The convergence of environmental condition monitoring and supply chain visibility

Pharmaceutical CommercePharmaceutical Commerce - May/June 2013

Fig. 1. USP’s plan for integrating complementary guidances into one Good Distribution Practice document. [5]

The complexity of global supply chains has continued to increase as companies leverage regional strengths in human capital, tax benefits, operational excellence, and technological expertise, to name a few. However, as supply chains become increasingly complex, companies need to deploy applications and services that provide greater visibility and, ultimately, help to manage and reduce risk. Given these trends, the melding of environmental (or product condition) tracking with data that supports supply chain integrity has become a necessary tool for supply chain and security risk practitioners worldwide.

The global regulatory and standards-based guidance covering the storage, handling, and distribution of temperature-sensitive medicinal products has increased dramatically over the past several years. Equally as dramatic has been the attention paid to pharmaceutical supply chain security.

The pharmaceutical industry has long pushed to unify efforts that secure the supply chain from various risks, including counterfeit, diversion, and theft with efforts to ensure proper environmental controls. It is widely known that a temperature-abused product has the potential to be just as dangerous as a counterfeit product. Therefore, a Quality Management System (QMS) that does not require the monitoring of both security and environmental controls may allow unknown or poorly understood risks to continue. [1]

Key industry issues include:

  • Increased regulatory scrutiny across the supply chain and new product categories
  • Expansion of Good Distribution Practices (GDP) and associated regulatory and standards-based guidance
  • Holistic approach to supply chain integrity, incorporating both environmental condition monitoring and documentation of a secure supply chain
  • Convergence of industry and technological trends driving greater supply chain transparency and added value

Regulatory drivers

Since 2005, more than 30 documents have been published covering GDPs that all have one recurring and consistent theme—increased scrutiny of the pharmaceutical supply chain and demands for documentation ensuring product quality and patient safety. Recent examples include:

  • Parenteral Drug Assn.’s (PDA) Technical Report 52: “Guidance for Good Distribution Practices (GDPs) For the Pharmaceutical Supply Chain,”
  • US Pharmacopeia’s (USP) General Chapter <1079> “Good Storage and Distribution Practices for Drug Products”
  • Health Canada’s “Guidelines for Temperature Control of Drug Products during Storage and Transportation” (GUI-0069)
  • World Health Organization’s (WHO) Annex 9: “Model Guidance for the Storage and Transport of Time and Temperature-Sensitive Pharmaceutical Products,”
  • European Union’s “Guidelines on Good Distribution Practices of Medicinal Products for Human Use,” which was published March 7, 2013.

While the extensive list of aforementioned GDPs outline expectations for appropriate storage conditions during both warehousing and distribution, these newer guidelines call for more broadly defined Supply Chain Integrity—specifically cargo security. For example, the Quality Management Principle outlined in the new EU GDP states: “All distribution activities should be clearly defined and systematically reviewed.”

Chapter 5 — Operations (5.8 Supply) states: “…a document must be enclosed stating…applicable transport and storage conditions”

Chapter 9 — Transportation (9.1 Principle) provides clear expectations for wholesaler responsibilities. “It is the responsibility of the supplying wholesale distributor, to protect medicinal products against breakage, adulteration and theft, and to ensure that temperature conditions are maintained within acceptable limits during transport.”

To further illustrate this point, PDA’s Technical Report 52 Section 3.2 outlines the scope of Distribution Control Management, stating that it “encompasses the process and controls necessary to ensure product integrity and traceability are maintained from the point of receipt through product distribution.”

Section 3.2.4 Storage and Inventory Control states: “All in-transit storage facilities should have adequate security and environmental control...”

Section 3.2.5 Transportation states: “Products should be transported in such a way that product — is secure (i.e. protected against spillage, breakage, or theft)” and “is not subjected to unacceptable changes in heat, cold, light, moisture or other adverse influences.” This message is consistent and supports the confluence of supply chain security and environmental control for both storage and transportation segments of the pharmaceutical supply chain.

Perhaps most importantly, FDA’s “Response to Cargo Thefts,” published in March 2012, states: “The FDA is very concerned about the increase in cargo and warehouse thefts of FDA regulated products, including prescription and over-the-counter medicines, vaccines, medical devices, and infant formula.” The key issue is an overall concern of threats to public health and potential “adverse reactions, most likely due to improper storage and handling.”

Along the same lines, governments around the world have been addressing supply chain security by encouraging compliance with security standards, including the US Customs-Trade Partnership Against Terrorism (C-TPAT) and the EU’s Authorized Economic Operator (AEO) programs. Both programs focus on upgrading supply chain security while facilitating trade. By extending the partnership of anti-terrorism principles globally, the international community benefits from safer, more streamlined supply chains.

