On December 13, 2016, during a webcast that is now available for on-demand viewing, TraceLink released results of its first Global Drug Supply, Safety and Traceability Report, undertaken with the market research firm, Actionable Research. The study surveyed 331 professionals from pharmaceutical manufacturers, wholesalers, pharmacies, and hospital pharmacies, to better understand issues and compliance trends at the lot level, in order to get a more realistic picture of gaps in readiness, and the challenges that face pharmaceutical companies, distributors and dispensers of all sizes in realizing full product traceability.
Half of the pharmaceutical companies that responded to the survey expect to comply with electronic data transfer requirements within six months of the November 2017 deadline, and 54% describe themselves as well-prepared for serialization. However, 19% of companies say they have not begun to address requirement, and only 24% say that their contract manufacturing organization (CMO) partners will be ready.
Respondents from pharmaceutical companies say that they underestimated the complexity of implementation, the total cost of IT upgrades required, and the overall impact that implementation can have on business.
The question of product aggregation, considered the lynchpin to full traceability, shows different levels of sophistication among pharmaceutical manufacturers. 51% expect to have aggregation in place by November 2017, 28% say they haven’t made a decision about aggregation, 13% say they plan to focus on it after November 2017, and 8% don’t have any plans for it at all. On the customer side, 26% of pharmaceutical distributors say they will require aggregated product, while 23% say they’d prefer to see aggregation, while the balance describe understanding that not all suppliers are ready yet.
Moving down the supply chain, customers at the dispenser level complain that the documentation required for compliance is often missing from products that they buy directly from pharmaceutical manufacturers. In their dealings with drug distributors, dispensers fear that their electronic data, currently accessible via distributor portals, may not be available if they change distributors.
In addition to shedding light on gaps in readiness, the survey offered an opportunity to test some common assumptions about the pharmaceutical distribution and supply chain, explained TraceLink CEO Shabbir Dahod. He began to work in pharmaceutical traceability over 15 years ago, when the terms track and trace, pedigree and e-pedigree were first articulated, leveraging work done at MIT’s Auto ID lab to help the state of Florida improve the safety of its pharmaceutical supply.
The “normal” linear view of the pharma supply chain so often seen on consultant PowerPoint slides, shows 90% of pharmaceutical products moving neatly from manufacturer to distributors (mainly the “Big Three” McKesson, AmerisourceBergen Bergen and Cardinal Health) ) to dispensers. This is far from reality, Dahod said. The true picture should include the practices of small players, and take into account a variety of business relationships and requirements, and models that include such practices as direct shipments, drop shipments and 340B distribution relationships. Al“Lot-level serialization and traceability is not simple, because there is no ‘normal supply chain’,” Dahod said at the webcast. These real-world conditions dictate the best way to manage data, in order to achieve compliance.
A total of 331 people responded to the survey, 31% of them from pharmaceutical companies, where respondents were mainly managers or directors; 14% from wholesalers, 44% from hospital pharmacies, and 11% from retail pharmacies.
Results showed that 25% of pharmaceutical manufacturers had more than 10,000 customers, while 31% had between 500 and 10,000. In addition, 29% sell directly to hospitals and pharmacies.
Assumptions about the dominance of the “Big Three” distributors were also proven wrong by the survey, said Carter Holland, TraceLink’s chief marketing officer, who moderated the webcast. Although between 80% and 90% of the market’s dollar value may go to the Big Three, that number does not match what happens on the transactional level. In fact, the survey showed, respondents from pharmaceutical companies said that 43% of sales went to wholesalers other than the Big Three.
Results suggest a highly fragmented distribution network. Of the distributors who responded to the survey, 58% said they have over 500 customers, and 35% of hospital pharmacies who responded to the survey say that they buy from 16 to 500 suppliers. In addition, 42% of hospital pharmacies and 19% of retail pharmacies resell products to other hospitals and pharmacies, the survey suggests.
Using TraceLink’s 2015 pharmaceutical customer base to illustrate the data exchange requirements for full lot-level traceability, Holland described 200 companies requiring 113,000 connections and 51,000 data exchange connections, an average of 143 files exchanged per transaction, 7.3 million files exchanged, over 60 million transaction histories recorded, and 46,000 unique National Ddrug Codes (NDC). Considering that this is only a slice of the full picture, the complexities become clear.
And some of this complexity may be preventing some pharmaceutical companies, not only from achieving, but even from attempting to achieve compliance. Although most respondents to the survey said that they found compliance to be “difficult but achievable,” a full 19% of pharmaceutical companies, 11% of wholesalers, and 9% of dispensers were not even addressing lot-level requirements, which took effect in 2016, at all.
Some other highlights from the research: