Good morning.
I’d like to begin this morning by thanking John and the HDMA staff for your commitment, your unwavering dedication and your teamwork. This year, you have worked tirelessly to advance a new association model based on leadership, partnerships and progress. I’m a great believer in continuous improvement, so I don’t believe the work is ever done, but the progress of this organization and the increase in its effectiveness is very gratifying to me.
2007 has been a great year for HDMA.
- John and staff have worked hard to enhance and deepen relationships with the key trade associations in the industry
- Political advocacy has increased, and HDMA is now recognized on Capitol Hill as a key player in pharmaceutical supply chain issues
- John and staff are focused on maintaining a culture of service to the membership
- And the membership of HDMA, both active and associate, is as active and engaged as I have seen.
I would also like to thank the HDMA Board of Directors for electing me to a second term as Chairman.
A two-year term is a departure from HDMA’s tradition, but it’s certainly not a precedent. HDMA now is leading multi-year, industry-wide initiatives that require consistent leadership and participation from end-to-end of the supply chain. Recognizing the need for continuity and consistency, the Board voted -- and I have agreed -- to serve another year in order to see through the major projects that began during my term.
I appreciate their confidence and look forward to the association continuing its leadership in supply chain issues.
A good example of this need for consistency can be found in the Rx SafeTrack initiative.
Last year, most of you will remember that I issued a Call to Action, and challenged the industry to identify a target date by when supply chain partners could be ready to implement track-and-trace systems and processes in the healthcare supply chain. Since that time, HDMA brought together a broad group of senior leaders to form Rx SafeTrack.
Today, the group includes top executives from Ahold USA, AmerisourceBergen Corporation, Apotex, Boehringer Ingelheim, Cardinal Health, CVS Corp., Duane Reade, H.D. Smith, Johnson & Johnson, Kinney Drugs, McKesson, Merck, Mylan Pharmaceuticals, Osborn Drugs, Pfizer, Sandoz, Smith Drug Co., Valeant Pharmaceuticals, Walgreens and Wal-Mart and others. The group is also guided by association CEOs from HDMA, NACDS, PhRMA, GPhA and NCPA.
Never before has the healthcare supply chain come together in such numbers to work toward a shared goal, and I believe this effort underscores the leadership of HDMA as well as the industry-wide commitment to both patient safety and track-and-trace implementation. More importantly, I believe Rx SafeTrack is a bellwether effort signaling new levels of openness and communication across the supply chain.
On one hand, Rx SafeTrack has fallen short of our ambition to have a date for when track-and-trace systems would be implemented. By track-and-trace, I’m referring to a process to track and follow a pharmaceutical product through the supply chain. However, Rx SafeTrack also has succeeded well beyond my imagination at being a vehicle around which to rally the industry and a platform on which to demonstrate that we are indeed proactive on this issue. Rx SafeTrack has been well received by regulators and politicians, and they are listening to us.
In addition, since it was formed, Rx SafeTrack has identified a wide range of technologies and approaches that may be needed to track and trace prescription medicines from the point of manufacture to the point of dispensing.
Rx SafeTrack was deliberately structured as an open forum, supporting technology-neutral discussions about what’s possible, what’s practical and what’s probable from multiple and varied perspectives across the entire supply chain.
Over the past year, this group has been working diligently, openly discussing obstacles, opportunities, challenges and varied technologies that all must be considered prior to any company implementing its own track-and-trace technology.
The group has mapped out the business processes and technologies that may be necessary to implement track-and-trace technologies at the item level, at the case/pallet level and at the lot level. These three business scenarios have required a great deal of work to develop, but the dialogue across the supply chain has been productive, and the resulting work product should be commended.
Through these efforts and the great work that’s been done this year, we have learned that supply chain partners believe that track-and-trace technologies are needed to further enhance the safety and the security of the supply chain. There is consensus that truly effective systems begin at the point of manufacturer and end at the point of dispensing. And supply chain partners agree that implementation would be much easier if we had one set of legal requirements to guide the industry.
However, supply chain partners disagree on the best way to implement track-and-trace technologies. These differences of opinion have already started to play out in California, where distributors have made strong arguments in favor of item-level serialization, and others have advocated for a “risk-based” approach using lot number tracking. More about that situation later.
We continue to try to work though these differences, but manufacturers, distributors and pharmacies, by definition, all have different business models. We have different customers. We have different business incentives, IT capabilities, core competencies and legal obligations. We have to consider all of that as companies work toward individual solutions.
