In an essay published in April, I explained my theory that “RFID is DEAD…at Unit-level in Pharma”, which, if true, would mean that most drugs in the U.S. supply chain would be serialized by manufacturers with 2D barcodes by 2015 for California. In my last essay, “Inference in the Pharmaceutical Supply Chain”, I carried that theory one step further by showing how the widespread reliance on 2D barcodes to serialize at the unit level would lead directly to the widespread use of the practice of inference in the supply chain. This would be out of necessity since the unit-level serial numbers would not be readable without opening their containers, something that can’t happen because it is so inefficient that it would cripple the supply chain. So let me say it this way, the widespread use of 2D barcodes for unit-level serialization will necessitate the widespread reliance on inference. The former leads to the latter just like excessive sunshine leads to sunburn.
But the projections of widespread reliance on inference lead directly to a new concern. Let me explain. Successful use of inference for determining the contents of cases is totally dependent on the accuracy of the aggregation information established and provided by the manufacturer, or whoever packed them. If a packer uses a casepacking process that is incapable of yielding highly accurate aggregation information, inference will not work well.
This is a problem. A big problem, because many pharma manufacturers currently use casepacking processes that will likely not yield highly accurate aggregation information.
Knowing which units were packed into which case is called the “unit-to-case aggregation”. Drug manufacturers will need to know, reliably and repeatably, the exact unit-to-case aggregation of every case they (or their packaging partner) pack. This will be necessary in a serialized-pedigree-mandated supply chain because the manufacturer will need to know exactly which units were shipped to which customer.
At this point, let’s not forget that if every unit had an RFID tag on it, manufacturers/packagers would simply have to run each case down a conveyor through a tunnel reader after they sealed them and read the serial numbers on the units and on the case at the same time. Voila! You know the unit-to-case aggregation for that case of product. And that technique would be very reliable and repeatable. Downstream trading partners could do the same thing to verify the unit serial numbers inside each case without opening them.
But, if all units have serial numbers carried only in barcodes, you have to read the serial numbers before you seal each case. A common approach to this new requirement is to simply arm the workers who are today manually packing product into cases, with 2D barcode readers and ask them to scan the serial number on each unit as they are manually placed into the case. The problem is, no matter how slow the process, and no matter how “careful” you instruct your workers to be, you just can’t expect the kind of accuracy that a pedigree law will require if human beings are responsible for manually aiming a barcode reader at each unit as it is manually loaded into a case. People make mistakes and they are prone to seeking out error-inducing shortcuts that make their tasks easier. That’s human nature. We all do things like that.
No. This can only be done reliably and repeatably with some kind of automated system. Generally, these systems are not going to be cheap, and you would probably need one complete system per packaging line. It would be an automated case-packing machine with integrated 2D barcode reading capability of some kind.
In my relative cost comparisons I focused mostly on the steady-state reoccurring costs at the manufacturer. I noted that these ongoing costs for RFID will be much higher, relatively speaking, than for 2D barcodes. But if the projected ongoing costs lead manufacturers to serialized their units with barcodes, as I predict, then their initial costs could be even higher because of the cost of these automated casepacking systems that will be necessary to accurately determine the unit-to-case aggregations. For really large manufacturers, this initial cost could be very large.
Until recently, most people hadn’t realized that they would need to include this cost as part of a barcode serialization plan. This additional cost is just hitting some people and that depressing realization has led to the introduction of a new idea that is being kicked around in the industry. This is the shift in attitudes about how a pedigree system might work that I was referring to in recent essays.
A NEW IDEA: NO AGGREGATION INFORMATION
This new idea is that, if it is necessary to generate accurate unit-to-case aggregation so you can know exactly which units were shipped to which customer, and if it is so expensive to reliably and repeatably generate accurate unit-to-case aggregation information, then perhaps a manufacturer shouldn’t really need to know exactly which units were shipped to which customer. That is, if to do A requires that you first do B, but B is much more expensive than you originally thought it would be, then maybe you really don’t want to do A after all. This semi-circular logic quickly spirals into uncharted territory.
So the new idea is that perhaps manufacturers would not even attempt to determine the unit-to-case aggregation. In that case, manufacturers/packers would still put serial number barcodes on their units, but they wouldn’t bother to scan each one as they are being loaded into cases.
If manufacturers don’t generate aggregation information, then downstream trading partners would not receive any and would therefore not be able to perform inference, because, as I pointed out above, the practice of inference relies on the availability of accurate aggregation information from the company that did the casepacking.
