Supply chain logistics can make or break a clinical trial. In many cases, failure to provide and manage trial supplies on time has resulted in costly delays. So how does a CRO partner work with a sponsor to ensure supplies are properly managed?
Over the next few weeks, stay tuned to PSI On Point to learn about “seven deadly sins” of trial supply management, brought to you by PSI Trial Supply Manager, Alan Morton.
Last week, we looked at the deadly sin of gluttony and walked through the dangers of chasing after too much, too soon. This week, we’re diving back in and looking at our third warning sign… greed.
Greed & Penny Pinching (I’m Not Paying For That!)
Penny-pinching on overage and costs of shippers. Temperature monitors are around $50 each and temperature controlled shippers vary from $60-80 to over $500 per shipment for passive units and substantially more for active ones. Using temperature-controlled shippers can increase the weight of a consignment considerably, increasing courier costs significantly. Because of that, courier and shipper fees are often targeted as an area in which to save money.
We are regularly asked if it would be acceptable to ship supplies without using temperature-controlled shippers or monitors. The way to answer this with another question: Would you take medication that you could not guarantee had been stored appropriately? Most likely, the answer is no.
The reason for the question is simple; it costs approximately 3 times more in courier fees to send an insulated shipper vs a cardboard one. Over the course of a medium-sized study, this would amount to perhaps $30-40,000. And while it sounds a lot, it’s a very small percentage of the overall study cost.
It is incumbent on the company providing the medication to prove the medicine has been stored correctly at all stages in the production process. From the manufacture of the drug substance to the final patient dose, supporting data has to be provided to ensure proper storage. This data comes from the building management systems in the production processes and warehouses that store the medication, and from the temperature monitors that record the actual shipment temperatures in transit. Failing to use a temperature monitor or a temperature controlled shipper means that there is no proof that an excursion didn’t take place, so the integrity of the supplies cannot be confirmed – a very easy observation for an auditor and potentially deadly to a patient.
Duty Fees, Taxes, And Cutting Costs
Duty fees are also seen as an area to try to cut costs. No-one likes to pay tax, and import taxes and VAT in some countries can be exorbitant! For the example that we just discussed, around 1000 vials of the drug will be sent to India over the course of the study – total drug purchase cost = £677,000. To pay tax at the purchase price would mean paying 16% of the landed cost in customs duty – £108,000, plus VAT on the duty paid cost – another £85,000. Local taxes and education levies add another 6% (£46,426) – a total tax bill for import into India of nearly £240,000!
Putting a small nominal value against the drug cost is often seen as an easy way to reduce that cost. But when challenged, it can cause long delays and possibly lead to temperature excursions and useless supplies. It can also tar the reputation of the shipping company, meaning more scrutiny of every shipment from them. Some countries also restrict the sale price of the drug after commercialization to the value declared during the trials – can a sponsor really make a profit when selling a biosimilar for $5.00 a vial?
Is It Worth It?
With so many moving parts in a clinical study, it’s imperative to do things the right way, every single time. Cutting costs on shipping and/or overages could be a potential risk to the success of the study. And when you get too greedy, or pinch-pennies too tightly, you’re committing a deadly sin of trial supply management and putting a study at risk.
Next In The Series:
Stay tuned for the next deadly sin to avoid, and find out how a CRO can partner with vendors on behalf of sponsors to ensure trial supplies aren’t just an aspect of the project, but a successful arm of the product. Hint: next week, we’re moving a bit faster…there’s no time to “chill out.”
Alan Morton, Trial Supply Manager
Alan has been working in the logistics and supply chain arena for almost 30 years and has spent the last 7 working for market-leading drug supply and packaging vendors supporting studies all over the world.