The management of saleable returns in the U.S. pharma industry has traditionally fallen under the remit of wholesalers. Track-and-trace regulations in the form of the Drug Supply Chain Security Act (DSCSA) are forcing the industry to revisit that model.
The key DSCSA milestone is November 2019, at which point wholesalers will be required to verify the GTIN, serial number, lot number, and expiry date of any pharmaceutical product that has been returned to them before re-selling.
While this may appear to place much of the burden on wholesalers to develop and manage a solution, the reality is that manufacturer participation will likely be imminent in the new saleable return verification processes.
Saleable Returns: just a wholesaler problem?
A saleable return occurs when a pharmacy returns drug product to a wholesaler, and currently, if there is evidence that the product has been handled properly, it can be re-sold.
Analysis of saleable returns by the Healthcare Distribution Alliance (HDA), the national organization representing primary wholesale distributors in the U.S., shows that approximately 60 million units of drug product are returned annually with most of saleable returns the result of overstocked product.
With an estimated worth of $5-10 billion, this is a valuable market segment that has traditionally been regarded as a wholesaler problem, with little dedicated regulatory involvement.
As part of the supply chain, saleable returns fulfill a portion of product demand. Failing to comply with regulations could affect demand planning for manufacturers and ultimately lead to drug shortages.
As of November 2019, DSCSA will dictate that for a product to be re-sold, the wholesaler must verify its serial number, lot number, GTIN, and expiration date.
The current industry perception is that this requirement will sit with wholesalers. Some manufacturers believe that saleable returns verification is a wholesaler problem and don’t understand the need to invest in a solution.
Wholesaler boxes at the facility. (Credit: TraceLink)
There are two issues with this perspective.
First, manufacturers often have little knowledge of their products being re-sold. Some companies don’t accept returns (for any number of reasons); however, the wholesaler that bought the product will very often still receive returns and re-sell them. If the wholesaler has proof that the product was maintained through the supply chain and any handling requirements were met, this is perfectly legal. With the change in regulations and verification requirements, manufacturers may receive queries from wholesalers who must verify the GTIN, serial number, lot number, and expiration date.
Second, the core challenge for wholesalers will be accessing the information they need to verify products against, and the only solutions involve manufacturer participation.
Manufacturer participation
By November 2019, the onus will be on manufacturers to participate in one of the following approaches to meet their wholesaler customers’ requirements:
- Provide EPCIS data with shipment: Manufacturers can provide EPCIS information alongside the shipment of product to wholesalers who will then store the information in a repository. Should the wholesaler receive a return, they will then verify the data from the repository. Timing is the challenge here as not all manufacturers are ready to do this yet and aren’t required to do so by DSCSA until 2023. Similarly, not all wholesalers have the capability to receive and store information yet.
- Response to data requests: The second approach will see wholesalers scan returned products for resale and request information from a manufacturer on the status of the serial number. In some cases, the returned product may have been originally shipped to a different wholesaler and the current wholesaler will not have EPCIS information for that product in its repository. In these situations, the wholesaler will need a solution to route the request to the appropriate manufacturer system and receive a response to their query. The manufacturers will need to create a means of capturing, processing, and responding to the verification queries.
In both instances, the system will have to deliver a response in real time. While the DSCSA will allow manufacturers one business day, not exceeding 48 hours, to reply, wholesalers will want the verification instantly. A slow response will lead to valuable products simply occupying space, which itself is at a premium, and creates additional costs, particularly if there are cold storage requirements.
Product being scanned at the wholesaler. (Credit TraceLink)
Master data management and exchange
An often forgotten requirement in the verification process is the need for product master data by the wholesaler. When the wholesaler scans the barcode—either at receipt or when processing the return—the system must have correct and accurate GTIN information available or the processing will fail.
Wholesalers then rely entirely on manufacturers to ensure the correct GTINs are provided and updated after changes or new product introductions. With many wholesalers managing in excess of 20,000 prescription drug SKUs, incorrect or missing product master data can be a significant disruption.
For manufacturers and wholesalers, communicating master data out to the supply chain in real-time is critical in order to be compliant and eliminate inaccuracies.
Final thoughts
Manufacturer participation in saleable returns verification will be imperative to successfully meet the wholesaler saleable returns verification requirement. Access to verification information and up to date and accurate product master data is critical to prevent any disruption in to the availability of medicines to the public.
As the life sciences supply chain begins its digital transformation journey, saleable returns verification is just one of many future data exchanges that will occur, requiring seamless and real-time information sharing between direct and indirect trading partners. When looking for solutions to meet saleable returns, manufacturers and wholesalers should consider solutions that facilitate real-time information exchange and can support their requirements for additional needs, through a digital information sharing platform.
PIM
TraceLink has launched Product Information Manager (PIM), a network application that enables manufacturers and wholesalers to share product master data and streamline the product verification process required for saleable returns verification.
As a network application, PIM enables sharing of serialized product information across the life sciences supply chain. This includes the ability for companies to share information with both direct and indirect trading partners, a cost prohibitive process with point-to-point architectures. Through PIM, companies receive critical product information such as serialization information and product master data, while providing the information provider with access controls to ensure that only verified, permissioned companies are receiving the data they choose to share.
About the Author
Dan Walles is VP of Solution Marketing at TraceLink, where he brings to his role more than 20 years of experience in product marketing, sales and service delivery. He has focused exclusively on the needs of the life sciences industry for the past 15 years. Since joining TraceLink in 2010, Walles has been instrumental in educating customers on how to drive business value and better patient outcomes through information sharing and collaboration.
