Securing the Pharmaceutical Supply Chain with Full Traceability

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-10-02-2020, Volume 44, Issue 10
Pages: 66–70

End-to-end traceability can provide more value than just securing drug product safety.

Across nearly every industry, the inability to resolve product problems as they arise can cause a lack of trust with consumers that’s hard to rebuild. But none more so than in pharmaceuticals where patients’ lives are at risk, companies’ reputations and futures hang in the balance, and care providers can be negatively impacted.

An article in the American Journal of Tropical Medicine and Hygiene reported that, “Falsified and substandard medicines are associated with tens of thousands of deaths, mainly in young children in poor countries. Poor-quality drugs exact an annual economic toll of up to $200 billion and contribute to the increasing peril of antimicrobial resistance. Some estimates say up to 10% of pharmaceuticals are fake” (1).

The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) emphasizes the widespread threat counterfeit drugs pose as well, stating, “Falsified medicines are a growing public health threat for every country, every medicine, and every person” (2).

Former FDA Commissioner, Scott Gottlieb, confirmed the threat in a speech in 2018 (3), when he said, “We see a world where the risk from counterfeit drugs is increasing rapidly. Where the means to produce counterfeits and distribute them through sophisticated, illegal networks is increasing. And the volume is also rising sharply. We have numbers that speak to these risks. We have enforcement work underway that’ll—unfortunately—illustrate that these concerns are real. If we tolerate a single weak link in the system, they’ll find it. And they’ll develop new ways to exploit it. The nature of global supply and distribution chains means that illegitimate products can cascade throughout the supply chain and reach patients if they’re not caught quickly.”

Deliberate falsification is not the only threat, as innocent errors can be just as harmful. In the United States, FDA reports that in 2020 alone, 46 drugs have been recalled for various reasons that include contamination, incorrect dosage, and mislabeling (4).

In an effort to enhance the safety of drugs and the security of the pharmaceutical supply chain, countries are implementing regulations to identify and track drugs throughout their journey to the patient. For example, FDA’s Drug Supply Chain Security Act (DSCSA) aims to enhance drug supply chain security by 2023 and mandates product tracing for manufacturers, repackagers, wholesale distributors, and dispensers (5). While the DSCSA mandated product tracking at the lot level back in 2015, it will soon require package level tracing as well. The European Union’s Falsified Medicines Directive implements similar tracking requirements too (6).

End-to-end traceability … it’s not just about safety

The International Institute of Research Against Counterfeit Medicines (IRACM) describes end-to-end traceability well; “The traceability of a product refers to the ability to locate it throughout the complete lifecycle of the production and distribution processes. … traceability plays a major role in the fight against health product counterfeiting” (7).

The obvious benefits are maintaining the effectiveness of drugs, improving patient lives, and minimizing the costs to the industry imposed by counterfeits, substandard drugs, and recalls. But full traceability across a digital supply network can help in other ways too, including:

  • Improving efficiency and minimizing waste
  • Enhancing collaboration in the supply chain to resolve inter-enterprise problems better and faster
  • Enhancing resilience and agility to help predict shortages and secure the supply during a crisis.

Enhancing resilience and agility is particularly critical, as the issue of resilience in the pharmaceutical supply chain has ‘elbowed’ its way into the boardroom in the wake of COVID‑19 (8). Executives can no longer ignore the threat posed by the often-tenuous threads of supply, both inbound and outbound, that compromise their end-to-end supply chains. Full traceability extends the view beyond the lab and corporate walls, to provide insight into the flow of ingredients, drugs, and equipment from their source all the way to clinic, hospital, and pharmacy shelves. Supply chain planners and managers are better equipped to identify potential problems and act early, protecting supply lines and ensuring products flow smoothly to patients and care providers.

Achieving traceability across the pharmaceutical supply chain

So, how is it possible to realize end‑to‑end traceability? Before value can be gained from full, end-to-end traceability, it is necessary to authenticate the product itself. There is no purpose in tracking a product through the supply chain if the drug itself is substandard or counterfeit. The keys to effective traceability include the following.

Product authentication and serialization. Product authentication technology is an essential part of a secure drug supply chain, and there are numerous ways to achieve this. Spectrometer analyzers can verify the actual ingredients and dosage of product, but other methods include specially designed coatings, chemical and molecular markers, and micro tags. The latter options can be applied at any and all levels—from the ingredients themselves all the way to the finished drugs and even the packaging. Serialization involves adding a unique identifier to sellable units of the product, so that it can be identified and traced throughout the supply chain. At the package-level, FDA recommends the Serialized National Drug Code (sNDC) as the standard numerical identifiers for prescription drug packages (9). Drugs that do not have an NDC (e.g., biologics) may use a different standard. Given these foundational elements, the big challenge is to track the product across all supply chain partners.

Legacy technologies fall short. Any drug supply chain is vulnerable to product quality problems, and there is always a chance for variance due to ingredient issues, substitution, contamination, formulation, or just plain human error. Many companies have tried to leverage electronic data interchange (EDI) across the network to address some of these issues. However, as a technology, EDI is woefully inadequate in addressing today’s supply network requirements. Remember, EDI was originally developed during the time of batch business processing and, even with the benefit of some of the newer extensible markup language business-to-business formats, it is still not possible to process much of the product quality related data being consumed through the various Internet of things sensors deployed throughout the network. So, while EDI itself will still remain in the picture for years to come, a supply network platform is needed that will enable continuous digital business processes to provide full traceability and the assurance of product quality and safety.

