News

Media And Political Bulletin – 02 April 2020

Media and Political Bulletin

02 April 2020

Media Summary

Emergency funding for COVID-19 not enough to prevent pharmacy closures, trade body warns

The Pharmaceutical Journal, Carolyn Wickware, 01 April 2020

The Pharmaceutical Journal reports that pharmacy bodies have said that emergency COVID-19 funding for community pharmacies may not be enough to prevent closures after the government promised £300m in advance, but not extra, payments for pharmacies.

Pharmacies were told that the sector will receive a £200m advanced payment on or shortly after 1 April 2020, with a further £100m expected at the end of month or in early May 2020. But announcing this on its website, the PSNC said the payments would need to be paid back at a later date.

Malcolm Harrison, chief executive of the Company Chemists’ Association, said he was “disappointed” with the level of funding, “and the fact that pharmacies will ultimately have to pay it back.” Claire Anderson, chair of Royal Pharmaceutical Society England Pharmacy Board, said the announcement “is a welcome step … but should have come from new money”.

This was also reported in C+D and Pharmacy Business.

COVID-19 update: coronavirus and the pharmaceutical supply chain

European Pharmaceutical Review, Hannah Balfour, 01 April 2020

With the COVID-19 pandemic affecting industries across the globe, European Pharmaceutical Review’s Hannah Balfour explored the latest reports on medicine availability during the global pandemic, and spoke to James P. Duffy, a Reed Smith Partner, to assess how the outbreak is affecting the global pharmaceutical supply chain. He explores the impact of China and India, logistics and distribution concerns, and future changes to manufacturing practices, amongst others.

While he observes that drug shortages due to COVID-19 are so far limited and expected to remain this way in the short term, James Duffy says that if the pandemic continues then stockpiles of pharmaceuticals, APIs and other chemicals may decrease, resulting in shortages. He adds that a further effect is the added complications for distribution, particularly with population movement restrictions across Europe.

 

Parliamentary Coverage

There was no parliamentary coverage today.

 

Full Coverage

Emergency funding for COVID-19 not enough to prevent pharmacy closures, trade body warns

The Pharmaceutical Journal, Carolyn Wickware, 01 April 2020

Although the government has promised an advance payment of £300m to the community pharmacy sector, the amount is too little to cover the full expense pharmacies are incurring, pharmacists have said.

Emergency COVID-19 funding for community pharmacies may not be enough to prevent closures, pharmacy bodies have said, after the government promised £300m in advance, but not extra, payments for pharmacies.

Pharmacies were told that the sector will receive a £200m advanced payment on or shortly after 1 April 2020, with a further £100m expected at the end of month or in early May 2020. But announcing the funding in a statement on its website, the Pharmaceutical Services Negotiating Committee said the payments totalling £300m would need to be paid back at a later date.

Malcolm Harrison, chief executive of the Company Chemists’ Association, said he was “disappointed” with the level of funding, “and the fact that pharmacies will ultimately have to pay it back,” adding that the initial £200m payment “will only just cover half of the estimated uplift in prescription items seen [in April 2020]”.

“In addition to the increased cost of purchasing medicines, pharmacies are having to pay for additional staff and overtime, additional cleaning and guarding, as well as providing protective equipment — such as screens and visors — to protect their teams, so that they can stay open for the public,” he said.

“We have grave concerns that pharmacy businesses, large and small, will not be able to continue to cope in this unprecedented situation without adequate additional support and may be forced to close permanently.”

Claire Anderson, chair of Royal Pharmaceutical Society England Pharmacy Board, said the announcement “is a welcome step … but should have come from new money”.

“With rising costs, this will not yet be enough to support those pharmacy teams working hard on the frontline during the COVID-19 pandemic,” she said.

“As we await further details on the proposed medicines delivery service, we must also see fair funding in the longer-term to help pharmacies keep their doors open to the public.”

Local pharmaceutical committee (LPC) leaders have also suggested the funding is insufficient.

Nick Hunter, chief officer of Nottinghamshire, Rotherham and Doncaster LPCs, told The Pharmaceutical Journal that although the advanced payments are “very welcome and essential to keep the sector running” during the pandemic, they are “a sticking plaster” with further negotiations needed.

Raj Matharu, chair of Pharmacy London — a representative body for London’s LPCs — said the lack of new funding will “[cause] pain later on”.

NHS England and NHS Improvement “do not value the fantastic response from the community pharmacy sector,” he said, adding that community pharmacy is “the only healthcare profession out there in the community still seeing people and patients face to face”.

“[We are], literally, putting our mental and physical health on the line and we can’t attract new funding after that. What else do we have to do?” he said.

Meanwhile, pharmacies in Scotland have also been promised advanced payments to help manage cash flow issues, although details have yet to be finalised.

