Q&A with Don Hsieh, Director of Commercial and Industrial Marketing, Tyco Integrated Security
Q: Some of the most impactful activities related to the pharmaceutical supply chain over the last couple of months have been regulatory in nature, i.e. DSCSA, DQSA. How well do these acts attempt to address supply chain security? What do you feel will be the reality of their impact?
A: DSCSA, also known as Title II of the Drug Quality and Security Act (DQSA), was put in place in 2013 to address downstream risks and facilitate the exchange of information about where a drug has been in the supply chain. This act aims to enable drug legitimacy verification, enhance detection of illegitimate products and facilitate more efficient recalls.
Regulations like DSCSA are exactly what the supply chain needs in order to gain another layer of security and protection for consumers. There are a lot of moving parts throughout the supply chain, but DSCSA addresses each and every player, including manufacturers, repackagers, wholesale distributors, dispensers, and third-party logistics providers to ensure every step in the supply chain is properly secured.
There is no doubt that the supply chain, and therefore consumers, will be better protected thanks to new pharmaceutical supply chain regulations, namely DSCSA. Some requirements began in November 2014, and several key requirements, starting with dispensers (primarily pharmacies) will begin in November 2015. With the help and support of the FDA, the industry will work to develop the system and specific requirements over a 10-year period.
Q: One of the most significant deterrents to realizing true supply chain security is cost. What are some cost-effective strategies that can help the marketplace as they battle against theft and counterfeit drugs?
A: Maintaining inconsistent security platforms across the global enterprise is a key driver of costs. Security processes and training have to be adapted for each discrete system. Companies may lack visibility across the global supply chain due to incompatible systems. It can be a challenge to ensure that every location meets corporate standards as well as local country requirement.
A cost-effective strategy is to move to a consistent global security platform supported by centralized program management. Increased standardization delivers consistent and centralized security systems that are more efficient and require fewer employees to manage, as does streamlining equipment, networks and servers. Integrating security systems with key business applications such as human resources, payroll and contractor verification systems can streamline authentication processes, reduce manual data entry and errors, and reduce risks associated with incorrect credentialing.
Centralized global program management can produce significant savings by delivering standardized processes and training, and consistent implementation of security programs across the enterprise.
Q: At what station in the supply chain (inventory management, warehousing, shipping, etc.) do you feel pharmaceutical processors need to improve the most in improving their supply chain security?
A: The shipment of products continues to be the weakest link in the chain because it is the most difficult to secure, and cargo theft is being conducted by organized criminal gangs specifically targeting high value loads such as prescription narcotics that have a high black market resale value. 90 percent of all cargo theft in the U.S. is due to the theft of full truckloads, and after several years of declining average loss value, pharmaceuticals suffered over a 5X increase in average loss value – over $1.5 million in 2014.
Organized crime targets vulnerabilities anywhere in the supply chain, so companies need to implement multi-layered security practices to combat crime. Deter fraudulent pickups by implementing identity management solutions, in addition to high-resolution cameras and facial recognition analytics.
Combat full truckload theft with strict in-transit shipment protocols such as no stops for the first 200 miles, along with both monitoring and securing the loads with GPS-enabled electronic locks.
Q: On-line pharmacies have been a leading source of many counterfeit drug initiatives. Do you have any thoughts here, in terms of how pharmaceutical companies can help insulate their distribution channels against the negative impacts of illegal on-line retailers?
A: The sale of counterfeit drugs by on-line pharmacies is a global problem. Operation Pangea VII, the most recent annual operation coordinated by INTERPOL to combat the sale of illegal medicines online involved 115 countries and seized a record 20.7 million fake and illicit medicines and shut down 2,410 websites.
The scale of this operation illustrates the scope of the problem. WHO estimates that 50 percent of the drugs purchased online from sites that conceal their physical addresses are counterfeit.
Protecting patients from the dangers of illegal on-line pharmacies will require proactive measures from government, industry, and technology. Initiatives such as the European Medicines Agency’s EU-wide logo that will appear on all online pharmacies that are registered to legally operate in their countries provide patients with a directory of legitimate sources.
Authentic looking packaging is the counterfeiter’s best friend, so companies need to track and secure the full lifecycle of their packaging inventory to and from their suppliers. Ultimately, the end product that reaches the consumer needs to be authenticated and RFID tags that will be able to track the chain of custody from manufacture to dispense may play a critical role as the requirements of DSCSA begins to roll out.
Q: Another complication of supply chain security strategies is how they can slow development and commercialization efforts. What thoughts can you offer in terms of keeping products safe without missing key timelines?
A: Conducting a vulnerability risk assessment is a critical initial step in developing and implementing a supply chain security strategy. A cross functional team of security, quality, regulatory, packaging, operations and logistics can develop a comprehensive assessment of the key vulnerabilities in that product’s supply chain.
By having a plan in place that identifies risks and lays out steps to mitigate those risks as part of the product commercialization process, the safety of the product need not be compromised to meet commercialization milestones.
Q: What do you feel will be the most impactful development in supply chain security or regulation over the next 12-18 months?
A: The complexity and challenge of securing the global pharmaceutical supply chain will continue to focus attention on maintaining product integrity from raw materials through manufacturing to dispensing authentic, unadulterated drugs to the consumer. Regulatory reforms around the world on standardizing track and trace processes will mandate progressive steps be taken for that cause.
The emergence of Internet of Things (IoT) technology has the potential of significantly improving the industry’s ability to have real-time monitoring of their products throughout the supply chain, even as the products pass through multiple third parties. Sensors that monitor temperature and humidity can protect product quality and safety, while sensors that monitor vibration and location can protect product security.
These sensors can communicate wirelessly throughout their journey and send data to the cloud for aggregation and analysis that can be monitored for deviations against standards. Automated alerts can be sent to individuals or even other equipment controllers in real-time to take actions to protect product integrity. The intelligent application of IoT promises to be a supply chain security game changer.
Pharmaceutical supply chain security is ultimately about protecting patient health. As opposed to many other product categories, the impact of a pharmaceutical security breach goes much further than the cost of product loss. Other industries face recall costs, litigation costs, regulatory fines and brand reputation impact from security breaches in their supply chain. The stakes are highest for the pharmaceutical industry because patient health is at risk if adulterated product is consumed by the patient from a break in supply chain security.
It’s important work that deserves continual focus.
This article can also be found in the October 2015 edition.