So, instead of debating the dates, implementation strategies and business process issues that would surely have slowed the overall effort, in September of this year we changed the goals of Rx SafeTrack. Instead, we have decided to identify the solutions that we can agree on about which associations and member companies can advocate proactively at the state and federal level.
This is critical due to ongoing legislative vehicles at the state level – such as in California - and the federal level, where there is new language in the Food and Drug Amendments Act, passed earlier this year, which directs the FDA and the Industry to work toward new standards for a track and trace system 30 months from now and pedigree requirements are a part of the proposed re-importation bills.
It’s our belief that the existence of Rx SafeTrack provides us the best opportunity to avoid a mandate that is dictated to us as an industry. So, in 2008, Rx SafeTrack will shift focus and drive efforts for uniform federal pedigree requirements. The HDMA board recommended this course of action a year ago as we knew uniform federal pedigree requirements would be coming. Indeed, the Legislature is now moving this direction, and HDMA continues to build its reputation and credibility.
Partners within the group agree that we have a national supply chain, and that in order to successfully implement a meaningful track-and-trace system, our industry needs a single set of pedigree requirements. Varying and inconsistent pedigree requirements in the states do not provide the strong and consistent regulation necessary to bolster the security of the supply chain and protect the public safety.
At the same time, supply chain partners also realize that developing technologies, business processes and operational systems that are unique and specific to each state is wasteful and inefficient, diverting human, technology and capital resources away from creating solutions that could provide even greater levels of safety and efficiency.
I want to stress that until now, Rx SafeTrack focused on the business process requirements for track-and-trace -- not the development of pedigree requirements. Creating a business plan for track-and-trace technologies and crafting a single set of legal requirements are very different tasks. We do not yet know what a uniform pedigree system will look like, nor do we have a recommendation for when it will be ready for implementation. That is the task ahead for 2008.
Although work is just beginning, we have already brought allied trade associations and the Rx SafeTrack partner organizations together to begin the discussions. And, I do believe that the business process work that Rx SafeTrack has already completed will inform the work ahead, and will help us develop a public policy proposal that will be effective and efficient.
Meanwhile, until the Federal laws change, we continue to face a myriad of state requirements, including those in California. As with Rx SafeTrack, there are many facets of the California law about which we can all agree. We all share the state’s vision for increased safety and security. And, I believe we all can agree that the 2009 compliance deadline will be a challenge.
From the distributors’ perspective, HDMA has and will continue to support provisions of the law that require item-level track and trace, based on unique, serialized ID numbers.
Underscoring that support, HDMA has been active this year, providing regular and ongoing education to the California Board of Pharmacy’s Enforcement Committee. The Association has been educating it’s supply chain partners on the law’s requirements, as well as pilot findings and implementation strategies, at an education seminar, held just last month. And, HDMA will continue to provide supply chain education on California requirements next month at the RFID/Track and Trace Industry Adoption Summit, co-hosted with NACDS.
The association has been consistent in taking a leadership position and advocating for the best position for it’s members, it’s customers and the patients they serve. HDMA will continue to pursue this ambitious goal because it’s the right thing to do for the industry and the patients, who expect and deserve medications they can trust.
As we approach 2008, a year I expect to be filled with controversial issues that will challenge our industry to grow, adapt and evolve, I would like to put forward another challenge. The time has come for Supply Chain Partners, wholesalers, manufacturers, hardware providers and software providers, to have open, honest discussions regarding their plans to implement track and trace in California. Let’s be candid and work together when we can, and disagree when we must. But let’s do so with the long-term goal in mind.
Let me explain a bit what I mean by that.
We have been discussing track-and-trace systems for years, but not until Rx SafeTrack have we worked together to develop a business case for the Industry. As we do not yet have a federal standard, we need to focus these discussions, and we need to be realistic and practical about what we propose, particularly in light of the California law. Each company needs to work with its supply chain partners to create plans that comply with the law -- not as some of us may wish it were written, but as it stands today.
Second, the patients we serve every day depend on us to implement solutions that increase value, enhance operational efficiencies and improve the safety of the medicine supply. We must start working together to accomplish this task in a way that works for all partners across the supply chain.
I believe the pathway to successfully accomplishing this is our work in building and fortifying relationships to become unified around our shared, long-term mission to safely and efficiently deliver the best possible patient care. The goal is not to push responsibilities onto another supply chain partner; it’s to share the work and together deliver on our commitments.
