Track-and-trace solutions are top of the agenda for pharmaceutical manufacturers, following the passing of the Drug Quality and Security Act in the US. Todd Applebaum, VP of healthcare and life sciences research at Gartner, tells World Pharmaceutical Frontiers what new traceability regulations will mean for the global pharmaceutical supply chain, and explains why end-to-end visibility is so crucial.

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Supply chain traceability has long been a hot topic for pharmaceutical companies. Given the very real risks to patient safety, keeping a close eye on your shipments goes far beyond protecting revenue streams. Manufacturers need to remain on high alert, ensuring their product integrity isn’t compromised and doing all they can to forestall the chance of counterfeiting.

Of course, if this were a straightforward matter, medications would always reach their destination in perfect condition and counterfeit pharmaceuticals would not be big business. Securing the pharmaceutical supply chain is a complex and multilayered undertaking that requires a well-considered plan. This issue has acquired particular urgency as the supply chain has become more global. It stands to reason that, as the path to the patient grows longer, additional opportunities may crop up for the products to be diverted or adulterated. Pharma companies are doing what they can to fight back, investing in everything from anti-tampering features to electronic monitoring.

Only recently, however, has track and trace been thrust into the spotlight in a major way. In November 2013, President Obama signed into law HR 3204, the Drug Quality and Security Act. The law will be phased in over the next ten years and will ultimately require all drugs sold in the US to be serialised, and tracked from the manufacturer through distribution and down to the point of dispensing. In short, track and trace for pharmaceuticals will be a legal necessity, as opposed to just a good idea.

This is undoubtedly an important step forward for the industry, spelling an end to regulatory uncertainty for those who sell their products in the US. Todd Applebaum, vice-president of healthcare and life sciences research at research firm Gartner, points out that the act has been a long time coming.

"Here in the US, regulation has been in the works for several decades," he says. "At the federal level, it was delayed for a long, long time, so states like Florida and California created a mix of different laws for pharmaceutical companies to comply with. But now, we have much more certainty about the timing and the approach that’s required."

While the guidelines are very much a work in progress, they do at least give pharma companies a starting point. This should enable them to proceed with confidence, secure in the knowledge that their investments will not be made obsolete by a changing US regulatory environment.

"There are still a lot of important questions that need to be resolved, but at least companies here in the US have a firm idea what the approach will look like and what the important milestones are for implementation," says Applebaum.

Compliance timeline

These milestones are relatively unforgiving, as might be expected where patient safety and well-being are at stake. By 1 January 2015, pharmaceutical companies will need to begin capturing and providing product transaction histories with the sale of any product. Following a transaction, all product identifiers will need to be retained for at least six years. Manufacturers and other participants in the pharmaceutical supply chain will also need to implement systems by that date to report suspect or illegitimate products.

By 2017, individual units of products must be serialised by way of a 2D matrix barcode. Finally, by 2023, the law requires an interoperable electronic track-and-trace system to be established across the supply chain, creating a virtual chain of custody for drugs at the individual unit level.

This is the first time the FDA has been so closely involved with traceability – never before has it been charged with overseeing the entire pharmaceutical supply chain. There are implications for logistics providers, distributors, pharmacies and repackagers, and staggered compliance timelines for all parties involved.

For pharmaceutical manufacturers, the task now is to work out the practicalities, focusing less on the ‘whys’ and more on the ‘hows’. Applebaum says that, of all the issues his pharmaceutical clients enquire about, track and trace is probably the most commonplace and topical.

"While the FDA is still developing its guidance in a lot of critical areas, there are important steps that manufacturers need to take this year," he says. "First, they must develop a means for building and sending lot-based transaction summaries with the sale of a product, which is one of the early requirements. This will require working closely with wholesalers, distributors and other downstream trading partners to understand and standardise requirements.

"Also, they will need to continue with the serialisation efforts that many manufacturers have been working on. Although the timelines for serialisation have been pushed out a bit, it will be required in just a few years and companies that aren’t working on it today will find themselves with a short time to actually put it in place."

He feels manufacturers should start work as soon as possible, so as to be prepared for what lies ahead. While the next four years are the focal point for now, it is hoped that later phases of the act (beginning in 2023) will usher in a complete track-and-trace solution.

