Supply Chain: Managing the E-Pedigree and Serialization Challenge

Oracle Takes On a Two-Headed Monster: Existing solutions haven’t yet integrated both serialization and e-pedigree

By Agnes Shanley, Editor-in-Chief

Supply chain regulations enacted in Florida in 2003 had software vendors scrambling to develop new approaches for electronically managing drug pedigrees— i.e., records documenting the legitimacy of a drug’s origins and chain of custody. Unfortunately, many of those solutions did not address the problem of serialization— numerically identifying each product so that it can be tracked throughout the supply chain. Nor have many solutions sought to integrate the two.

With stringent California laws set to take effect on January 1, 2011, vendors are now beginning to tackle the two-headed monster. A major player in this space figures to be Oracle. Pharmaceutical Manufacturing spoke with the company’s life sciences senior director, Arvindh Balakrishnan, about the road ahead.

PhM: We’ve been hearing so much about e-pedigrees for so long that skepticism can set in. Despite postponements, I guess the California deadline is very real. How is industry responding this time?

A.B.: The pharma industry is taking things very seriously. All major companies have an implementation plan or a way to get there well thought-out. Most companies are taking software selection very seriously. It’s no longer a nebulous thing. Recent acts have been proposed in California, one by Senators Ridley and Thomas and another by governor Schwarzenegger, that suggest the need to be a bit more practical about the deadline. But the industry is taking the challenge saying, “We can’t depend on any more legislation coming out and saving us. Let’s just go ahead, do the right thing and get it done.”

PhM: What are the leading challenges for manufacturers, distributors and other partners in terms of data management, IT platform and technology selection?

A.B.: Across the board, most customers have the same challenges, whether they’re manufacturers or distributors. Distribution was somewhat covered in the Florida law that was enacted a few years ago. One might think that preparing for the Florida requirements would make it easer for distributors now. It hasn’t. In reality, no one has required serialization and pedigree to be there at the same time. . . . Customers are getting frustrated because many leading e-pedigree vendors have come into this area from the Florida side, and they address the e-pedigree problem without solving the serialization problem, which can result in a very difficult integration problem. We say that you can’t require a pedigree and serialization to be two different solutions. We try to integrate and offer one single out-of-the-box approach.

PhM: Will 2-D barcode or RFID ultimately prevail?

A.B.: That is the million dollar question. The answer changes each day, but everyone agrees that RFID is the long-term solution. It’s smart, but the cost of each chip, especially those with good read rates (99.9%) tend to be $1 to $1.50 per chip. That cost is still overly high. If costs are too high, generic manufacturers are out of the picture. . . . Even the top companies who have come on board saying that RFID’s the way to go are scaling back and rethinking—especially branded companies that are getting into generic brands to extend the life of a drug and value of a brand. Even after a brand goes to generic, there’s a way to sell it, but margins come down. Motivation thus becomes higher to use barcoding.

PhM: Do customers have to buy IT and hardware and other components separately and integrate themselves, or will you offer an integrated platform with other partners in serialization and pedigree?

A.B.: Our solutions will center around our Application Integration Architecture, which is being used as standard in Oracle products and to connect to non-Oracle products as well. By the time we release a product, we will also have all integrations built in . . . either by ourselves or partners.

PhM: How would costs for an individual e-pedigree project for Drug X be divided among supply chain partners—for example, manufacturers and distributors?

A.B.: Models for the U.S. and Europe and the rest of the world differ significantly. In the U.S., we have a business model where every company contracts individually. The cost for the manufacturer would be highest, but every one of them would have to invest in an e-pedigree system that they own, or integrate to one. In China and Europe, regulatory bodies take a more centralized approach, issuing a whole bunch of randomized serial numbers, ship preprinted labels off to them, to slap on existing bottles. We don’t expect that to happen in the U.S.

PhM: You mentioned the potential for serialization to slow manufacturing lines. What progress is being made in speeding up serialization to match the rates of filling?

A.B.: We’re seeing two different types of enabling technology take shape. On the packaging line level, the actual printing of the 2-D barcodes doesn’t take much more time than the printing of a very colorful label with carefully controlled art work. . . . so it doesn’t significantly decrease speed. . . . On the RFID side, they’re starting to do mass serialization, where it’s not done at the line level. You can take, say, five boxes, each holding 64 bottles, and move them to a standing area. . . . You can then have operators move to another staging area, and use a serial gun to program all the boxes at one time….It is not production ready yet, but we see that as the way to solve this problem for RFID chips. It’s not the chip providers that are working on this, but the gun providers.

PhM: When will Oracle be rolling out its e-pedigree solution, formally?

A.B.: We expect to launch the product by May or June of next year.

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