Jacob Sumner
03/29/21
Vaccine Supply Chain
COVID-19 has officially overstayed its welcome. Nearly every country on Earth is scrambling to offer its citizens a return to normalcy. Following over a year of lockdowns, mask mandates, and social distancing guidelines, the spotlight has been on pharmaceutical companies to bring an end to this pandemic through widespread public vaccination. Fortunately, four major U.S. pharmaceutical players (Pfizer, Moderna, AstraZeneca, and Johnson and Johnson) have already begun the rollout of these vaccines at unprecedented speeds. With the demand for these shots consistently outpacing supply, there is constant stress on the supply chains facilitating their distribution. This stress has been made worse by discrepancies in IT across healthcare providers, public outcries against allocation decisions, and stringent storage protocols that create difficulties in the mass transportation of these doses. By examining Pfizer’s role in the manufacturing, distribution, and allocation processes in their own vaccine supply chain, it becomes much easier to understand why these challenges occur. This analysis is also important in understanding how decisions are made by Pfizer and the federal government to ensure that the processes continue to run smoothly.
The supply chain supporting the Pfizer-BioNTech vaccine distribution follows the principles of a “just-in-time” (JIT) inventory management and operations strategy. A JIT supply chain, at its core, seeks to match both finished goods and raw materials inventories as closely as possible with actual projected demand. By keeping inventories low, a company or manufacturer can reduce the holding costs incurred while keeping these items on hand. This strategy, ironically, caused massive crises for several firms as COVID-19 began to ravage commercial supply chains in early 2020. Because inventory is inherently a risk management tool used to insure a company against fluctuating demand, keeping inventories low means that a sudden shift in demand can create massive confusion upstream in a supply chain. Spikes in demand for certain products, namely personal protection equipment, resulted in shortages that could not be reconciled with scarce inventory levels. This begs the question: why would Pfizer pursue a JIT strategy if there is risk of supply chain confusion? Pfizer’s reasoning behind implementing JIT principles begins with the relatively low risk of fluctuating demand. Being one of the sole providers of a life-saving drug almost guarantees steady demand, particularly in the context of a pandemic where the population is universally affected by a virus or disease (in this case, COVID-19). Pfizer knows that demand will stay high and that keeping a large finished goods inventory only means that less citizens have access to the vaccines. The U.S. government’s initial $1.95 billion contract for 100 million vaccine doses also guarantees this demand in that as long as the vaccine is developed and approved, Pfizer stands to sell at least these 100 million units.
Historically, just-in-time principles have not always been compatible with healthcare supply chains. Only in the last five years have hospitals and healthcare providers turned to these methods, as failures of these fragile and complex systems could have serious ramifications when lives are on the line. Although the high-stakes of the situation demand quick action from vaccine manufacturers, some of that risk still remains. This is further complicated by the obstacle of keeping the delicate vaccines safe and in the proper conditions from the moment they are filled and shipped all the way to when they are finally injected into a patient’s arm.
Pfizer-BioNTech’s vaccines are particularly delicate in that they need to be stored at a temperature between -13°F and 5°F. Keeping a dose of the vaccine outside of this temperature range for over six hours will render it unsafe and unusable. Pfizer has dealt with this challenge by using “cold-chain” strategies often employed in maintaining ideal conditions for similar medications through a supply chain. The vaccines, directly after being manufactured, are stored in a small cooler with dry ice where the doses can be kept at the proper temperature for days at a time. The vaccines stay in these coolers through the transportation process until they arrive at the “point of use”. Once the doses reach the point of use, healthcare providers then have the option to either keep the vaccines in a freezer or replace the dry ice to keep the temperature consistent and avoid spoilage.
A great deal of additional danger comes from the ongoing presence of the virus itself. If working members of the supply chain become infected with the virus, the number of active hands goes down, and with it, the productivity of the process as a whole. Pfizer has had to deal with this by putting supply chain staff first when making its initial allocation decisions. The most obvious example of this is the high-priority vaccination of “frontline” workers such as doctors and nurses working closely with the virus and vaccine administration. However, it is becoming clear that those workers associated with other key functions have proven equally as important to the smooth operation of the supply chain.
