There is a long-running tug-of-war going on between GS1 and national governments around the world over how exactly to identify medical products, whether devices or pharmaceuticals.  National governments regulate those products to maximize the health of their citizens and so they take a natural interest in how they are identified.  They want to eliminate all ambiguity between products within their market.  They need to be able to tightly grant market authorization, revoke it and oversee recalls when warranted.  To do that effectively, they need a way of clearly and concisely referencing a given product.  That same way of referencing the product should also be used for patient education and for healthcare professional prescribing.  Bad things happen when mistakes are made in the identification of healthcare products.

GS1 offers a global standard way of identifying any product—including those in healthcare—known as the Global Trade Item Number (GTIN) standard.  (For more on GS1’s GTIN standard, see “Anatomy of a GTIN”.)  Even better, that identification standard is accompanied by a rich set of other global standards that are complementary and which extend and enhance the value of the GTIN so it can be used to elevate the accuracy and streamline manufacturing, supply chain and clinical operations.  This seems like a perfect solution to the needs of national healthcare regulators, right?  So why is it so hard to convince regulators to adopt, or even just allow the use of GS1 standards?  This is the “tug-of-war”.

We here in the United States do not usually observe this tug-of-war.  That’s because the GTIN standard was developed at the same time as the U.S. National Drug Code (NDC) and GS1 US (the US national affiliate of GS1, or GS1 Member Organization, M.O.) agreed, way back in the beginning, to take specific action to keep the two compatible.  Consequently, when the FDA issues your company what they call a “Labeler Code”, GS1 US has already set aside the matching “GS1 Company Prefix” (GCP) for you to acquire and make use of on your pharmaceuticals within their family of GS1 standards.  This agreement ensures that no one else can acquire and use the GCP that matches your FDA Labeler Code.  All you need to do to take advantage of this agreement is to register with GS1 US and then encode your NDCs within the GS1 GTIN structure and put GS1 barcodes on your product packaging.  (For more on the NDC, see “Anatomy Of The National Drug Code” and “Depicting An NDC Within A GTIN”.)

In every other country where the GS1 GTIN is used to identify medical products the government has either specified the use of GS1’s GTIN by name in their regulations, or played the game of describing GS1 standards in a way that allows companies to use them, but without actually naming the standard or the organization that manages it.  GS1 expends a lot of time and effort trying to convince governments to specify their standards rather than dancing around the naming.  Some see the value and end up naming them explicitly (like Turkey, Argentina, and Saudi Arabia), and others resist their pressure and play the game (like the E.U. and the even the U.S.).  Still others ignore GS1’s recommendation—even when they are backed up by many in the pharma industry.

Why do governments resist specifying GS1 GTIN as the identifier mandated for drugs and medical devices in their market?  It’s hard to say in general, let alone for any single market, but I suspect there are a number of contributing arguments.

• GS1 as competition
  Governments don’t like to let third-parties control parts of their regulations, and by turning over control of the product identification system to GS1, they may feel like that’s what they are doing. By ceding the product identification standard to GS1 they might fear that GS1 will make some change to the GTIN standard in the future that will open some ambiguity that doesn’t exist today.  Do GS1’s intentions and goals align with those of a national government?  Actually I think you would find that this fear is unfounded.  GS1’s intentions and goals regarding ambiguity in identification are probably even more strict than the intentions of most governments.  In fact, this is actually a big reason why a government should want to specify GS1 standards.  GS1 will ensure their identification standards remain unambiguous globally, but they will also carefully adjusted their standards when warranted as new technology and requirements arrive.  When a government defines their own identification “standard”, those standards become brittle and increasingly restrictive over time because governments are ill-prepared to know when or how to adjust them.  GS1 is not in competition with governments.  In fact, they are the perfect partner of governments.
• The GS1 “tax”
  To be able to use GS1’s GTIN, manufacturers and repackagers must pay an annual fee to one of the GS1 M.O.s for the use of their GCP. Once issued by GS1, this GCP and the associated GTINs, GLNs and other GCP-based identifiers may be used anywhere in the world without additional cost.  When a government mandates the use of GS1 GTINs to identify drugs within their market, they are effectively mandating the payment of that annual fee to the GS1 M.O. of their choice.  (NOTE:  Some GS1 M.O.s would like their national governments to mandate the use of only locally issued GCPs within that market, but the overseeing GS1 global organization presses when necessary to keep GTINs truly global.  If someone claims that you must obtain a local GCP to do business within a given market, check with GS1 global for clarification.)

