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Int. J Sup. Chain. Mgt Vol. 2, No. 1, March 2013 Reverse Logistics in Pharmaceutical Industry Malik Iqbal Kabir Manager, Operation Process Compliance, Opsonin Pharma Limited, Dhaka, Bangladesh worth US$5 billion [10]. Some important considerations Abstract: This study looks into detailed aspects of reverse
for the industry when it comes to reverse logistics are the logistics on the issues that pharmaceutical organizations
security of the returned goods, keeping the cost low with the face. Reverse logistics is now following a trend where it is
help of automation, traceability of the goods returned from seen as a competitive advantage and a source of potential
the customer to the final stage of disposition. revenue. The perception is changing from the tradition of
returns being a barrier to profits and a cost burden. Also

Literature Review
the sustainability issue being addressed by reverse logistics
is beneficiary to pharmaceutical organizations with end-of

During the last decade, reverse logistics has obtained focus life products. The discussion contributed to the market
in research and practice both. In early nineties, the Council perspective and to back up the misconception of returns
of Logistics Management published two studies on reverse being a cost issue, when it maintains market share by
logistics. In 1992 Stock [1] first recognize the field of retaining quality. The perception of those industry
reverse logistics as relevant for business and society practices on the environment and sustainability practiced
generally. Rogers and Tibben-Lembke [2] in 1999 by organizations has shown less enthusiasm than once
presented a broad collection of reverse logistics business practices, but they had given special attention to the US experience. They found that four in ten logistics managers management, logistic, consider reverse logistics relatively unimportant compared pharmaceutical logistics, pharmaceutical reverse logistic to other company issues. During the last years, many articles dedicated to the optimization and management of reverse logistics appeared, like Guide et al. (2000) [3] on In common scenario a product or service is developed to be the characteristics of reverse logistics for remanufacturing manufactured or created and go through the supply chain (e.g. manufacturer-wholesaler-retailer) to be sold to a In terms of resource recovery, the most often described consumer. Supply chain is integrating more activities than option was recycling and re-use/redistribution (De Koster et those concerned with supply chain alone like including al., 2001) [4]. Products, components, materials, equipment service and product recovery. Here we will focus on and even complete technical systems may go backwards in especially reverse logistics, i.e. the handling of products back the supply chain (for convenience we will use the term to manufacturer's or producer's end. The objective is to products to refer to all of them). minimize the handling cost while maximizing the value from the goods, or proper disposal. Essentially, reverse logistics is For some time we have been familiar with products being the opposite of logistics management. Goods or materials reworked during manufacturing due to unsatisfactory move in the opposite direction of the supply chain, that is, quality, or with good materials or components being from the customer back to the supplier. Products are returned returned from the production floor because they were to the manufacturer or retailer for any number of reasons. leftover after production (manufacturing returns). Some of the more common reasons are warranty failures, damaged products, product recalls, incorrect product Defective products may be detected after they have entered orders/shipment, exchange of impaired products for the supply chain resulting in a pull back of products through functional ones, reusable packaging materials, product the chain (product recalls). upgrading and so on. Whatever the reason, returned goods have to be processed in the best manner possible. Reverse Methodology
Logistics has become a fairly serious issue in recent times The methods to be used will be conducting a literature review primarily because retailers have been forced, due to throughout all the sections, researching websites, books and increased competition, many forces drive reverse logistics, academic journals. like, competition and marketing motives, direct economic motives and concerns with the environment. Whatever the reason, returned goods have to be processed in the best Discussion on Different Reverse Logistics
manner possible.
