EpiPen Shortage Raises Questions About Supply Chain Consolidations

April 17, 2018

 

 

Recently, we wrote about the recent disruption to deliveries of KFC Chicken in the U.K. In that case, KFC’s switch to a new 3rd Party Logistics provider led to a bottleneck in service at the distribution level, empty store shelves, and rumbling stomachs. The 3PL’s spokesperson blamed the issues on “complexity” which, we think we can all agree, is an inadequate explanation in an age when Supply Chains are expected to be nimble, flexible and reliable despite the many moving parts in play.

As a company focused on Supply Chain trends, developments, and news, we’re always disappointed to see these Supply Chain disruptions burst into the wider world of customer anger and pop culture. But we’re also always eager to see what kind of lessons can be learned, and what individual Supply Chain failures have to say about the state of various industries, and the function, more generally.

Now, another, more dangerous Supply Chain snafu has reared its ugly head.

The issue:

CBC news and Reuters are reporting that there’s a shortage of EpiPens in Canada, as well as the U.K., following production delays in Pfizer’s manufacturing activities that supply Mylan Pharmaceuticals with the devices. While the U.S. supply of the anaphylactic shock-treatment kit appears to be intact, doctors and pharmacists in Canada and the U.K. are struggling to maintain supply and issuing recommendations for individuals who rely on EpiPens to deal with possibly-deadly allergic reactions.

Given that 3,500 Canadians experience anaphylactic shock each year, and 2% of children in Canada have peanut allergies that might require administration of adrenaline via EpiPens to stave off potentially fatal allergic reactions, a shortage of EpiPens could represent a significant issue for public health.

It’s one thing to have a shortage of fried chicken, but a shortage of a potentially life-saving medication is a whole other thing entirely.

As of right now, this shortage is mostly higher up in the supply chain – affecting distribution centres, with limited impact on EpiPen availability at the retail level. But some Canadians are finding it difficult to secure EpiPens at pharmacies. Health Canada is recommending that Canadians try multiple pharmacies if they can’t secure the EpiPens they need. In the meantime, Health Canada is advising people to use EpiPens that might be already expired if they need to, then call 911 right away (devices past their expiration date aren’t necessarily ineffective, but haven’t had the same level of testing scrutiny). It’s not an ideal situation while the supply comes back online, but it’s something.

In March 2017, Ottawa made it mandatory for manufacturers to report shortages of drugs, and since then 4,400 shortages have been reported. This is in fact the fourth time that EpiPens have been flagged for shortages since those requirements, but it’s the first time that the shortages are impacting EpiPen Junior autoinjectors for younger children as the normal devices.

What are the Supply Chain Management Implications?

Supply Chain strategies and positions are a source of competitive advantage – and disadvantage – that often run below the surface of what the public sees. So details are often scant in terms of how companies explain disruptions. In this case, Pfizer’s corporate affairs manager said the shortage was due to “manufacturing delays as well as limited third-party quantities of a component of the product. Unfortunately I don’t have a lot of detail on what that component is.”

Anyone familiar with manufacturing Supply Chains knows how the shortage of even a single component can provide a massive bottleneck, halting production. The Globe and Mail’s report on the issue describes how companies have consolidated their overseas suppliers in India and China when they source components for medical devices. This incident speaks to the importance of maintaining a wide supplier base, with backup vendors so that the chain doesn’t experience a devastating disruption if a vendor doesn’t come through with crucial components at the right time.

While alternate vendors exist in Europe, it’s a dicey situation for a product with no current alternative in Canada, and a significant role as a front-line treatment for an increasingly common medical condition.

The shortage was originally forecast to last until May, but the federal government has issued an update that they’re not sure how long the shortage will last. In the meantime, it’s another blow to Mylan, a company whose public image – and stock price – has taken hits the past couple of years after prices for a package of two EpiPen auto-injectors rose from $100 to $600 in 2016, and after the company was forced to recall tens of thousands of devices in 2017 after some devices failed to activate.

Which just goes to show: even though it’s not the most high-profile business function, disruptions to Supply Chains can have big impacts on companies that are already troubled, not to mention the consumers who rely on their products.


But what’s your take? With the scant details available, are there any lessons to draw from this Supply Chain disruption? Let us know in the comments! 

2 Comments

  1. Muhammad Malik

    Supplier Relationship Management (SRM) function of the organization is responsible for that as they have a mandate to organize annually audit of suppling companies with their supplier (Supplier’s Supplier Tier 1, Tier 2 & Tier 3) which provide clear eye for future direction.

    Reply
    • Argentus

      Thanks for the comment Muhammad! SRM is indeed important to prevent some of these issues.

      Reply

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