Industry leaders from key corporations have taken the initiative to expand their own supply chain security programs by documenting industry best practices and developing standards that are being applied across industry verticals. Two examples are the Transported Asset Protection Assn. (TAPA) and Rx360, both of which have published a number of important and influential industry documents, including:

Rx 360 Supply Chain Security White Papers

  • Threats and Monitoring Processes
  • Audits and Assessments of Third Party Warehousing and Distribution Facilities
  • A Comprehensive Supply Chain Security Management System
  • Cargo Risk Assessment [2]


  • Freight Security Requirements (FSR)
  • Trucking Security Requirements (TSR)
  • TAPA Air Cargo Security Standards (TACSS) [3]

A unified direction for USP

As recently presented at several industry conferences, USP has outlined its goal to integrate individual components of general guidance under a single GDP chapter, while extending both the coverage of the products included and the stages of drug development. “The motivation for one chapter in the USP is to reduce redundancy and potential conflict and provide a holistic approach to GDPs—one chapter that could be used internationally as a standard for importation into the US and exportation out of the US for pharmaceutical products,” stated Dr. Mary Foster, chair of USP’s Packaging and Storage Expert Committee.

The basis for this USP work follows the USP strategic plan to develop standards in the international arena for ensuring the quality and purity of medicine, food ingredients, and dietary supplements and the recognition of USP in over 140 countries. [4] The expansion of coverage for the newly combined document is likely to include excipients, active pharmaceutical ingredients (APIs), intermediary drug substances, finished dosage form drug products, dietary supplements, biological products, and medical devices, and will require extensive collaboration between several USP Expert Committees including:

(1) Packaging, Storage and Distribution

(2) Physical Analysis

(3) Excipients

(4) Dietary Supplements.

Ultimately, the industry’s expectation is that the USP Expert Committees will integrate content under one single USP General Information Chapter. This would entail combining

USP <1079> “Good Storage and Distribution Practices for Drug Products” PF37(4); 2011 (Official December 1, 2012);

USP <1083> “Good Distribution Practices — Supply Chain Integrity” PF 38(2), 2012;

USP <1197> “Good Distribution Practices for Pharmaceutical Excipients” FP37(6), 2011 into one GDP [Fig. 1].

Fig. 2. Scope of various USP guidances and their coverage overlaps. [6]

Fig. 2 outlines the areas of overlap across the three documents and highlights the interconnected nature of supply chain security and environmental control required to ensure product quality. Perhaps most importantly, there has been a push from industry for USP to consider driving the chapter below <1000>, which would move the content from an interpretative general guidance to a regulatory requirement. While arguably this may be difficult to accomplish, because the specific wording for a regulatory requirement is often quite different from the structure of a guidance chapter, the sentiment is notable.

Integrated solutions will drive greater value

Historically, the global logistics industry has worked to address the unique needs of environmentally sensitive shipments, such as food or drugs, or high-value theft targets, such as consumer electronics, but has rarely been called on to handle both simultaneously. When this combination has occurred, with priceless artwork, for example, the option usually resulted in a highly customized and expensive procedure.

Now, a convergence is occurring between technology options to provide both environmental monitoring and security, and the regulatory expectations for industries, such as life sciences, to deploy these technologies. In particular, the ability to combine electronic devices that monitor condition, security and other relevant factors, with global communications networks (cellular or satellite) makes it possible to provide an integrated solution.

Sensitech Inc., a global leader in supply chain visibility solutions targeting temperature-sensitive markets that include pharmaceutical, food, and industrial chemicals, recently acquired FreightWatch International, a leading provider of cargo security solutions—providing real-time visibility of products during both storage and transit.

The pharmaceutical industry has grappled for years over how to bring real-time, in-transit visibility of environmental condition data to market in a cost-effective manner. At historical price-points, it was difficult to justify this expense, particularly when factoring in the relatively low percentage of shipments resulting in the destruction of product due to a temperature excursion and the limited ability to take corrective action during a shipment. Given the increased threat and concern over supply chain security however, the equation for using in-transit cargo security monitoring solutions easily supports a positive return on investment (ROI). With justification for real-time, in-transit, cargo security monitoring, adding real-time condition data provides opportunities for generating meaningful additional benefits.

An example of the potential costs associated with cargo theft occurred to Astellas in June 2009. The company lost a $10 million load consisting of 18 pallets with 21 different types of medicine. One of the products, Prograf, posed a significant public health risk. The drug prevents patients from rejecting transplanted organs and is sensitive to temperature and humidity. Within seven days of the cargo theft, Astellas withdrew all drugs on the market from the same lots as those on the stolen load. All products had to be destroyed—increasing the original $10 million theft-related loss to a $47 million loss. With cargo theft concerns on the rise, the risk of losing any one shipment is potentially worth the cost of recalling the entire lot of product on that shipment. Unfortunately for Astellas, this cargo theft resulted in a 10 percent decrease in North American sales for the quarter. [7]

At a recent Healthcare Distribution Management Assn. (HDMA) meeting, Chuck Forsaith, Director of Supply Chain Security for Purdue Pharma Technologies, and Chairman of the Pharmaceutical Cargo Security Coalition (PCSC) stated: “Pharmaceutical manufacturers are always looking for ways to increase the effectiveness of their logistics management and shipment monitoring (be it both for environmental and security concerns) to gain as much control over their complex supply chain as possible. The changing regulatory landscape and increased supply chain security risks are driving a need for monitoring both the physical flow of product as well as the environmental conditions under which the product is held.”

