I’m pretty excited about the kickoff this Wednesday of the GS1 EPCglobal Software Action Group (SAG) Discovery Services Work Group which will take the business and technical requirements that were collected by an earlier group and turn them into an actual standard.  This will be the first new major technical standard GS1 has started for quite a few years.  The most recent kickoff I can remember was the GS1 Drug Pedigree Messaging Standard (DPMS) which kicked off back in late 2005 and completed in January 2007.  The GS1 Electronic Product Code Information Services (EPCIS) standard effort kicked off in late 2004 and completed in April 2007.  That gives you an idea of how long these things take.

The effort to create the business and technical requirements for Discovery Services started just about two years ago and completed this past December.  How long will it take to get to a ratified standard?  The GS1 Discovery Services Work Group Charter predicts it will be done in June of 2011, but predictions in charter documents are notoriously optimistic.  The EPCIS Charter predicted that standard would be ratified in August of 2005, for example—one third the time it actually took. 

This is not a bad thing in my opinion.  A Charter document needs to estimate how long the effort will take, but once things get rolling, GS1 EPCglobal takes as long as needed to get the standard right.  So how long will this one take?  Based on how long the requirements took, I’m guessing the development of this standard will take some time.  Right now, I’d guess it will be complete sometime in early 2012.  That would be two years.  Hmmm….  Almost feels too short.  We’ll see.

Standards development can be contentious.  If it’s done right, that is.  I’m talking about contentiousness along the lines of the Lincoln-Douglas debates or the crafting of the U.S. Constitution, only pitting different technical approaches against each other.  The GS1 EPCglobal SAG facilitation crew really knows what they are doing when it comes to facilitating contentious groups so the blood, sweat and tears invested are directed in a positive direction and results in a valuable standard in the end.  I worked with Mark Frey in the development of DPMS and I just can’t say enough good things about him.  According to the charter document, Mark will be involved in the Discovery Services group, as will Giselle Ow-Yang—a great start.  From these choices you can tell GS1 EPCglobal places a lot of importance on the success of this effort.

BUT WILL DISCOVERY SERVICES HOLD ANY VALUE FOR PHARMA?

Right now, I don’t think the pharma supply chain will be able to make use of Discovery Services for regulatory compliance with current or even future pedigree laws.  As far as I can tell, I’m the only person I know who sees it that way so let me explain.  It comes down to what Discovery Services is aimed at and how that differs from what pedigree laws are trying to accomplish.  There seems to be a disconnect between what people think a pedigree law is trying to accomplish and the reality.  That leads them to the misconception that something like Discovery Services has value for compliance.

I reach this, perhaps shocking conclusion from the following analysis.

FUNDAMENTAL LAW OF COMMERCE

In my first substantive essay in this blog I pointed out what I called a fundamental law of commerce.  That is, when regulations mandate that a product’s value is determined by the ability to show, at any time, specific information about the product’s history, then the buyer of that product must receive all of the necessary information from the seller at the same time the product is received.  That information is so intertwined with the product’s value that it actually becomes part of the product itself, and needs to move with it.  Supply Chain companies who buy products can’t rely on previous owners to hold information on their behalf without a contract to do so if the total value of those products depends entirely on the instant availability of that information at any unpredictable moment. 

This is the case with drugs in supply chains that operate under pedigree regulations.  If a regulatory inspector arrives at the door of one of these companies and asks to see the pedigree of any item they happen to pick randomly from the inventory, and the company cannot produce the pedigree because they are unable—for any of a myriad of reasons—to collect it from remote databases controlled by upstream trading partners, that item has zero value and the company should expect to be fined, or worse. 

When this scenario happens, more than likely the pedigrees of a lot of other units will also be unavailable at the same time for the same reason.  This single inspection at the wrong time–when an earlier owner’s database is, coincidentally, unavailable–could result in a significant part of the company’s inventory being impounded, large fines imposed and the opening of a wider investigation.  All because essential information was not in the control of the party that was responsible.

So, a distributed pedigree doesn’t work in a regulated supply chain.  But why doesn’t this issue get discussed more in industry groups that are trying to figure out how to create an interoperable, standard approach for the industry to follow to meet the current and future pedigree laws?  It’s because of a very interesting thing about this “fundamental law”:  for the most part, it has no impact on drug manufacturers. 

