influenza vaccine supply chain

Thursday, May 05, 2005 © David George Williams All rights reserved

1

The Influenza Vaccine Supply Chain: Structure, Risk, and Coordination

By David George Williams


2

Deaths In England From All Causes


3

Deaths In England From Influenza


4

The Cost Per Year In The U.S.

•  $12 to $15 Billion Direct and Indirect Costs •  35,000 deaths, 90% Elderly •  100 Million Days of Work Lost •  40 Million Days of School Lost


5

Aventis Pasteur’s Fluzone®


6

Distribution Problems?


7

The Chicken Eggs


8

The Cold Chain


9

Other Problems

•  Order Gaming – Duplicate, Inflated Orders

•  Opportunistic Vending – The worst example 2000 shortage:

•  11 days, 3 transactions, price from $23 to $147

– Fax and email spam distorts supply visibility


10

Manufacturer

Distributor

Health Care Provider

Vaccine Recipients

And General Public

Insurance Company

Goods

Goods

Goods

Goods

Money

Money,Information

Money,Information

Information

Money,Information

Money

Information

Money

The US Flu Vaccine

Supply Chain


11

The Timeline

PRE-SEASON FLU SEASON

MANUFACTURING CAPACITY

ALLOCATED

BOOKING PERIOD

PRE-BOOKING REGULAR BOOKING

KEY ISSUE: FORECASTING AND PLANNING

KEY ISSUE: DISTRIBUTION AND REALLOCATION

PRODUCTION BEGINS


12

Manufacturer Health Care Provider

Goods

RISK BORNE: WITH PRE-BOOKING:

• DEMAND UNCERTAINTYWITH REGULAR BOOKING:

• YIELD UNCERTAINTY

RISK BORNE: WITH PRE-BOOKING:

• YIELD UNCERTAINTYWITH REGULAR BOOKING:• DEMAND UNCERTAINTY

Money,Information

The Risks


13

The Root Problems



ALLOCATED

BOOKING PERIOD




PRODUCTION BEGINS

Third Strain Identification

Shipments Go Out

EGG BASED PRODUCTION PROCESS TIME


14

The Root Problems



ALLOCATED

BOOKING PERIOD




PRODUCTION BEGINS


Shipments Go Out


NO SLACK IN THE SYSTEM FOR DISTRIBUTION LEAD TIME BUFFERING OR STAGGERED PRODUCTION


15

The Root Problems



ALLOCATED

BOOKING PERIOD




PRODUCTION BEGINS


Shipments Go Out


NO SLACK IN THE SYSTEM FOR DISTRIBUTION LEAD TIME BUFFERING OR STAGGERED PRODUCTION UNCERTAIN

DEMAND


16

Coordination

Manufacturer

Distributor

Vaccine Recipients

And General Public

Goods

Goods

Goods

Goods

Money,Information

Money,Information

Money,Information

SometimesMoney

Information

Money


Insurance Company

Money

Information


17

Coordination

Manufacturer

Distributor

Vaccine Recipients

And General Public

Goods

Goods

Goods

Goods

Money,Information

Money,Information

Money,Information

SometimesMoney

Information

Money

BUYBACK VALUE

PREREQUISITE REPORT


Insurance Company


18

Coordination

Manufacturer

Distributor

Vaccine Recipients

And General Public

Goods

Goods

Goods

Goods

Money,Information

Money,Information

Money,Information

SometimesMoney

Information

Money

BUYBACK VALUE

PREREQUISITE REPORT


THE E-HUB: A

VIRTUAL MARKET PLACE

Insurance Company


19

Coordination

Manufacturer

Distributor

Vaccine Recipients

And General Public

Goods

Goods

Goods

Goods

Money,Information

Money,Information

Money,Information

SometimesMoney

Information

Money

INSURER BUYBACK:«INCREASE VACCINE

SALVAGE VALUE AT THE HEALTH CARE PROVIDER

BUYBACK VALUE

PREREQUISITE REPORT

THE E-HUB ALLOWS FOR TRANSPARENT

ORDERING AND REALLOCATIVE EFFICIENCY

FORECASTS BASED ON PRE-BOOKED, EXACT AND HONEST ORDERS

ALLLOW FOR BETTER CAPACITY ALLOCATION AND STABLE

DEMAND PLANNING


THE E-HUB: A

VIRTUAL MARKET PLACE

INCREASED INCENTIVE TO FORECAST

WHEN BUYBACK IS RESTRICTED

Insurance Company


20

Acknowledgements

•  Jennifer Alfisi of the Health Industry Distributors Association (HIDA) •  Catherine Fuller MD •  Google: the most important human invention after the printing press

•  Brian Greenberg MD

•  Jay Grossman DDS •  Janet Heinrich of the United States Government Accountability Office (US GAO) •  Leonard Kruimer of the Crucell Corporation in the Netherlands

•  Jeanne Santoli of the Center for Disease Control (CDC) •  Jeffrey Wasson MD •  Dr. Prashant Yadav

influenza vaccine supply chain

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