Identify the root cause of quality issues. When an issue does arise, an effective traceability capability should allow for a root cause analysis at the process level to be performed, which means network level master data management is needed that is extensible across multiple data types and geographic regions. Just like a Single Version of the Truth (SVOT) from a demand signal perspective across the network is needed, so too is a SVOT at the process level from a product quality and safety perspective. In this way, traceability becomes another foundational element of quality culture. Over time, a network platform will become the backbone for the digital twin, including a multi-party ledger (i.e., a blockchain at the network level), which also provides permission-based security between trading partners. Such an architecture also opens up the potential to add artificial intelligence (AI) into the mix. A multi-party intelligent agent can operate across the network targeted at improving key metrics such as achieving on-time in-full order fulfillment.

Traceability: The basis for effective execution. When there is a problem with a drug, any missteps in handling the crisis are costly in a social media-driven world where brand damage can happen quickly. In times of crisis, pharmaceutical companies need to respond quickly by:

  • Acting immediately with great transparency
  • Rapidly identifying the scope of the problem
  • Locating the specific drugs,
  • lots, and impacted locations and customers
  • Initiating the recall and executing the recall logistics
  • Identifying the source of the problem and fixing it
  • Instilling confidence in their marketplace and with consumers.

To do all this effectively, more control over the supply network is required. Leveraging network-based technology that tracks the full chain-of-custody for every item from start to finish provides visibility into supply chains with a way to effectively track products, intermediates, and raw materials in real time, from their source, across trading partners, all the way to the clinics, hospitals, and pharmacies who need them.

By rapidly extracting only the affected product in a recall, and at the precise locations in the supply chain that are affected, companies can minimize the impact on consumers and healthcare providers, protect their reputation, and minimize costs. Another critical factor is knowing exactly what and how much product needs to be replaced to quickly resupply to locations with minimum business impact.

Brand quality: More than just product quality

Over time, traceability data will enable process improvement and product-quality initiatives. Plus, with AI in the mix, it is also possible to relate changes in process variables to potential outcome, with probabilities measured against acceptable thresholds. But what’s interesting is that today, brand quality extends well beyond product quality.

Understanding and verifying sources and origins. Today, it is more important than ever to know the specific ingredients of each drug and if they are authentic, where they originated, and who made and handled the product. In fact, more and more pharmaceutical manufacturers are being asked to provide and prove the answers to those questions. Using a chain-of-custody solution, raw ingredients, drugs, shipments, and origins can be completely tracked, so that all approved sources of raw materials, intermediates, and finished drugs, as well as their paths through the supply chain network, are 100% verifiable and auditable. This takes on life-saving significance, especially where counterfeit pharmaceuticals are a concern such as in some regions in Africa. Or, where medical products, like biologics, must be maintained at certain temperatures to prevent spoilage or degradation during their journey through the supply network.

Business network platforms exist to support traceability and chain-of-custody. Given the implications traceability has in relation to product quality, safety, and compliance with current and imminent regulations, there really is no choice but to move forward with a technology investment to enable this capability.

The business network not only enables chain-of-custody and traceability services but also provides a foundation for future growth and innovation. Scott Gottlieb recognized that digital networks play a remedial and protective role and are an active element in the future of healthcare innovation stating, “A fully digitized supply chain can also help develop predictive analytics to reduce health care fraud, waste, and abuse. It can allow regulated industry and regulators to more easily manage or avoid costly or dangerous supply disruptions. It can help support innovative manufacturing and distribution technologies at a time when the drugs being developed are becoming increasingly tailored to specific patient populations” (3).

The bottom line is that whether a product quality issue leads to recalls, warranty claims, or unit level medical device repairs, after the event the trust of the patient and healthcare provider will need to be regained. By having the ability to address and communicate a course of action proactively, the overall impact can be significantly limited. Business network technology enables companies to be proactive and more, as it tracks the full chain-of-custody for every item from start to finish, providing visibility across final products, intermediates, and raw ingredients in real time from their source, across trading partners and to the point of care, whether that be a hospital, clinic, or retailer.


  1. G.M.L. Nayyar, et al., Am. J. Trop. Med. Hyg., 100 (5) 1058–1065 (2019).
  2. IFPMA, “Falsified Medicines,” [Accessed Sept. 7, 2020].
  3. FDA, “Remarks on Enhancing Drug Distribution Security,”, Speech by Scott Gottlieb, Feb. 28, 2018.
  4. FDA, “Recalls, Market Withdrawals, and Safety Alerts,” [Accessed Sept. 7, 2020].
  5. FDA, “Drug Supply Chain Security Act Resources for State Officials,” [Accessed Sept. 7, 2020].
  6. European Commission, “Falsified Medicines,” [Accessed Sept. 7, 2020].
  7. IRACM, “The Technologies for the Detection of Fake Medicines,” [Accessed Sept. 7, 2020].
  8. R. Gottipolu, “A New Platform for Hospitals and their Suppliers is Boosting Resiliency, Efficiency, and Collaboration Across the Supply Chain,” The Network Effect, May 4, 2020.
  9. FDA, Guidance for Industry: Standards for Securing the Drug Supply Chain—Standardized Numerical Identification for Prescription Drug Packages (Rockville, MD, March 2010).

About the Author

Reddy Gottipolu is senior vice‑president Healthcare at One Network Enterprises.

Article Details

Pharmaceutical Technology
Vol. 44, No. 10
October 2020
Pages: 66–70


When referring to this article, please cite it as R. Gottipolu, “Securing the Pharmaceutical Supply Chain with Full Traceability,” Pharmaceutical Technology 44 (10) 2020.