Can GS1 Hold Onto Drug Identification Worldwide?

Some countries mandate the use of GS1 standards for drug product identification and package and case barcodes.  The European Commission seems to tolerate GS1 standards, leaving it up to each member state to decide.  Most use them, a few held onto their own national codes as long as they could.  China is taking their time warming up to the GS1 Global Trade Item Number (GTIN) but it seems to be happening.  That is, I think it’s happening.  The United States has always had its own national numbering system for identifying drugs, known as the National Drug Code (NDC) (see “Anatomy Of The National Drug Code”).  Because they are running out of numbers to identify new manufacturers (labelers), they are considering changes to the NDC that could break the ability to encode an NDC within a GTIN (see “How To Properly Define GTINs For Your NDCs”, “FDA New NDC Format Public Meeting” and “An Open Letter To The FDA: New NDC Format Public Meeting”).  The USA is not the only country to be considering a break with GS1 standards.  Indonesia will allow QR Codes on drug packages, and now there is a movement in the India government to move away from GS1 standards.  What’s going on here?  Can GS1 hold onto drug identification around the world?  Let’s take a look.

There is no doubt in my mind that governments around the world gain more than they lose when they elect to mandate the use of GS1 standards for drug product identification and barcode encoding, at the very least.  But it seems like it’s hard to convince non-technical people in governments who are responsible for making these decisions that you are not just blindly supporting the company for some hidden reason.  One reason is that there is no shortage of people who express glowing support for GS1 without seeming to know why—blindly—and skeptical government people can tell.

If you don’t know me, you might put me into that category.  I’ve written some very positive things about GS1 over the years (see “’Why the rush for GS1 standards?’”, “Can HIBCC Withstand The GS1 Tide In Medical Device Identification?”).  But I’ve also written some very negative things about them too (see “’The State of Healthcare Logistics’”, “Before You Participate in The GS1 US 2015 Readiness Program, Read This”).  I was once just as skeptical about GS1 as those government officials.  I had worked with GS1 standards—starting with the Serial Shipping Container Code (SSCC) around 1990—for almost 20 years before I figured out that the value of widespread use of GS1 standards within a supply chain far exceeds the costs of GS1 Company Prefixes (GCP) (see “Your GS1 Company Prefix: An Enterprise Resource”).  Like most skeptics, I used to fixate on the costs.  Even though GS1 is a non-profit organization globally, it just seemed like they were making out too well financially by “just selling codes”.  I see evidence of that same skepticism in governments who say they are defining their own coding system to help their local industry avoid the cost of buying global codes.  They are saving their local companies a little bit of money, but they don’t see the real cost of doing so.

It took me a long time to figure out that the fees you pay GS1 and their local Member Organizations are not excessive for what you get.  What do you get?  You get a complete set of logically coherent, complex, efficient supply chain standards that define the structure and rules for more kinds of identifiers than you will probably need that are suitable for global commerce because they are globally unique.  And, most importantly, you get support.  Support from the global organization with high-quality usage documentation and training, but you also get a global community that is always ready to help answer your questions. 

And there are always questions when an entire supply chain adopts GS1 Standards.  They are deceptively complex.  That sounds like an insult, but it’s not.  A system of standards like “The GS1 System” is complex because the new components need to work with the old components and need to be applicable to all types of products everywhere in the world.  But in GS1 standards, there is a well-honed method to their definition and evolution that has resulted from decades of use and extension. 

And you get growth.  When things change and new technologies become available, GS1 works diligently with members of supply chains to expand their system of standards to incorporate the new tech, and address the new uses.  Their processes can be a bit bureaucratic and cumbersome, but that’s what happens when a core group of technical people and people from industry with varying technical backgrounds work together to figure out something new.  I’ve seen it many times and it almost always results in solid gains for the standards and those who use them, whether those users participate in the standards development process or not.

It’s not cheap to maintain a large presence in most of the countries of the world, continue expanding and improving the standards and helping huge numbers of people understand and use them.  If you could do all of that for less money, you would, but you can’t.  So I accepted the fees and now I believe they are a bargain for what you get.

So I don’t understand the countries who are considering discounting the use of GS1 Standards in their pharma identification and traceability mandates.  It seems very short-sighted to me, but at the same time, I was in that same boat for a long time too, before I saw the light.  GS1 can try to convince them of their value, but in some cases, that’s hard to do convincingly.  It takes end user companies to convince governments of the true value of GS1 standards.  Global companies need to counter the demands of local companies who don’t see the need to pay for the use of global standards.  Regulators need to recognize that they benefit greatly from the globalization of the pharm industry, and securing a global supply chain will only be successful through the use of global standards.  They need to hear that on a regular basis from the global drug manufacturers and others.