Skip to main content

Inventory Management

Is building inventory a good strategy or just selfish?

Around the year 2000, the world was still experiencing a shortage of immunoglobulin therapies that caused all kind of concerns for the patients in need of this therapy. Then the production of recombinant FVIII was reduces, causing a worldwide shortage of rFVIII. Patients needed to be switched to plasma derived therapies, elective surgeries were postponed, and the shortage was serious.

I remember being in Tokyo talking with representatives of the Ministry of Health. They informed me that the Japanese Ministry wanted all companies to have an inventory of 6 months to avoid future supply problems. I was appalled and told the Ministry that this would cause an enormous problem. How can you justify in a time of shortage that therapies are laying on a shelf instead of being used by the patients that were suffering the consequences of insufficient supply?

Currently we see supply tensions, shortages in different parts of the world for a variety of therapies. The old idea of building inventories is back on the table. Now the Dutch Minister of Health Bruins brought up the idea of a mandatory inventory of 5 months and is trying to convince other European states to do the same.

This is not a good idea for many reasons. It is like trying to stop the damage from a water leakage by putting more and more towels on the leaking side, instead of fixing the cause of the leak.

There can be many reasons for supply problems such as:

  • Insufficient starting material
  • Manufacturing problems
  • New regulatory demands
  • Recalls because of inadvertent reactions by patients
  • Higher demand than anticipated
  • Inadequate reimbursement policies

Whatever the reason is, it is not a good idea to put 5 months of inventory on a shelf. Companies and distributors have worked hard to build inventory management systems to bring therapies to patients in a time and cost-effective manner. A blanket political decision like this is shortsighted and an enormous unnecessary financial burden. Even when the government would pay for this, it is not solving the problem how to bring more therapies to market.

 

Jan M Bult
December 2019