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TraceLink charges HDA with antitrust activity over its Origin database
One of the great imponderables of the coming era of traceability of pharmaceutical shipments throughout the supply chain—the goal of the Drug Supply Chain Security Act (DSCSA)—is: who owns the data? Pharma manufacturers generate the serial numbers and other identifiers of a product, but once its ownership is transferred (such as to a wholesaler), subsequent data on the drug’s disposition is up in the air. Does it belong to the wholesaler, to the manufacturer, or to others in the supply chain that take ownership? Now, that uncertainty has resulted in litigation between one of the leading vendors of traceability software, TraceLink, and the Healthcare Distribution Alliance (HDA), the trade association of US wholesalers and distributors.
On Oct. 23, Tracelink filed an antitrust case against HDA (case No. 1:17-cv-01197-AJT-IDD) in the Eastern District of Virginia federal court. The company alleges a “conspiracy” by HDA to monopolize product identity information through the Origin data service it set up over the past year. HDA’s intent, it is claimed, is to “coerce” its members (which constitute the vast majority of primary wholesaling in the US) to use Origin, and has set up “exclusionary license contracts” to hinder pharmacies and other supply chain participants from using alternative products, specifically TraceLink’s Life Sciences Cloud. Already, says TraceLink, “a number of TraceLink’s customers have discontinued their subscription to TraceLink’s Life Sciences Cloud to date, with an unknown number of them switching directly to the HDA’s competing solution.”
TraceLink seeks to enjoin HDA from making participation in the Origin data repository mandatory, and to recover $30 million from HDA for damages. Another complaint of TraceLink is that HDA chose another IT company, ValueCentric, to create and manage the Origin repository; however, TraceLink is not litigating against that firm with this filing.
“We are reviewing the complaint and do not have any further comment at this time,” according to an HDA spokesman.
Identity plus transactions
When Origin was announced, HDA seemed to be clear that the repository was a database only of identifiers, the so-called Global Trade Item Number (GTIN—and specifically, the GTIN-14), which does not include either unique serial numbers, or transaction history information. TraceLink’s suit acknowledges some of this, noting that Origin “is solely a data repository that identifies specific packages of drugs that have been put into the supply chain,” and that “To the contrary, the Life Sciences Cloud provides the user not only with this information, but also with information regarding, among other things, when and to whom the product was sold.” However, that word “specific” in the TraceLink statement points to serialization data.
TraceLink’s suit goes on to note that the use restrictions on Origin “which in the very least require users of competitive track and trace solutions to incur substantial opportunity costs by forcing them to re-enter their data into the competitive systems, effectively prohibit manufacturers and distributors from dealing with competitors, like TraceLink.” And this points to a workable, if onerous, solution: either HDA makes the Origin data available to companies like TraceLink, or TraceLink customers go through the process of entering their GTIN data with both Origin and with TraceLink’s Life Sciences Cloud.
Obviously, such duplication of effort runs against the grain of DSCSA, in that it is highly problematic for two data repositories to be exactly identical. (The alternative, that TraceLink be the sole repository of GTIN data, is equally problematic, given that there are numerous competitors to TraceLink.)
GTINs, which were defined by the GS1 organization years ago, are used not only for pharmaceuticals, but for a growing number of trade items in commerce—and, as the name indicates, throughout the world. When an organization like HDA or, for that matter, a private company like TraceLink compiles a repository of such data, it has created something of value. Who gets to take advantage of that value will, it seems, be up to the courts to decide, although there should be a lot of wiggle room for HDA and vendors like TraceLink to work out a suitable arrangement.
10/27 update: in a 10/26 communication with Pharmaceutical Commerce, Shabbir Dahod, CEO of TraceLink, sought to clarify TraceLink's position. "The issue is not over data ownership," he says, "but is about creating an open, interoperable system for GTIN data that allows all solution providers, including TraceLink, to compete" versus what is said to be the closed, proprietary system that HDA has created. "GTIN information is at the core of what must be shared, by trading partners or by vendors like ourselves to service the industry."