http://www.va.gov/year2000/outreach/3.8.99.%20Rx%20Meeting%20Minutes.html

Year 2000 (Y2K) - Pharmaceuticals Acquisition and Distribution Meeting

March 8, 1999

Department of Veterans Affairs

Conference Room 830

9:30 - 11:30

The purpose of the meeting was to continue discussions of Y2K concerns with the pharmaceutical industry and Federal government on the issues surrounding pharmaceutical stockpiling and to present the results of several industry surveys. Len Bourget, Veterans Health Administration, opened the meeting with introductions of attendees.

John Koskinen, Chair of the President's Council on Year 2000 Conversion:

Time is crucial. We are at a stage where we need to look beyond preparedness and ensure that there is sufficient communication with the public. The President's Council is looking to put together three cross-industry reports this year (the first April 15, another late spring/early summer, and the third late summer/early fall). These reports will be a compilation of industryreports. All evidence suggests that the basic infrastructure of the country will not fail as a result of Y2K. This needs to be communicated to the public. People need reassurance not only that nationwide systems will continue to function, but that their specific banks, power companies, etc. will continue functioning as normal. Pharmacy issues will continue to be a major concern to the public. The pharmaceutical industry needs to give a clear, factual understanding that will assure them without providing a false sense of security. There needs to be a White House summit pulling together all aspects of the pharmaceutical industry to deliver a common message stating the facts regarding "just-in-time" inventory, raw materials, international supply, sole-source manufacturers, etc. What are the real risks and actions needed to address them? We must share these facts with the public and assure them that back-ups are in place should any part of the system fail. The pharmaceutical industry should take advantage of the Year 2000 Information and Readiness Disclosure Act to address the issues without worrying about anti-trust violations.

Regarding stockpiling issues within the industry, the White House believes that the best way to address this is by industry self-evaluation. If the industry determines that stockpiling is necessary within the supply chain, then industry will have White House support. Issues that need to be considered are international raw material, critical products, at-risk countries, etc. Regulatory concerns also need to be addressed.

Issues raised to John Koskinen:

Ed Harvey (AMSUS) reported that most of the pharmaceutical industry has already completed or scheduled production for the remainder of 1999, and some are already scheduling well into 2000. A large number of manufacturers have already increased stock (some up to 20%) to prevent Y2K-related shortages. The main issue is to reassure the public that there is no need to hoard. John Koskinen agreed. If the public has no information, they will assume the worst. People need to be given the facts. A White House summit within the next few weeks will address these issues.

Roger Goldblatt, Federal Trade Commission's Y2K hotline (1-888-USA 4 Y2K):

The hotline receives approximately 1000 calls each day. Advertising for the number has stopped, however millions of flyers were sent out with income tax information, so the number of calls is expected to increase. Callers want more than just an operator's reassurance. A fax-back process has been put in place to give callers information in writing.70% of calls are regarding contingency plans. (i.e. "What should I do?" "How much food, water, drugs, etc. should I have?")The hotline is willing to be the consumer's main point of contact, but it is necessary for industry to provide accurate information for the hotline to distribute. John Koskinen suggested that it would be very helpful for industry associations to put as much information as possible on their websites in order to refer callers to more specific information.

Laurene West, National Patient Advocate:

Over 40 million Americans are dependent on medicine. She is confident that government and industry will overcome this obstacle by working on these issues together. Americans need to be reassured that their medicine will be available. Ms. West is no longer advocating that consumers keep a 90-day supply of their medicine. She is willing to help in any way possible to ensure that the public is informed regarding this issue.

George Patterson, VA National Acquisition Center:

Four main issues need to be addressed regarding Y2K.

1.Get the word out to the public. We need to pull together all of our industry surveys to provide one main source ofinformation.2.There is not enough money to enable stockpiling throughout the supply chain.3.Pharmaceutical manufacturers should put measures in place to prevent stockpiling.4.Wholesalers are "gatekeepers" and should develop plans to prevent unnecessary stockpiling.

Denny Steele, AmeriSource, Department of Veterans Affairs Prime Vendor:

AmeriSource has been working on Y2K since 1995. Compliance issues are constantly changing, requiring a regular redirection of focus. The current problem is the misperception among the public that may lead to consumer stockpiling.

