Almost everyone agrees that GS1’s Electronic Product Code Information Services (EPCIS) standard will be used by drug manufacturers and the large wholesale distributors in the United States for compliance with the serialization requirement of the Drug Supply Chain Security Act (DSCSA).  Even I think that (see “Will EPCIS Event Exchange Replace EDI ASNs for DSCSA Someday?”).  But there is a problem that could kill its use beyond the internal uses of today, keeping it from being used for data exchange or the data repositories that will eventually become the way data is “exchanged” in 2023 as part of the Enhanced Drug Distribution Security (EDDS) phase of the DSCSA.

The problem is, EPCIS defaults to the use of a single location identifier, the GS1 Global Location Number (GLN).  So what?  Why is that a problem?  Let me explain.

GS1 is a non-profit company, but in order to continue generating interest in their standards over time, and to ensure that their standards are used properly, they need to generate some revenue.  That’s why they charge an annual fee for the assignment of a GS1 Company Prefix (GCP).  Because it is registered as a non-profit company, these fees are kept to a level that pays for their normal activities without generating a huge profit.  In my view, those activities are necessary and beneficial to the pharma industry and the other industries they play a part in, and so the fees are justifiable.

The assignment of a GCP to an end user company gives that company the right to generate GS1 identifiers (for a complete list of GS1 identifiers that may be generated using a GCP, see “Your GS1 Company Prefix: An Enterprise Resource”).  One of the identifiers a drug manufacturer is able to generate with its GCP is a GS1 Global Trade Item Number (GTIN), which they can do for all of their products and different levels of packaging.  All of that manufacturer’s trading partners are welcome to make use of the manufacturer’s GTINs without paying anything to GS1 for the privilege, because the manufacturer already paid GS1 for the right to generate those GTINs.  Their use and reference throughout the supply chain is royalty-free after that point.

The same is true of all of the other identifiers that may be generated with the GCP.  The original generator of the identifier must pay an annual fee to GS1 for their GCP, but the use of that company’s identifiers by others is royalty-free.

Interestingly, there are a few GS1 standards that do not require the payment of a royalty when they are used, even by the product manufacturer.  This includes GS1’s EPCIS, the Core Business Vocabulary (CBV) and a few others.  You can build and use applications and data exchange architectures that are based on EPCIS and CBV without additional charge.  That’s because, for these standards to be used meaningfully, they require the use of GS1 identifiers which are based on GS1 GCPs, which must be paid for annually.

We already know that drug manufacturers and repackagers will pay GS1’s annual fee for the GCPs they need for their NDC-based GTINs, which will then be the basis of their Standardized Numerical Identifiers (SNIs) that are required on most drug products by the DSCSA after November 27, 2017 (see “The DSCSA Product Identifier On Drug Packages”).  Many wholesale distributors will likely do the same so they can generate GS1 Serial Shipping Container Codes (SSCC) to identify their totes and other shipping containers.  Once they pay for their GCPs, all of these organizations will also be able to generate Global Location Numbers (GLNs) for their physical locations and corporate entities without additional charge.

GET TO THE PROBLEM PLEASE

OK, here’s the problem.  To use GS1’s EPCIS to document a change of ownership and shipment in a DSCSA-compliant way, the seller must include their GLN and the GLN of the buyer.  By default, the EPCIS standard only defines the use of GLNs to document shipping source and destination locations.

When the buyer is a small pharmacy, this is the only use the pharmacy has for a GCP—to generate their one GLN for their one location, so that they are able to receive their drug shipments.  (For my explanation of how hard it is to use only one GS1 standard, see “GS1 Standards – Betcha Can’t Use Just One!”.)

Fortunately, GS1 US has a graduated fee schedule that allows smaller companies to pay a lower amount for their GCP in recognition of the fact that they have less need for it.  However, in the case of small pharmacies, I think any fee is going to prove too high.  For as little as these companies will benefit from owning a GCP, other than generating that single location identifier, it is extremely difficult to justify charging them anything at all.  If I were a small pharmacy, I might view GS1 as some kind of patent troll who all of a sudden popped up to claim I owe them an annual fee just so I can remain in business (lucky for GS1, I’m not a small pharmacy).

What if just one of them refuses to pay?  Can you shut that one company out of the U.S. pharma supply chain?  That would be un-American.  What if a bunch of them refuse to pay?  Does it jeopardize the industry’s ability to use EPCIS for data exchange/sharing?

To answer that question, let’s look at the latest available version of GS1 US’s “Applying GS1 Standards to U.S. Pharmaceutical Supply Chain Business Processes to support DSCSA”.  Right now the latest version is version 1.1, which is admittedly a little old now and is mainly aimed at the use of GS1 standards to meet the lot-based requirements of the DSCSA, including the use of EPCIS.  That is, pre-2023 data exchange.  They are working on version 1.2 which will be out someday and will be aimed at meeting the serialization-based data exchange requirements.  Interestingly, the EPCIS standard itself does not require the use of GLNs for locations (see page 42 of the GS1 EPICS vs 1.1 specification), but version 1.1 of the U.S. Member Organization’s (MO) DSCSA guidance does not provide any alternatives.

AND?

And there’s another problem.  Back in 2013, a few months before Congress passed the DSCSA, the FDA announced in non-binding guidance that they had chosen Dun and Bradstreet’s Data Universal Numbering System (DUNS) as their universally accepted Unique Facility Identifier (UFI).  This was done to meet a Congressional mandate contained in the FDA Safety and Innovation Act (FDAISA) of 2012 to define a location identifier (see “FDA Chooses DUNS For Unique Facility Identifier”).

Ouch, GS1 US, that had to hurt.  While the UFI is solely required by the FDA for registration of domestic and foreign drug establishments, it could be viewed as their preferred location identifier for other purposes as well.  And it makes sense.  Creation and use of a DUNS number is free of charge.  With such a financially attractive, FDA-sanctioned alternative, why would small pharmacies want to pay for a GLN for reporting supply chain transactions that are mandated by the FDA?  Of course, they wouldn’t.

But today, there is no defined way to use a DUNS number in an EPCIS-formatted event.  And if GS1 defines one, it could mean that they will lose a significant amount of present and future income, especially if every end-point company in every supply chain in every country in the world then decides they don’t need to pay GS1 for a GCP.  That might be unacceptable to GS1 and their MOs.  Remember, the end-point in a supply chain is usually a retailer, and there are almost always many more retailers than there are manufacturers and distributors of products.  That’s a lot of companies to write off.  I suspect the GLN is GS1’s “ace in the hole” for generating income in the coming years.

If I’m right, then now is the time for GS1 to reconsider their pricing structure.  Eliminating the cost of a single GLN for all retailers may require them to raise the price for everyone else, but I’m afraid if they don’t, it could drive supply chains away from the use of EPCIS, and ultimately maybe GS1’s other revenue-generating standards.

One more thing.  This is not really a new issue.  It has been mentioned in GS1 US traceability groups for years but to my knowledge, nothing has ever been done to address it.  Maybe now is the time.

Dirk.