Track-and-Trace Compliance Looming, but Once Implemented Will It Bring Benefits?

Serialization regulations in California and the EU come into effect in 2015 and 2016, and two US federal bills are moving through Congress. What are the implications for the pharmaceutical industry?
Jun 26, 2013

In the fight against counterfeit pharmaceuticals, governments are aiming to harmonize legislation across borders. As a result, several new regulations will be coming into effect in the coming years, including the European Union’s Directive 2011/62/EU and California’s e-pedigree. This legislation will impact all areas of the pharmaceutical supply chain as a drug product must be tracked as it travels from the point of manufacture all the way to the pharmacy. Track-and-trace systems will require the participation of stakeholders from all areas of the business, such as packaging, distribution, marketing, regulatory, IT, and executive management. Although the challenges are significant, and track-and-trace programs will impact all processes from packaging through distribution, the benefits can be as equally rewarding.

Regulations around the globe
A number of major track-and-trace regulations are currently in the process of being implemented globally. EU Directive 2011/62/EU requires the implementation of uniquely coded, serialized packs for almost all prescription drugs, as well as tamper-proof closures, according to Franz Ludwig, product manager track & trace, Bosch Packaging Services. The new product serialization is scheduled for application across Europe in 2016. Turkey has had regulations in place since 2009, and China’s Good Supply (Distribution) Practices (GSP) rules went into effect June 1 of this year.

In the US, there are several different state regulations; California’s e-pedigree is the most stringent and requires item level serialization at the unit level along with full aggregation from the item to the case, and depending on the distribution model, the pallet, according to John DiPalo, chief operating officer for Acsis, a provider of enterprise serialization solutions. Furthermore, each individual saleable unit must be tracked from the manufacturer through to the point at which it enters the dispensary using an electronic, interoperable system. By 2015, 50% of all drug products sold into California must be serialized, with all products in compliance by 2016. Wholesalers and pharmacies, meanwhile, must meet the requirements by 2016 and 2017, respectively.  

In addition, there are two bills pending at the federal level in the US that are intended to eliminate the patchwork of state requirements, according to Margot H. Drees, executive director of global strategy with GHX. On June 3, 2013, the US House passed the Safeguarding Americas Pharmaceuticals Act (H.R. 1919), and on May 28, 2013, the US Senate Committee on Health, Education, Labor, & Pensions marked up and combined the Drug Supply Chain Security Act (S. 957) and the Pharmaceutical Compounding Quality and Accountability Act (S. 959). The Senate is set to vote on the new act sometime in July. “The intent is to reconcile the two bills and have something on the president’s desk before the August recess,” notes Drees. She adds that both federal proposals extend the time horizon in which industry must comply and propose a lot-level tracking system with individual unit serialization.

More than patient safety

The driving force behind the regulations is to enhance patient safety by reducing the number of counterfeit, adulterated, diverted, or stolen products in the marketplace,” asserts Drees. Counterfeiters are increasingly targeting the pharmaceutical supply chain, which is a dangerous trend that can have fatal consequences, according to Ludwig. “Counterfeit medicines are thought to account for up to 10%  of the global medicines market, and are responsible for many instances of serious illness and death. All supply-chain players can contribute to increasing the safety of drug supply,” he says.

Enhanced patient safety isn’t the only positive outcome for companies that implement effective track-and-trace programs. Pharmaceutical manufacturers and distributors can also gain a host of operational and supply-chain efficiencies, according to DiPalo. “An integrated serialization system that can combine serialization data with business data can serve as a targeted visibility solution that benefits other business activities, such as returns management, recall management, and chargeback management, as well as helping to ensure 100% order accuracy. Expired product and new product introduction management and forecasting replenishment are other business processes that can also benefit from track-and-trace/serialization programs once the units are identifiable and there is visibility across the supply chain, according to Drees. DiPalo also notes that serialization can provide the ability to spot inefficiencies in the supply chain that are impossible to detect when items are managed at the lot or batch level.

The keys to success

The key properties of a track-and-trace system include data security, and for a cloud-based model, a very strict data governance policy both of which protect the integrity of the data and the product, as well as the proprietary information of supply chain trading partners, according to Drees.

The technology alone, however, will not result in a successful track-and-trace program. “Stakeholders from all areas of the business must be involved when designing an effective track-and-trace system, including packaging, distribution, marketing, regulatory, IT and executive management, and there needs to be cross-functional participation and buy in,” DiPalo observes.

Furthermore, Drees believes, data standards are needed to ensure interoperability across the supply chain. “These standards include GS1 serialized Global Trade Item Numbers (sGTINs) to identify individual products and cases of products, GS1 Global Location Numbers (GLNs) to identify participating facility locations, and the electronic product code information standard (EPCIS) for event capture.”

Another major key is to fully understand the multiple paths that a product can go through in both internal and external supply chains.  “Mapping this ‘day in the life’ is very important for understanding all of the possible exceptions that a system will need to be able to handle,” notes DiPalo. Finally, according to Drees, the system must be scalable and highly available to meet the vast data access/storage and retrieval/reporting that will be required as the industry matures.

Managing technology gaps

Many of the challenges in implementing a serialization system are related to the changes required in the flow of product in order to capture the serial number data and the new systems required to capture and store the data. In addition to technology gaps and business process changes, ambiguity about implementation requirements and timelines, cost, evolving data standards, and the considerable variation in the level of sophistication of the parties involved are some of the primary challenges facing the industry today. Incorporation of third-party processing, such as contract packaging and distribution operations, into an overall serialization solution is also an area of risk that companies need to be aware of, because many third-party service providers are not serialization ready.

Early adopters have the advantage

Early adopters are serializing product lines, conducting pilot programs with their trading partners, and participating in GS1 workgroups to define implementation best practices and guidelines, according to Drees.

In Germany, the association “securPharm e.V.” is developing technical and organizational solutions in compliance with the EU directive within a pilot project that was launched earlier in 2013. “For this purpose, the data matrix code was determined as the data carrier, which must contain a unique product number and serial number for end-to-end verification. In addition, because the serial numbers must be randomized for tamper-proof allocation, secure and reliable software is essential,” explains Ludwig.

In the US, some major healthcare industry players have been working with GHX to develop a network-centric, traceability information-sharing system (leveraging a variety of industry data standards) in an effort to standardize the process for all parties involved and provide access to actionable supply chain data, according to Drees. Using secure connections, the various parties along the supply chain can use the GHX cloud-based repository to capture key drug product events (i.e. commission, aggregation, shipping, receiving and disaggregation.) The repository processes the event data using a business rules engine and makes it available to the authorized trading partners for tracing and chain of custody reporting. The GHX system also retains a copy of all supply chain data submitted and can provide redundancy in the event a trading partner experiences a system failure.

In a recent traceability pilot referred to as “Track-and-trace for Serialized Product,” products that were manufactured and serialized at AbbVie were tracked as they were delivered to a McKesson Corporation distribution center and then distributed to the Veterans Health Administration (VHA) Consolidated Mail Outpatient Pharmacy. The GHX pilot was awarded the 2013 Distribution Management Award from the Healthcare Distribution Management Association, recognizing GHX, these three companies, and platform development partners AmerisourceBergen Corporation, Cardinal Health and Johnson & Johnson Health Care Systems for their efforts in the pilot study.