Supply Chain Resiliency and the Role of Public-Private Collaboration: Results from an FDA Panel

I recently facilitated an FDA panel that focused on creating a resilient supply chain for the medical devices industry.  The virtual panel, Building Medical Device Supply Chain Resilience: A Healthcare and Public Health Ecosystem-Wide Collaboration, featured a number of speakers from various industry groups;

Eric Gascho
Senior Vice President, Policy and Government Affairs, National Health Council

Deborah Haywood
Vice President, Government Solutions, McKesson Medical Surgical

Erin Kyle, DNP, RN, CNOR, NEA-BC
Editor in Chief, Guidelines for Perioperative Practice, Association of periOperative Registered Nurses (AORN)

Andrew Lam
Vice President, Procure to Pay, Kaiser Permanente

Linda Rouse O’Neill
Vice President of Supply Chain Policy & Exec. Branch Relations,
Health Industry Distributors Association (HIDA)

Soumi Saha, PharmD, JD
Vice President of Advocacy,
Premier Inc.

In this panel, I began by asking the question – what do we mean by resiliency?  And how can we achieve it?  The panel discussed how true resiliency involves overcoming obstacles – by having diversified points of care and being prepared, ensuring adequate stockpiles of product that is ready to use.

The issue of reserved capacity was also invoked when discussing resiliency.  The capacity of a system should be innate, and for a medical supply chain, every part of the system cannot be locked into a single source strategy for critical supplied components – and for medical devices this includes sterilization capacity, transportation capacity, and flexibility to shift around different parts of the system.  Developing this capability means having contingency plans to anticipate potential vulnerabilities.  Global sourcing from overseas is an inherent vulnerability that is engrained in our supply chains today – so we may need to shift to domestic sources, and begin development of suppliers on our continent.

Even today, the shortages we are experiencing are a matter of life and death, which was the framing for the panel’s entire conversation.  We are coming out of a time where we have been stretched further than ever before.  Not all of the medical disruptions we experienced were caused by the pandemic.  As a result of the pandemic, however, we have a lot of lessons learned about just how non-resilient our current supply chains are, and the direct impact on patients.  Examples of shortages that led to hoarding throughout the supply chain included hydroxychloroquine, albuterol inhalers, asthma products, contrast agents which led to delayed diagnoses, lack of access to PPE and testing, which led to susceptibility to COVID and endangerment of individuals with chronic conditions.  One observation was that the impact on people with disabilities was much greater than on the remainder of the population.

The panel agreed that the focus on cost reduction has reduced the led to a lot of sourcing decisions that have created barriers in the supply chain.  Today, hospital systems are looking at a list of 9000 different items that are on backorder.  This has been exacerbated by the resin and plastic shortages which hits multiple categories of items, such as the severe shortage of tourniquets and suction canisters.  Any small supply chain issue leads to backorders, and this can include natural disasters, recalls, and nutritional product shortages, which in turn leads to downstream effects such as lack of communication, lack of trust, and increased hoarding, which becomes a self-fulfilling prophecy.

An important component to address these issues is the public-private partnership.  The FDA can play a critical role in this regard.  The panel envisions the creation of a holistic supply chain control tower can provide a system-wide view with greater transparency, one that is provisioned by the FDA on behalf of citizens throughout the United States.This means making sure that there are accurate forecasts for products that are approved, particularly in for products supported by the FDA, and measuring the resiliency of those product channels.  This may mean becoming aware of shipment status, awareness of where shipments are going, and accountability over those shipments to present hoarding, and ensuring that shipments go where they are needed most.

The panel also discussed what happens when shortages are not avoided.  Healthcare delivery does not happen the way it is supposed to happen.  Clinicians do what is necessary to treat patients with what they have available, and may be forced to compromise and move outside their standard of practice.  This creates a great degree of discomfort in clinicians, and leads to moral distress and eventually burnout.  Lack of PPE and lack of medical devices and supplies can lead to physicians feeling unsafe, and further leads to a standard of care that is less than what is expected, which of course leads to lower outcomes and increased levels of suboptimal surgeries.

