In my last post, Safety First for Global Outsourcing, I indicated my view that companies should not assume that risk is something that can be outsourced to supply chain partners.  An article on Bloomberg.com outlining the scope of counterfeit medicine seizures caught my eye this week as reinforcement.  The article provides specific data points to what many professionals in the pharmaceutical supply chain already have keen awareness, namely that the presence of counterfeit medicines continues to grow at alarming rates.

According to data from the Pharmaceutical Security Institute, the industry’s own security groups, seizures of counterfeit prescription medicines were up 24% in 2007, with illicit versions of 403 different prescription drugs confiscated in 99 countries.  “It’s a big issue, it’s a global issue, it’s an insidious issue,” said John Lechleiter, the president and chief executive officer of Eli Lilly & Company.  “Over the past six years we’ve seen double-digit increases around the world” of counterfeit drug seizures, further indicated Thomas Kubic, the executive director of the pharmaceutical institute.

 The article points out that the while the more popular drugs such as Pfizer’s Viagra, Eli Lilly’s Cialis, Bayer-AG and Schering-Plough Corp.’s Levitra, tend to be the popular targets, the number of drugs is on the increase.   It further concludes that the availability of drugs through non-regulated Internet based channels provides a convenient channel of distribution for these illicit drugs. Regulatory agencies such as the U.S. Food and Drug Administration (FDA) say that they do not have resources to stop the flow, and that the counterfeiters are “too good at what they do”.

 In my view, the obvious take-away is that the pharmaceutical industry has to step-up its efforts to stem this tide of counterfeit drugs and materials across their global supply chains.  As consumers, we place our trust and confidence in a brand, and get rather upset when the brand fails in expectations.  Supply chain risk management needs to be identified as a key initiative for any pharmaceutical company’s business agenda, as a means to insure ongoing brand integrity, as well as responsiveness to incidents that place consumers at health as well as safety risk.  As has been pointed out in Supply Chain Matters posts regarding Heparin and other incidents, the problem is obviously growing beyond just the sale, and stretches back to origins of raw material. 

Investing in people, process, and technology enablement practices that directly mitigate the issue of product integrity is of prime importance, and cannot be passed over to just government regulation or enforcement.  Joint as well as coordinated industry and government actions must continue to lead in resolving the issue of product and supply chain integrity.

 Bob Ferrari

In a recent Spend Matters post, Jason Busch called attention to a Forbes.com commentary article titled Safety First Abroad, which clearly addresses the growing issue and concern for the need for a supply chain risk management strategy when presented with a growing global supply chain.  Jason within his post encourages the procurement community to step up to the plate and invest in supply risk and performance management solutions that go beyond just simple scorecarding of suppliers. I would agree.

 But this Forbes article brings to light an even more important take-which has been often reinforced for manufacturers and retailer readers of Supply Chain Matters.  Outsourcing, either raw materials, finished goods, or contracted manufacturing within your global based supply chain does not absolve any organization from its ultimate responsibility for product quality and safety.  Just follow the multiple posts on this site tracking the issue of Heparin contamination. This is not just a technology and/or tool consideration, but also an issue of overall management and accountability culture. 

“When companies had integrated vertical manufacturing processes, they were responsible for what went out the door” author Ben Heineman, Jr. points out in his article.  “The “deverticalization” of the production process through off-shoring and outsourcing doesn’t-or shouldn’t-change that ultimate responsibility.”

 In other words, companies should not assume that risk is also something that can be outsourced.

 Bob Ferrari