As part of the focus on greater supply chain integrity, standards organizations and regulatory authorities are now driving the cGMP standards of documented continuous process improvement into the pharmaceutical supply chain. For example, the background information section of USP <1079> states: “Good storage and distribution practices should facilitate the movement of drug products throughout the supply chain that is controlled, measured, and analyzed for continuous improvements…” The more timely and accurate data provided by real-time monitoring solutions enables comprehensive compliance programs that support a QMS.

As such, the combination of Sensitech Inc. and FreightWatch International is positioned to drive improved cold chain management, cargo security and supply chain visibility.

Value proposition

The value proposition for a combined Sensitech/FreightWatch International offering falls into three broad categories—better cold chain management, improved cargo security, and more timely supply chain transparency. Each of the points listed below touches on one or more of these three categories.

• Regulatory Compliance

- Improved documentation of chain-of-custody and temperature control supports external audits and could potentially lead to a reduction in audit frequency as a risk-based approach is often applied by auditing agencies.

• Vendor Management

- There is an opportunity to optimize logistics expenditures through better management and increased oversight of outsourced logistics-related services.

- Improved visibility providing documentation and control of transport routes supports continuous process improvement programs.

- Measurements against Key Performance Indicators (KPIs) support evaluation against quality agreements.

• Risk Management

- Documented and ensured compliance with Standard Operating Procedures (SOPs) and related training programs for drivers, outsourced contractors, internal packaging, logistics and transportation teams, etc. can reduce potential risks.

- Incident tracking and reporting programs can serve to identify risks and enable a company to focus investments that will reduce non-compliance incidents resulting in better risk management and cost reduction.

- Timely alerts of supply chain challenges provide opportunities for supply chain disruption management.

• Operational Benefits

- More timely and accurate supply chain data enables transport risk analysis by trade lane, product type, carrier, packout, etc.

- Overall improved supply chain visibility can provide operational benefits that shorten disposition time-frames for in-bound product and optimization of facility and warehouse resources.

- Greater visibility and ease of data sharing enables streamlined processes for managing Quality Assurance (QA) hold/release process when product is quarantined.

- Improved information sharing will provide opportunities for managing Time Out of Refrigeration (TOR)/thermal budgets based on stability data.

• Insurance Benefits

- Greater supply chain visibility helps to reduce risk that can lead to decreases in insurance premiums and/or insurance deductibles.

- Insurance companies looking for opportunities to reduce losses participate in cost-sharing programs, such as covert asset-tracking.

Fig. 3. Priorities for healthcare executives, based on a 2012 UPS global industry survey. [8]

“Concerns over cargo security have risen consistently over the past few years - particularly in Europe. This increase in cargo theft is largely attributed to a challenging economy. When times are difficult, criminal activity tends to increase resulting in more cargo thefts. Although specific countries are worse than others, it is understandable that product security is top-of-mind with today’s pharmaceutical manufacturers. In fact, based on UPS’s research, 53 percent of healthcare executives are planning on investing in security-specific technologies in the next five years.” — Dan Gagnon, UPS’s senior director of marketing - new product development.

Current areas of focus and concern for healthcare companies include regulatory compliance, cost management, optimizing efficiencies in expanding markets, improving capabilities for transport of temperature-sensitive products, and management of outsourcing to 3PLs. The categories indicated in red above (regulatory compliance, product security, product damage/spoilage) highlight specific areas where an integrated temperature and security monitoring solution will add value. That said, a combined offering has the promise of improving efficiencies in all areas listed.


The increased importance placed on ensuring product quality and patient safety has blurred the lines between traditional cold chain and supply chain security initiatives. While the cold chain market has historically pushed for real-time temperature data, the technology and associated price-points did not support a business model on its own. Over the past several years however, technologies have improved, price-points have decreased, and the coalescing regulatory scrutiny now requires ensuring that a product has flowed through the supply chain in a manner in which it was originally intended and was held at appropriate environmental conditions protecting its quality, potency, and efficacy. With these evolving market dynamics, the industry is ripe for change. Solutions from providers such as Sensitech Inc. and FreightWatch International are leading the charge to take what has largely been considered a regulatory expectation and creating opportunities to drive greater value and return on investments linked to supply chain transparency.


Henry Ames serves as the VP of strategy and business development for Sensitech (Beverly, MA; He focuses on global market analysis and strategic marketing initiatives. Ames earned an MBA from the F.W. Olin Graduate School of Business at Babson College, and a double major in Business Management and Entrepreneurship from Florida State University.

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