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Countless Hollywood movies present the film’s heroes trapped in some dire circumstance, with hope fading, only to be saved by the arrival of reinforcements/allies/best buddies at the very end. Something of the same scenario is playing out with blockchain as a method of securing pharma supply chains. “Protecting the supply chain” is a stated goal of the US Drug Supply Chain Security Act (DSCSA), now five years old, and Falsified Medicines Directive (FMD) of the European Union. Both have near term deadlines; both have had delays in implementation; and both have significant obstacles to full implementation.

In the case of FMD, what looked like a streamlined “bookend” approach (authenticating product integrity at the beginning and end of the supply chain—manufacturer and dispenser—and gliding over the intermediaries) is showing unexpected complexity; only a handful of nations in the EU are ready for the February 2019 start date.

With DSCSA, the barcoding part is well along—a significant investment on the part of industry—but there are growing concerns over how serialized product data are to be shared and accessed. FDA hints at a central repository of all US information; industry is pushing for some type of “federated” system where each manufacturer’s data is accessible via some sort of switching point (the Origin database, proffered by the Healthcare Distribution Alliance, is a partial solution here).

Blockchain has been talked up for about two years now as a way to address the data-sharing issues, but the problem is that while technical issues are gradually being addressed, “governance”—who will manage such a network, and how parties can be explicitly included or excluded from the network—remains little more than a talking point.

A possible near-term outcome is for highly restricted blockchains to be set up around, say, a particular group of drugs, or a segment of the supply chain such as specialty pharmacies. We’ll be watching for such networks to arise, while keeping a (worried) eye on continued DSCSA and FMD progress.

Blockchain to  the rescue?

With the US and EU about to implement the next stage of their ‘track and trace’ legislation to combat illegal drugs in the pharmaceutical supply chain. Whether illegally diverted from the supply chain through theft or introduced into the supply chain via counterfeits, every company must prepare to ensure compliance. This is a challenge. It’s also a major opportunity. Artificial Intelligence (AI) will allow companies to use their ‘track and trace’ programs to deliver new levels of transparency and visibility to their supply chains.

Counterfeit goods are a major issue in every industry. Analyst firm PWC estimates that counterfeit products have cost almost $1.6 trillion in the 2010s, more than tripling from the decade before. With annual sales of over $1 trillion, prescription drugs lead the list of products counterfeited. [1]

The effects of these drugs can be devastating. It’s estimated that one million patients die each year through toxic or ineffective counterfeit product and that there are as many as 450,000 preventable malaria deaths annually from counterfeit pills.

No one in the life sciences industries is opposed to measures to help ensure the integrity of the pharmaceutical supply chain. Properly implemented, track and trace should provide a “virtuous cycle” that benefits government, the pharmaceutical companies and patients. If we can always prove that drugs are what they say they are then the entire industry can drive improvements in patient outcomes worldwide.

In November 2018, pharmaceutical manufacturers will need to deliver lot-level traceability with product serialization at an individual unit level to comply with the Drug Supply Security Act (DSCSA). Mandated details include product identifier, serial number, lot number and expiration date. By 2023, there must be complete product traceability from manufacturer to dispenser.

The EU Falsified Medicines Directive (EU FMD) brings similar track and trace requirements to all EU countries in 2019. This activity sits within a global environment where more than 40 countries already have or are implementing a track and trace regime.

The pharmaceutical sector is an increasingly global business. Pharmaceutical manufacturers have operations throughout the world. The production of drugs often involves processes taking place in multiple different locations. The shape and nature of the global pharmaceutical supply chain is changing. Contract manufacturers and contract packagers are becoming more prominent and the supply chain is based on collaboration rather than distribution.

The linear supply chain operation from manufacturer to patient is being replaced by a networked environment where supply chain partners work more closely together and role definitions blur (Fig. 1). For instance, major manufacturers are acting as distributors to other manufacturers in some territories and pharmacists are acting as wholesalers to other pharmacists where it makes sense.

Track and trace means that you need to know at a granular level exactly where the product is and the condition it’s in at every stage in the supply chain. It’s important to remember that track and trace is not just about product information. It’s also about supply chain information such as where it currently is, where it’s going and when it’s likely to get there. Ideally, this is best served by transparency between supply chain partners and visibility – for both the manufacturer and for government – across the entire supply chain.

Supply chain visibility is not something that the pharmaceutical industry has been traditionally good at, but it is now a necessary component of whatever track and trace solution that a company implements to comply with global regulations. It is also the basis for improving supply chain operations is areas such as sales and demand forecasting, inventory management, supplier performance management and business continuity.