AmeriSource believes that there is approximately 8-9 months of product in the supply chain. Manufacturers most likely have 6 months' supply (2 months raw materials, 2 months in production, and 2 months finished product). Distributors have approximately one month's supply, and points of care (hospitals, pharmacies, etc.) have anywhere from 10 days to 1 month's worth of supply. There is enough in the supply chain to handle a Y2K setback, but consumer hoarding will hurt the process. AmeriSource is currently working on comprehensive contingency plans. AmeriSource recommends that consumers keep no more than an extra 1-2 weeks' worth of their medication. Ed Harvey (AMSUS) disagrees with AmeriSource's assessment that there is a 6 month supply within the supply chain. He believes that it is closer to 3 months. This varies greatly depending on the drug, the time of year, demand, etc.

Industry Surveys:

Del Persinger, Pharmaceutical Research and Manufacturers of America (PhRMA):

PhRMA surveyed 25 companies representing 90% of industry segment production. The 24 companies who responded all expected no disruptions in the supply of pharmaceuticals due to Y2K issues in these companies. As of the survey date (1998), 2/3 of remediation and = of testing had been completed. The majority expected to be completed testing by mid-year, 1999.All respondents have inventoried their embedded chips, with a compliance rate of 85-90%. Of the 10 to 15%remaining, perhaps half is minor adjustments/date changes. Respondents stated that they had to date contacted 85% of their key business partners regarding Y2K compliance. The respondents main international concerns are overseas awareness, infrastructure and technical abilities to fix problems, although none of those surveyed plan to discontinue overseas business, and they are developing contingency plans. Complete results of the survey will be available next week, included on PhRMA's website. The names of the companies that responded to the survey will also be posted on the website.

Ed Harvey, Pharmacia & Upjohn, AMSUS:

AMSUS conducted a survey of 61 members (17 are also members of PhRMA, 9 are represented by GPIA and NAPM). Of the 42 who responded, all felt that testing would be completed by June 30, 1999 and that they would have a handle on any minor problems by the end of September 1999.The amount spent per company on Y2K issues ranged from $2 million to $700 million. Respondents were confident that the supply chain will not be disrupted as a result of Y2K failures. AMSUS is working with VHA and DoD on supply issues affecting centralized mail-out pharmacy programs (CMOP and DMOP). They recommend that normal 90-day prescriptions be increased to 135 days for those written September 16-30, 1999, and 120 days for those written in October 1999. Patients will not need a refill until February 2000.AMSUS will repeat the survey in June.

Buddy Menn and Diane Dorman, Generic Pharmaceutical Industry Association:

Of the 36 companies surveyed, 44% responded. Fourteen of the seventeen generic drug manufacturers who are members of GPIA replied to the survey.

All stated that they have Y2K plans in place, with companies spending up to $1.5 million. Most are prepared to test all systems by June or July of 1999.The most common concern is with overseas Y2K problems, since 90% of the active drug substances used to manufacture prescription generic pharmaceuticals originate overseas. Transportation is also a concern with international trade partners, especially in China and Eastern Europe.

At the end of March, GPIA will be hosting a meeting on Y2K.

Susan Grymes, National Association of Pharmaceutical Manufacturers:

Surveys were sent to 20 companies. Most companies reported that they do have Y2K plans in place.

Don Bell, National Association of Chain Drug Stores:

All companies surveyed reported that their Y2K plans would be completed by July/August 1999 and contingency plans are being developed. Respondents were less concerned about their own readiness and more concerned about critical infrastructure, payment agencies (particularly state Medicaid agencies) manufacturers' readiness and consumer hoarding. A helpful website for retailer Y2K compliance is www.nhin.com

Cathy Hotka, National Retail Federation:

No formal survey of members has been taken, but major issues that NRF members have addressed include EDI, contingency planning, etc. Retail stores are not increasing stock, and manufacturers don't plan to increase production for Y2K (example: battery stock is not being increased)

Tom Schafer, National Wholesale Druggists' Association:

NWDA conducted a stockpiling survey of 200 members, to which 77 responded.75% of those surveyed can provide a 3-month supply today. Less than 20% can handle a 1-year supply.50% cannot handle a 1-year supply even if they know about the need in advance. The majority of respondents stated that they do have contingency plans in place. Tom noted that we need to distinguish between stockpiling (for business and safety reasons) and hoarding (for selfish reasons). Ron Streck (President & CEO of NWDA) spoke regarding the industry's initiatives in addressing the issue of stockpiling. Over 12 industry associations are included on a task force to develop strategies to prevent shortages in the supply chain.

