Information Makes Good Medicine

July 1, 2002
It's time for the pharmaceutical industry to set the pace in material handling.
Information Makes Good Medicine

by Tom Andel, chief editor

In the march toward material handling excellence, the pharmaceutical industry has been comfortable following the lead of other industries. Now it’s ready to set the pace.

Catalysts are big in the pharmaceutical industry. In formulations, a catalyst causes or accelerates a chemical change. Manufacturers in the pharmaceutical industry are becoming masters of change — in manufacturing and distribution — as they adopt material handling logistics technologies to help them prepare for their future.

This change is the result of several catalysts:

• FDA regulation of the pharmaceutical information supply chain;

• A growing population of aging customers with prescriptions to fill;

• New drug formulations requiring specialized handling;

• Plants and distribution centers that need help anticipating and meeting these demands.

Technology can help pharmaceutical manufacturers and distributors deal with these challenges, and the Food and Drug Administration (FDA) knows it. That’s why it issued guidelines it expects the industry to use as manufacturers implement such tools as automatic data collection and warehouse management systems (WMS) to track and trace shipments.

That’s the purpose of FDA 21 CFR Part 11 of the Code of Federal Regulations. It defines how companies are to use electronic records and signatures in the production and/or distribution of FDA-regulated products. It is designed to ensure the integrity of system operations and information stored in a system. Such measures encompass:

• Validation;

• The ability to generate accurate and complete copies of records;

• Use of computer-generated, time-stamped audit trails;

• Use of appropriate controls over systems documentation;

• Archival protection of records;

• A determination that persons who develop, maintain or use electronic records and signature systems have the education, training and experience to perform their assigned tasks.

These capabilities are crucial to any supply chain that supports public health and welfare. If you’re part of that chain, you share responsibility for adherence to CFR Part 11.

“The bar is being raised so groups that were not part of the regulated supply chain now are, or soon will be — including the carriers and third-party logistics [3PLs] providers being employed,” says Todd Applebaum, a researcher and consultant who works with leading biopharmaceutical companies. “For example, these players are actually qualifying specific containers that would always be used to transport their material. What’s becoming more important than tracking the trailers themselves is the event management — when it arrives, when it leaves and when it enters customs. Also important is the monitoring of conditions within the trailer. We’re seeing more active automated monitoring of those conditions within the trailer, then audits to make sure the specs are being met.”


The early beneficiaries of adherence to CFR Part 11 will be the quick-moving 3PLs and other companies that can get an infrastructure in place to provide this across different industries, not just pharmaceutical, Applebaum adds. These include industries where critically important products need to be tracked and monitored, like high-value capital spares, components and products with short life cycles. In these cases, you not only need to manage the amount of inventory in the supply chain, but match it to demand.

Pharmaceutical companies are getting involved in rigorous full-life-cycle supply chain planning. This happens while drugs are in development and entails distribution network planning, make vs. buy decisions, planning for future line extensions, and early trending of demand through demand modeling.

“Everyone is trying to maintain inventory levels at a very low point while still satisfying their needs,” says Kevin O’Brien, manager of the Branchburg, New Jersey, distribution center for Schering-Plough Healthcare Products. “The Rx industry has never been held to the same standards, but now, more than ever, we are expected to understand what our customers want. That’s why the industry is investing in more automated picking and batch control and coordinating delivery dates.”

Schering Laboratories, a division of the $9.8 billion Schering-Plough Corp., recently completed the third installation of Ann Arbor Computer’s mid-range WMS, pcAIM, at its western region distribution center in Reno, Nevada. The first two installations were in Branchburg and in its Suwanee, Georgia, facility. The WMS manages the incoming storage and outgoing distribution of prescription drug products and samples throughout the United States from these three DCs.

“We can now trace by lot down to the line-item order level, and our accuracy is near 100 percent,” O’Brien says. “We also ship samples. Within the WMS, because of requirements by the FDA, sample accountability tracks the history of a batch or product or a representative distribution.”

