China once had one of the most aggressive pharma serialization mandates of any market. Their compliance timeline began in 2007 with a list of “essential drugs” and ended in January of this year when, effectively, all drug packages were required to carry a unique serial number. Shortly after that milestone the government suspended that requirement, pending a new regulation. Since that time the China Food and Drug Administration (CFDA) has posted several documents related to their new plans (see “China Adds Traceability Requirement To CFDA Drug Quality Management Specification”). Last month a new notice from the CFDA appeared on their website which some are interpreting as a retreat from pharma serialization in China.
Interpreting the meaning of documents released by the CFDA is notoriously hard, but this new notice appears to indicate that, going forward, drug manufacturers are responsible for establishing a “traceability system”, not the government. Don’t take my word for it. You need to come up with your own interpretation, but they appear to only “encourage” manufacturers to assign a unique identifier on the smallest unit of sale. That doesn’t sound like a requirement. It sounds more like a retreat. Without traceability standards identified by the government, how will companies align behind a single approach? They probably won’t. Without an apparent mandate, and without a market-wide standardized approach, will companies voluntarily place a unique serial number on their drug packages? Some probably will follow the old China approach, some will probably follow GS1 standards, and some who interpret the word “encourage” to mean there is no mandate might skip serialization altogether.
The question is, is this the beginning of a new trend? Will other governments eventually back away from drug serialization? China’s apparent step backward on serialization is surprising because there is a long history of large scale seizures of counterfeit drugs there (for an example with an amazing photo, see this Newsweek article). But maybe governments who have imposed serialization have found that serialization is not worth the huge cost to the industry. I have always wished that the governments with the early serialization requirements—like Italy and Turkey—would publish data that shows the effect of their serialization mandate on the incidence of pharma supply chain crimes. Shouldn’t we expect a very observable and steep drop in those numbers as their market became saturated with serialized drugs? If not, they why do they maintain their regulation and the high cost of compliance?
COULD IT HAPPEN HERE IN THE U.S.?
The debate over the value of pharma serialization in protecting patients always occurs prior to the enactment of a pharma serialization regulation within a given market. The only valid reason to enact that type of regulation is if the government is convinced that it will result in a steep drop in pharma supply chain crime, particularly in the incidence of counterfeit drugs. After such a regulation is enacted, the question for drug manufacturers is no longer whether or not it will result in greater safety. At that point, the regulation becomes one more thing the manufacturer must do to continue selling drugs into that market. Everyone hopes it will have the desired effect on crime, but whether it does or not, serial numbers must be affixed to drug packages as specified, and the tracing/reporting provisions must be followed as well.
The problem I have with that process is that I don’t think the debate prior to enactment is ever based on actual studies and facts. I fear it is based completely on opinions and assumptions, as in, ‘we believe drug serialization will block counterfeiters’. The United States is an interesting example. On February 18, 2004, the FDA published the final report of their “Counterfeit Drug Task Force” called “Combating Counterfeit Drugs: A Report of the Food and Drug Administration.” This was a big part of the “debate” about whether or not serialization would help protect the supply chain against counterfeiters.
The interest in the problem at that time was triggered by the significant increase in the incidence of counterfeit drugs throughout the U.S. in the early 2000s that were so well documented in Katherine Eban’s 2006 book “Dangerous Doses: A True Story of Cops, Counterfeiters, and the Contamination of America’s Drug Supply” (see “Dangerous Doses”). But those problems were largely eliminated after the “Big-3” wholesale distributors (and others) stopped buying drugs from sources other than the manufacturer in 2006/2007 (see “Do We Even Need To Mandate Drug Pedigrees Anymore?”). The members of the FDA Counterfeit Task Force appear to have been unaware of the effect of grey market sourcing on the rise of those crimes when they speculated that serialization (through RFID, no less!) would likely solve the problem. Their report was what led to the passage of the California Pedigree law in 2005.
In 2013, the Institute of Medicine (IoM) should have had that knowledge, but instead, they referred to those same crimes that were known to the FDA Counterfeit Drug Task Force from the early 2000s to justify their conclusion that “Tracking pharmaceuticals through the global distribution chain with unique serial numbers is a good defense against criminal infiltration.” The report made no mention of the sea change in the operation of the U.S. supply chain that resulted from the change in buying practices of the big wholesale distributors in 2006/2007 (see ”Well-Intended Report Calls For Global Track & Trace Of Pharmaceuticals”). The IoM had the opportunity to look at the problem realistically by focusing on the results of that change (at least for the U.S.), but instead they fell back on the opinions and guesses about the problems that existed in the U.S. a decade earlier. Of course, the U.S. Drug Supply Chain Security Act (DSCSA) was enacted shortly after the IoM issued their flawed report.
We should not expect solutions based on theories about an outdated reality to solve today’s real problems. Serialization of drugs in the United States will not likely result in a measurable increase in the safety of patients, but it will cost a whole lot (and yes, keep you and me employed!). But that’s just based on opinion too (see “Illegitimate Drugs In The U.S. Supply Chain: Needle In A Haystack”). Hopefully an educated one. Once the high cost/benefit ratio becomes more apparent, is it possible that even the DSCSA could be rolled back? Probably not. That would take an admission of poor analysis. Instead, we are likely to do what Italy and Turkey have been doing: declare success, and don’t publish any proof of the impact on counterfeiting.
REST OF THE WORLD
The U.S. is rich enough to absorb the cost of serialization and view it as just another thing we have to do to sell product, but that might not fly in less wealthy countries. Brazil recently suspended their burdensome pharma serialization and tracing regulation and is about to publish a new, (hopefully) less burdensome regulation. If that new law is found to have a higher than expected cost/benefit ratio—not because the costs are so high, but because the benefits cannot be documented, making the ratio go to infinity—will they keep it? Hard to say, but in light of China’s apparent action, the odds have probably decreased a little. What about India? Will they ever finally enact the domestic serialization regulation they’ve been discussing for the last year? Will that proposed regulation in Russia make it beyond the pilot that is expected next year?
Is this the beginning of a new trend?
Dirk.
