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The pioneering firms that installed serialization and track-and-trace systems are being joined by a fast follower crowd, but an industry-wide commitment is still in the future
Veterans of the pharma serialization wars of the past eight years are starting to smile again: business activity is picking up in companies announcing projects, releasing RFPs and renewing debates over how best to proceed. After California postponed its serialization track-and-trace mandate in 2008 (pushing it off to 2015 at the earliest, and practically pleading for the feds to step in), the rising tide of project work hit a wall, and things haven't been the same since. Activity did not come to a dead stop; and in the meantime, similar efforts in the European Union, and pharma-concentrated countries like India, Brazil and China had taken some steps themselves. The GS1 organization has steadily moved forward with planning workshops, implementation guides and standards development. Companies that were bidding for serialization business pre-2008 have been dusting off and updating their technical specifications; and new players are entering the fray.
"There have been some lean years for a lot of us since 2008," says Greg Cathcart, president of Excellis Health Care (New Hope, PA; www.excellishealth.com), an IT consulting firm focused on life sciences supply chain. "Now there are some fast-moving companies preparing for the national and international mandates, and we're already seeing a capacity crunch in service companies that can do the systems integration work that will be necessary."
Greg Cathcart, Excellis Health
Excellis was the sponsor of a Global Track and Trace symposium last fall, and is planning to host another one later this spring on the West Coast. Cathcart says that his company already has dozens of contractors in place at several of its clients involved in serialization pilots, "and they're going to be there for multiple years as this rolls out."
Perhaps the most significant technical hurdle--how to transmit and exchange large volumes of data swiftly, in keeping pace with supply chain movements--appears on its way to solution despite the lack of standards or dedicated infrastructure: the effects of cloud-based computing. As cloud-based systems become more widespread, and as the pharma industry deepens its already extensive experience in cloud systems, some of the technical hurdles begin to fade.
Just a year ago, FDA held a public workshop where deliberations about how serialized data to track movement and to authenticate products took up a significant part of the program, with the discussion ranging among a centralized database into which all tracking data would flow, or a "federated" model where pieces of the data stream would reside in different locations, with a data-linking mechanism to manage the connections. In November, the Network Centric ePedigree (NCeP) Work Group of GS1 US Healthcare ran a survey asking participants to voice opinions on what type of network should be organized; a key question is whether e-pedigree (the specific record of where a product has been) should become "just another track-and-trace process, not something 'special'."
Results of the survey have not yet been released--but in comparison to the 2008 era, the question of data-sharing has moved from "if" to "how." There are still hurdles to overcome: Dirk Rodgers, a GS1 committee leader and blogger (at RxTrace.org) points out that track-and-trace systems as currently conceived do not meet the technical requirements of the California e-pedigree rules, nor the still-in-place Drug Pedigree Messaging Standard (DPMS) of GS1. Even so, the medical device community is moving ahead quickly with adoption of identification and authentication measures for their products. In developing nations in Africa, a simple text-message authentication service developed by Sproxil (Cambridge, MA; www.sproxil.com) has already passed its millionth user, according to the company. Back in the US, GHX (Louisville, CO; www.ghx.com), having announced a developmental program to organize a data-sharing service for pharmaceutical distribution, is about to launch a pilot project this spring, involving a major wholesaler, a manufacturer and a pharmacy network. The bet is, either by 2015 or whenever a national tracking and authentication service is in place, the data-sharing details will be resolved by the rapid evolution of cloud technology.
A mockup of what the SecurPharm serialized package will look like. credit: SecurPharm
A milestone of sorts is being crossed in Germany, where a consortium of German pharma trade associations* is following through on the EU Directive 2011/62/EU (the European Union "Pharma Directive") passed last year for an end-to-end authentication system using 2D Datamatrix barcodes. The consortium is planning for a multi-party pilot program involving manufacturers, wholesalers and retail pharmacies, with the launch date in early 2013. In the intervening months, manufacturers are installing barcoding equipment and scanners. The project builds on the EFPIA pilot that was conducted during 2009-2010; the main difference is that there are two databases (one for manufacturers to store serial data; one for pharmacies to run authentication checks) rather than one centralized database. Other EU members are expected to follow suit; Europe as a whole is aiming for a 2017 date for compliance with the EU Directive.
*Members are the Federal Union of German Assns. of Pharmacists (ABDA); the Federation of Pharmaceutical Manufacturers (BAH); the Federal Assn. of the Pharmaceutical Wholesale eV (PHAGRO); Pro Generika eV; and the Assn. of Research-Based Pharmaceutical Companies (VFA).