I am encouraged by the fact that we are already discussing the issues more openly and more broadly. We’re talking earlier, with more people, and we’re willing to assess how our decisions may affect our trading partners. There is more recognition and understanding of differing points of view. And we’re more open to working together than ever before.
The evidence of this can be seen broadly across the Industry. Supply chain partners are realizing more than ever before that they are interconnected and interdependent. In fact, many companies have requested to be added to the Rx SafeTrack initiative. But, the Rx SafeTrack initiative is just one example. The Association’s work with supply chain partners on Rx Response, an initiative to enhance coordination and communications in times of emergency is another. Overall, I believe there is greater recognition that when the supply chain works together, we achieve better solutions that deliver more safety, value and high-impact results.
But, our work is in its nascent stages. We need more support from more companies across the supply chain. We need new partners and new perspectives. The industry has made so much progress, but more can be done.
With this goal in mind, HDMA has revitalized the Research and Education Foundation to become a hub for the healthcare supply chain to come together to manage the changes ahead and continue ongoing efforts to create greater levels of healthcare transparency, trust and value. To better reflect this new mission and vision, the Foundation has changed its name to the Center for Healthcare Supply Chain Research.
The Center’s research and education programming going forward will not be merely theoretical – it will be based on real-world perspectives and it will be directly applicable to challenges and opportunities facing trading partners. We intend the Center to answer real questions and provide a path forward for companies to create major gains in supply chain efficiencies, new market opportunities and solutions that improve patient access, compliance and clinical outcomes.
It is my pleasure to announce a new leadership structure, which I expect will help energize and add vitality to the Center’s programs and objectives. The new Center for Healthcare Supply Chain Research will be led by Executive Vice President and COO Karen Ribler. For those of you who have not yet had the opportunity to meet Karen, I can tell you she has extensive experience managing non-profit charitable organizations. Her demonstrated leadership skills and forward-looking strategy will be a valuable asset as the Center begins delivering exciting new research and resources on the healthcare supply chain.
I want to thank Karen and her staff for their work this year to revitalize the Center with new strategic research that will help trading partners work together to create more cooperative business models that ultimately will lead to increased business intelligence, strategic innovation, streamlined efficiencies and enhanced customer value.
You will learn more about current research projects being led by the Center during the Executive Breakout Sessions tomorrow morning, including an update to 2004’s Role of Distributors in the Healthcare Supply Chain, conduced with Booz Allen Hamilton, and the Blueprint for Data Management and Data Sharing in healthcare.
These two projects are just the beginning of what will be an exciting future of dynamic new research that looks to answer the critical questions facing the healthcare supply chain. Upcoming research projects planned by the Center will examine the business benefits and economic ROI for adapting data sharing technologies and practices in healthcare. The Center also intends to lead pharmacy panels to uncover additional areas of study to help distributors and manufacturers deliver additional value to end customers.
Our supply chain is becoming increasingly complex. Patient care settings and dispensing sites continue to multiply, and new products are being created every day with unique logistical and handling requirement.
This complexity opens up new opportunities for supply chain partners to work together to explore new public policies, business realities and trends that will shape the future of healthcare delivery. I encourage all of you to look to the Center as a place to share knowledge and think beyond our supply chain segment to create new opportunities in healthcare. Through future-focused research, case studies and interactive education, the Center will work to help all of us better respond to new demands to advance patient health and the quality of care.
In summary… 07 has been a great year for the association. And I believe 2008 is going to be an extremely challenging year, but I am confident it will be a great one as well. Our industry will be called upon to confront some very real, very controversial issues. However, with the environment that’s been created at HDMA, I look forward to having engaging discussions across the supply chain that will propel us forward for years to come.
As I look ahead, I see tremendous opportunities for us to continue our progress in working together as a fully integrated supply chain, bound together by our shared responsibility to safely and efficiently serve patients across the country.
I believe that in the year ahead, existing alliances will be strengthened and new partnerships will be forged as we uncover new issues and continue the work of articulating distributors’ vital role in delivering healthcare.
These partnerships may be difficult at times, but if they are worthwhile and built on a solid foundation, they will endure. Let’s start by being realistic about what we have to accomplish, listening to one another and understanding other points of view and cooperating to get the job done.
As we go forward, let’s go with the knowledge that we are interconnected, and that together we can achieve new levels of long-term safety, value and success in the world’s most sophisticated pharmaceutical supply chain.
Thank you very much.
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