He adds that with biotech becoming more prevalent in his industry, handling requirements will start to change. New requirements include controlled room shipping, whether that involves cold product or formulations that must be maintained at a particular ambient temperature.

“Our future is contingent on the new products created and generated by our R&D,” O’Brien concludes. “Our DCs were built with the ability to provide for future growth.”

Multi-purpose information

The beauty of logistics data collection technology is that once data are captured, the information can be used by the enterprise in a wide variety of ways. As data requirements proliferate, WMS packages are evolving to meet them.

“Originally pcAIM did lot control and shelf life expiration date tracking only, but we’ve extended the quality control [QC] part to meet many of this industry’s requirements,” says Ann Arbor Computer’s Art Fleischer. “That includes being able to check if a QC status has changed, even after the product has been picked and before it has gone out the door. Pharma companies have a lot of archival needs. For recalls, companies must pull information from archived records. The easiest way to do that is through the execution layer, which includes the WMS.”

It also includes automatic data capture; according to Karen Longe, president of Karen Longe & Associates and a consultant to the pharma industry, this technology offers significant untapped potential. The FDA’s data management requirements will bring those benefits to everyone in the supply chain, she believes.

“The product side of the healthcare industry has been slow to bar code,” she adds. “They need bar codes down to the unit-of-issue or dose. And to be really helpful, you need lot and expiration dates on those doses. That becomes a challenge, but if you collect information for that reason you can use it for many other purposes. In addition to patient safety, there are tremendous benefits to the manufacturer and to everyone else in the supply chain.”

More than just savings

Security has risen to the top of that list of benefits.

“Security issues have become an everyday concern at many points in the supply chain,” agrees Tan Miller, director of distribution planning for Pfizer Pharmaceuticals. “Within the four walls of the warehouse, individual products may require special storage and handling procedures simply because of their high value. That applies over the road, as well. In fact, the attention to maintaining the integrity and security of the product in transit leads pharmaceutical manufacturers to employ material handling techniques that one might not think to use in other industries.”

He cites the use of overpack cardboard containers to ship pharmaceutical cases. This requires loading pharmaceutical cases into an overpack container (perhaps at the staging dock) after the individual cases have already been picked in the warehouse.

“This step clearly adds a cost at the warehouse loading and shipping stage,” Miller admits. “On the other hand, this approach can significantly reduce shortages and the vulnerability to individual cases being stolen in transit. So the extra cost incurred at the warehouse loading and shipping stage may be more than offset by the savings in shortages and theft that occur further down the supply chain. This approach clearly does not make sense for all industries, but it may have merit for those that use a total supply chain cost perspective.”

Indeed, with the high-value product it handles, the pharmaceutical industry in the U.S. and in Western Europe doesn’t invest in material handling technology to save costs. The primary goal is to ensure product quality. It’s a different story in developing countries such as those in Asia or Eastern Europe. In addition to the economic efficiencies of automation, companies in Poland, Slovenia and Serbia want a piece of the American market. Automation is the price of entry.

“Up to now, these companies produced medications for their home markets and for other Eastern European markets,” explains Urs Dietler, manager of the Industry Practice Group, Pharma, at Swisslog, supply chain solutions providers. “Now they recognize that they can earn more money if they sell to Western Europe and to the U.S., where medicine prices are much higher. But there is one condition they have to fulfill: They must produce in accordance with FDA regulations, and this is almost impossible without automated material handling processes because their staffs are not sufficiently educated.”

Preparing for growth

As the elder population grows in the U.S., the demand for new and established pharmaceuticals will increase. The pharma industry is gearing up for this, but manufacturers have some difficult choices ahead: either build new DCs, increase throughput capacity, use third parties, or figure out how to put more automation to work.