In the US, a federal-level national program still awaits legislative activity in Congress. HR 3026, The Safeguarding America's Pharmaceutical Act, was reintroduced in September by Rep. Jim Matheson (D-UT), along with Rep. Brian Bilbray (R-CA); this bill was kicked around in the previous Congress, and the one before that, along with a variety of similar measures, all seeking to mandate uniform licensing standards for drug wholesalers, and for manufacturers to implement item-level serialization and some form of pedigree tracking of drug shipments. For roughly the past half-year, a consortium of organizations involved in pharmaceutical distribution, including PhRMA, HDMA, NCPA, NACDS and GPhA, have been meeting regularly to develop an industry-wide consensus that can be brought to Congressional committees, according to industry sources. Then, the thinking goes, the Matheson-Bilbray legislation (or something similar to it) would be attached to the Prescription Drug User Fee Act (PDUFA), which needs to be reauthorized before Oct. 1 in order to continue funding FDA.
However, a consensus remains to be found among the groups negotiating. "NCPA continues to feel that track-and-trace technologies remain largely unproven and such a system may prove to be prohibitively expensive for independent community pharmacies," according to a statement by NCPA CEO B. Douglas Hoey, RPh, in September; in January, an NCPA spokesperson said that "NCPA is participating in discussions with other stakeholders" and "we still have concerns about the potential burdens that may be imposed on small business community pharmacies."
Elizabeth Gallenagh, VP of government affairs at HDMA, says that although HDMA "would like to see this happen this year," adding the Matheson-Bilbray legislation to PDUFA "is a big task", and there will be a concern in Congress not to hold up the vital PDUFA bill for any add-on legislation that could throw the entire bill into doubt. Still, she says that "this is the best opportunity in a long time to fix the current patchwork system, and it might not come back for another five years" (presumably, when the next PDUFA reauthorization would be discussed).
Hunting business value
The yin and yang of serialization has been the driver of business value for engaging in the process, as opposed to the governmental requirement that regulators have tried to impose. IDC Tech Insights, a Framingham, MA, technology analysis firm, has identified $11 billion in "revenue leakage" that might be reduced by better drug tracking: these leakages include reconciling chargebacks and rebates, product returns, and diversion from one distribution channel to another. No better example of this could be mentioned than Pfizer's just-announced recall of Lo/Ovral-28 and Norgestrel birth-control pills (see p. 10) where, if press reports are accurate, over 1 million packages were recalled even though it was believed that only 30 packages had packaging problems. Using serialization to isolate which packages had improper composition could have allowed the bulk of the remainder to stay in distribution.
"I understand the importance of regulatory compliance with serialization," says Glen Seigele, president of Omega Design Corp. (Exton, PA; omegadesign.com), "but our proposition is based primarily on better packaging line efficiencies and better supply chain integrity, and those things can have a very positive ROI." Omega, a relatively new entrant on the serialization scene, manufactures packaging line components, such as bundlers and "descramblers" (machines that align product bottles for filling cases). It is espousing a new element in how to run a packaging line: including a serial code (which may or may not be the product's GS1-compliant serial code) on the bottom of the bottle at the beginning of the filling and packaging process. Then, as the bottle is filled and labels and other packaging components attached, that specific bottle is tracked all the way through the line, and into the case with which it will be shipped.
This process has the potential to sidestep one of the nagging problems of today's packaging process: the ability to form an accurate "parent-child" relationship between the serial code on the unit, and the serial code on the case that that unit resides in. Regulators and industry experts have spent countless hours debating the relevance of "inference"--the practice of inferring the codes inside a case of product, rather than being forced to open up each case and identify each package individually. "Besides being able to do much better verification and quality checks on the packaging line, you get an accurate fill of the carton, and you know the parent-child relationship exactly," he says. It is currently difficult to put the entire GS1-compliant code on the bottoms of all types of conventional pharma bottles, so Omega is using a temporary or in-process code to track the bottle through production. But in theory, those obstacles could be overcome, and inference potentially fades as a technical hurdle.
Omega is one of a group of companies, called 4Serialization, that formed up a couple years ago to provide pharma clients a complete serialization solution. The other participants are Acsis (tracking software), Cognex (machine vision) and Nosco (labels). Siegele says that Omega sells many of its individual machines into the pharma industry, and is bidding (both with and without its 4Serialization partners) for several of the serialization projects going on now.
Nosco, a label and carton converter, touts its ability to produce coded labels (applied on the packaging line, as opposed to printing serialized codes in the packaging line) with its digital, variable-printing technology. "We have many customers piloting and ramping up their serialization projects to secure their supply chain and prepare for upcoming mandates. They have embraced serialization to simplify their packaging. Most of our customers are selecting 2D Datamatrix pre-serialization using our digital printing production to minimize the incremental variable data costs," says Scott McFall, packaging advisor at Nosco. "This enables them to speed their product to the market faster. Variable codes are being added to both digitally produced labels and folding cartons, both with and without human readable."