4.1 Pharmaceutical Industry Scenario

Reverse logistics in the pharmaceutical industry is extreme important, not only from the economic point of view, but Pharmaceutical producers combine ingredients precisely, also from the environment as well as regulatory point of under specific conditions, while negotiating a maze of view. The pharmaceutical returns industry is worth US$2.5 stringent regulations and quality controls. Companies that billion. There is also an estimated reverse flow of goods manufacture, move or store pharmaceutical products must meet similar demands. Many drugs are highly sensitive to temperature; some are extremely valuable; and all are International Journal of Supply Chain Management
subject to a complex array of government and international IJSCM, ISSN: 2050-7399 (Online), 2051-3771 (Print) regulations. In the pharmaceutical supply chain, every detail Copyright ExcelingTech Pub, UK ( counts. Pharmaceutical logistics is such a specialized Int. J Sup. Chain. Mgt Vol. 2, No. 1, March 2013 di scipline that drug manufacturers have long been reluctant. or wholesalers and typically involve drugs that are three But some recent industry trends are making drug to six months from expiration, explains Larry Hruska, manufacturers rethink their strategies. One trend is that president at GENCO Pharmaceutical Services. some popular drugs are coming off patent. Without popular "Consolidated returns tend to arrive from a pharmacy or products to boost their bottom lines, manufacturers try to delivery route in a box with a few hundred bottles of all make up the difference by cutting costs. One way they do shapes and sizes," he explains. this is through cutting cost in logistics operations. In country like India, Bangladesh many drug makers still 4.3 Recalls
manage some or all of their supply chains internally. Whichever strategy a company chooses, its supply chain Product recalls are similar to returns but require team wrestles with some highly specific challenges. additional identification and have a greater sense of urgency. Recalls and returns differ mainly because of Pharmaceuticals are not like other common products. When the notification aspects; there should be protocols for those products are recalled or returned, they can be notification, including business reply cards. Information repaired, resold, or donated. Pharmaceuticals, in contrast, regarding what has been returned need to be stored and are destroyed. The need for destruction relates to the documented for FDA and other regulated Pharma inability or difficult constraint of regulated facilities of market compliance purposes. There's also more manufacturers to ensure pharmaceuticals were handled regulatory oversight. For example, Pharmaceuticals properly after leaving their control and to ensure a secure may need to be held for inspection by regulators. chain of custody. Pharmaceutical manufacturers also may need to To put this into perspective, consider temperature. Storing a examine samples. As Richard Smith, managing director television or most other products at ambient temperature of life science specialty services at FedEx Express isn't harmful. But, for nearly half of the new drugs entering explains, "Pharmaceutical companies want to tie in the market, maintaining a specific temperature range is returns to a specific batch, so more identification is imperative. Temperature excursions can reduce potency, needed for recalls than for returns. This often is tied to reduce shelf life, or alter a drug so it becomes harmful. Live legal actions. It may be only a single batch that contains attenuated cholera vaccine is a good example. Stored defects." For example, the October recall of Astellas between 2-8°C, its shelf life is one year. But at room Pharma's Advagraf 0.5-mg time-release capsules by the temperature, its shelf life is seven days. "The regulatory European Medicines Agency involved only 12 batches. aspect of pharmaceuticals is among the most heightened of Ensuring that the correct batch is recalled affects any product category," explains Jeff Pepperworth, President patients but also has significant financial ramifications. of Inmar's Supply Chain and Healthcare Networks. Within Therefore, it's providers are becoming more common the pharmaceutical industry, track and trace requirements as pharmaceutical companies get out of the bricks and proving chain of custody are stringent and are only growing mortar business of distribution," Smith says. more robust. But, from manufacturers' perspectives, chain "Particularly as pharmaceutical manufacturers move of custody verification breaks down once the drug reaches into the developing world—mainly Latin America and its destination. Within the pharmaceutical industry, track Asia—they are establishing in-country collection and trace requirements proving chain of custody are strategies and are consolidating shipments," Smith says. stringent and are only growing more robust. But, from Because these compounds are returned for destruction, manufacturers' perspectives, chain of custody verification the requirements for temperature control and express breaks down once the drug reaches its destination. delivery that are present on their outbound transit are Pharmaceutical returns also require more vigorous security non-existent for their return. Consequently, some than most other goods because of the high value of the customers using cheaper ways of carriage, substituting ocean freight for air freight in some instances. Consolidating pharmaceuticals returns has inherent 4.2 Streamlined Returns
