Issue link: https://beckershealthcare.uberflip.com/i/1528857
19 EXECUTIVE BRIEFING There are concrete steps hospital pharmacies can take today to contribute to the long-term sustainable supply of generic sterile injectables. Start by purchasing from suppliers with a proven track record of quality, reliability, and resources. Strategize within your own hospital network to develop contract compliant solutions that drive volume predictability or consider comparing current contracting to more innovative direct contract solutions for potential added benefits. And, support long-term supply sustainability policy reforms—all voices are needed. Change can only happen together, and we are proud to stand shoulder-to-shoulder with our customers and patients to work toward solutions for long-term generic sterile injectable supply reliability. manufacturing networks. Moreover, you can encourage purchasing organizations, including Integrated Delivery Networks, GPOs, and wholesalers/distributors, to do the same. We believe price alone should not be the sole criterion for awarding a contract to a manufacturer, as research has shown shortages are more common at lower price points "where competition may be driving some of these drugs below their cost of production and distribution, causing manufacturers to exit the market and disincentivizing new entrants." 5 Since 2015, Pfizer has invested over $2 billion in our global sterile injectable manufacturing network to improve reliability, increase capacity and adapt to evolving market needs. By purchasing at a fair price, which may not always be the lowest price, pharmacies can help sustain manufacturers that do the right thing by committing to supply resiliency, manufacturing innovation, quality assurance, and patient safety. Solution 2: Support demand predictability through compliance or direct contracting Many hospitals purchase generic sterile injectable products through their contracts. Assuming that these contracts are awarded to manufacturers investing in long-term supply reliability, the next step pharmacies can take to support demand predictability is through contract c o m p l i a n c e . D e m a n d p re d i c t a b i l i t y d r i ve s s u p p l y performance by ensuring accurate volume forecasts are communicated to supplier manufacturing sites, enabling suppliers to be better able to produce product at consistently predictable levels. Variations in contract compliance, often due to price-seeking behavior, can reduce demand predictability and may contribute to increased supply risk. Contract compliance helps drive that volume predictability, reinforcing a cycle of reliable supply within the supplier's entire manufacturing network. Alternatively, we believe direct contracting with suppliers, including those like Pfizer, which offer a broad portfolio of generic sterile injectable products, can offer benefits to hospitals committed to supply sustainability. Over time, long-term contracts with reliable suppliers may help reduce the pharmacy's inventory management costs and offset the commitment to paying a fair price for generic sterile injectable products. Solution 3: Advocacy and policy engagement around U.S. supply-chain resiliency Agreement on the economic root causes of generic sterile injectable supply shortages and the need for change has never been higher. We urge all stakeholders to acknowledge that manufacturing of high-quality medications requires a sustainable commercial model in order for it to function reliably for hospitals and patients, and it is incumbent on all stakeholders to identify aligned solutions. For example, Medicare and Medicaid programs may benefit from targeted payment reforms that would have enormous influence over supporting a more sustainable market for generic sterile injectables by evolving the reimbursement systems we know pharmacies struggle with today. Forward, together October 2024 PP-UNP-USA-4783 © 2024 Pfizer Inc. All rights reserved. References: 1. ASHP (n.d.) Drug Shortages Statistics. August 2024. Accessed September 2024. https://www.ashp.org/drug-shortages/shortage-resources/drug-shortages- statistics. 2. USP Annual Drug Shortage Report: Economic factors underpin 2023 shortages. June 2024. Accessed September 2024. https://www.usp.org/supply-chain/drug- shortages. 3. Vizient. Drug shortages and labor costs: measuring the hidden cost of drug shortages on U.S. hospitals. July 2023. Accessed September 2024. https://wieck-vizient- production.s3.us-west-1.amazonaws.com/page-Brum/attachment/c9dba646f40b9b5def8032480ea51e1e85194129. 4. Pfizer Global Supply, 2024. 5. IQVIA. Drug Shortages in the U.S. 2023. A closer look at volume and price dynamics. November 2023. Accessed September 2024. https://www.iqvia.com/insights/the-iqvia-institute/reports-and- publications/reports/drug-shortages-in-the-us-2023 S:15.5" S:10" T:16.75" T:10.875"