All Aboard the Cold Chain
As liability risks increase, drug manufacturers are assuming greater ownership of the “cold chain” for transporting valuable biologics. Stability testing, data logging and other technologies are helping to ensure product safety as the industry moves toward a whole new distribution model.
By Angelo De Palma, Ph.D., Contributing Editor
Globalization, economics, and the rise of biotechnology have vastly complicated pharmaceutical distribution and logistics. Of the $400 billion worth of pharmaceutical products sold worldwide in 2003, approximately 10% were cold-chained biologicals. Sales of biotech products between 1999 and 2003 grew nearly twice as rapidly as those of small-molecule drugs.
The U.S. Food and Drug Administration emphasized the need for a safe, secure drug supply through its February 2004 document, “Combating Counterfeit Drugs.” Every one of the top 30 counterfeiting targets have some cold-chain component.
As manufacturers consider anti-counterfeiting strategies, they are beginning to recognize that the cold chain is a key component of authentication. “A product adulterated through tampering is just as dangerous as one that has suffered temperature abuse,” says Henry Ames, director of marketing for Sensitech (Beverly, Mass.). “In fact, FDA includes temperature abuse in its definition of adulterated product.”
||A validatable temperature data logger such as Veriteq's VL-1000 can help protect sensitive products in the cold chain. |
Historically, manufacturers were satisfied to manage the cold chain within their facilities. Today, their desire for greater control over the cold chain during handling, storage, and distribution necessitates close relationships with distributors and third-party logistics/ transportation providers. “Manufacturers who do a really good job while the product remains within their manufacturing or filling plant often wash their hands [of it] when product ships,” says Carla Reed, a VP at Chainlink Research (Cambridge, Mass.). “But if you own the brand, you own it until the patient consumes it and you’ve achieved a good result.”
Of the major distributors, just three — Cardinal Health, AmerisourceBergen, and McKesson — control approximately 90% of drug distribution in the United States. Their traditional business models were based on both a “buy and hold” strategy and a secondary arbitrage model. Distributors hoarded expensive product and held it as prices rose, thereby enjoying an inventory profit. At the same time, manufacturers were able to enter revenue earlier on than if purchases more closely tracked patient demand.
For the arbitrage model, the distributors bought and sold among themselves based on expected price increases and or regional differences in supply and demand. Terry Hisey, U.S. managing principal for Deloitte Life Sciences (Philadelphia, Pa.), refers to these practices as “cannibalization of high-value products by distributors.”
FDA's push for safe, secure supply chains has jeopardized this business model, which directly affects who “owns” the cold chain. It has also opened the door for nimble, technology-savvy logistics and shipping companies to pick up some of pharma’s cold chain business.
“It’s going to take some time for the new distribution model to kick in,” says, Henry Ames. “Eventually we’ll reach the point where distributors will be held to a higher standard with respect to drug storage and handling.”
One thing that will not change is the burden of responsibility for delivering effective products unadulterated by extremes of temperature. “If there’s a problem with a drug shipment people will remember the manufacturer’s name, not the distributor’s,” Ames notes.
Like many long-established pharmaceutical business practices, the current logistics model is probably unsustainable. Large distributors and manufacturers view the “happy medium” of current cold-chain pricing radically differently. Drug makers look longingly to the day when competition drives shipping costs down, while distributors attempt to raise prices through outright increases or by adding services.Bioburden
Biotechnology has been the driving force behind cold-chain innovation. “Just a few years ago hardly anyone was aware of the cold chain as a significant force in pharmaceuticals,” notes Bob Townsley, managing consultant for global life sciences and healthcare for PA Consulting (London, U.K.). “Today, 244 products approved in the U.K. are handled, shipped, and delivered under controlled temperature conditions.”
A related driver will be the emergence of novel cell-based therapies, points out Peter Berry, CEO of CryoPort (Brea, Calif.). Vaccines consisting of live or attenuated cells have, of course, been “cold-chained” for decades.
|The cold chain is a critical element in product authentication — in fact, FDA considers temperature-abused product to be "adulterated." Photo courtesy of Sensitech.|
Serono’s (Geneva, Switzerland) cold-chain requirements are typical in biotechnology; more than two-thirds of the firm’s finished products ship cold. After production, the company transfers bulk actives to another site for final formulation and filling. This “first leg” journey involves small quantities of highly concentrated, potent material that is packed in dry ice and shipped. “As long as it reaches its destination within a certain time frame we’re certain the product has arrived at full potency and quality,” explains Werner Bucher, who directs Serono’s Packaging and Distribution Center of Expertise.
Bucher sees shipment of finished products as significantly more problematic than for unformulated active because physical volumes are much higher for the former (pallets of several cubic meters vs. several liters), and maintaining and validating freezing temperature is significantly easier, even for long trips, than keeping within the magic 2-8°C window. Difficulties arise as the distribution chain sprouts to hubs and distribution centers, where variables begin to pile up, multiply, and cause logistical headaches. “This is the most challenging part of our cold train,” Bucher admits.