Why we need mass serialization — now!

June 1, 2009
Gary Noon

Gary Noon is CEO of Aegate.

Pharmaceutical Technology Europe

Pharmaceutical Technology Europe, Pharmaceutical Technology Europe-06-01-2009, Volume 0, Issue 0

Today, approximately 1.5 million counterfeit medicine packs enter the legal supply chain each year - in other words, one pack in every 20000 is counterfeit.

Today, approximately 1.5 million counterfeit medicine packs enter the legal supply chain each year — in other words, one pack in every 20000 is counterfeit. What is more worrying, however, is the rate at which this is increasing. Between now and 2020, the spread of counterfeit drugs is estimated to rise to either an 'optimistic' 19.5 million or a pessimistic 192 million packs in the legal supply chain.

What happens when a product has to be removed from the market? Experience from a range of industries shows that a more effective method of recalling products is needed. In 2005, for example, 2500 packets of fake Lipitor, Pfizer's widely used anticholesterol medicine, were believed to have entered the UK market. Research by Frost & Sullivan estimates that fewer than 15% of the packs were recovered. Aside from the potential danger to patients this inability to effectively recall drugs poses, the damage to the reputations of individual manufacturers and to the industry as a whole is vast.

We have the technology...

According to the EU Commission consultation on combating counterfeiting medicines for human use, released in December 2008, the annual direct and indirect societal costs of counterfeiting are approximately €950 million. The overall costs of inaction will reach €9.5 billion–€116 billion by 2020, and this does not take into account the intangible yet significant damage to brand reputation and trust. The proposal also highlighted the worrying change in the type of medicines that are now being counterfeited: there has been a distinct shift during the last few years from lifestyle medicines to prescription medicines such as oncology treatments and antidepressants; even generic and overthecounter (OTC) products are no longer immune.

So, we clearly need an urgent solution — but which one?

Mass serialization

Mass serialization is the method of adding machinereadable codes containing a serial number to individual packs of medicines. Unlike all other methods for verifying drugs, it enables product authentication at the point of dispense (POD) and provides the ultimate barrier between potentially harmful drugs and the patient, while offering the pharmaceutical industry a myriad of benefits.

Serialization is only effective, however, as long as an authentication check takes place. For optimal results, the authentication check is conducted in real time at the POD in pharmacy, using the professionalism of the final healthcare worker in the patient's care pathway to confirm the suitability of the medicine for dispensing. Verification at other points in the supply chain is not authentication and will not sufficiently protect patients. At retail level, mass serialization allows for the detection of fake products across every single product dispensed, ensuring that none are missed.

Rules for optimal secure coding

Benefits of mass serialization

In addition to identifying counterfeit drugs, medicines serialization allows manufacturers to quickly locate and gather errant products if necessary. An effective recall management system means that pharmaceutical companies can act quickly to protect patient safety, and limit damage and cost if a medicine is substandard or counterfeit.

In 2006, legislation in Russia mandated the use of barcodes on all vodka sold in Russia. Prior to the law, more than 37% of all vodka produced and sold in Russia was outside official channels, with an estimated 42000 Russian fatalities annually attributed to counterfeit alcohol. A mass serialization programme was implemented by vodka/alcohol manufactures to address consumer safety and address the financial loss, and has since contributed to brand protection and awareness.

While the risk of injury or death is compelling enough, there is also a significant business case for mass serialization. The risk of lawsuits from injured parties against both manufacturers and pharmacists, if they allow ineffectual or harmful medicines to reach the patient, is high. In the absence of mass serialization, it may in the future become both difficult and costly to prove that all reasonable care has been taken.

An effective mass serialization programme should act as a safety net, preventing counterfeit products from falling into the hands of patients by identifying them at the POD. In 2008, an independent audit of Aegate's authentication system operating in Belgian pharmacies, demonstrated 100% accuracy in the identification of suspicious, recalled and expired products before they were dispensed to patients.

This level of security helps protect pharmaceutical companies from the negative publicity associated with a drug scare, but most importantly removes the danger of patients falling ill — or worse — through the consumption of fake, ineffectual or unsafe medicines.

There is also a significant amount of goodwill to be gained from the successful implementation of mass serialization programmes. While the pharma industry is driven by financial success and risk management, there is a widespread acknowledgement that efforts to promote public safety generate a positive return on investment. Under the right conditions and with the right incentives, pharmaceutical manufacturers stand to benefit significantly from the successful adoption of such programmes.

The bottom line

The EU commission consultation findings estimate that the one-off cost for an industrywide serialization solution would be €11.5 billion, with the running costs for nonOTC companies being €185.5 million. The cost for EU pharmacies to install the right IT and reading devices to support serialization would be €157 million. But with closer examination and a better understanding of the solution, it is clear that the implementation of a harmonized mass serialization programme also offers compelling cost benefits.

While the financial outlay is significant, there are significant short-and longer-term savings that need to be considered. First, harmonization of coding would save the industry €1 billion, strongly suggesting that the EU needs to provide guidance and regulations on coding type. Further cost savings can be generated through being able to effectively recall drugs at the POD. The handling and losses of a recall are estimated to be €2 million per recall. Mass serialization creates savings of 30% and enables savings of up to €1 billion annually regarding product returns.

Why are we waiting?

So, in a year that will see a muchneeded change in the pharmaceutical industry, mass serialization stands out as a system that not only protects the patient most effectively, but also offers a number of valuable opportunities, and reputational and fiscal benefits: mass serialization can offset many of the costs outlined in the EU commission consultation document. With such arguments in its favour, it does beg the question, why has mass serialization used at the POD not been implemented already?

Gary Noon is CEO of Aegate, a patient safety communications company.