Lessons from an E-Pedigree Early Adopter

March 16, 2006
FFF’s Patrick Schmidt discusses the cutting edge of electronic pedigrees, and shares IT challenges and the benefits of leading rather than lagging.

FFF Enterprises (Temecula, Calif.) is not one of the big three drug distributors, but it has taken it upon itself to blaze a trail in supply chain security. It is an early adopter of electronic pedigree to document and monitor product exchanges within the supply chain, and has also taken a firm stand on cutting secondary wholesalers out of the distribution loop.

President and CEO Patrick Schmidt is in large part responsible for FFF’s progressive practices. In this exclusive interview, he shares secrets of success, and cautions those who would be laggards in incorporating e-pedigree. He also discusses technical details of incorporating e-pedigree solutions with an ERP, and how using a secured web portal for viewing pedigree information will save time and money.

PharmaManufacturing.com: You're an early adopter of e-pedigree. Are there risks associated with this?

Patrick Schmidt: The only risk is in failing to pursue a pedigree solution — with passion. Postponement of federal pedigree requirements has resulted in states intervening at their level; but the channel is national, risks to channel integrity cross state lines, and risks to patients persist across the country. Consequently, as a national distributor, we were compelled to take action. In fact, we first launched our Verified Electronic Pedigree (VEP) in 2004, and now we are upgrading it. VEP will meet requirements pending throughout the United States, and we will continue to update VEP to respond to any new requirements.

P.M.: Other distributors may be taking a "wait and see" approach until technology, standards and legislation mature. What's the danger in this?

P.S.: The danger in a “wait and see” approach is already being realized: Patients are harmed by counterfeit, tampered, diverted and mishandled pharmaceuticals; the industry is losing the public’s trust in the nation’s pharmaceutical supply; and industry members who are not implementing solutions are losing the opportunity to lead on this critical healthcare consumer safety issue. Waiting may save money in the short term, but it does not save lives.

P.M.: Among the many benefits of implementing e-pedigree (such as patient safety, compliance, channel integrity, channel optimization, competitive advantage), how do they rank? What's really driving you to implement a comprehensive e-pedigree system?

P.S.: FFF is dedicated to Guaranteed Channel Integrity, and our VEP validates our channel’s security. Guaranteed Channel Integrity means that we purchase product only from manufacturers and distribute only to healthcare providers, protecting patients from the risks inherent in the traditional U.S. pharmaceutical supply channel.

Although we are a for-profit corporation, we know from 18 years of success that conducting business with integrity — defining our channel with integrity — allows us to do the most good for the nation’s patients and to be the most successful. We have never handled a counterfeit product, and our manufacturing partners and healthcare customers value this. FFF’s integrity — and the resulting benefit to patients — is our competitive advantage.

P.M.: How much of a headache is the shifting legislative landscape for e-pedigrees? How are you handling this?

P.S.: Evolving legislative approaches to e-pedigrees are not much of a headache. We constantly track legislation in every state to assure we are aware of current and pending requirements. This information is translated into technical requirements for VEP.

P.M.: What limitations does the lack of electronic pedigree standards place upon you? What does EPCglobal need to recognize in considering standards?

P.S.: The lack of a national e-pedigree standard poses two key problems: One, it serves as an excuse for repeated postponement of implementing e-pedigree requirements at the state and federal levels; and, two, it forces those of us who choose to lead on this issue to assume greater financial risk than if the entire industry had been actively collaborating on a solution — as it should be.

EPCglobal, like many others, seems focused on RFID, the cost of which poses yet another challenge to fully implementing e-pedigrees throughout the channel. Additionally, without mandated funding for hardware at the lowest level and without adequate requirements to track pharmaceuticals that healthcare providers re-introduce to the channel, no e-pedigree system — RFID-based or otherwise — will successfully secure the channel. That is why FFF’s business model of purchasing only from manufacturers and distributing only to healthcare providers is our primary method of securing our channel. VEP serves to validate that our channel is indeed secure.

P.M.: What were challenges in implementing the SupplyScape e-pedigree solution? Was there significant cost or training involved?

P.S.: The primary challenge to implementing SupplyScape’s solution is crafting that solution in the void of an industry standard and despite the lack of commitment from the entire supply channel. However, the costs are insignificant compared to the risks of a vulnerable supply channel.

P.M.: How does the e-pedigree software from SupplyScape fit into your ERP (Movex, from Intentia)? What are the integration challenges? Is it easier with a smaller ERP vendor like Intentia than it would be with, say, SAP or Oracle?

P.S.: The integration challenges we faced with Movex are not too different from any other ERP in terms of modifications, and Intentia proved more than equal to the task due to the close working relationship between Intentia and FFF.

P.M.: How is e-pedigree data viewed within the ERP, and who does it? How is the data being managed, and then used to optimize channel processes?

P.S.: The details are proprietary information, but, in general terms, FFF implemented some modifications, with Intentia’s help, that our supply chain director thought appropriate to provide our customers and us better reporting granularity. SupplyScape also worked with FFF on documenting current “as-is” warehouse processes and then drafted “to-be” warehouse processes.

P.M.: I understand that you're using an ASP (Active Server Pages) web-secured portal model for your system (as opposed to HD Smith, which is managing its own data). What does this enable you to do? Why did you choose to go this route?

P.S.: An ASP model reduces the computer infrastructure and, potentially, the technical personnel we would need at FFF’s location if we were to host it here. SupplyScape’s hosting includes a data center with the latest in security and technical infrastructure protection that would otherwise require constant attention by the FFF IT department. So, availability and reliability, and ultimately cost reduction, are the attractive features of the ASP model.

P.M.: Besides Movex and SupplyScape's solution, what are the other key pieces to your supply chain IT puzzle? Are there pieces you are still looking to implement?

P.S.: FFF is pursuing an ongoing initiative to assess our business processes for optimization opportunities, as we continue our commitment to capture and report on customer touches. As we continue to grow, we will be implementing cost management and redundancy and reliability measures to assure we continue the highest level of customer care and services.

P.M.: Your system only purchases from manufacturers and ships only to healthcare providers. Theoretically, does greater channel integrity open the door to working with other wholesalers and distributors in the future, or is there just too great a risk from secondary wholesalers to consider this at the moment?

P.S.: Our model of purchasing only from the manufacturer and distributing only to healthcare providers is the only way to truly secure the channel. What our model does is open the door to other wholesalers and distributors to adopt this standard. Had this been the standard all along, pharmaceutical e-pedigrees would be simple, inexpensive and perhaps unnecessary.

About the Author

Paul Thomas | Managing Editor