Matt Barclay, director of operations at Community Pharmacy Scotland (CPS), said in a video update on 31 March 2020 that an agreement with the Scottish government on advance payments is “to be made at the end of April [2020]”.

“These will be three times the value of the net amount paid at the end of December 2019,” he said, and added that the CPS was “still working with Scottish government on new monies and how that could happen”.

Keith Ridge, chief pharmaceutical officer for England, also announced, on 31 March 2020, that pharmacies will be given £300 to pay for screens or other “physical barriers” to be installed to maintain social distancing in pharmacies.

Jawad Merali, pharmacist at Fairview Pharmacy in Edgware, told The Pharmaceutical Journal that putting up a screen at his pharmacy had “made a big difference” to staff morale, but that it cost £1,500 to install at short notice.

“There will be an equivalent, probably three quarters of the cost [of installation], to take it away,” he added, as it required drilling to the floor.

The advance payments come as some community pharmacies in England are expected to receive an uplift in their transitional payments from 1 April 2020, depending on their dispensing volume.

Under the agreed dispensing volume bands, pharmacies that dispense between 2,501 and 5,000 items will now receive £1,168, compared with £700 in 2019/2020.

Pharmacies dispensing between 5,001 and 12,500 will get £1,475, while those dispensing between 12,501 and 19,167 items will receive £1,598 monthly. Previously all pharmacies dispensing between 5,001 and 19,167 received £780.

Lastly, those dispensing more than 19,168 items will get £1,660 each month — nearly twice as much as the £833 monthly payment they received in 2019/2020.

This was also reported in C+D and Pharmacy Business.

COVID-19 update: coronavirus and the pharmaceutical supply chain

European Pharmaceutical Review, Hannah Balfour, 01 April 2020

With concerns rising about medicine availability during the global COVID-19 coronavirus pandemic, European Pharmaceutical Review explores how the pharmaceutical supply chain is faring.

With the COVID-19 pandemic affecting industries across the globe, European Pharmaceutical Review’s Hannah Balfour explored the latest reports and spoke to J.P. Duffy, a Reed Smith Partner, to assess how the outbreak is affecting the global pharmaceutical supply chain.

Supplying the supply chain

The impact of China and India

Among the problems for pharmaceutical supply chains during this pandemic are the restrictions and impact of COVID-19 on two of the largest global producers of active pharmaceutical ingredients (APIs) and generics: China and India.

Since the outbreak started in China and lockdowns were imposed, ­supply from their manufacturing facilities has reduced. The true extent has been difficult to quantify as limited numbers of the typical workforce have been able to return to work. A recent letter sent by Medicines for Europe revealed that the Chinese powers expect large manufacturing facilities to be fully operational soon, although smaller producers may continue to struggle for some time.

Duffy stated that “most companies feel that they are relatively well positioned to weather short-term disruption. This is because many publicly traded companies have six months to a year of stockpiles; however, if restrictions continue for an extended period of time, especially if people in China cannot get back into the factories to work, eventually supply chain shortages will start to disrupt everyone.”

Reports suggest a range of possible effects, including:

  • generic drug producers who source APIs from China are likely to face supply chain issues if the outbreak continues
  • short-term scarcities affecting certain products – one such shortage has already been announced by the US Food and Drug Administration (FDA)1
  • manufacturers of branded pharmaceuticals may see a shift in their demand, both as antiviral use rises and as other chronic conditions are left untreated by patients due to concerns over exposure to COVID-19.

A second roadblock for some pharmaceutical manufacturers is that “India has restricted the export of 26 active pharmaceutical ingredients… which represents about 10 percent of their export capacity,” according to FDA Commissioner Stephen Hahn. As the contributors of 20 percent of the global generics supply, the decision to restrict exports due to fears of internal supply shortages has far-reaching impacts, particularly on supplies of paracetamol, several antibiotics such as tinidazole and erythromycin, the hormone progesterone and vitamin B12.2

According to reports, the restrictions were imposed because India’s manufacturers rely heavily on imports of their APIs from China. As a result of the lockdowns and closures, slowed production of APIs by the latter resulted in less availability and higher costs for the materials required for generics production. Duffy said the primary reason behind the export restrictions was to prevent domestic shortages in India in the long-term.

When speaking with EPR, Duffy highlighted that: “The US is the largest consumer of pharmaceutical products, accounting for somewhere between 45 and 50 percent of the market. We import more than half of our APIs and finished products. Therefore, it seems logical to think that if disruption in India and China goes on for an extended period of time, it will have to impact the US, as it will the rest of the world.”

