WSJ: DRUG COMPANIES PREPARE FOR Y2K RUN ON MEDICINES
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By Elyse Tanouye - Staff Reporter WALL STREET JOURNAL - February 2, 1999
Will panicked patients attempt to hoard critical medicines out of fear that year 2000-related computer snafus could disrupt the drug pipeline?
Pharmaceutical companies believe that is a real possibility, and they are in the early stages of mapping out ways to potentially ramp up production of drugs they think patients will rush to stockpile, and to help wholesalers deal with larger-than-normal amounts of inventory.
Manufacturers say they are hearing reports of doctors advising patients to stock up as Jan. 1, 2000, approaches. Glaxo Wellcome PLC has been talking to medical professionals and patients to try to gauge the size of the problem. "Because Y2K is unique, there isn't a precedent for it," a spokeswoman for Glaxo, London, says. "We don't have a feel yet" for what the extra demand will be.
Months to Develop
Merck & Co., too, is paying closer attention to sales patterns in the hope of detecting early signs of hoarding, says Charles Popper, chief information officer. But meeting a sudden surge in demand could be challenging.
"One reason we keep saying [stockpiling] is dangerous for the industry and patients is that we can't turn around on a dime," Dr. Popper says. It can take months to develop a drug from raw materials to finished product, and many manufacturing plants are booked tightly.
A surge in demand could quickly tax capacity. "There's not that much give in the system," Dr. Popper says. Because of U.S. Food and Drug Administration regulations, drug companies can't quickly add capacity, contract with new raw-material suppliers or make other changes to respond to a suddenly changing marketplace.
In the event of a run on drugs, priority will go to those that are life-sustaining such as AIDS medicines, and drugs such as the cholesterol-lowering Zocor that are important profit generators for Merck, Dr. Popper says.
Panic Itself Is a Problem
Ironically, widespread patient panic stemming from fear of the Y2K bug could create more problems than the software problem itself, which could cause some computers to read the year 2000 as 1900 and make errors or shut down. The drug industry is spending more than $2 billion to correct the flaw, according to the Odin Group, Nashville, Tenn., a health-care industry consultant.
SmithKline Beecham PLC's Y2K program began in 1995 and is the biggest project ever undertaken by its information-resources department, says John Parker, chief information officer. His staff of 2,300 employees and 700 consultants is evaluating and testing every piece of equipment and software in the company -- more than 100,000 units in factories and an additional 50,000 personal computers.
Drug companies, wholesalers and pharmacies are working out common procedures for manual order taking and claims processing in case of
computer failures. Merck, Whitehouse Station, N.J., will try to locate inventories of critical drugs closer to patients in case of transportation failures. In the case of heart drug Flolan, for instance, its maker, Glaxo, is devising contingency plans that include backup delivery services -- used during the United Parcel Service of America Inc. strike in 1997 -- and other ways to ensure that patients get the medication.
But "if people start stockpiling, that will create more of an issue than Y2K itself," Merck's Dr. Popper says. "If demand were to double or triple in a short time, we will get spot shortages and people won't get their medicines."
Expiration Dates
Most pharmaceuticals have limited shelf lives, and people who stockpile run the risk of taking medicines past their expiration dates.
But patients who depend on medications say they can't risk being caught short. Joel Ackerman, executive director at RX2000 Solutions Institute, Edina, Minn., which is helping health-care companies correct Y2K problems, says his advice to patients is: "In some cases, a little bit of stockpiling may be
prudent."
That is what Austin Amaro, a Sonora, Calif., parent of a 12-year-old boy with diabetes, has in mind. Near the end of the year, he plans to get a few extra bottles of insulin, just in case. "Not knowing or having a good handle from the industry of what's going on, I need to take steps to protect my son," he says.
Some drug wholesalers, too, "are likely to stock up a little more, just in case" as they did before the UPS strike, says Ronald J. Streck, president of the National Wholesale Druggists' Association.
The toughest task may be quelling public fears of a Y2K disaster. "We
understand people saying, 'If I'm going to hoard cash and food, I'm sure going to hoard medication,' " says Keith Mallonee, vice president for the year-2000 project at McKesson Corp., the largest drug wholesaler in the U.S. Preventing a run on drugs, however, is complicated. Contingency plans may include refusing to fill orders that are much larger than usual, he says.
But placing limits on orders, whether from a pharmacy or a patient, could fuel patients' fears of shortages.
Ultimately, the industry has to mount a public-awareness campaign to reassure patients, says Sen. Robert F. Bennett (R., Utah), chairman of the Senate's special committee on the Y2K technology problem. Some people are also urging health plans to relax prescription rules that typically limit medicine quantities to a month's supply or so.
What would a drug-company technology expert advise patients who depend
on medicines? Here's what Susan O'Day, vice president of information
services at Bristol-Myers Squibb Co., says she would tell her own parents, who take various medications: "Make sure you have a reasonable amount on hand."
Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.
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