This drive for supply chain visibility is implicit in, at least, the US DSCSA legislation. Commenting recently on how the legislation enhances drug distribution security, the FDA’s Commissioner, Scott Gottlieb said: “We want to create a system that flags illegitimate drugs in the supply chain…A fully digitized supply chain can also help develop predictive analytics to reduce healthcare fraud, waste and abuse. It can allow regulated industry and regulators to more easily manage and avoid the costly or dangerous supply disruptions.” [2]

Achieving Gottlieb’s goals requires the application of new technologies such as artificial intelligence and analytics. Stephen Meyer, research director, life sciences at Gartner Group recently told Supply Chain Dive that, for Pharmaceutical supply chain managers, “visibility is hands down the biggest challenge and the one most likely to be solved with technology.” For Meyer, technologies such as AI and blockchain can help automate, sort and analyze the data needed to deliver visibility and improve supply chain security. [3]

Of course, track and trace is hardly a new concept. Pharmaceutical companies have been tracking product through their supply chains for years but this is often manual or spreadsheet-based. Where business has been conducted digitally, the files exchanged have been transactional in nature and have not allowed for anything to be tracked. There has been no way to analyze that supply chain data to address any of the counterfeiting, diversion or supply chain performance issues that companies are faced with.

The track and trace legislation forces every company to address this situation. The first step is to realize that you are not just handling the product, you’re handling the product data. To move any product along the supply chain means accommodating a complex set of requirements on how data is created, managed, stored and accessed as the product passes from manufacturer to patient – and you have to be able to do this at scale.

There’s often a range of unintended consequences that fall out of government regulation. In this case, it’s the sheer volume of data that a track and trace solution creates in the supply chain. It’s highly unlikely that those regulators that created the legislation had a clear understanding of the huge data sets, transaction volumes or network interaction required for effective track and trace compliance.

Nor could they foresee the way that technologies advance to meet business requirements. For example, chemical taggants are being used to protect both the product and the packaging. Smart labels are appearing that enable much more information to be added above the identifiers – such as prescribing guidance or adverse side effects.

The result of which is that the track and trace solution must be able to accommodate not just the volume of data but also the variety – both structured data, such as label information, and unstructured data, such as adverse side effects.

With this Big Data challenge, effective compliance with track and trace regulations will be difficult to achieve through existing infrastructure and approaches. The pharmaceutical industry is no different than any others in that it has built up silos of information in its ERP, MES and warehouse management systems. Customization of these systems is unlikely to work and will prove challenging to maintain as regulatory requirements change of over time.

In addition, the levels of supply chain visibility required for track and trace need high levels of collaboration and data exchange between supply chain partners. In an industry that jealously guards its data for competitive advantage, the track and trace solution needs to find a way to make the right data available in a way that can be accessed in a secure way that doesn’t add risk to intellectual property.

The answer is likely to be a track and trace solution that’s based around an enterprise data management platform that can contain all the relevant data and enable secure access across the supply chain – and for regulators if required.

The platform can deliver the end-to-end visibility required. In fact, OpenText operates the world’s largest business network with over $7 trillion dollars of business transacted each year. It enables the automated processing of key business documents and transactions between trading partners. [4]

The interesting point is that, often, companies on our business network use it to analyze elements of their business as the network is the place where they can gain the visibility into their transaction. It’s a good example of how a global data management platform facilitates the use of AI to deploy the predictive analytics necessary to achieve supply chain improvements.

AI: Driving the business benefits of track and trace

While it’s difficult to find research into the specific benefits that an effective track and trace solution can bring, a McKinsey report from 2012 [5] estimated that a pharmaceutical manufacturer with 25 packaging lines and $4 billion in revenues could see the following benefits from track and trace:

$11 million/year from reduced inventory financing and holding

$25-35 million/year from reduced loss to counterfeiting

These are benefits that supply chain managers wish to achieve from their track and trace programs. PWC found that 80% of companies expected an anti-counterfeiting solution to offer additional capabilities beyond pure brand protection. The same capabilities that achieve counterfeit detection can also drive supply chain efficiencies.

A new generation of AI-powered analytics can help transform the pharmaceutical supply chain by processing the vast amounts of data within your track and trace solution. As Figure 2 shows, the top use case for AI technologies are predictive analytics and simulation/modelling both of which are critical not only to manage risk and product quality but also harmonize and optimize supply chain management.

The challenges are evaluating and classifying structured/unstructured data to automate and refine processes. Together with an enterprise data management platform, AI-powered analytics can help companies use track and trace data to make information supply chain decisions while facilitating real-time data availability across the supply chain. It enables you to blend your track and trace data with data from a wide range of sources including the enterprise applications of organizational ecosystem, social media, weather conditions, traffic patterns, disease incidences and the like.