But let’s assume this idea is someday accepted and implemented. In doing so, we are definitely in uncharted territory, but that’s exactly where innovation is most likely to occur. How would a supply chain pedigree system work, and how would it protect the supply chain? First, it would require a radical new view of the concepts of “pedigree” and “track and trace”. Consider this:
- The manufacturer wouldn’t know for sure which unit went into which case, but they would always know exactly the full set of unit serial numbers that they produced so they could at least respond to an authentication request from downstream trading partners with a response of “valid” or “not valid”. In this approach, it could be left up to their immediate customer, whether wholesaler, chain pharmacy, mailorder pharmacy, etc., to read the serial number on each unit they receive and then authenticate the unit serial number with the manufacturer through some sort of real-time, internet-based electronic communication. Through this communication, the manufacturer would learn exactly where they had previously shipped each unit. Once authenticated, the immediate customer could then start a pedigree, including proof of product identifier/serial number authentication, and pass it on to their supply chain customer, if any.
This approach has some similarities with the EFPIA approach known as authentication at the “Point Of Dispense”, or POD, except that the serial number authentication would only be necessary at the first trading partner after the manufacturer (and optionally downstream as well). Trading partners downstream of the first recipient would have to receive, validate, update and pass traditional electronic pedigrees (something that is not part of the EFPIA proposed approach).
- As an alternative to an authentication service, the manufacturer could simply give their immediate customers all of the serial numbers that they produced in the entire lots/batches that are represented in their shipment, perhaps in an electronic pedigree, but without indicating where each serial number was actually shipped (because they wouldn’t know that). When the customer receives the shipment (or at some point later in their processes), they would open the cases and scan the serial numbers on each unit and check it against the full list of valid serial numbers provided by the manufacturer. This is similar to the first bullet above, except that the manufacturer would pass on the data necessary to perform the serial number authentication to their customer and let them do it locally. Again, trading partners downstream of the first recipient would have to receive, validate, update and pass traditional electronic pedigrees.
This approach would require a great deal of trust by each manufacturer of their immediate customers because they would be giving them all of the serial numbers that were produced. Armed with those numbers, an untrustworthy customer could cause lots of damage to the security of the supply chain. For this reason, this idea is probably not workable without some kind of additional checks and balances.
Both of these approaches could work up to a point because wholesalers and pharmacies would open cases and could read each of the unit serial numbers at some point during their ownership of them. But both approaches fall apart whenever the first recipient is a wholesaler who sells and ships one or more full manufacturer’s cases of product to a certain set of their customers. This probably describes all major, and many smaller, wholesalers. It would be very costly, inefficient and risky to expect wholesalers to manually open full cases, read all of the barcodes on the units and then seal them back up for shipment. The accuracy of this step would be no better than if the manufacturer’s had done it in the first place, and this is where the destruction of supply chain efficiencies would occur without inference.
Perhaps as a new service to manufacturers, wholesalers or 3PL’s could install their own automated systems for the purpose of determining the aggregation information on behalf of the manufacturer, but that would almost certainly result in an ongoing fee. Would that fee be comparable to the higher ongoing cost of RFID in the first place? Hard to say.
Perhaps the biggest problem with the whole idea is that it wouldn’t come close to complying with existing state serialized pedigree laws. That’s because the California pedigree law requires manufacturers to provide pedigrees that include the unit serial numbers to their customers. That is, the law requires all trading partners to pass the exact pedigrees for the exact unit serial numbers they ship to their customers. Any discrepancies means that the recipient will have one or more units that do not have a pedigree and these units would be unsellable from that point on. In effect, without a pedigree, these units would have no value and would have to be returned.
So the only possible way it could work at all is if the FDA were to recognize this problem and then adopt a national pedigree architecture that would accommodate an approach like one of the two I have outlined above, or something else. That would be a pretty radical departure from the current direction of pedigree laws and even the pedigree-containing bills that have been introduced into Congress in past sessions (but failed to pass). For something like this to be accepted by the Feds, this concept would have to get the attention quickly of those who are currently crafting proposed pedigree legislation.
IT’S JUST AN IDEA, NOT A PROPOSAL…YET
Remember, it’s just an idea that’s being kicked around by a few people. I don’t think anyone knows how to make it work, but you can’t innovate unless you start by thinking about something that seems impossible. We just need someone to extend the idea in some way that would make it work to the benefit of everyone. Submit a comment below with your thoughts on what might make it work.