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PhM: Things have been pretty quiet regarding ePedigree legislation in the past year or so. What’s going on behind the scenes, and when might this lull end?
J.D.: In March 2008, the California Board of Pharmacy announced its plans to delay ePedigree legislation to 2015 (Governor Schwarzenegger signed this into law in September 2008). The State of California appears intent on upholding the 2015 date due to the implicit agreement with industry that there will be widespread compliance with the legislation by the 2015 deadline.
From a technology and solution perspective, there were few viable or tested solutions available in the 2005-2008 timeframe. So when the March 2008 decision was announced at the general body meeting of the California Board of Pharmacy, most of industry took a deep breath of relief and put aside their scramble for a solution. Some companies, however, have persisted with their strategies to implement serialization—either due to requirements from European countries, or because of strategic concern over their brand integrity and potential business benefits.
In recent months, this topic has begun to move back to the forefront of the pharma/biotech industry agenda. The leading standards body, GS1 Healthcare, has recently kicked off a 2015 California readiness program to build an industry reference model to enable efficient product serialization and visibility using GS1 standards.
PhM: Where are most manufacturers in terms of ePedigree program implementation? What percentage would you say already have workable serialization programs? What percentage will easily have them and comply (with California) by 2015?
J.D.: Most manufacturers are now actively planning for complying with the 2015 deadline for serialization and ePedigree management. The product tagging pilots—carried out by the manufacturers affected by well publicized counterfeit attacks—have been studied and digested. While industry continues to pilot RFID (radio frequency identification) tagging on a limited basis, 2D barcoding seems be more popular option.
By and large, these pilots have been conducted on a standalone basis. Even the architecture for integrating serial and ePedigree data with internal systems is not completely understood. Some companies have intensified their search for integrated ePedigree and serialization solutions that combine a pre-built application for managing serialization and pedigrees, with services to easily integrate with existing ERP (enterprise resource planning), packaging execution and labeling systems.
Almost all brand owners outsource some or all of their manufacturing, and as a result, are also working to educate and assess their contract manufacturing organizations (CMOs). CMOs vary widely in the level of technical infrastructure in place to manage product serialization and the two-way data communication required to receive and export serialized product data. Some CMOs see this as a business opportunity to provide value-added services for serialization and pedigree management to their pharmaceutical brand owner customers. On the other hand, CMOs who rely on faxes for communication with their customers are going to be blindsided.
The term “workable” raises another concern. While companies may have systems in place that relate serial information with legacy back-order data, the system may not scale to the complexities that will arise when dealing with the downstream supply chain – distributors, retailers, disputed shipments, returns and recalls all add complexity. Very few of the manufacturers have worked on pilots encompassing the entire supply chain.
While our assessment is that about 5 percent of manufacturers are serializing today either in a pilot or basic, disconnected mode, we are optimistic that they will be ready, by and large, for 2015.
PhM: ePedigree and product serialization are just part of overall brand security. Have most manufacturers come around to this way of thinking, and have they integrated pedigree well into their overall brand security efforts?
J.D.: Most manufacturers have seen brand integrity as a key business benefit of ePedigree. In fact, we recently spoke with a company preparing to launch its first product in the coming year. The company plans to make its drug product serialization and ePedigree strategy a cornerstone of its marketing messaging, and will serialize the product from day one in part as a demonstration of its stewardship of public health and safety.
PhM: ePedigree by paper is still possible. Are there manufacturers that still prefer paper-based programs, or is it just a matter of some not having converted to electronic systems?
J.D.: To this point, manufactures have received little pressure to adopt ePedigree requirements, as most of the burden from existing state regulations falls on the shoulders of the distributors. While paper is still possible, it is clearly not the preference. Many manufacturers resorted to paper as the only option prior to the availability of electronic-based programs. As a result of new technology advancements, companies are looking to deploy electronic applications that not only enable compliance, but also deliver business benefits.
PhM: Are linear or 2-D barcodes still the primary labeling devices to carry pedigree data, or is the use of RFID expanding beyond high-value or high-risk products?
J.D.: 2D barcodes are the primary data carrier for industry. The interest in RFID chips has waned significantly among pharmaceutical manufacturers. A recent study by Eric Newmark from IDC Health Industry Insights entitled “Health Industry Insights 2009 Leading Indicators in Life Science IT Spending Survey 2Q09” supports this assertion. The report states that RFID adoption levels have dropped and RFID evaluations have not seen any growth in nearly 18 months. The survey results revealed that nearly 50 percent of respondents indicated that their organizations were either not evaluating RFID or had evaluated it and decided not to adopt it, while only about 15 percent had any level of adoption.
PhM: California legislation focuses on serializing the “saleable unit” and increases the data and thus the data management concerns for manufacturers and their supply partners. How are they dealing with this? Are they struggling to collect data and make it easily accessible to all parties who need to use it?
J.D.: Right now the focus is on serialization and the ability to export that data at time of shipment in various formats. This is the crux of most initiatives and pilots we see in the industry. The biggest issue is collecting the information in-house, and enabling processes and policies that will keep this information accurate in real-time. The issue of making it accessible to other parties is not as difficult, as portals, business-to-business standards, etc. have existed for a while, and communication channels have been opened due to innovations like EDI (electronic data interchange) and XML (extensible markup language). We think that getting the internal serialization efforts right will enable seamless exchange of information across trading parties with relatively few hiccups.
PhM: Is data management a matter of installing the right hardware and software and ensuring integration with partners, or is there much more too it?
J.D.: Data management takes care of the basic blocking and tackling, but in order to realize business benefits, companies want to derive some analytical information from the data that they are painstakingly collecting. They want to analyze various components, such as unit volumes generated, shipped and received. In addition, they want to receive notifications regarding shipping and receiving exceptions, find their products in the supply chain, understand supply chain cycle time, find the quantity of their products in the supply chain, and perform quick and efficient recalls when needed. As other sectors of the software industry have already learned, implementing transactional systems offer little value if the systems do not come with pre-built and pre-integrated analytics.
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