Life Sciences companies are increasingly involved in extended partner ecosystems, working closely with CROs, suppliers, customers, academic bodies and regulators. Managing the supply chain becomes more important as companies rely more heavily on—and spend more with—a wide range of suppliers. AI-powered analytics can help improve supply chain automation and visibility. It allows for real-time management of supplier relationships and performance, as well as improved contingency planning and business continuity. It can use a combination of internal and external data to help reduce unforeseen shortages and supply chain disruptions affecting customer service levels and sales revenues. By breaking down information silos and providing “good data” for analysis, AI can help apply actionable insight to all supply chain processes, such as forecasting, inventory management, procurement automation and production optimization.

Within the next few years, over three quarters of all the world’s prescription medications will be protected by legislation. While some companies are taking a wait-and-see approach to how the legislation develops, it is more sensible to begin to build a digital track and trace platform that can be amended to support the global regulations that affect your business. This platform will allow you to apply AI-powered analytics to improve the ability to protect against counterfeit drugs as well as provide a basis for the supply chain visibility needed to transform supply chain operations.

https://www.strategyand.pwc.com/reports/counterfeit-pharmaceuticals

https://www.fda.gov/NewsEvents/Speeches/ucm598719.htm

https://www.supplychaindive.com/news/drug-supply-chain-technology/521857/

https://www.opentext.com/what-we-do/products/business-network

https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/operations/pdfs/ops_%20%20mck%20white%20paper%20global%20standards%20vf.ashx

Based in DC, Jaleel is the Life Sciences Industry Strategist at OpenText with over 25 years of experience working with and for a diverse set of global organizations in life sciences, healthcare, academia and government. Jaleel is a Six Sigma Green Belt, and a member of the DIA, ISPE, and RAPS. He earned his BS in Biology from Tufts University and MBA from University of New Haven.

Big Data and AI will bring value beyond compliance

How tackling counterfeit drugs will drive improvements in the pharma supply chain

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EU requirements for protecting medicines against counterfeiting will become mandatory in February 2019. Consequently, pharmaceutical manufacturers are preparing to meet these demands with 2D identification codes and sealing of their sales packs. However, they should be aware that this measure alone will not guarantee a product’s integrity or authenticity. Only the combination with additional counterfeit-proof authenticity features can offer a comprehensive approach against fraud, misuse and tampering. Customized multi-level security concepts, including analog as well as digital features like NFC (Near Field Communication) ensure that all stakeholders, if informed expert or end user, can be involved in the authentication process.

By means of EU Directive 2011/62/EC, the so-called Falsified Medicine Directive (FMD), legislators and pharmaceutical manufacturers intend to safeguard the supply chain in Europe. Effective February 9, 2019, every manufacturer must provide most of the prescription medicine packs (exceptions on white list) and a selection of high risk non-prescription packs (on black list) with an individual serial number in the form of a 2D code (DataMatrix) and a tamper protection feature. Thus, patients shall be protected against falsified medicines. As the requirements set out in the valid version have been known since October 2, 2015, the roadmap for those who need to take action is clear. The level of the counterfeiting risk determines whether or not a medicine has to be provided with these security features.

The Drug Supply Chain Security Act (DSCSA) mandates the development and implementation of standards for drug product tracing, to be phased in by 2023. A tamper-verification feature is not part of the DSCSA. In terms of physical packaging, the FMD and the DSCSA do differ in many details besides this. Since the demanded safety features were released, it seems that tamper-verification measures in general gained attention with respect to the value they provide to secure a product´s integrity and the manufacturer’s brand.

Serialization by means of 2D codes, as required by the EU Directive, opens up additional opportunities to the industry. It controls internal logistics processes more efficiently and offers clear identification of every individual medicine pack. However, further actions are necessary to convert an easy-to-copy serialization code into an authenticity feature for effective verification. Deep industry knowledge combined with specialized know-how in materials and printing technologies are prerequisites for developing tamper protection and anti-counterfeiting solutions for the pharmaceutical industry.

Effective security solutions for diverse threat scenarios can be divided into three categories:

A label may clearly indicate first-opening and tampering.

Integrated technologies of various security and detection levels provide effective protection against counterfeiting.

Track & trace system solutions serve to identify and trace products, and thus indicate gray market activities.

All functional components can be customized and combined with each other. This results in complex security labels that effectively put a stop to the counterfeiters’ game and offer a wide range of added value to the pharmaceutical company.

Overt features enable fast authentication by sellers, pharmacists and consumers without any extra tools. Optically variable holograms, for instance, are based on microscopically small, diffractive structures in the film layers, which make the feature unique and thus achieve a high level of counterfeiting protection. Pharmaceutical manufacturers increasingly complement this feature by security color-shifting inks. Providers of professional solutions rely on specialty inks that may only be used by security printing companies. Manufacturers achieve a particularly high protection level by combining these color effects with special printing techniques, “latent images” or thermo-reactive inks.

