To address supply chain issues and take preventative measures, manufacturers must invest in advanced technologies such as the Internet of Things (IoT) for equipment monitoring and artificial intelligence.


Oleksandr Amelin

Medication shortages come with a substantial cost to pharmaceutical companies—loss of revenue, provider loyalty, and brand reputation pose significant and detrimental threats to business. Currently, the United States Food and Drug Administration (U.S. FDA) lists over 150 drug shortages, costing the United States $216 million in labor and $200 million in substitution costs, each year. As time and resources are invested heavily in drug discovery—approximately $2.6 billion is spent to bring a drug to market—it is vital that the medication supply chain is optimal to recoup investments.

Let’s look at significant issues impacting the medication manufacturing process and discuss how advanced technology can be applied to remove barriers and bottlenecks.

Drug shortages transcend the pharmaceutical sector to encompass all aspects of healthcare. In an industry focused on the benefits of patient-led care, it must be noted that a patient’s quality of life is at risk when medication is unavailable. Furthermore, when providers are unable to deliver the proper drug therapy, unsafe practices and potentially harmful substitutions compromise a provider’s ability to effectively care for patients. For example, past shortages of succinylcholine, used for anesthesia, resulted in surgery cancellations and medication triage when an alternative paralytic agent was not available. A 2018 survey concluded that 71% of providers were unable to prescribe patients with the preferred treatment protocol due to drug shortages, with 47% of these providers believing patients received less effective medication treatments as a result.

Manufacturing is the most cited cause of medication shortages, according to a 2018 survey conducted by the American Society of Health-System Pharmacists (ASHP). Once a drug is approved, manufacturing is the most costly and process-intensive step in the supply chain. Delays, such as changing regulatory requirements and halted productions due to recalls, contribute to the drug shortage epidemic and bottom-line expenditure—and one hour of unplanned downtime costs upwards of $260,000.


Updated and ongoing pharmaceutical compliance

As with all aspects of the healthcare and life science ecosystem, regulatory compliance is a primary concern for pharmaceutical companies. As drug manufacturing facilities must undergo frequent and rigorous inspections, failing inspection will cause delays, negatively impacting the facility’s output.

The FDA averages a mere 50 drug approvals per year—this approval process equates to about one in 10 drugs approved of those tested. However, regulatory measures do not end there, as the FDA continues investigations into the manufacturing process to ensure ongoing quality and safety.

Until recently, FDA inspections were tedious and time-consuming, with limited staff and outdated inspection processes. To review the plant according to code, inspectors would don clean room personal protective equipment (PPE), walk through the facility, record findings, and make a determination of pass/fail. This manual process was subject to human errors such as unsafe handling techniques, differing results from inspector subjectivity, and overlooked microscopic particles and contaminants. FDA programs were siloed, leading to delays and differences in approval standards.

The increasing complexity of the pharmaceutical landscape and technological advancements prompted the FDA to evaluate manufacturing facility inspection methods.


The New Inspections Protocol Project (NIPP) was created in 2015 to bring facility inspections into the digital age. NIPP, a new digital inspection and reporting system, changed the way FDA inspectors completed the verification process. The standardized electronic inspection protocol evaluates the overall state of a facility, including its systems and operations. The project includes algorithms to identify high-risk sites where detection was previously unavailable. Advanced technology is utilized to facilitate a more efficient and cohesive analysis of inspectors’ findings.

Along with the FDA and NIPP protocols, the pharmaceutical industry—from producer to pharmacist or home delivery—must prepare for the Drug Supply Chain Securities Act (DSCSA) which comes into effect in 2022. (DSCSA is Title II of the Drug Quality and Security Act, DQSA). This updated measure takes a digitized approach to drug monitoring and security

As the FDA and other regulatory bodies continue to increase digital protocols, life science, biohealth, and pharmaceutical companies must prepare for the change to ensure operations are not slowed or halted. As many shortages are caused by outdated equipment and infrastructure, without updates to legacy systems plant inspections will fail as NIPP and DSCSA protocols uncover processes and systems that do not meet the more rigorous quality standards.