They don’t buy drugs, so, even if a distributed pedigree were selected as the industry solution, they would almost never need to access data on anyone else’s server to reconstruct a pedigree.  All pedigrees from their perspective are entirely stored on their own servers because they start them.  Because of this fact, drug manufacturers won’t “feel” this problem with a distributed pedigree.  Only wholesalers and pharmacies will “feel” it because they buy drugs from upstream trading partners.  Right now the pharmacies are not participating much in the search for a solution, and the number of wholesalers involved is not great.  The largest representation is from the manufacturing segment.

THE DEPUTIZED SUPPLY CHAIN

More recently I posted an essay on the “deputization” of the pharmaceutical supply chain by regulators.  This is a recent phenomenon where regulatory agencies have begun to require supply chain member companies to monitor the supply chain themselves.  It comes from the realization of two things by the regulators:

1. the supply chain is too massive for regulatory enforcement officers to inspect anywhere near enough transactions to detect illegitimate behavior;
2. the responsibility for supply chain security rests with the participants and not just with the regulators.

When you put these two concepts together, the only natural conclusion is that supply chain participants must self-monitor and report suspicious activity.

You can see this deputization in the way the Florida and California Pedigree Laws are written.  They both require companies who buy drugs in the supply chain to receive a pedigree for every drug purchased (although in Florida, wholesalers who buy directly from the manufacturer are allowed to initiate pedigrees).  They also require the recipient to check those received pedigrees for errors, inconsistencies and omissions—all before they are allowed to put the drugs they purchased into regular inventory.  Any irresolvable discrepancies must be reported and the drugs must be quarantined pending further investigation.

I hope it’s obvious to you that the buying company must have all of the prior supply chain history—the pedigree— of every drug before they can properly perform this analysis and before they can confidently place it into usable inventory.  Theoretically you could accomplish this with a network of distributed information servers, but the full set of pedigree data would also have to be passed down the supply chain, along with the drug, in addition to it being distributed.  However, the official pedigree—the one that companies and regulators would rely on—would remain the information that is passed.

THE POINT OF DISCOVERY SERVICES

On their website, GS1 EPCglobal answers the question, “What is ‘Discovery’?” this way:

“’Discovery’ is finding and obtaining all relevant visibility data, of which a party is authorized, when some of that data is under the control of other parties with whom no prior business relationship exists.”

They view the benefits of Discovery Services to include:

“Enable trading partners to discover all of the resources who may have information about things (who has data about EPCx? Where is their EPCIS located so I can ask about this data about EPCx?)                  

“Enable trading partners to exchange data in a secure way with parties that they may not have a prior direct business relationship                  

“Will ensure each party retains rights of ownership of its visibility data                  

“Will ensure that queries are authorized and authenticated”                  

Clearly Discovery Services has a value if your supply chain can get away with distributing visibility data across the supply chain, but I’ve already dismissed the utility of this approach for pedigree compliance above.  But if a push-model is used for compliance instead, what value are these benefits? 

THE TRUE VALUE OF DISCOVERY SERVICES IN THE PHARMACEUTICAL SUPPLY CHAIN

When you look at the future Discovery Services standard through this analysis, how can you conclude that it will contribute any value to pedigree compliance?  I don’t, but lots of other people, who have not seen my analysis, do.  But how about value from non-compliance uses?

When you think about it, the concept of pedigree—or chain-of-custody/ownership—is a historical view back “up” the supply chain, as viewed from the perspective of where a drug is right now.  That fulfills one side of the concept of “track and trace”.  Different people define that concept in different ways, but I subscribe to the group that believes that “trace” is the capability that is encased in the concept of “pedigree” (thus the name of my blog:  RxTrace).  In my view, a push-model pedigree completely fulfills the definition of a “trace”, but it does nothing to enable the other side of the coin:  “track”. 

“Track”—a consolidated forward view of exactly where drugs are right now in the supply chain from the perspective of previous owners—has value for things like recalls, regional emergency response, manufacturer production planning and wholesaler purchase planning to name a few. 

Tracking drugs may also make an important contribution to supply chain integrity by helping to detect diversion, theft and duplication of unique identifiers by counterfeiters, depending on the adoption model.  This is where the real value of Discovery Services lies for the pharma supply chain.  But tracking of drugs, and the use of Discovery Services as part of the implementation, has some thorny data ownership issues that will have to get solved.

