The one thing all pharmaceutical manufacturers can count on, regardless of whether or not the U.S. Congress passes a new track and trace regulation in this or future sessions, is that unit-level serialization will be a necessity on drug packages sold into the U.S. market within the next few years. We have all been paying close attention to the draft legislation that has been moving through the two houses of Congress for several months now, but there is no doubt that unit-level serialization will be required whether something passes at the federal level or not. The only questions are, exactly which year will it be required and what else will be required?
We know that, if nothing passes at the federal level—a distinct possibility considering the differences between the House and Senate versions—drug manufacturers will be faced with applying FDA Standardized Numeric Identifiers (SNIs) on 50% of the drugs going into the State of California by January 1, 2015 (now less than 18 months away), and 100% by January 1, 2016. That’s according to the California pedigree law, having been on the books for about nine years now and having been updated with these dates almost five years ago. That law only deals with drugs distributed within the State of California but because most manufacturers can’t tell exactly which units will eventually make it to that state, they are forced to serialize and ePedigree all of their units sold into the entire U.S. market (see “Estimated Rise In Serialized Drugs In The U.S. Supply Chain”).
That’s what we know. But we also know that both bills in Congress, if enacted, would preempt the California pedigree law as well as all other state and federal serialization, pedigree and track and trace laws. So if either bill were to pass and be signed into law, the California regulation would abruptly go away, but it would be replaced by the new federal serialization and pedigree requirements. It’s a little hard to predict exactly what the pedigree requirements might be because the two bills differ in that area (see “The Federal Lot-Based Pedigree Before Congress”), but they both have the same basic serialization requirement.
That requirement would force drug manufacturers to apply FDA SNIs, lot number and expiration date within a standard machine-readable carrier technology on all drug packages and cases distributed in the United States. The only question would be exactly which year this would have to be done by. In the Senate version it would have to be done within four years and in the House version it would have to be done within five years of enactment (see “The California ePedigree Timeline Vs. The Senate Bill Timeline”).
So no matter what happens, unit-level serialization will be a requirement and case-level serialization might be a requirement. Case-level serialization is a good idea even it if is not a requirement.
WILL GENERIC DRUG MAKERS BE READY?
I have been in lots of conversations over the years where someone in the group expresses their opinion that generic drug manufacturers are not likely to be ready with serialization of their drugs on time. In my observation the only people who make these statements are those who are simply speculating. Those in the know do not make these statements because there are some large generic drug manufacturers who are working on adding serialization to their packaging lines just as diligently as branded manufacturers.
The theory is always that the profit margins on generic drugs are so thin that these companies probably cannot afford to make the investments necessary in the right technologies to be ready. That theory might be true of some generic drug manufacturers—after all, there are a lot of them—but I suspect that smart generic drug companies see serialization requirements as a wedge that just might eliminate some of their competition. If that happens, the “law” of supply and demand—the “law” that is a significant factor in the price of a generic drug—might allow them to raise their prices (or not lower them as fast) and thus widen their margins.
A few years ago I took a tour of a drug distribution center with a team of serialization technology people. Our group had just finished one of these conversations where someone expressed the theory that generic drug manufacturers would not likely be ready by the California deadlines. I disagreed, and we had a brief debate based on competing theories. None of us had any facts. We then took a tour of the warehouse.
The very first pallet of drugs I laid my eyes on in the warehouse storage area was supplied by a generic drug manufacturer from India. I don’t remember the name of the company but it was not one any of us recognized. We looked carefully at the case labels and found that each case already had a GS1 GTIN plus serial number printed on them in both GS1 Datamatrix 2D barcode and human readable form. I remember seeing serial numbers in the teens and twenties. This was either an experimentally labeled pallet or the first pallet in production by that manufacturer with case serial numbers. We hunted down that drug in the each-pick area and found that the units were also serialized with 2D barcodes printed on them in addition to the linear NDC barcode. The labels looked exactly the way I would have recommended. That is, I could not find anything wrong with them at the time.
Being from India, this particular manufacturer might have been preparing to meet the India government’s requirement that all drugs exported from that country be uniquely serialized, or they might have been preparing for the California pedigree law. We did not investigate the reason, but that was the last time we had the debate over the readiness of generic manufacturers.
The point is, companies should not make any assumptions about who will not be ready, whether the California deadlines remain in effect or federal deadlines replace them. In fact, if you must make an assumption, you should assume that everyone else will be ready on time. When you look at it that way, how will you feel if your company is the only one who is not ready on time? What impact would that have on your business?