In addition, "Companies will need to familiarise themselves with the law and actively work with the FDA to help them shape the guidance in important areas like interoperability and aggregation," he says. "They need to develop a road map so they can get started this year with some of the early requirements for capturing transactions at a lot-and-batch level. Ultimately, this will also lead them in the right direction for a full-unit track-and-trace system in ten years’ time."

A virtual chain of custody

So what precisely does track and trace involve? Although technologies are developing quickly, a complete system has several distinct components and the market is still far from mature. So, while the ideal traceability system would track shipments on a real-time basis, all the way throughout the supply chain, in practice, companies must often adopt a piecemeal approach. Rather than acquiring a full track-and-trace solution, they are more likely to have to team up with several different providers, each bringing different aspects of the overall solution.

"In short, track and trace for pharmaceuticals will be a legal necessity, as opposed to just a good idea."

One major component is packaging line systems. Many companies, for instance, have turned their initial focus to hardware and equipment for applying and reading serial numbers on products. Since one of the key tools for tracking drugs is product serialisation (applying serial numbers or unique identifiers to the packaging itself), this may well seem an intuitive place to begin. Products can be identified either in batch or right down to the unit level, giving companies a clear idea about which ones have gone missing.

Beyond this, there’s technology that captures the serial number information and supply chain events at warehouses and distribution centres, alongside an information systems component that manages serialised transactional data across the enterprise.

Additionally, says Applebaum: "There’s a layer of messaging and interoperability that needs to be involved, for sharing the information with downstream and potentially upstream trading partners. One emerging approach is to rely on a third party to provide this interoperability as a cloud-based service. And then there’s a whole layer of business process changes, and policy and procedural changes that need to be put in place around these kinds of technologies. So the manufacturer has to consider all these aspects to really put in place a track-and-trace solution."

Cumulatively, these pieces can combine to create a virtual electronic chain of custody for the product, ensuring it stays within authorised channels and doesn’t enter the supply chain from an unchecked source.

As an alternative approach, some manufacturers have adopted point-of-dispense authentication systems, which essentially make sure that at the time the drug is used, it can be verified as an authentic product. While this avoids the complexity of full track-and-trace systems, point-of-dispense authentication can provide a useful mechanism for ensuring the authenticity of a drug. European regulators, as well as regulators in other countries around the world, are moving toward adopting this type of system to help counter falsified medicines.

Through applying one or more of these technologies – ideally alongside anti-counterfeiting packaging features – pharma companies stand a good chance of avoiding product tampering or diversion.

Harmonising standards

If all this sounds rather arduous, it is surely commensurate to the scale of the task in hand. Challenging scenarios often require involved solutions, and today’s multi-tiered global supply chain landscape is nothing if not a challenging scenario. We are dealing with a vast web of partners and players, with multiple processes occurring in tandem. If you want to achieve end-to-end visibility, you need some way of integrating these processes and capturing data throughout the entire network.

"It’s a very complicated effort, no question," says Applebaum. "Companies often have a difficult time just capturing the information within their own organisation, and that’s because the information usually resides in lots of different systems. It gets even more complicated when they think about capturing information from outside their organisation, from suppliers or downstream customers and trading partners."

This is especially the case where a supply chain extends across multiple geographies, each with its own data formats and standards. A pharma company may have multiple trading partners in different markets, which can lead to communication barriers.

"It is not only a question of ensuring the data is captured and made available in some electronic form, but also that it can be read and used effectively in another company’s internal systems, often lower down the value chain," remarks Applebaum. "Adoption of data standards is one important element of making it easier."

Harmonising standards is perhaps essential to the future of the supply chain. At present, the global landscape for track and trace is relatively fragmented, with different countries abiding by different laws and supply chain models. Following the passing of the Drug Quality and Security Act, we may be seeing the early signs of change. Many elements of the act are consistent with trends in Europe and China, and it is hoped the law could help shape global standards in this arena.

In the meantime, it is clear that track and trace will remain a top priority for the years ahead. As technologies develop, and we edge closer to the goal of a total solution, the new regulation is certainly a positive step forward. This applies not just to pharmaceutical companies (which can only benefit from actively monitoring their products) but also to end users or patients.

"This is a critical issue because the products in the pharmaceutical supply chain are essential for patient safety and well-being," says Applebaum. "Preserving the security and integrity of those products is of the utmost importance to everyone involved in the value chain."