  This GS1 “tax” is money that does not go to the national government.  It goes to one of the GS1 M.O.s, so it may be hard for some governments to require that, even though the GS1 M.O. is a non-profit organization.  Governments have taxing authority and they are used to charging fees for licenses and for market authorization, but mandating a payment to a third-party can be problematic.

  In my view, this argument should be viewed differently.  Everyone should admit that it takes a concerted effort to maintain a global standard, keeping it current as technology and requirements change, and ensure that it is understood and followed properly.  Without that element, a standard is of little use.  But a “concerted effort” costs some money.  Not a lot per company, mind you, and GS1 (GS1 US anyway) has done an admirable job of lowering the costs over the years I have been observing them, rather than raising them.  GS1’s model for funding the maintenance of their standards is appropriate for what end-user companies—and governments—receive in return.  If a government charged this money, it might be called a “tax” or a “user fee”.  The user of the standards is paying for a specific service:  maintenance of the set of standards they use.  Paying a GS1 M.O. ensures that it is truly a “user fee” specifically for the maintenance of GS1 standards on behalf of the payee, and it ensures that these fees will not bleed over into the government’s “general funds”, as happens too often with fees paid to a government.  Multinational healthcare manufacturers recognize the value of this funding model.  It’s time for local and regional manufacturers and national governments to recognize it too.

• What about GS1’s competitors?
  GS1’s identification standards are based on a number of ISO standards. Other non-profit organizations have applied those same ISO standards to develop different, competing product identification standards.  The Healthcare Industry Business Communications Council (HIBCC) is one.  How can a government specify the use of GS1 over HIBCC?  Wouldn’t that be anti-competitive?This argument carries more weight in the identification of medical devices than it does for pharmaceuticals (see more about that below).  HIBCC’s product identification standard, the Health Industry Bar Code (HIBC) has never been widely use on pharmaceuticals, but it is used by many manufacturers of medical devices—just not everywhere in the world.  That identification standard is usable everywhere, but it is not recognized everywhere, even on medical devices.  But for drugs, GS1’s GTIN standard receives more widespread recognition.  So for drugs, GS1 does not have any meaningful competition nationally or globally.

  For medical devices in the United States the FDA has a very fair way of dealing with the competition between product identification standards.  Under the direction of Congress, they established the Unique Device Identification (UDI) standard, which allows device manufacturers to choose between multiple identification standards that are pre-accredited by the FDA (see “FDA Proposed UDI: A Revolution In Number Assignment”).  Currently device manufacturers may choose between three standards organizations for uniquely and unambiguously identifying their products:  GS1, HIBCC and ICCBBA.  Beyond accreditation, the FDA cedes all standards maintenance and number assignment to these organizations.  All you have to do is register your final identifiers and their associated master data with the FDA (see “FDA Proposed UDI: The GUDID Database”).

  By the way, UDI in the United States is just the beginning.  The concepts behind it were agreed to by a consortium of regulatory bodies around the world.  The intention is for the same kind of regulation to be adopted/enacted by other major markets around the world.  The European Union is working on it right now.  This is the right way forward for governments everywhere for healthcare product identification.  In fact, I have called for the U.S. FDA to throw out the antiquated National Drug Code system of today and replace it with the same kind of program as they have today for medical devices (see “UDI And The Approaching End Of The NDC”).  It wouldn’t be a total replacement, since today’s NDC would be backward-compatible with the new system when encoded in a GS1 GTIN (which nearly all are).  The transition would be more of an evolution than a revolution.

• Suspicion of Global-anything
  Some countries don’t like to follow anything that is deemed “global”. Global standards are a big essential step toward “globalization” of commerce.  Globalization makes it easier for multi-national drug companies to market their products within your borders, competing directly with local drug manufacturers.  Competition like that is hard.  It forces the need for world-class efficiencies and quality in manufacturing and supply chain operations.  Any company that only serves the local market where their headquarters is located may find it difficult to do what is necessary to compete, so those companies may be threatened by globalization.  No government wants to see their local pharma industry lose against the multi-nationals.  Avoiding global standards is one small way to take a swipe at globalization.

The adoption of GS1 standards by a pharma regulator will have a net positive impact on the health of the local population.  Governments should take a hard look at these benefits, and drop their suspicions and their opposition.  The world will be a better place when they do.

Dirk.