Len Bourget (speaking on behalf of Daniel Nutkis, Odin Group)

Contingency planning is essential at this point in the process. Major considerations are EDI issues and alternative operating procedures. A communication plan is essential, but more important is the content of that message. Odin Group has a project underway (Vital Signs 2000) to address these issues.

George Patterson, VA National Acquisition Center:

NAC surveyed 848 pharmaceutical and medical supply companies (410 pharmaceutical, 438 medical supply). 357 companies responded, with 142 reporting that they are 100% compliant (46% of the 142 are pharmaceutical companies). 215 responded with varying rates of compliance, with 70% of those reporting that they would be compliant by June30, 1999. Of the remainder, most plan on being compliant by September 30, 1999.NAC is making their results public, and suggested that a single database/website be established to coordinate all available survey results from the industry.

Steve McManus, DSCP and John Hallahan, DMLSS, AOSD/HA

DoD is initiating a comprehensive testing program for all of the wholesalers that they deal with, focusing specifically on 13 prime vendors. Most of the vendors will be tested for compliance by June 1999.A specific end-to-end will focus on the fiscal year rollover, calendar year, leap year and the next century change.

John Koskinen closed by stating the importance of pushing all of our business partners to test for Y2K problems. Meeting adjourned at 11:50 p.m.

Action Items

1. Identify the pharmacy distribution process and benchmark inventory levels.

2. Plan a national pharmaceutical media event to communicate industry progress.

Distribution process International concerns Normal supply process What is being done

3.Trade associations need to identify international concerns.

Identify the countries of concern Determine Y2K status of manufacturers within those countries

3.Invite representation from pharmacy regulatory group, such as DEA.4.Plan White House Summit.

-- Pierce (Hawkeye@mash.mil), May 03, 1999

Answers

****Regarding stockpiling issues within the industry, the White House believes that the best way to address this is by industry self-evaluation. If the industry determines that stockpiling is necessary within the supply chain, then industry will have White House support. Issues that need to be considered are international raw material, critical products, at-risk countries, etc. Regulatory concerns also need to be addressed. ***

They are smart enuff to make their decisions re stockpiling, but we aren't?????

Got enuff Prozac? Your DGI friends are going to need it.

Taz

-- Taz (Tassie @aol.com), May 03, 1999.

The embedded chip compliance rate is not good. Again the old numbers are rearing their ugly heads. Not to worry, though, I am sure these numbers will be adjusted as the reports are fine-tuned for public consumption.

snip

All respondents have inventoried their embedded chips, with a compliance rate of 85-90%. Of the 10 to 15%remaining, perhaps half is minor adjustments/date changes.

snip

And that leaves a much higher percentage with problems than we are being led to believe is the average for these embedded chips.

-- Mike Lang (webflier@erols.com), May 03, 1999.

AMSUS conducted a survey of 61 members (17 are also members of PhRMA, 9 are represented by GPIA and NAPM). Of the 42 who responded, Buddy Menn and Diane Dorman, Generic Pharmaceutical Industry Association: Of the 36 companies surveyed, 44% responded.

NWDA conducted a stockpiling survey of 200 members, to which 77 responded

NAC surveyed 848 pharmaceutical and medical supply companies (410 pharmaceutical, 438 medical supply). 357 companies responded

********* Comment: Note the number of those surveyed who did *not* respond. I see this phenomenon in many industry status reports. Readers may tend to focus on the reported progress made as representive of the entire industry. How good are these figures for risk assessment purposes when less than half of those surveyed even participated?

-- marsh (armstrng@sisqtel.net), May 04, 1999.

I wonder about that too, Marsh. I don't know much about statistical sampling methods, but surveys have the added twist of human nature. No one likes to report bad news, so do the finding represent the more successful of the industry?

Koskinen's comments are interesting. Clearly the panic effect really worries him. Me too.

-- (Lurkette@no.spam), May 04, 1999.