What The TraceLink v HDA Lawsuit Teaches Us About The Value of Supply Chain Master Data

Buried deep inside the complaint filed in federal court last month by TraceLink against the Healthcare Distribution Alliance (HDA) is the heart of the issue (see “Tracelink vs. HDA”).  It’s about the sharing of product master data throughout the supply chain—that is, “Supply Chain Master Data” (SCMD) (see “Supply Chain Data Synchronization and Patient Safety”).  According to TraceLink’s complaint, the closed nature of HDA’s Origin master data sharing service (see “Dawn of HDA’s Origin, The Key to DSCSA Compliance”) is causing problems for vendors of DSCSA compliance solutions, and that will cause end-user companies in the supply chain to pay more for their overall solution.

WHAT’S SO “CLOSED” ABOUT HDA’S ORIGIN?

According to TraceLink, “…Origin is based on a closed proprietary platform that excludes market competition”…

“In addition, the HDA, as the contracting party supplying Origin and with the approval of its members, requires that Origin users and contributors accept sweeping, restrictive, non-compete clauses as a condition to access and use the Origin database. For example, the HDA User Agreement […] and Contributor Agreement […] for Origin contain restrictions that prevent licensees from providing track and trace product data from Origin’s GTIN database to third-parties – even though HDA creates none of the data in the Origin database. Contributors create virtually all the data and merely deposit that data in Origin. The non-compete clauses also prohibit competitors from accessing that data for pharmaceutical manufacturers and distributors that own or have the right and need to use the GTIN data. These clauses, which in the very least require users of competitive track and trace solutions to incur substantial opportunity costs by forcing them to re-enter their data into the competitive systems, effectively prohibit manufacturers and distributors from dealing with competitors, like TraceLink.”

“These non-compete clauses curtail innovation and competition by service providers and directly conflict with the DSCSA’s interoperability goals. Moreover, the HDA has used these contract clauses to effectively assert exclusive ownership over standardized product data in Origin – data supplied by manufacturers that HDA neither created nor defined. As a result, competitors have been prohibited from accessing the Origin database to obtain that standardized data, and cannot use that data to provide interoperable track and trace solutions.”  [from TRACELINK, INC. vs. HEALTHCARE DISTRIBUTION ALLIANCE]

Interesting claims.  TraceLink’s argument only holds water if the terms and conditions of their own competing solution does not have a non-compete clause in it that is comparable to that which they allege is in HDA’s.  In an interview with a TraceLink representative who was qualified and authorized to speak about their products, including their terms and conditions, I was told they do not have a comparable non-compete clause.

Irrespective of the lawsuit, product supply chain master data is a resource that is owned by the manufacturer of the product.  No vendor should wrest control of its access or use away from its rightful owner.  This is exactly the reason GS1 created their Global Data Synchronization (GDS) standard and the Global Data Synchronization Network (GDSN) years ago.  To enable sharing of current product master data from the single, authoritative source—the manufacturer—with downstream trading partners through a group of competing service providers.  Under GDSN, the product manufacturer retains ownership and control over their SCMD.

GS1’s GDSN is a way for product master data to be published by the owner, and made immediately available to all subscribers through a group of competing data pool service providers.  There can be any number of data pool service providers and any subscriber can sign up with any of them to get access to the identical data.  That causes competition, which results in reasonable prices for both publishers and subscribers.  Any service provider can become a data pool service provider.  HDA and TraceLink could each become one and still offer other value-added services.  If that were to happen, the SCMD made available by the drug manufacturers who publish the data would be available to any subscriber who bought the services through either HDA or TraceLink, or any other competing data pool provider who targets DSCSA SCMD.

The passage of the Drug Supply Chain Security Act (DSCSA) in 2013 made standardized, supply chain-wide sharing of SCMD essential by 2023.  That was my point 2 ½ years ago when I posted “DSCSA Deadline Represents A Crossed Threshold Into The SCMD Era”.  So why aren’t we talking about industry adoption of GDSN for DSCSA SCMD sharing by now?

Instead, we have a service provider and a non-profit industry association bickering in court over terms and conditions of their competing, non-interoperable (with each other) SCMD sharing services.  Obviously they both recognized how important SCMD is to the success of industry compliance with the DSCSA.

IS THAT A SURPRISE TO ANYONE?

That’s no surprise.  Without a multi-segment, supply chain-wide governing body or steering committee, anyone who tries to get an industry as large as the US pharma supply chain to agree on the ubiquitous use of a specific for-fee service—even when there is a choice of service providers—is going to have an up-hill battle (see “DSCSA: The U.S. Pharma Supply Chain Must Organize, Or Risk Failure, Again”).

Who is willing to step up to make the case for what is clearly right over what is clearly wrong?  I had hoped that the HDA would eventually take that stand, and I thought they were just about to do it.  And then they introduced Origin.  Yes, I once said, “If HDA had not initiated Origin, someone else would have had to do it” (see “Dawn of HDA’s Origin, The Key to DSCSA Compliance”).  I didn’t mean a for-profit solution provider, I meant a non-profit organization (something like the European Medicines Verification Organization (EMVO)…see “A US Medicines Verification Organization (USMVO)?”).  And I followed up that comment with,

“But the question is, why not just use GS1’s Global Data Synchronization Network (GDSN)?  My description of Origin makes it sound a lot like GS1’s existing standardized service.  That’s because it is.  But there is one big reason why GDSN won’t work today, and that is, it doesn’t have the data elements necessary for DSCSA compliance.”

Since then I have been told by multiple people that GDSN actually does have the data elements necessary for DSCSA compliance.  I have not made an exhaustive comparison with GDSN to know, but if it is true, then why did HDA feel the need to create Origin?  And why did others, including TraceLink, create their own SCMD sharing service?  (TraceLink claims their service is based on industry standards but declined to be more specific.)  Clearly, the handling of SCMD is lucrative in one way or another.

One thing is certain.  For the industry to be successful in efficiently meeting the 2023 requirements of the DSCSA, the IT systems of every member of the supply chain will need to have fast access to the identical product master data.

Without that, the only alternative is to include all of the necessary product master data in every DSCSA transaction information (TI) record (see “DSCSA: Transaction Information”).  In that scenario, TI would be exchanged in GS1’s Electronic Product Code Information Services (EPCIS) format, whether that information is transmitted via AS2, Blockchain (see “Could Blockchain Technology Be Used For DSCSA Compliance?”) or carrier pigeon (short of a centralized model, which no one wants right now).  That will result in an excessive amount of repetitive data being sent and stored everywhere.  And that’s the wrong way to do it.

FULL, FULL, FULL DISCLOSURE

In the interest of full disclosure, I am currently employed by Systech International, a competitor of TraceLink in one product area.  Systech International is currently a solution provider member of the HDA.  Back in 2007 and 2008 I was employed by SupplyScape, the predecessor company to TraceLink and run mostly by the same people.  From 2002 to 2007, and then from 2008 to 2012 I was employed by Cardinal Health, one of the “Big 3” wholesale distributors who is an important member of the HDA.  During 2013 and 2014 my own consultancy was a solution provider member of HDA.  I have also been a long-time active member of GS1 and GS1 US.  RxTrace is a wholly owned by Dirk Rodgers Consulting, LLC and is not owned or controlled by any other company.

Dirk.

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