Pressures within supply chains have paved the way for oversupply of prescription opioids, says WVU researcher | Today
A new study by WVU global supply chain expert Ednilson Bernardes finds that manufacturers and suppliers of opioids, particularly national companies, influenced how pharmacies procured and dispensed these prescriptions. Bernardes and a colleague tested a model using a dataset that combined geographic, market and public health data.
In today’s post-pandemic world, strained global supply chains have become a new normal. But in the case of prescription opioids, namely oxycodone and hydrocodone in the early 2000s, that supply chain flowed freely without any problems.
This is partly due to the influence of supplier pool pressure on pharmacies’ participation in oversupply, according to a study by Ednilson Bernardesteacher and program coordinator global supply chain management to West Virginia University John Chambers College of Commerce and Economics.
In other words, pressure from opioid manufacturers and suppliers, especially national companies, influenced how pharmacies purchased and dispensed these prescriptions.
“We argued that when the supplier group has consistent expectations of how buyers should behave and sufficient power to dominate the supply relationship, then buyers are under pressure to act in accordance with those expectations” , said Bernardes.
Bernardes and his co-author, Paul Skilton of Washington State University, analyzed transactions involving oxycodone and hydrocodone between 2006 and 2012. They chose these two drugs, Bernardes said, because they are the most commonly abused and legally prescribed products and are essential to America’s opioid epidemic. According to the Centers for Disease Control and Prevention, in 2019, an average of 38 people die every day from prescription opioid overdoses.
The researchers tested a model using a dataset that combined geographic, market and public health data. The study found that more than 90% of the supply came from three generic manufacturers who were aggressively competing for shelf space from distributors and pharmacies. Their findings are published in the Supply Chain Management Journal.
Bernardes explained how several factors have led to an oversupply of opioids, which occurs when ordinary production and distribution processes deliver products in excess of a market’s safe needs.
“First, even though the pharmacists, suppliers, and manufacturers knew the products were toxic, the doctors prescribed the products,” Bernardes said. “Second, although the DEA (US Drug Enforcement Agency) expected companies selling opioids to report unusually large purchases, it had no checks in place to ensure they were doing so. Third, even if this was the case, the individual transactions were generally small but amounted to very large totals.
“Under these conditions, the entire supply chain could produce far more of these products than would be good for patients or society. Although this is a system-level phenomenon, we theorize that it stems from individual behaviors and that the actions of providers and competitors influence these behaviors in addition to patient demand.
Additionally, Bernardes said market characteristics, such as demand, regulation, and market population size, influenced pharmacy participation.
“Supplier pools can only impose their expectations if they have greater bargaining power than buyers or if buyers are critically dependent on them,” Bernardes said. “Pharmacies are critically dependent on the opioid supplier pool, which is federally and state regulated, because opioids are important contributors to supplier and pharmacy profitability.”
Bernardes and his colleague believe that this study paves the way for further supply chain research by developing a new notion of oversupply, distinct from the traditional idea of excess inventory, and normal misconduct that explains how pressures within supply chains shape misconduct beyond the context of opioids.
The research is also unique, Bernardes said, because previous studies focused primarily on firm-level behavioral consequences, such as supplier sustainability risk and corrupt opportunism. The focus on firm-level outcomes leaves a void in understanding the systemic factors that normalize misconduct in supply chains.
“The phenomenon reveals supply chain behavior that is widespread and persistent despite its negative consequences for society,” Bernardes said. “Examples include products that harm consumers and business models that degrade the environment, exploit labor or perpetuate social injustice.”
MEDIA CONTACT: Jake Stump
WVU Research Papers
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