Like many big hospitals, the University of Utah Hospital carries a 30-day supply of drugs, in part because it would be too costly or wasteful to stockpile more. Some of its hepatitis vaccine supply has been diverted to the hurricane- ravaged Gulf, leaving it vulnerable should an outbreak occur closer to home. About 77 other drugs are in short supply because of manufacturing and other glitches, such as a drug maker shutting down a factory.

“The supply chain is horribly thin,” says Erin Fox, a drug-information specialist at the Salt

Lake City Hospital. In the event of a pandemic flu outbreak, that chain is almost certain to break. Thousands of drug-company workers in the United States and elsewhere could be sickened, prompting factories to close. Truck routes could be blocked and borders may be closed, particularly perilous at a time when 80 percent of raw materials for U.S.  drugs come fromabroad. The likely result: shortages of important medicines—such as insulin, blood pro- ducts, or the anaesthetics used in surgery—quite apart from any shortages of medicine to treatthe flu itself.

A problem facing Utah Hospital, as well as other hospitals, is that production of drugstakes place offshore because that’s cheaper. The federal government doesn’t intervene as a guaranteed buyer of flu drugs, as it does withweapons. Investors and tax rules conspire to eliminate redundancy and reserves. Antitrust rules prevent private companies from collaborating to speed development of new drugs.

A report issued by the Trust for America’s Health, a public-health advocacy group in Washington, concluded that 40 percent of thestate’s lack enough backup medical supplies to cope with a pandemic flu or other major disease outbreak.“Most, if not all, of the medical products or protective-device companies in this country are operating almost at full capacity,” says Michael Osterholm, director of the Center for InfectiousDisease Research and Policy at the University of Minnesota. “That’s the reality of today’s economy: just-in-time delivery with no surge capacity.”

  1. Utah Hospital (as well as for other large hospitals)?
  2. What recommendations would you make to the hospital in question to have drugs avail- able to deal with a pandemic or other emergency?

One significant concern is what MichaelLeavitt, the secretary of health and human ser- vices, described in an interview as the “Albert- son’s syndrome,” referring to the grocery-store chain. At the first sign of panic, all supplies disappear from shelves, something that routinely happens when there is the threat of even a modest storm.

Discussion Questions

  • How suitable is the just-in-time inventory management system for the University of

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