“Areas where they need to further automate include the replenishment of pick-to-light systems or automatic dispensing systems,” concludes Jeff Hedges, director of market development for HK Systems. “When you’re dealing with high-value, pocket-size components, pilferage is easier. Furthermore, you’re dealing with high turnover rates within the picking staff. Then, if you expect throughput to double, do you double the number of pickers, require them to work faster or add three shifts a day?”

Wyeth Pharmaceuticals employs 240 people in its Knoxville, Tennessee, distribution center — one of three U.S. DCs. This one handles 85 percent of the company’s prescription medications. According to Patrick Flanagan, DC director, cross-training is key to maintaining a reliable workforce in the world of pharmaceutical distribution.

“Some come in at 6 a.m. to begin receiving; others come in at 8:30 to begin picking, and some come in at 2 to finish picking and shipping, and then they work in replenishment. Our objective is to ship every order the same day. We are also set up for emergencies. We have people who are trained and on call 24 hours a day, seven days a week, to ship lifesaving drugs. It’s not unusual for someone to be called in on the weekend.”

Technology plays an important role in eliminating mistakes in this life-or-death occupation. In fact, the entire 600,000-square-foot facility was designed to house mistake-proof operations.

“When we designed this facility we made sure our building control systems, which maintain the temperature, the electronic security systems, our warehouse management system and related systems, were all completely validated in accordance with FDA regulations,” he explains. “We also do extensive testing and tracking to ensure the packaging we use is sufficient.”

Wyeth’s Knoxville DC handles about 500 SKUs, but its capabilities will really be put to the test as the biotech products currently in R&D reach production. Facility flow is governed by a WMS from DCS, now known as Vertex Interactive. Operations are paperless, employing a mix of bar code and RF technologies, two-and-a-half miles of conveyor, high-speed sorters, and pick-to-light and pick-to-belt systems.

“The WMS will accommodate the special handling requirements of our biotech products,” Flanagan explains. “Storage classes are built in, including refrigerated, freezer and controlled drugs, so we’ll see more of a physical change than a systems change. Physically you must make sure you have sufficient refrigerated space; you make sure it’s validated and that you have the right technology in place to monitor temperatures. Our building management system measures temperature in the warehouse and in the refrigerator/freezer every hour in several stocking positions, and we have alarms that go off if temperatures go out of tolerance.”

Why did they select Vertex?

“It had proven technology in the pharmaceutical industry and its pick-to-light system enables us to verify the lot number. We could have just bought its pick-to-light system and someone else’s WMS, but I put in several WMS packages before, and interfacing one vendor’s technology to another’s is a major challenge. This package also had an integrated manifesting system, and the vendor had experience with our conveyor integrator, Conveyco. The conveyor supplier was Buschman.”

Since Wyeth put these technologies to work in its Knoxville facility in 1999, shipping accuracy has reached near 100 percent. “It’s all part of our chairman’s effort to promote quality,” Flanagan concludes. “Back in March of this year the company changed its name to Wyeth from American Home Products. We have taken many such strides in the last few years because we have a busy pipeline of products and we wanted to make sure

we are in 100 percent regulatory compliance.”

Other leading players in the pharmaceutical industry are making similarly bold business moves. Manufacturers are buying up wholesalers. Joint ventures are making supply chains global. And many facilities are closing as companies update, improve and streamline their handling and verification processes.

Throughout these changes, material handling logistics technology will continue to play a key role in ensuring that healthy supply chains keep their customers healthy as well. MHM

Pharma Automation in Europe

When it comes to material handling in the pharmaceutical industry, Europe has long employed a higher level of automation technology than the U.S. Much of this can be attributed to cultural and labor cost differences, but historical differences among distribution channels also play a part.

About the Author

Tom Andel | Editor-in-Chief

Tom Andel is an award-winning editorial content creator and manager with more than 35 years of industry experience. His writing spans several industrial disciplines, including power transmission, industrial controls, material handling & logistics, and supply chain management. 

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