finances. Supply chain/ procurement/ inventory takes up a lot of money and needs careful management. It so happens that procurement in most companies is controlled directly by the owners, whose focus is juggling money or saving money, and they do it at the cost of material availability. For example, they may buy less than required quantities or they buy materials only for fast selling items to keep their cash flow intact, or they may be looking for longer credit terms and take time in negotiating the terms of procurement. In this process, the procurement of materials gets delayed. 

There is severe competition for money between marketing and supply chain, with marketing winning mostly on the argument that if they are not given money, the business will stop.

All companies, barring a handful, get credit from suppliers and vendors, and most companies do not pay on time. 30-days credit goes to 60 or more days and 60 days credit goes beyond 90 days. Next orders are placed, and partial payment is released. In this way, the company keeps using millions of vendors money. They know it but cannot do anything because they need business, and they know this will be the same everywhere. Despite this addition to working capital, the situation may remain the same.

Marketing has very important role to play in Supply Chain. 

Marketing provides forecast on which material planning is done for procurement. It is common observation that the forecasts are usually higher due to which larger purchases are done, and extra money gets tied up. Particularly, the forecast for new products is usually quite aggressive and builds stock pile up, tying more money. 

Sum Up

Drugs shortage is a tangible issue. It can only be solved with a holistic approach including all stakeholders. It also needs strategic planning and meticulous execution, both of which are missing at the moment. Marketing, finance and supply chain must coordinate closely to make availability of drugs certain.

Concluded.

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For most blogs, I research from several sources which are open to public. Their links are mentioned under references. There is no intent to infringe upon anyone’s copyrights. If, however, it happens unintentionally, I offer my sincere regrets.