So why am I so excited about the kickoff of the Discovery Services standard development work group?  I want to help find a way to solve those thorny data ownership issues that stand in the way of some of these “track” applications.  I think they will exist in all supply chains but perhaps pharma’s use case has the most thorns.  If we can find the right technical solution to that issue I think the supply chain will find the value in Discovery Services… It just won’t come from pedigree compliance. 

If you’ve stayed with me by reading this far, then you should join me on the work group.

Who owns supply chain visibility data? Does the manufacturer of a product retain any rights to track that product after it enters the supply chain? What if the product is a pharmaceutical and it is found to have a life-threatening defect? Should technology or standards availability play any role in answering these questions?

These kinds of questions come up occasionally in discussions of track and trace systems design when people talk about the future of “full supply chain visibility” and how easy recalls will be executed because of it. The implication is that the manufacturer of a drug will be able to perform a targeted recall because they will be able to see exactly where their product is in the supply chain.

But one could easily make the argument that it is no longer “their product” once it enters the supply chain. True, they invented, manufactured and labeled it, and in a recall situation we all have a strong desire for them to get it back quickly and efficiently, but that doesn’t change the simple fact that they don’t own it anymore. And if they don’t own the product anymore then they don’t automatically own the knowledge of where it is either.

I’m not a lawyer but it seems to me that once a product is sold the seller gives up all rights to that product. The buyer can do whatever they want to with it, within the law of course. Recalls that are necessary for reasons that might be life-threatening are special and supply chain members should do everything they can to find and return any item that is involved in a recall. But is it necessary for the manufacturer to have instant access to the location of all of the affected product?

Serialization and track and trace will allow all supply chain participants to know a lot more than they do today about the location of recalled items just using the data that they clearly own. Compared with today, an individual company will know very quickly if they have ever received, shipped or currently have in stock the recalled units. If they currently have them in stock they will be able to place an immediate hold on those items to prevent them from being shipped to a customer until they have been collected and returned. If they have previously shipped the items to a customer they will know exactly which customers were involved and which unit went where. But that’s it. The knowledge of what their customers might have done with those products once they receive them is not owned by the seller.

WHO OWNS WHAT DATA?

I think it’s clear that each company owns the data that they create. Would anyone dispute that? But some of that data is shared with trading partners in the normal course of the selling and buying process. In that case, one could argue that both the buyer and the seller subsequently own that data. For example, the fact that pharmacy X bought drug Y from wholesaler Z is data that is known through direct experience by both X and Z. Did either company “create” that data? It seems to me that both X and Z can rightfully claim to own this data. Unless somehow bound by a contract, either one might choose to sell that data or give it away for free without consulting or negotiating with each other.

If data such as the one in my example above has value then it can be treated as any other asset that can be packaged, priced and sold. Today, supply chain data similar to this is collected, aggregated, priced and sold under terms that are determined by contracts.

THE VALUE OF SERIALIZED SUPPLY CHAIN DATA

But what about tomorrow? Things might get interesting when the sales transaction in my example above includes item-level serial numbers. The data available for that transaction would now include serialized references to the prior history of each item. Would that add any value to the original, non-serialized data? Depending on the needs of the data buyer, I think it might.

Now, I’m not predicting that data needed to properly execute a recall would ever be held for ransom. All I’m saying is that the supply chain visibility data that will come from serialization and track and trace technologies might have more value than the current data that is a source of revenue for some companies. This information is like any other intangible company asset. For this reason we should acknowledge that data ownership must be recognized and retained in the track and trace systems that we design for the future or those systems are unlikely to be adopted widely.

What does this mean for the ability to execute recalls efficiently in the future? I’m confident that supply chain visibility for recalls can be achieved without having to give data away at a financial loss, but it will require very selective visibility–some might call it selective blindness. With serialization and a well-designed supply chain track and trace system, recalls will execute very fast and efficiently without the need for end-to-end supply chain visibility by any single party.

GS1 has spent the last two years collecting end-user requirements for their next crown jewel standard, Discovery Services. Discovery Services, as envisioned by GS1, will be the cloud computing service that supply chain companies will go to initially to get more information about a serial number in their possession. I was a member of the requirements work group early on but I was unable to stay involved so I lost track of exactly where their efforts ended up. Having missed out on the development of these requirements I’m hoping that they strongly support the concept of data ownership. If that’s not in the completed requirements then the future standard may not be very attractive to some supply chains.

I understand that the GS1 Discovery Services standards-making work group is just about to kick off its work. If you have an interest in track and trace and/or data ownership, I suggest that you join. I’m going to.

Have a Happy New Year!