Recent, well-publicized shortages of medicines ranging from the EpiPen to flu vaccines underscore the challenges related to managing an inventory of prescription drugs. At OptumRx we know that getting the right medication to the right member at the right time is essential to improved outcomes and a lower total cost of care. That’s why we are using artificial intelligence (AI) and machine learning (ML) to efficiently manage the way we acquire, store and dispense the millions of home delivery and specialty drug prescriptions we process annually.
As the technology has matured in recent years, OptumRx increasingly uses AI/ML to improve existing inventory management tools. The job of managing a complex supply chain and partnering with multiple drug manufacturers and wholesalers requires state-of-the-art technology to maintain our supply of medications.
In comparison, consider automobile manufacturing, where Just-In-Time (JIT) manufacturing processes are common. JIT manufacturing means, in part, avoiding large inventories of spare parts, and only keeping on hand enough parts to keep the assembly line moving.1 This makes sense for economic reasons (not having lots of expensive parts laying around) and for space optimization.
A JIT-style inventory process enabled by AI/ML is well-suited for pharmaceuticals for several reasons. One is that the roster of drugs in the marketplace is constantly evolving, as new therapies and generics are approved. Another reason is that medications are perishable. This is especially the case with biological drugs, which are becoming more commonplace and more expensive.
With some biologics costing many thousands of dollars per dose, it doesn’t make sense to have a huge inventory constantly on-hand. So keeping the correct amount in stock – not too much, not too little— is essential.
New tools for a big challenge
Historically, OptumRx has used enterprise resource planning (ERP) software and predictive models to help manage inventory and forecast demand. Due to our national scale, our home delivery pharmacies and fulfillment centers are dispersed across a broad geographical footprint so that we can efficiently serve patients across the country. Keeping the correct amount of drugs on hand in each location requires us to precisely and continuously forecast the demand for each medication across the country.
Enter artificial intelligence and machine learning. AI/ML lets systems “learn” independently, instead of relying on explicitly programmed instructions.
To construct the AI/ML module, OptumRx technologists included a variety of historical data, claims data, data on stock levels, as well as demand and utilization data for each drug in stock. The team then curated the data and refined the models over a period of 10 months.
The dynamic new inventory control system that resulted from this process is better able to anticipate demand and react to market changes. By including a far wider set of variables, our inventory specialists are granted a much more granular – and accurate – analysis.
Since becoming operational, the AI/ML system is able to continuously improve itself by analyzing data and outcomes, all without additional intervention. Early results indicate that AI/ML is already reducing the amount of drugs that either expire or are in excess of what is needed. In summary, our ability to correctly anticipate the kinds and amounts of medications to keep in-stock is already paying dividends.
Yet, it’s important to view this application of machine learning in a broader context. For years, OptumRx has built out industry-leading data and analytics capabilities in order to impact overall health and better manage complex conditions and costs. Known as OptumIQ, it represents our unique combination of data, analytics and health care expertise, which is infused into all our products and services. This core competency also serves us well as we continue to innovate and advance pharmacy cares services.
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- Investopedia. “Just-in-Time.” Accessed at: https://www.investopedia.com/terms/j/jit.asp
STATEMENT REGARDING FINANCIAL INFLUENCE:
This article is directed solely to its intended audience about important developments affecting the pharmacy benefits business. It is not intended to promote the use of any drug mentioned in the article and neither the author nor OptumRx has accepted any form of compensation for the preparation or distribution of this article.