Internet of things (IoT) technologies connect devices, processes, and machines through a data communication system, allowing the manufacturers to know immediately if the facility is meeting current good manufacturing practices (CGMPs). Facility leaders are informed about the state and health of equipment in real time. They can then take active measures to keep systems and processes continuously up to code, significantly improving facility approval scores during inspections.


For example, the overheating of equipment can lead to variations in medication batches. IoT sensors on machines collect real-time information and, should equipment near temperature thresholds, automatically provide immediate remediation and alert staff. Data collected from multiple devices across the factory can be analyzed by AI/ML technology to deliver insights to identify environmental trends and pose preventative solutions. IoT-enabled equipment and predictive analytics ensure medication manufacturers continuously uphold inspection requirements. Predictive maintenance also provides cost savings on equipment repair as sensors monitor equipment performance markers and notify staff well before a mechanical failure so action can be taken.

Reduce cost to provide care

Material quality inspections can also impede the drug manufacturing process should facilities fail to meet CGMP standards. Primary components and raw materials are delivered continuously from suppliers—mandating manufacturers follow an ongoing inspection protocol.

As production costs and patient demand continue to rise, it becomes increasingly difficult for medication manufacturers to control batch variations. Should a batch fail to meet inspection standards, the FDA must take regulatory action, such as ceasing the distribution and manufacturing of a potentially volatile product. Failing inspections not only limits the company’s ability to drive revenue, but process, equipment changes and additional inspection costs can also be incurred.

Moving production offshore has become a popular means of reducing costs in the pharmaceutical industry. While labor may be less expensive, quality is harder to control, which can lead to sub-standard products. Although manufacturing standards and regulations vary depending on the offshore country, the FDA or other regulatory bodies will prevent the local distribution of medication if criteria are not met. Short-term savings may lead to a longer-term increase in costs and a reduction in medication supply—and thereby, revenue—as companies devote funds, labor, and time to rectify quality situations.


To address this quality control issue, medication manufacturers must increase the level of visibility and monitoring within the offshore production facility. IoT sensors can relay real-time data and provide immediate alerts when anomaly thresholds are detected anywhere in the facility.

Automating processes through AI—including the use of robotics—can provide further control as human error is removed as a factor and intelligent systems can self-regulate for specific criteria. Automation also increases efficiency, thereby cutting operational costs by completing repetitive tasks.

Robotics is a relatively new trend in manufacturing but a promising one, proven to increase capacity and reduce manufacturing costs and waste. Using robotics for medication production is extremely beneficial due to the ability to decontaminate all mechanical components in contact with drugs. Any variations or differences in human technique are also eliminated, ensuring the identical, sterile product every time. Automated processes free up humans to address more nuanced and complex issues, such as properly completing drug quality inspection requirements. Predictive maintenance must also be applied to offshore production facilities to minimize equipment downtime.

Mitigate recall risks

Much like new regulatory requirements and increasing cost requirements, recalls can be another source of delay for medication production. Drug shortages occur when the medication is pulled entirely from the market, or during the supply chain and manufacturing process, halting production entirely. Companies devote significant time and resources to addressing the implications of the recall in addition to mitigating the impact on public perception.


In 2004, one major pharmaceutical company took a loss of $725 million in sales after recalling an arthritis medication due to the increased risk of heart attacks/strokes and paid out $4.85 billion in lawsuits. A costly incident for the company, but patients who experienced adverse reactions to the drug paid an even higher price. Drug recalls impact not only immediate profitability, they also deteriorate brand reputation and trust.

To eradicate the recall risk, data-driven processes, such as business intelligence and advanced analytics, must be implemented within the pharma supply chain. By collecting and analyzing data from all points across the medication production process, AI-enabled systems can quickly identify defect causation, track batch location, and pinpoint contamination particulates. In the case that a contamination or production issue is recognized, the defective batch can be easily tracked, isolated, and removed before patient treatment begins.

Regulatory protocols, increasing costs, and drug recalls can negatively impact the drug supply chain, causing medication shortages—and costing the healthcare industry both revenue and brand reputation.

To address supply chain issues and take preventative measures, manufacturers must invest in advanced technologies such as IoT for equipment monitoring and AI/ML to gain insight and automate processes. Advanced technology holds the keys to increased operational efficiency and productivity—and profitability.


Oleksandr Amelin is senior vice president of client success at SoftServe, a provider of digital technology services.