Equipment integration at packaging lines is one part of the serialization adoption process; another is managing the data collection and transfer. At the packaging line level, this integration is being offered by a range of companies, including Systech International (www.systech-tips.com), Acsis (www.acsis.com), rfXcel (www.rfxcel.com), Covectra (www.covectra.com) and TraceLink (www.tracelink.com). One level up from that are enterprise-level programs to store and communicate that data to other parts of the organization, or to outside trading partners. Vendors at that level include Axway (which has won a global integration contract recently with Sanofi-Aventis), IBM and its Websphere product, Oracle and its serialization manager offering, and SAP with its AII component of its enterprise software system.
A new--or "renewed"--participant here is Verify Brand (Minneapolis; www.verifybrand.com), which had been bidding for pharma business in the mid-2000s, departed that market and is now returning. In the interim, it has garnered significant operating experience from a handful of global clients, including all the product-tracking effort of Lexmark and its business in manufacturing printer cartridges (a field that has historically been as ripe for counterfeiting and diversion as pharmaceuticals have been). Kevin Erdman, president, says that the company is now offering version 4.0 of its VB Enterprise for Life Sciences, and is structured as a "traceability repository" rather than the conventional "event repository" that is called for under the GS1 schema. Nevertheless, the company is in the process of joining the GS1 organization, and getting its software certified by GS1's evaluation program.
Another new entrant, which has just announced GS1 certification, is FastPoint Technologies (Lake Forest, CA; www.fastpointtech.com), offering an "e-pedigree Management System." Interestingly, the company is targeting such application areas as Risk Evaluation and Mitigation Strategies (REMS--see Pharmaceutical Commerce, Mar/Apr 2011, p. 1)--a patient- and post-marketing drug-safety requirement of FDA, in addition to supply chain tracking.
Packaging equipment vendors and IT companies involved in production data collection make a natural fit in providing a comprehensive solution to manufacturers and contract packagers. Systech International (Cranbury, NJ; systech-tips.com) is partnering with Videojet Technologies (Wood Dale, IL; videojet.com) and with Marchesini Group (Bologna, Italy; marchesini.com); Uhlmann Group (Laupheim, Germany; uhlmann.de) has paired up with Werum (Lueneburg, Germany; US HQ: Parsippany, NJ), a provider of manufacturing execution software.
Serialization + anti-counterfeiting
It's difficult to remember, deep in the track-and-trace discussion, that much of the original impetus for the technology came from a desire to prevent counterfeits from entering the supply chain. That is still a concern, but has been added to (or complicated by, depending on your point of view) the desire of pharma buyers to ensure safe delivery of cold-chain products, and of manufacturers to prevent diversion from one sales channel to another, or to manage product recalls better. Nevertheless, the many vendors of anti-counterfeiting technologies have a place at the track-and-trace table.
"We have a technology roadmap that includes covert and overt authentication technologies, plus an online track-and-trace system," says Greg Miller, VP and GM at JDSU (Milpitas, CA; www.jdsu.com). "We want to be flexible to meet customer requirements, as well as future regulatory mandates." Besides offering the authentication technologies to an undisclosed list of label converters and others, JDSU has its own label-production unit to provide already-authenticated labels to pharma packaging lines.
JDSU is one of several firms that seek to combine authentication systems common in such things as national currencies or postal stamps
JDSU's combined authentication and tracking service employs smartphone connectivity. credit: JDSU
with the track-and-trace technologies coming out of pharma supply chain development. Others with pharma-industry experience include SICPA (Prilly, Switzerland; US HQ: Springfield, VA; www.sicpa.com) and OpSec Security (Crowther, UK; US HQ in Denver, CO; www.opsecsecurity.com). These organizations emphasize a high level of proprietary information, both in technologies as well as customer experience, and while they are keeping a close eye on evolving GS1 standards for data-sharing, are also guarded about how their databases would be opened to a client's trading partners.
In a journey similar to Verify Brand, a company of tech executives who had worked at Blue Vector, an out-of-business venture in track-and-trace technology, have reformed as ROC-IT Solutions (Fairport, NY; www.rocitsolutions.com) to offer software based on "aspect oriented programming," which can be scaled effortlessly, says the company.
Another new entrant, which has just announced GS1 certification, is FastPoint Technologies (Lake Forest, CA; www.fastpointtech.com), offering an "E-pedigree Management System." Interestingly, the company is targeting such applications areas as Risk Evaluation and Mitigation Strategies (REMS)--a patient- and post-marketing drug-safety requirement of FDA, in addition to supply chain tracking.