risks, however. Every handoff and each delay in the Traditionally, when returns arrive at a distributor, the supply chain increases the chance that criminals will distributor applies the manufacturer's retailer policies and divert the drugs into the black market where expired pricing to ensure the pharmacy, hospital, or wholesaler products will be diluted and labeled as saleable. The receives credit for the return. Then, the distributor sends the risk depends upon the location of the facility and the returns to a third party returns processor for destruction. Returns arrive at distributor or manufacturer are validated, Some 3PL logistics [7] company handles recall solutions policy and pricing policies are applied, accounts are for medical devices, applying best practices learned in the reconciled, reports are filed online for the manufacturer and information technology sector. They had seen several the shipper, and the pharmaceuticals are destroyed. recalls that often were inefficient and poorly organized, so Documented proof of destruction must have to be kept for we built a solution for our customers to handle recalls in a regulatory purpose. Here process has to be made to ensure more structured way. That solution consists of Recall the elimination of errors, duplicate processing and diverted Alliance and Recall Action, With Recall Alliance; work with customers to build knowledge around their products Not all returns are credited. But, when manufacturers do and the most efficient recall procedures. The most basic credit returns, reverse logistics have the additional level focuses on industry best practices, systems, and challenge of ensuring that returns are authorized, quantities management. The premium level also includes readiness, are validated and returns data for lot or batch number and audits, and certifications. Recall Alliance is in the initial shipper are matched against the original documentation. stages of launch. It debuted in Europe and launches in Returns for credit, primarily, are made by retail pharmacies Asia and America in 2012. Recall Action is the execution arm, ensuring access to the right logistics. Int. J Sup. Chain. Mgt Vol. 2, No. 1, March 2013 warehouse after business hours, cut a hole in the roof, and There's no magic pill for dealing with those issues, but the used a gantry to hoist out the product. And those products industry has developed some effective solutions. Here's a look immediately go to other markets. at the state of pharmaceutical reverse logistics today. To stay one step ahead of the criminals, Sentry continuously adjusts its security strategies. For example, some logistics 4.4 One Batch at a Time
providers monitor with sensors 24/7 throughout the whole In a typical batch process associated with pharmaceutical facility. Some 3PL service providers around the globe reverse distribution, the reverse distributor consolidates and applies any level of security that an individual customer ships returns from pharmacies that have nothing in common requests. Among the tactics and technologies it uses are GPS other than the wholesaler they purchase products through. tracking, biometric scanning, video analytics, motion These products are then sent back to the pharmaceutical detection, infrared detection, and roving security patrols. manufacturers in one consolidated shipment that might contain several hundred products from several hundred different 4.7 Controlling the Temperatures
pharmacies. It's much more efficient for the wholesalers, Keeping pharmaceuticals safe means not only keeping them manufacturers and reverse distributors to handle the returns out of the hands of thieves, but also maintaining them at the this way. The problem is that most reverse distributors take the proper temperature. For many pharmaceuticals, a two-degree easy way out when it comes to issuing credits as part of a Celsius temperature variation is all that's needed to spoil the entire lot. By 2014, seven out of 10 of the leading pharmaceutical products will require temperature-controlled 4.5 Managing Regulations