Logistics and distribution concerns

Duffy explained that while manufacturing of the products is complicated by COVID-19, a further concern is disruption in product delivery: “This is not just pharmaceuticals, it is everything. The huge restrictions on population movements in Europe make distribution and shipping a problem. Let us look at an example: say you start with the manufacturing of an API in one country that then has to be moved to another jurisdiction to be manufactured into a finished product or go through several other production stages. You also need pill casings that are made somewhere else. All these elements have to be brought together to manufacture the finished product and then be moved by logistics companies, who, despite their best efforts to keep up with all this, have movement restrictions and worker illnesses placed upon them.

“What I would suspect is that there are going to be several disruptions within the supply chain, such that companies start declaring force majeure, as it becomes a commercial reality that people cannot perform under contracts.”

Force majeure clauses in contracts essentially state conditions under which the performance of a company can be excused or suspended. They can also state that a company is not liable for failing to meet the terms a contract. Force majeure typically applies while the event, such as a pandemic, is impacting the ability of the company to perform; however, Duffy explained: “there is no one standard force majeure clause that is in every contract. Therefore, the scope of what is entitled, what companies can claim and the scope of what your excuse for non-performance might be varies from contract to contract.”

What can pharma do to limit the impact on the supply chain?

Duffy suggested that because of the “incredibly fluid situation… companies need to constantly monitor these issues and assess their possible impact for the immediate future, as well as the more medium- and longer-term impacts. Companies must think around corners and anticipate problems before they become larger immediate issues”.

What can companies actively do aside from monitoring?

Duffy presented two suggestions; first, every company should review their contracts: “look at the global contracts and suss out which ones are going to be impacted by cross-border issues and determine what the force majeure provisions say, both in terms of what you can claim and what others can claim against you. I think the biggest and most important exercise now is to get a grip on what the potential issues are and what the potential exposure is.”

The second is to look at the indemnity provisions, which require a party to compensate another company for a loss suffered in which they have some role or in which they have accepted some form of legal responsibility. These could include the provision of financial or legal aid, so Duffy said: “companies need to be looking at those as part of this same exercise, because if someone claims either force majeure or indemnity provisions against them, the business against whom it was claimed might not be able to perform or offer services to another enterprise higher up in the supply chain.”

As a result, Duffy suggests pharma needs to be careful of both the direct supply shortages and the legal situations that COVID-19 could place them in.

Future changes to manufacturing practices

While the effects of coronavirus are overwhelmingly negative, Duffy suggested there could be one positive as a result of COVID-19: that companies may begin to spread production across different markets, limiting the effects of future disruptions: “I think the next six months are going to be extremely interesting because companies are going to have to look at shifting manufacturing from impacted markets to less impacted markets. A few pharmaceutical companies have already released statements saying they are trying to shift manufacturing or compensate for market disruptions by increasing manufacturing elsewhere.”

He suggested this could be problematic in the short-term, as an increasing number of markets are impacted by COVID-19 and the process to establish pharmaceutical manufacturing facilities is lengthy due to the tight regulations and the need for precise capabilities. In order to do this Duffy said that pharma companies will have to use and expand production at existing facilities in other markets. However, “in the long-term enterprises are going to have to diversify out their manufacturing capacity across a number of markets. Where manufacturing is highly concentrated right now, such as in China or India, that is probably not going to be the case in five years.”

Duffy concluded: “I think over the long term, businesses across several markets are going to be looking at whether it makes sense to have lots of factories in any one market or if they should be attempting to diversify by building factories elsewhere.”

Conclusion

While drug shortages due to COVID-19 are so far limited and expected to remain this way in the short term, if the pandemic continues then stockpiles of pharmaceuticals, APIs and other chemicals may decrease, resulting in shortages. A further effect is the added complications for distribution, particularly with population movement restrictions across Europe.

Duffy advises pharmaceutical companies to monitor the evolving situation and ensure enterprises are aware of the clauses of their contracts that may become problematic in the longer term.

Media And Political Bulletin – 02 April 2020

From Factory to Pharmacy

As part of our mission to build awareness, understanding and appreciation of the vital importance of the healthcare distribution sector, we developed an infographic explaining the availability of medicines. It identifies the factors that can impact drug supply, as well as the measures that HDA members undertake day in, day out to help mitigate the risks of patients not receiving their medicines.

See the Infographic

Apply to become a Member

Membership of the HDA guarantees your organisation:

  • Access to leading policy and industry forums of debate and discussion
  • Invitations to a range of networking industry events organised through the year, including an Annual Conference and a Business Day
  • Representation on HDA working parties, including the Members’ Liaison Group
  • A daily Political and Media Bulletin and HDA Newsletters
  • Access to HDA policy documents and all sections of the HDA website
  • Branding and marketing opportunities
Apply Now

Already a Member?