At the recent HDMA Distribution Management Conference, LSPediA spent a lot of time talking to distributors, wholesalers, and manufacturers about the 2017 deadlines and found a wide range of answers, from “on schedule and feeling confident” to “behind schedule and getting concerned.”
But let’s put aside your status for a moment and consider the broader picture: how far we’ve all come, and where we’re headed as serialization deadlines get closer to becoming a reality.
DSCSA Serialization: What We’ve Accomplished
We’re living in a different industry than we were before the DSCSA was enacted 28 months ago. Through its phased approach, this is what’s changed:
- Authorized trading partners: Manufacturers and wholesale distributors (WD) can trade only with authorized partners.
- Product tracing: Manufacturers, repackagers, WDs, and many dispensers (primarily pharmacies) must send and receive transaction information, transaction history, and transaction statements (TI/TH/TS) when drug products change ownership in the supply chain.
- Detection and response: Manufacturers, WDs, repackagers, and many dispensers (primarily pharmacies) must quarantine and promptly investigate drugs identified as suspect (i.e., counterfeit, unapproved, or potentially dangerous).
- Notification: Manufacturers, WDs, repackagers, and many dispensers (primarily pharmacies) must establish systems and processes to notify FDA and other stakeholders if an illegitimate drug is found.
- Wholesaler licensing: WDs must report their licensing status and contact information to the FDA.
- Third-party logistics provider licensing: Companies that provide storage and logistical operations services related to drug distribution must obtain a state or federal license.
Getting there has been hard work, but the resulting drug, supply chain, and patient safety gains are and will be worth it.
Of course there are still some wrinkles to iron out. For instance, many WDs have asked that TI/TH/TS be sent via EDI 856 Advanced Shipping Notice (ASN). While large distributors are reaching 100% compliance with manufacturers and suppliers – and experiencing big benefits in receiving, stock visibility, and cash reconsideration – smaller WDs are struggling with the EDI ASN requirement. Many are meeting TI/TH/TS mandates through modified packing slips, portal access, and emails, which means manufacturers who have invested in EDI technologies can’t consolidate their shipping processes, resulting in costly inefficiencies. The 2017 DSCSA mandates require TI/Th/TS to be in an electronic format. Here at LSPediA, we anticipate there will be another round of implementations and testings as the remaining distributors get on board the EDI platform.
DSCSA Serialization: What’s on the Horizon?
Here are the next round of mandates, which become effective November 2017:
- Product tracing: TI/TH/TS must be submitted in an electronic format.
- Product identification: Manufacturers and repackagers must include a unique, electronically readable product identifier (such as a barcode) on certain prescription drug packages; distributors cannot transact drug products without serial numbers as of 2019.
- Product verification: Manufacturers, WDs, repackagers, and many dispensers (primarily pharmacies) must establish systems and processes to be able to verify the product identifier on certain prescription drug packages; manufacturers and WDs must verify returned re-saleable units.
The TI/TH/TS requirement will bring consistency to the entire industry, requiring even smaller WDs to adopt new technologies and do away with paper and emails. The second requirement represents a giant leap for the industry: attaching serial numbers to all drug products in the U.S. supply chain. But the third requirement takes this even further, mandating that partners verify serialized products, including returned re-saleable products. And this is causing some controversy, because in order to verify returned re-saleable products, distributors must have two additional pieces of information:
- Serialization data at the unit and case level
- Aggregation data at all packaging levels
This starts with manufacturers, who create serialization data when they affix unique identifiers their products. Some of those same companies will also create aggregation data. But will all of this data be passed on to the distributors and other downstream partners? And why is that data so important anyway?
Implications for Distributors, Manufacturers, and Suppliers
WD companies like McKesson, Cardinal, and AmerisourceBergen receive about 30,000 to 60,000 returned units a day. Without serialization and aggregation data, these distributors would need to reach out to manufacturers and suppliers to verify each and every unit, costing them about 250+ labor hours – every day! Recognizing the burden this would create, McKesson announced in January 2016 that they expect “Serialized DSCSA information will be exchanged by industry trading partners using the GS1 EPCIS format for transactions when sending data.”
Many WDs agree with McKesson: Having serialization and aggregation data will be a huge benefit to them, helping manage inbound and outbound inventory, and verifying returns for authenticity. But some WDs aren’t interested in having the data – because they don’t have the capability to receive and make sense of it. As it’s doing with TI/TH/TS data, the industry will likely deploy workaround solutions for some time.
While distributors work toward meeting verification requirements, manufacturers and suppliers are evaluating FDA and distributor mandates. In 2015, the distributors’ EDI requirement was more stringent than the FDA mandated in the DSCSA. Likewise in 2017, WDs will essentially be requiring aggregation and track-and-trace data pulling forward FDA’s 2023 requirement six years earlier. If we try to determine how many manufacturers will aggregate versus not, it’s almost a 50/50 split. Billions of dollars have been invested in building out lines and solutions without aggregation, and it would be a colossal investment – and interruption – to go back and add that capability. From a compliance perspective, serialization without aggregation is enough. But from a wholesaler’s business perspective, it’s not.
Manufacturers need to make critical decisions about their futures – and they need to do it soon. When they factor in international serialization laws – from the E.U., Korea, China, Saudi Arabia, and other countries – it makes matters even weightier, because any mistakes they make today will have snowball effects down the line.
Architect, plan, and execute serialization is a big job. It impacts all organizations in your company including operations, quality, supply chain, warehouse, IT, CMOs and 3PLs. The good news is that – no matter where you are in the process – we can help you get on track with Serialization Toolkits and DSCSA strategy and consulting services.
LSPediA: Simplified Serialization and Aggregation Services
Our Serialization Toolkit is already providing companies like yours efficient and flexible implementation options that ensure fast onboarding and complete control around all aspects of DSCSA compliance – including serialization, aggregation, and other regulatory and operational needs. To find out how we can give your company compliance piece of mind – and a competitive edge – contact us today.
LSPediA helps pharmaceutical manufacturers and distributors implement serialization and aggregation processes to meet global regulations, DSCSA requirements, and future track-and-trace mandates. Our services include URS, RFQ, gap analysis, serialization toolkits and solutions, DSCSA strategies, management consulting, and more.
We value long-term relationships and work with our clients’ internal teams to properly define roadmaps, create architectures, and implement systems that align to vital business goals, ultimately helping them derive maximum value from their investments, both now and well into the future.