Counterfeit medicines and the threat they pose to patients have driven a global regulatory response of a wide-scale introduction of serialization or track-and-trace legislation in a bid to hinder these products’ entry into the supply chain.
The shaping of a more secure, transparent, and connected supply chain that puts patients front of mind for drug manufacturers and their partners is deserving of dedicated resource and investment.
However, the significant capital expenditure involved has led many drug manufacturers and their supply chain partners to seek out returns beyond compliance to ensure they make the most of their investment.
Here, we discuss how drug manufacturers can generate additional value and returns from their serialization solutions by investing in aggregation and single unit dose track-and-trace.
Market and Regulatory Demand for Aggregation
The introduction of serialization is allowing the pharmaceutical industry to take the first, crucial steps towards connecting the entire supply chain from manufacturer to patient. This connectivity will enable businesses to gain transparency of their supply flows and access to data that can be used to streamline operations and logistics.
Many manufacturers, wholesalers, and contract service suppliers are exploring the scope of this heightened data access to make more of their serialization investment. Few, however, are looking to implement additional services or processes that will make the data flow and its collection easier and more robust. Aggregation is one such process with potential to improve operational efficiencies for those who implement it.
At present, aggregation is yet to become the market standard in the U.S. or EU. Three-tier aggregation will be introduced by 2023 in the U.S. as part of the rollout of the Drug Supply Chain Security Act (DSCSA). In the EU, aggregation is not currently part of the European Falsified Medicines Directive (FMD) legislation.
While many pharmaceutical companies supplying the U.S. have stated they will not begin aggregating drug product until the 2023 deadline, the market demand for aggregation services is growing, creating a disjoint between supply and demand.
Drug wholesalers in the U.S. have made it clear that they need to be supplied with aggregated goods, explicitly stating that the practice of inference—or presumption based on reasoning as to what exactly is inside the pallet—rather than collection-based data will not be accepted.
This demand is in part being driven by the need for saleable returns verification. From November 2019, the 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 check is similar to that which will be carried out at the point of dispense (POD) in Europe.
Analysis from the Healthcare Distribution Alliance (HDA)1 shows that approximately 60 million units of drug product are returned annually in the U.S., with an estimated value of $5–10 billion. Given the value of these products, it is essential that wholesalers can verify all unique identifiers (UIs) at once, enabling them to re-sell the product quickly and cost effectively.
This makes aggregation invaluable as it provides the only alternative to opening group packages, such as bundles, cases, or wrapped pallets, and verifying all of the consumer packages it contains one by one.
The EU FMD’s risk-based verification requirements pose similar problems. The directive dictates several instances that require wholesalers to scan UIs to make sure products are genuine.
For example, returns from pharmacies, hospitals, or other wholesalers where verification of UIs is needed, exporting to outside the EU, cases in which product lots are spoiled as a result of a break in cold chain storage, and mass verification and decommissioning of UIs.
As with the DSCSA, without aggregation, wholesalers will have to unpack each batch and scan packs individually in each of these scenarios. Receiving aggregated data for each shipment will offer an increased level of operational efficiency, which inevitably will generate both time and money savings.
Improvements to Logistics
In cases where multiple suppliers are offering a similar drug, manufacturers that offer aggregated products will have a competitive advantage over those that do not.
In addition to these external factors—such as the market demand from wholesalers discussed above—there are internal motivations to encourage companies to adopt aggregation solutions.
Ultimately, the heightened visibility and insight into the supply chain offered by aggregation presents the industry with a unique opportunity to make significant logistical improvements. Real-time monitoring and access to the legacy data will enable companies to create a virtual mirror of the supply chain, offering transparency and allowing partners to streamline order forecasting and reduce wastage, improve warehouse management, and offer greater shipment visibility.
Single Unit Dose Track-and-Trace
Virtualizing the entire pharmaceutical supply chain to the most granular level can be achieved by implementing a track-and-trace system that allows each individual pocket of a blister to be equipped with a data matrix, human readable information, and a unique identifier.
This system will offer hospitals and community pharmacies more visibility over the medicines they source and dispense, so that each dose can be verified right up to when it is administered to the patient.
Beyond the clear advantage of complete traceability and accountability, the system also provides deeper insight into supply flows and patterns and enables users to plan supply requirements more accurately and efficiently. Improving order forecasting, the track-and-trace system could save costs, reduce stock levels, and waste, and help prevent stock-outs.
This has particular relevance in the EU where hospitals are forming purchasing groups and consolidating their supply chains. A track-and-trace system that operates on the unit dose (UD) level not only will offer the ability to ensure robust management of the flow of goods but also will enable centralized inventory sharing on a pay-per-use basis.
Investing in Opportunity
While introducing aggregation may increase the complexity of serialization implementation, it is clear that the benefits far outweigh any initial investment concerns.
Allowing for logistical units to quickly move through the supply flow and undoing the need for unpacking, aggregation itself presents huge advantages to the pharmaceutical industry.
Aggregated data will bring a faster passage of drugs to market, optimize operational process, and provide a solution that allows end-parties to comply with ‘risk-based validation’ and serialization-related decommissions.
Market demand for aggregation no doubt will drive adoption and those already providing it will have an immediate competitive advantage. Similar opportunity lies with the investment in single unit dose track-and-trace.
By offering this advanced service to community pharmacies and hospitals, allowing them to make significant improvement to their logistics and stock management practices, drug manufacturers will no doubt gain an advantage over competitors offering similar products.
1 Healthcare Distribution Alliance (HAD) Saleable Returns Pilots Report, https://sv-db1.hdma.net/eweb/downloads/HDA%20Saleable%20Returns%20Pilots%20Report%202017.pdf, page 6.
About the Author
Dexter Tjoa is the Director Corporate Strategy at Tjoapack. He is responsible for devising, implementing, and evaluating the mid- to long-term strategies of the company and the services it offers, as well as overseeing the commercial department within Tjoapack.