The remnants of Hurricane Helene (September 27-28) were especially destructive for higher elevations northeast of Asheville, North Carolina. A Baxter Healthcare facility in North Cove, North Carolina along the North Fork Catawba River, about 1500 feet above sea level, was hit especially hard (NC flood map). According to the American Hospital Association, “The plant manufactures 60% of the country’s supply of IV solutions and produces 1.5 million bags per day.” As a result, in early October several IV solutions were added to the FDA shortage list.
On September 29 Baxter reported, “heavy rain and storm surge triggered a levee breach, which led to water permeating the site. The bridges accessing the site have also been damaged.” (See picture below and several more pictures at HealthExec. Video of nearby here.) The temporary “rock bridge” shown in the second picture below was facilitating site access by the first week in October. Many employees were also disaster survivors dealing with damaged homes, lack of grid power, and disrupted transportation routes. Helene slashed the preexisting capacity of both this place and these people.
Intravenous solutions are essential medical goods. They are also low-margin, commoditized products with predictable demand that can be effectively transported long-distances. This practically ensures highly concentrated production capacity, such as the North Cove facility. North Cove is Baxter’s single largest manufacturing facility. Concentrated capacity involves concentrated risk. Whenever sixty-percent of national capacity is suddenly lost, there will be potentially serious consequences and urgent need for effective mitigation. In this case, mitigation measures included:
On October 3 Baxter announced, a temporary pause in shipping several products and an allocation plan. “… After review and consideration of available inventory and the medical necessity of the impacted products, a specific limit on what a customer can order has been implemented. This allocation helps limit stockpiling and increases the likelihood of equitable access to available products. The current allocation includes saline, dextrose and PD solution products manufactured in all sizes.” (More) The company and its competitors also announced plans to increase production at other sites. On October 9 FDA authorized Baxter to import replacement products from its manufacturing facilities outside the United States. The company reported, “by the end of the year, we project that collectively approximately 200 747 airplanes full of product will be delivered to the U.S., which represents nearly 18,000 tons of product from Europe and Asia.”
On October 14 Baxter announced, “A second temporary bridge is being installed at the site, thanks to the support of ASPR (Administration for Strategic Preparedness and Response), North Carolina Department of Transportation and our local team. This will enable additional truck and equipment traffic to enter and leave the site. In the interim, our first temporary bridge has already transported more than 350 truckloads of finished product off site to begin shipments to customers.” The evacuation of existing inventory from the North Cove facility — across the temporary bridge — was an essential step in maintaining minimum product flows. As both inventory evacuation and imports increased available supply allocation limits were loosened. (More here.)
On October 17 Baxter announced, “We achieved a critical milestone in our recovery efforts this week, with full restoration of utilities, including electric capability, water and wastewater treatment. IT infrastructure is also now fully operational.”
On October 28 the FDA announced “extended use dates for some parenteral drug products, after a review of the stability data submitted by Baxter International. Providers and patients that have the lot numbers in stock will be able to use them through the corresponding new use dates to help with supply.” (More here and here.)
On October 31, the company announced, “Baxter has restarted the highest-throughput IV solutions manufacturing line. At its peak operation (prior to Hurricane Helene), this line represented approximately 25% of the site’s total production and approximately 50% of the site’s production of one-liter IV solutions, the most commonly used size by hospitals and clinics.”
On November 7 Baxter announced that a second temporary bridge has been installed at the site. Since early October, the first temporary bridge allowed for the evacuation of more than 1000 truckloads of finished product. (More here )
Earlier this week Baxter restarted a second IV solutions manufacturing line. According to the company, “Together with the line restarted the week of Oct. 28, these two lines represent – at their peak operation (prior to Hurricane Helene) – approximately 50% of the site’s total production and approximately 85% of the site’s production of one-liter IV solutions, the most commonly used size by hospitals and clinics. “
To review: mitigation included 1) demand management through allocation and related product conservation efforts; 2) distribution management by building temporary bridges, evacuating surviving inventory, and allowing importation of related products from outside the United States; and 3) production management by rapid remediation of preexisting capacity. More liberal extended use dates are a form of inventory management that I would characterize as a midstream adjustment, but not a distribution management measure. In any case, upstream, midstream, and downstream mitigation has, so far, minimized clinical consequences. The real test will probably emerge in mid-to-late December and early in the New Year as inventory drawdowns begin to pinch the most. This week Baxter noted, “While we currently expect that all lines will be restarted by the end of the year, we do not yet have a timeline for when we expect North Cove production to be fully restored to pre-hurricane levels. ”
It is worth foot-stomping that restoration/recovery/remediation of preexisting capacity is usually the only effective means of Supply Chain Resilience at scale. It is worth highlighting — and celebrating — that private-public collaboration was effective in this case. Power restoration was prioritized. Temporary bridges were rapidly constructed. Regulatory flexibility was actively and creatively deployed to enhance access to constrained products.
Prevention questions worth asking: Is it wise to ever concentrate more than one-third production or distribution capacity in any single place? Is it wise to ever place a major capacity concentration in a significant flood plain or seismic zone or storm-surge risk area or name your most deadly poison. How can preventive wisdom be incentivized? How can lessons-learned be mindfully embraced and sustainably implemented?
Close up of northwest corner of Baxter North Cove facility, showing flooded employee parking lot to left. Roughly 500 feet from midstream of the North Fork Catawba River channel.
Temporary “rock bridge” under construction to reconnect Baxter facility to US Route 221