copyright © 2015 reverse logistics association. all rights reserved managing pharmaceutical reverse...

Copyright © 2015 Reverse Logistics Association. All rights reserved 1

Managing Pharmaceutical Reverse

LogisticsSeptember 17, 2015

Hosted by the RLA Life Sciences Committee

http://rla.org/company_focuscommittees_index5.php?showlist=true&FC=10


Agenda

• Introduction• Return Scenarios• Returns Process Overview• Stakeholders• Landscape• Issues• Challenges• Opportunities• View into the Future• Q&A


Introduction

• Principal / Owner Bradford Rx Solutions since 2013 Focus on pharmaceutical distribution and reverse logistics Deliver large ROI to clients

• Finance background prior to 22 years Pharmaceutical experience Audit and Financial Reporting Managed several financial operations at McKesson

• Reverse Logistics perspective from all supply chain partners Privilege to create, build and sustain Reverse Logistics at McKesson for 13 years Client base includes healthcare providers, reverse distributors, wholesalers and manufacturers

• Business philosophy is entrepreneurial and disciplined Business models must evolve Reverse Logistics should be viewed as a business unit Cross functional collaboration and integration is critical to success


Return Scenarios

• Wholesaler returns Upon receipt (Damage, Ordered in error) - Returned to MFG MFG initiated (Recall, Market Withdrawal) – Returned to MFG/MFG Provider Wholesaler initiated (Overstock) – Returned to MFG/MFG Provider Wholesaler initiated (Expired) – Returned to MFG/MFG Provider

• Healthcare Provider (Pharmacy) returns Upon receipt (Damage, Ordered in error) - Returned to Wholesaler MFG initiated (Recall, Market Withdrawal) – Returned to Wholesaler/MFG/MFG Provider

Healthcare Provider initiated (Overstock) – Returned to Wholesaler Healthcare Provider (Expired) – Returned to MFG/MFG Provider


Mature Returns Process


Expired Returns Process


Stakeholders

• Healthcare Providers (HCP) Initiate the return process for valuation, disposal and reimbursement Overwhelming source of return volume within the industry

• Wholesalers/Distributors Primary financial conduit between HCP and MFG Create programs with return providers and HCP

• Return Providers Outsourced reverse logistics partner for return by (HCP& Wholesaler) and return to (MFG) Manage multiple data elements and processes (Product [NDC], MFG, returns policy terms, shipping or

disposal requirements) which are unique to most MFG

• Manufacturers (MFG) Liable for product reimbursement according to terms and conditions of their policy Initiate the reimbursement by check or credit to wholesaler, return provider or HCP


Landscape

• Highly regulated industry Many agencies (DEA, EPA, FDA, DOT, State Boards of Pharmacy, State Health Dept.)Return providers subcontract final product disposal for incineration Impact of product traceability on reverse distribution not resulting in a sale

• Large majority of stakeholders outsource returns processing Generally viewed as non core business processesComplex reverse logistic models to scan, value, reimburse and dispose Rx products

• High product value and regulations increases product handling Product value approx. $100 per unit Mfg drive product eligibility and terms

• Stakeholders are heavily dependent on each other to execute well


Stakeholder Issues

• Healthcare Providers (HCP) Unable to recover about 35-45% of expired product’s current value Lack of resources for managing logistic and financial processes

• Wholesalers/DistributorsManaging a financial reconciliation process and collection effort “outside” their networkMFG and HCP policies and actions may conflict

• Return ProvidersRegulatory burden continues & legislative/regulatory stakeholders lack full understanding Success is heavily dependent on all other stakeholders performing well

• Manufacturers (MFG)Bear much of the financial responsibility yet have no control of the inventoryReimbursement pricing is complex and critical to understand the source of the return


Challenges

• Overall return volumes have moderately improved over the years but remain relatively constant due to variety of factors

Who or what really drives abandon scripts or inventory that expires on shelf?

• Significant number of product scans increases cost and excessive reconciliations Which scan is most accurate with most auditable process?

• Regulatory disintegration creates ambiguity/inconsistency with compliance and increases cost Which regulatory agencies and rules do I follow and what is the business risk I am willing to accept?

• Data is not transparent to all stakeholders creating exceptions and rework What can be done to identify the correct price for reimbursement from inception of return until final reimbursement?

• Reimbursement values are highly complex since most returns are NOT from direct purchaser from the MFG How does a MFG determine the price for a product that their wholesaler/distributors sells to the HCP?

• Reimbursement process lacks EDI penetration with other order to cash processes How can I reconcile to the product level in a paper credit or check environment?

• Reverse logistic processes and reimbursement valuation are variable and unnecessarily complex Where do I start and how do I remove cost without compromising a safe and secure supply chain?


Opportunities

• LogisticsDevelop more collaborative relationships and business models with StakeholdersEducate regulatory agencies on reverse logistics practices to improve rules/regulations

• Data transparency and integrationLeverage technology to reduce duplicate processes and systemsIncrease usage of EDI 812 credit reimbursementBuild more auditable processes to remove duplicative handling

• Inventory inefficiencies and manual processesShare data with stakeholders that drives more value to both partiesUtilize traceability for reverse processes where prudent

• Decision tools at source of the returnAssist pharmacists in managing inventory and automating return processesProvide more incentives for supply chain partners to be part of the solution


View into Future

• Consolidations will continue to impact these Stakeholders• Margin pressures will force companies to reduce cost/profit leaks• Consumers will be a new stakeholder with take back initiatives• Industry needs cost savings to effectively fund “Take Back” processes• Product traceability can drive improvement beyond compliance• Emerging forward distribution models and specialty products will

create new models and change economics of today’s models


Question & Answer

• What is on your mind now?• What could you do as a practical next step?• Where do you see opportunity for your company?


Contact Information

Scott [email protected]

(817) 907-5419

Will KyzerAirport Business Development Director &RLA Life Sciences Committee ChairmanAnchorage Economic Development Corporation+1 907-258-3700



http://www.aedcweb.com/

copyright © 2015 reverse logistics association. all rights reserved managing pharmaceutical reverse...

Documents