Meeting Unparalleled Demand for Critical Supplies and Drugs

While the supply chain has faced isolated spot shortages in the past due to natural disasters and other health crises, no single state, country, government or manufacturer could have fully prepared for the 7X to 30X global surge in demand for critical supplies as a result of COVID-19.

The unprecedented demand created immense pressure on health systems that continue to struggle to obtain products needed to protect employees and care for patients.

However, over the course of the pandemic, Premier worked with contracted suppliers to ramp up production – in many cases by more than double or triple historic demand levels. Premier also implemented a range of strategies to obtain products, including direct sourcing, forward buys, special distribution arrangements and other non-traditional partnerships.

As a result, Premier has been largely able to meet historical demand levels, as well as a significant proportion of surge demand.

The below charts demonstrate the impact of our combined efforts on three critical supply categories: isolation gowns, surgical and isolation masks, and N95 respirator masks. Premier’s total contribution to demand includes product ordered through a combination of rallying our contracted suppliers, mobilizing our global direct sourcing network, executing forward buys and securing additional supply through non-traditional partnerships.

Central to our effort was the solid groundwork we began laying over a decade ago to diversify sourcing. This is a topic we have not just been talking about, but acting on, for years. For example, we have a direct sourcing company grounded in global and dynamic sourcing. Through S2S Global, we go factory-direct to the country of origin and work with manufacturers to produce high-quality products to our members’ specifications. In the pharmaceutical space, last year, Premier launched ProvideGx® to address drug shortages. The ProvideGx model allows Premier to better align the market with long-term committed demand from health systems and committed, sustainable supply from high-quality manufacturers, which incentivizes new manufacturers to enter the marketplace for shortage drugs. ProvideGx also prioritizes manufacturing of these drugs in the U.S. where possible.

Surgical and Isolation Masks

While demand for surgical and isolation masks (not N95s) surged 342 percent over historic demand, Premier and its contracted suppliers were able to meet the majority of member needs. Premier’s contracted suppliers increased production by 214 percent, while Premier grew sourcing and production by 1,657 percent in order to deliver on member needs through S2S Global suppliers, forward buys and non-traditional partnerships.

Isolation Gowns

With respect to isolation gowns, demand during COVID-19 increased by 500 percent over historic levels. To meet this need, Premier secured a 245 percent increase in contracted supplier production and a 360 percent increase from S2S Global, forward buys and non-traditional partnerships.

However, as evidenced by isolation gowns replacing N95s masks as the top shortage concern in April, there remains unmet demand for isolation gowns that we continue to work to address. This supply in particular has been challenging, as it is essential both for treating COVID-19 patients, as well as resuming elective surgeries. However, we continue to work with suppliers and non-traditional manufacturers to source raw materials and finished goods.

N95 Respirator Masks

Demand for N95s surged 2,700 percent – a spike greater than in any other category. This was complicated by the fact that only 5 percent of all face masks and respirators are made in the U.S. While N95 production by contracted suppliers grew by 265 percent, it was not enough to meet the surging market needs. N95s are one of many critical-to-operations supplies we continue to address and secure for domestic production.

This is why Premier and 15 of our members acquired a minority stake in Prestige Ameritech, the largest domestic supplier of masks, including surgical masks and N95s. Prestige Ameritech represents a vertically integrated domestic supply chain, with production of raw materials and finished goods completed in the U.S. Prestige also sells 100 percent of its products to U.S. customers.

Not only does Premier’s agreement with Prestige Ameritech secure a domestic supply of critical supplies, but it also enables Premier to pre-purchase the equivalent of four times the health system-committed historical volume to create a strategic stockpile.

Impact on the Availability of Critical Pharmaceuticals

As the U.S. remains vigilant in addressing and limiting the impact of COVID-19, demand for drugs used for treatment and supportive care is also surging.

Many of the drugs that are vital to COVID-19 care are also products that have historically been in shortage and vulnerable to supply disruptions. Our program to address generic drug shortages, ProvideGx, continues to work as intended, and despite steep increases in demand, continues to provide its participants with 100 percent of their demand for critical drugs on shortage included in the program.

An analysis of 10 critical drugs used for COVID-19 treatment supportive care, that are either in or approaching shortage, demonstrates that the ProvideGx program is able to consistently deliver product to its participants in and out of a pandemic. While the pandemic caused demand for those products to surge by 156 percent, ProvideGx participants saw no interruption in their fill rates.

For drugs not on shortage, but heavily backordered due to COVID-19 surge demand, Premier worked with manufacturers as well as our distribution partner, FFF Enterprises, to remove product from the traditional wholesale allocations and earmark it for purchase by Premier members. To date, we have 44 different pharmaceutical products available only to Premier members through FFF. In other cases, Premier arranged for product to be directly shipped to members in order to get supplies to hotspots and avoid distributor allocations.

Bringing the Supply Chain Back to Health

Premier has stood beside our members through every stage of COVID-19. From supplementing suppliers, distributors and wholesalers with critical supplies to expediting new contracted suppliers and identifying alternative sources, our team pulled every lever we had to support our members in this critical time of need.

Our commitment is to continue sharing key insights, developing and spreading best practices, and partnering with our members so they are enabled to improve the health of their communities. Learn more.