Going green often starts with what you eat: fair trade tea, organic apples. We buy these products because they reduce impacts on people and planet. But when we go to the Pharmacy to pick up our needed medicines, we often remain uninformed of these issues. Who ever heard of organic Lipitor?
Though the pharmaceutical industry takes great strides to ensure a reliable and safe supply chain as demanded by FDA safety regulations, a lack of awareness of the environmental impacts of the pharmaceutical supply chain led to an atmosphere which made the Heparin Incident possible. People died as a result.
Business for Social Responsibility(BSR), an international NGO dedicated to promoting ethics and environmental sustainability in multinational corporations, created the Pharmaceutical Supply Chain Initiative (PSCI) to address these essential issues. Recently, I had the opportunity to interview Andrew Matthews, Manager of Advisory Services at BSR and discuss their work in this and other areas:
“BSR [does] a lot of different types of work, we do a lot of strategy…number one: how you set your CSR priorities and then integrate those with the core business strategy and measure those over time. And we also do a lot of work with supply chain sustainability so looking at ethics, labor, environment, health, safety and management systems, help companies put the protocols into place to help manage their suppliers in an effective way and further sustainability. My focus, [in addition to] supply chain, is on industry, on healthcare, we focus on social innovation, focusing on emerging markets…”
Andrew was able to draw on his diverse experience of work both internationally and in the investor community in order to further services at BSR. Having worked in a variety of prior roles including a corporate strategy startup in DC where “we helped fortune 500 companies understand the political and economic environments of BRIC countries” and a year teaching English in Malayasia, Andrew has a unique and distinctive perspective on the challenges facing the pharmaceutical industry. His overall trajectory towards corporate social responsibility (CSR) started in college. While researching business ethics he learned “how the private sector was doing a lot to further Millennium Development Goals and was often making a bigger impact, a more measurable impact than non-profits – which was where I was working at the time.” He finds his work at BSR satisfying and empowering as “its really a great marriage of development and private sector financial sector thinking – applying commercial solutions to social problems.” Currently, his work focuses both on healthcare and medical device industry initiatives in addition to PSCI.
On the origins and overall goals of the PSCI, Andrew explained:
“There is an initiative in industry called the Electronic Industry Citizenship Coalition (EICC) and they came together as an industry to understand how they could improve their supply chain, both from procurement and selecting suppliers, and evaluating them in audits, to improving them through supplier capacity building initiatives and monitoring them over time. We saw an opportunity to do that in the pharmaceutical industry. So, in 2006, four companies came together and put together a set of principles that govern responsible supply chain management. After those principles were released, between ‘07 and ‘09, there was an explosion of interest and now we are up to 17 companies.”
BSR was not satisfied with having simply another declaration that companies could put in their marketing material. BSR wanted to take this out of the boardroom and into the field. Andrew elaborated on this point:
“From the time we set the principles into place, we thought how do we put them into practice. So we launched an audit program, that sends in site auditors preferably with pharmaceutical experience, to look at these suppliers and how they match PSCI principles whether they are living up to them and then they create an audit report that is shared amongst all the members. They evaluate the suppliers against criteria our members have established, which include ethics labor environment, health, safety and management systems. Then we also provide resources for these suppliers to learn more about what they can do related to sustainability, so we have an online library for suppliers, in 2014 we are having teleconferences and a workshop in China actually in 2013 we held a conference in Europe on industrial hygiene and a lot of suppliers in Europe attended that and enjoyed it. We have seen rising interest from suppliers and it’s poised to grow.”
The field of responsible supply chain management is growing, and no sector exemplifies the challenges and possibilities more than that of pharmaceuticals. Understanding the implications of factories on the health of their workers and environment, as well as the multiple different chemical components needed to manufacture a single drug, are the key issues that need addressing in this sector. As the heparin incident exemplifies, these issues can rapidly deteriorate into one where patients are harmed if supply chains are not properly managed. And companies are listening and beginning to engage:
“One of the biggest reasons PSCI members get involved is because they see supply chain as a business risk, because if the supplier explodes, to put it bluntly, will affect the ability to get millions of dollars of product to the market. They see it as a significant risk and take it seriously. They see sustainability more and more as a valid set of issues to take into their analyses.”
As the PSCI eloquently shows, sustainability and collaboration can go hand in hand. Through sharing information, the industry is able to move forward together. While PSCI shares some information publicly, it is hoped that through further transparency and embracing the principles of open source, the entire field of pharmaceutical manufacturing can benefit from the breakthroughs of these leading companies.