These allocation concerns also bring to mind another important question: who decides where the vaccine goes? Pfizer, in cooperation with the federal government, has decided that the number of vaccine doses each state is allocated depends on what portion of that state’s population is over 18 years of age relative to the population of the country as a whole. Every week, the federal government releases the number of vaccines each state has been allocated and allows states to order the specified number of doses from a limited supply shipped by Pfizer to the Center for Disease Control. The states then determine individually which facilities receive these vaccines. This decision-making process also explains why some states appear to be so far behind others in vaccinating their respective populations. Statewide allocation procedures often may not be entirely fair or reasonable: because it is so difficult to project public demand within cities, towns, and individual vaccination sites, there can be misallocations in which low-demand areas receive more doses than necessary or high-demand areas receive too few doses. Further complicating the matter, the lack of integrated IT in hospitals and retail pharmacies and inequities in access to modern reporting systems can create a situation where vaccination data is not properly recorded. This exacerbates the problem in that improper data can lead state legislatures to commit to inaccurate decisions when choosing which sites get the doses first.
The supply chains that support vaccine distribution during the COVID-19 pandemic are some of the most important ever developed. However, these supply chains are incredibly delicate and have quickly become very complicated as illustrated by the rollout of the Pfizer-BioNTech vaccine this spring. As the supply chain becomes more mature and stable over time, it will likely enjoy learning-curve benefits as vaccines begin to be distributed faster and faster in the coming months. If Pfizer’s supply chain proves to be successful and efficient in getting shots to the public, it could lead the way toward a more widespread adoption of JIT in the healthcare industry. Although it is easy to be optimistic about the progress the country has made to this point, the fragility of this supply chain and the possible consequences of its failure should not be ignored.
Works Cited
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“Breakthrough Vaccine to Potentially Protect Against the Spread of COVID19.” Pfizer, cdn.pfizer.com/pfizercom/2020-11/Scaling-Up%20to%20Manufacture.%20a%20Potential%20COVID-19%20Vaccine.pdf .
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“How COVID-19 Vaccines Get to You.” Centers for Disease Control and Prevention, Centers for Disease Control and Prevention, 17 Mar. 2021, www.cdc.gov/coronavirus/2019-ncov/vaccines/distributing.html.
Kaplan, Deborah Abrams. “Developing the Coronavirus Vaccine Supply Chain.” Supply Chain Dive, 16 June 2020, www.supplychaindive.com/news/coronavirus-vaccine-supply-chain/579835/.
“Manufacturing and Distributing the COVID-19 Vaccine.” Pfizer, www.pfizer.com/science/coronavirus/vaccine/manufacturing-and-distribution.
“Pfizer's Coronavirus Vaccine Supply Contract Excludes Many Taxpayer Protections.” NPR, NPR, 24 Nov. 2020, www.npr.org/sections/health-shots/2020/11/24/938591815/pfizers-coronavirus-vaccine-supply-contract-excludes-many-taxpayer-protections.
Rao, Raja, et al. “Immunization Supply Chains: Why They Matter and How They Are Changing.” NCBI, U.S. National Library of Medicine, 19 Apr. 2017, www.ncbi.nlm.nih.gov/pmc/articles/PMC6592606/.
“Supply Chain Experts Explore Challenges of COVID-19 Vaccine Distribution.” Elmhurst University, 5 Feb. 2021, www.elmhurst.edu/news/supply-chain-experts-explore-challenges-of-covid-19-vaccine-distribution/.
Weissman, Rich. “Today's Supply Chains Are Too Lean.” Supply Chain Dive, 24 Mar. 2020, www.supplychaindive.com/news/lean-supply-chain-jit-inventory-covid-19/574693/.
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