transportation, estimate some industry observers. The interesting part of regulation is you have to maintain it all Maintaining just the right temperature is a challenge for through the value chain. So when products are in their anyone who ships or stores pharmaceuticals, but it's an even backward journey even it is for destruction it has to be larger obstacle for companies shipping from the warmer regulated. In highly regulated market in addition to requiring climates where many drugs are made today. "When you're drug makers to ship their products in country and across moving product out of locations such as Hyderabad and borders and over long distances, the pharmaceutical industry's Bangalore or in Bangladesh, a long X-ray screening process nature stymies manufacturers with a complicated array of at the airport can create complications," says Richard Smith, regulations governing transporting drugs in different countries. managing director of FedEx life sciences, specialty services "Pharmaceutical industry service providers need to be aware of and global trade services in Memphis. For large freight about 70 different sets of regulations," says Larry Sweeney, shipments, damages can run into the millions. To prevent chief operating officer at DDN, a Menomonee Falls, Wis., firm these losses, shippers and their service providers have that provides supply chain services to companies that make developed some sophisticated techniques for maintaining the pharmaceuticals, biologicals, and medical devices. [5]. Experts of logistics and distribution understands that challenge from the manufacturer's side, as well. In recent years, members of Now many global logistics has started with storage the International Conference on Harmonization of Technical environments tailored to the needs of different products. Requirements for Registration of Pharmaceuticals for Human Sentry, for example, recently added a room cooled to -45C to Use (ICH) have been trying to bring some unity to the rules. its Minneapolis facility. That building also offers rooms maintained at ambient (15C to 25C), refrigerated (2C to 8C), The industry is also seeking global standards for tracking drug frozen (-15C to -25C), and ultra-low (-70C to -90C) pedigrees. Different countries and U.S. states have established temperatures. To maintain consistent shipment temperature their own requirements for serializing drugs. This typically in transit, companies use equipment such as refrigerated involves attaching a two-dimensional bar code or other device trailers, insulated packaging, thermal blankets, and dry ice. that uniquely identifies a unit of the product so it can be tracked throughout the supply chain. In some regions, When a flight delay, Food and Drug Administration (FDA) serialization is designed mainly to monitor the chain of inspection, or other contingency holds up a pharmaceutical custody and keep counterfeit drugs off the market. Outside the shipment, FedEx Express might add more dry ice to a United States, governments look to this to prevent package, refreeze gel packs, or put items into temperature- reimbursement fraud. controlled facilities. Some companies have introduced active Although the industry has experimented with radio frequency packaging, which comes with a power source to maintain the identification (RFID) tags for serialization, that technology has temperature inside. Active packaging allows shippers to raised concerns, including fear that prolonged exposure to RF regulate different drugs at different temperatures inside the signals might harm certain biological products. "Issues also same trailer or container. have arisen with some products—such as liquids or packages with metal caps—reflecting energy and blocking the RF tag's Many companies also use sensor-based systems to document reading," Sweeney says. a product's temperature throughout its journey, and sometimes send an alert if the temperature veers too far. 4.6 Deal with Inventory Security
Exel, for example, uses a device called TempTale to monitor temperatures inside its customers' packaging. The device Keeping inauthentic product out of the supply chain is half the maintains a temperature history and validates that the security challenge facing drug manufacturers. Shippers also shipment was in compliance from pickup to delivery. Some deal with the opposite issue—keeping genuine product where it belongs. Given the high value of many drugs, loss exposures as well. Technologies now are able to determine prevention is a vital concern. There are many examples that whether a product was exposed to light—which would be might be cited as one pharmaceutical company that lost a bad news for a biologic product—or whether the product was noticeable worth of product when thieves arrived at a Int. J Sup. Chain. Mgt Vol. 2, No. 1, March 2013 subject to high vibration. For recalling the product or to right to sell a generic for 180 days before other manufacturers return goods for short date or any other reason has to can jump in. That makes it even more urgent to get the maintain every steps of cool chain validation. As the cool product to market. "Every day a company loses sales is total chain is determined during distribution of the products to end lost value," says Wiesman. "When the market is opened to customers it must have to be similar for collection for other generic manufacturers, prices drop dramatically." Competition will very quickly push the price down by as much as 80 percent. While speed is of the essence, a 4.8 A Journey for five Days with 106 pallets [6]