The impact of medical shortages on patients is critical.  The direct clinical impacts on patients can be significant, and varies by condition, often leading to a life threatening diagnosis.  Patient care is often delayed, particularly when there is a delayed diagnosis of cancer, which leads to difficult decisions that patients and clinicians are forced to make.  Patients who are not seen may have to make decisions without the guidance of a clinician, which can have drastic outcomes.

Medical disruptions also lead to massive administrative burdens on hospital personnel.  Having to manage a constant stream of backorders requires research for alternative products and vendors, constant communication, cancelation of procedures and communication with patients who are distraught.  Using alternative product substitutes can impact all facets of an operation, as the product may not be identical.  This requires additional clinician and nursing time to learn about the alternative product or practice, which takes them away from patient care.

One element that would help with shortages would be multi-state multi-region inventory systems, that would broadcast availability of different products, and which could enable shared virtual inventories across different regions.  This would alleviate the “every man for himself” scenario, where every hospital system is trying to track down product on their own.  We need to have a national approach for critical drugs and medical devices, and not simply become experts on gray markets, using suppliers that are not vetted and which we can’t ascertain their authenticity.  Today, distributors can’t tell hospitals what is on US soil, and there is no transparent method to establish what inventory is available in hospital and distributor markets.  We don’t know where product is, and can’t move product to the areas of greatest need, and can’t support non-acute providers who have no supply available.  The answer is not to burden hospitals with manual reporting of their inventory, but instead need to find ways to automate data collection and allocation.

This is why increased levels of private-public collaboration is the only way.  By working alongside the private sector, the FDA can create increased transparency.  However, this role needs to be better defined to address medical supply chain resiliency.  Manufacturers and distributors will also have to learn to work more closely with one another, using an inventory visibility system that must be able to be accessed by all entities so that data can be shared on the amount and location of US government approved products.  This will be the only way to halt the influx of gray product, the hoarding of inventory, and the assurance of supply for all parties that require these products.

Allocation of product should also account for the fact that during the pandemic, supply chain shortages had a particularly massive impact on marginalized populations.  Without actively planning ahead, it is easy to see that there will be disproportionate shortages for marginalized populations.  People of means can usually access product, but without equitable distribution, a lack of supply chain resiliency will impact those with diseases and disabilities in black and brown populations.

Today, the FDA helps hospitals identify recalls.  Is it a stretch to envision having the FDA manage a central database or communication platform, to provide early warning systems or impending shortages?  The FDA could help to better manage stockpiles, provide ongoing monitoring, provide early warnings to hospitals to engage in early substitution planning, and address equitable distribution issues.  A device shortage emergency list would better support public health emergency planning, and ensure more robust communications.  A big burden will rely on suppliers, being mindful that reporting requirements can increase administrative burdens on all parties, so cost increases may be necessary.   Making this information available to people on the front lines, that is a trusted source of information, can help them be more aware the minute they walk into the hospital that morning, and ensures that this communication becomes part of their daily work and prioritization strategies.

The panel also recognized that having domestic sourcing is not the only answer.  We will need to have the right balance of domestic and international sourcing, with a domestic source being available for emergencies such as when borders are shut down.  The FDA must become the source of truth, and will play a key part in that communication.  There will necessarily be tradeoffs involved for pricing, availability, market access, and limitations on space in different care setting, which in turn will require a variety of distribution strategies to support all providers.  An important requirement is also a standardized data nomenclature for all SKUs that is universal to all providers.

All of this will require significant shifts from the way we have done things in the past.  Most of all, it is a huge mindset change across the board, to create a communication rich environment and the right governance structure for this information sharing approach.  And there will be increased costs associated with domestic sourcing and this may require changes in CMS compensation for providers and private payers.  But without efforts to overcome these barriers – we will be back at ground zero.  And everyone on the panel unanimously agreed – we don’t want to go back there, at any cost.

[1] Lentzos, F., Goodman, M., and Wilson, J. (2020):  Health security intelligence:  engaging across disciplines and sectors, Intelligence and National Security.

[2] WHO, “Preparedness for Deliberate Use”.  This is often not the case, as advance notice often occurs through local media / lay public communication of such crises, often ahead of formal local / provincial / national official disclosure.