manufacturer introducing a generic drug faces multiple hurdles that can slow the race to market. For one thing, the Temperature control was a major focus when Cadence drug has to meet FDA requirements for release into the U.S. Pharmaceuticals Inc., San Diego, worked with FedEx to market. The FDA might also require some changes to the move an unusually large load of its product OFIRMEV from labeling right before the launch. "Changing labeling rapidly Italy to the United States early in 2012. The drug, an would require great logistical efforts," Wiesman says. injectable form of acetaminophen, must be maintained at controlled room temperature, between 20C and 25C, plus or 4.9 No Error Focused Trials
minus 10C, says Dave Dezan, Cadence's director of supply chain operations. One logistics function unique to the pharmaceutical industry is the work that supports clinical trials. Rather than distribute Cadence usually transports OFIRMEV in temperature- large quantities of a drug for use in the market at large, controlled intermodal containers, which allow the product to manufacturers conducting trials move product to labs and stay in the same environment while moving from truck to hospitals and, often, directly to patients' homes. The demand ocean vessel and back to truck. But in this case, the company for shipments to clinical trial sites tends to ebb and flow, and needed to move 106 pallets so quickly that marine transport each project is unique. "Various studies go on at the same was out of the question. "We considered moving product via time, and all have different requirements," Saponaro says. single pallets, using temperature-controlled containers on "It's a new learning process each time." passenger airlines," says Dezan. But in the end, Cadence decided to charter an entire Boeing 777 aircraft. Cadence and Depot services for clinical trials make up one of the fastest- FedEx developed processes to keep the shipment in the growing business areas for Sentry BioPharma. The company required temperature range while it was in motion and helps clients move product from manufacturing facilities during mode-to-mode transfers. Two FedEx temperature around the world to locations in a variety of c ountries. Some specialists flew to Italy to oversee the load through the entire destinations are growing increasingly important. "Our U.S. trip, from the factory to Cadence's 3PL in Memphis. and Canadian clients need to get product to test sites in Central Europe, where it seems to be easier to find test The specialists arrived at the factory with the necessary subjects for these programs," says Mitchell. number of trucks, plus one spare. At the airport, they supervised as pallets of product were prepared for air travel The drive for cost containment is causing pharmaceutical and wrapped in thermal blankets. "They set temperature manufacturers to combine their clinical and commercial loggers inside the plane, and did spot checks on the loggers logistics operations under one logistics contract. In we had on our product," Dezan says. "And they were on the established lanes, that strategy is effective. In developing flight while the product was being flown from Italy to regions of the world, however, Fisher Clinical Services advises its clinical trials customers to use specialized service providers to ensure that therapeutics, diagnostics, and patient In Memphis, the specialists supervised as the shipment samples can travel among sites easily [8]. unloaded, unwrapped, put onto trucks, and sent for and Customs clearance. Cadence worked with FedEx to submit Every pathway for the retirement of the products has to be documents to the FDA in advance, to help speed the tracked and documented for regulatory purpose and clearance process. compliance issues. The logistics has maintained, for sending the products to the market has to be strictly followed for While waiting for the go-ahead to move the shipment to recalling and return. Taking back the pharmaceuticals has Cadence's 3PL, FedEx kept the product on temperature- equal importance and must have to be the same way they controlled trailers. "They monitored the temperatures, as well as the fuel levels for the diesel-powered generators, to make sure the shipment stayed within the right temperature 4.10 The future—parallel logistics
range Dezan says.
The development of personalized medicine means that fewer,
The delivery went just as fast as Cadence had hoped. but more expensive, drugs will be developed. With average "Pickup started on Friday, and product arrived at our 3PL on costs of $1 billion and 15 years to bring a drug to market, the Wednesday," Dezan says. "For that type of shipment, and pharmaceutical industry is looking at ways to reduce those requiring FDA clearance, it doesn't get better than that." In costs. Some involve clinical trial logistics. Today, when patients some sectors of the pharmaceutical industry, getting product drop out of trials or trial enrollment is insufficient, the drugs to market as fast as possible is essential. This is especially shipped to a trial site are destroyed. There is discussion, true for generic drugs. "Generics have a very short window however, about developing regulatory requirements for drug of profitability," explains Saponaro. "Once the drug goes off storage at clinical trial sites like those for manufacturing and patent, the first one to market wins. Manufacturers have a distribution, according to Fisher's Smith. If that occurs, it may 30- to 60-day window to make huge profits, and then it starts be possible to shift drugs between trial sites and thus reduce to level out." overage, transport less material, create fewer returns, and reduce the need for disposal. In some cases, the FDA gives one company the exclusive Int. J Sup. Chain. Mgt Vol. 2, No. 1, March 2013 That future remains years distant, however. For the [4] De Koster M.B.M., M.A. van de Vendel and M.P. de foreseeable future, the best strategies for reducing the costs of Brito (2001), How to organise return handling: an pharmaceutical returns involve process improvements and exploratory study with nine retailer warehouses, ERIM integrated logistics [9]. Report Series in Management, ERS-2001-49-LIS, Erasmus University Rotterdam, the Netherlands Conclusion
(International Journal of Retail & Distribution Management, forthcoming). Reverse logistics in the pharmaceuticals industry works differently from many other industries. Drugs or products returned in a pharmaceutical industry are seldom repaired or last visited 8th January 2013 resold. Instead, they need to be destroyed and disposed properly. There are various considerations to be taken into account such as pharma-logistics, last visited 15th January 2013 Need for accurate tracking and visibility [7], last visited 12th January • Batches and Expiry control • Cold Chain requirements • Proper storage and disposal • Pedigree reporting Clinical-Services, last visited 3rd January 2013 • Anti-counterfeiting and so on. [9] last visited Reverse logistics is considered a bullet in company's profits 26th January 2013 and an expensive process most times. Yet, it is an imperative process in modern times due to various reasons such as government regulations, growing environmental concerns, [10] - India growing consumerism, and competitive advantage. An important consideration for companies is to perform the operations in reverse logistics effectively so that it reduces the cost involved. When it comes to legal complexities, especially in the global context, the regulation states that, goods once sold by the manufacturer can be brought back only through declaration to excise authorities and proper documentation. This process is cumbersome and takes time. Non-compliance also leads to legal actions. What else will the future hold for the pharmaceutical supply chain? New security systems? Even better methods for maintaining and documenting temperatures?
The author would like to thank to the member of Opsonin
Pharma Limited, Bangladesh for giving the opportunity to
work in a congenial environment where I have learnt a lot
about pharmaceutical logistics. Special thanks to Honorable
Managing Director of Opsonin Pharma Ltd. Bangladesh, Mr. Abdur Rouf Khan, Executive Director Abdur Rakib Khan, who gave me a wide window to work with. Last but not the
least; thanks to Dr. Md. Mamun Habib for the information
regarding the publication opportunity information, otherwise
I did not have any courage to write.
[1] Stock J.R. (1992), Reverse Logistics, Council of Logistics
Management, Oak Brook, IL. [2] Rogers, D.S. and R.S.Tibben-Lembke (1999), Going Backwards: reverse logistics trends and practices, Reverse Logistics Executive Council, Pittsburgh, PA [3] Guide Jr. V.D.R., R.H. Teunter and L.N. van Wassenhove (2001), Matching Supply and Demand to Maximize Profits Remanufacturing, 2001/84/TM/CIMSO 21


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Engineering Formal Metatheory Arthur Chargu´eraud Benjamin C. Pierce University of Pennsylvania University of Pennsylvania Stephanie Weirich University of Edinburgh University of Pennsylvania rem proving; D.3.1 [Programming Languages]: Formal Defini- Machine-checked proofs of properties of programming languages tions and Theory—Syntax have become a critical need, both for increased confidence in largeand complex designs and as a foundation for technologies such as