Ideally, holistic counterfeiting protection should always consist of a combination of overt security features with digital and covert technologies.

Covert features are especially important for checking suspect products, for complaints and final legal proof. For this purpose, manufacturers integrate special molecules and pigments into the packaging or label. Only a special detector can prove the presence of these pigments during authentication. These robust and colorless markers can be invisibly incorporated into any design and implemented using diverse techniques. A customized formulation with an invisible “fingerprint” represents the highest level of counterfeiting protection, as it can neither be seen, copied nor re-engineered.

Digital security features use computer-generated and highly encrypted encodings as human-readable numbers, 2D codes or special random patterns to enable internet-based authentication in the pharmaceutical supply chain all the way to the end user. In addition, digital technologies offer direct interaction between the product and the person performing the check, and can thus serve to provide information and to support promotional activities.

However, due to the possibility of copying them, numbers and encodings alone are not counterfeit-proof. Companies should therefore always combine them with additional features. Copy protection patterns, for instance, provide clear proof of authenticity with a high-resolution, cloud-like printed image.

Smart E-Labels: Digital Authentication Made Easy

In the context of digital security features, there is another innovative technology that can help monitor the pharmaceutical supply chain and – just as importantly –enhance patient safety. Labels with integrated Near-Field Communication (NFC) technology that allow digital data to be read out contactless using a smartphone. Due to their thin and flexible structure, the labels with integrated NFC chips can be easily applied to primary containers during production and open up a wide range of applications for pharmaceutical companies, such as counterfeiting protection, interaction with patients and lock-and-key applications.

The solutions using an e-label as protection against counterfeiting attempts are as varied as the threat scenarios -- they range from online, offline verification, password protection and signatures to encryption techniques. Manufacturers benefit from the widespread use of NFC-enabled smartphones, in which corresponding readers are already integrated to read the data. Up to now, the use of NFC readers was primarily limited to the Android operating system, but recently Apple’s iOS has been provided with NFC label reading capability as well. Thus, every stakeholder involved in the process is able to perform reliable and easy authentication. In addition, data can be fed back to the pharmaceutical manufacturer during authentication. This provides the manufacturer with important information, for instance, to monitor the supply chain and to clarify possible gray market activities.

In addition to authentication, the patient can obtain further information and assistance when using these e-labels. The data can either be stored directly on the NFC chip or retrieved via the internet. Thus, the patient as well as healthcare professionals, for instance, gain easy and interactive access to important information about their medicine, such as clear identification of the medication, its expiration date as well as product or warning messages. Furthermore, a respective NFC label can assist with difficult handling by enabling the manufacturer to store explanatory videos or audio files showing how to correctly use the product.

However, the possible uses of NFC labels are not limited to smartphone-based authentication by the user. A medicine marked with an NFC label can also interact with respective medical devices in the sense of lock-and-key applications. In the case of medicines, the medical device, such as an infusion pump, reads the data stored on the NFC chip. Initially, authenticity and shelf life of the medicine are checked and subsequently, the information transmitted by the chip assumes control of the device. Thus, administration of counterfeit or wrong medicines can be prevented and dosage errors avoided. In addition, the programming of the NFC chip in the label prevents reuse and thus misuse of the original container.

The requirements of the EU Directive to enhance the security of medicine packs meet with proven technologies on the manufacturers’ side. An analysis of the threat scenario and the product to be protected, as well as the development of an appropriately adapted security strategy, provide an important basis for selecting the security technology best suited for the respective task. However, the subsequent qualification and implementation process should not be underestimated. In addition to the high complexity involved in the system integration of code printing, checking and acquisition, administration and transfer to a database, solution providers have to rely on established know-how of integrating anti-counterfeiting and tamper protection. The experts not only consider the technical requirements and the particularly high quality criteria of the pharmaceutical industry, but also the demands made on security manufacturing, warehousing and distribution. Tamper protection and anti-counterfeiting measures are tasks requiring comprehensive, in-depth security management. Thus, effective measures to protect products against counterfeiting should always be based on a holistic approach to product and patient safety.

Nadine Lampka is Product Manager Pharma-Security at Schreiner MediPharm, a business unit of Schreiner Group based in Oberschleissheim near Munich in Germany. Schreiner MediPharm develops and produces innovative, multi-functional specialty labels with value-added benefits for the pharmaceutical industry. Nadine is in charge of defining business development strategies as well as managing the product portfolio which covers complete security systems.

Arne Rehm is Product Manager RFID/NFC Solutions at Schreiner MediPharm. He is in charge of developing new markets and smart solutions for diverse applications in pharmaceuticals and medical devices.

Counterfeiting protection for medicines: Overt, covert and e-labels

Optel Vision—now Optel Group—has been a leader in developing the machine vision systems integral to the labeling and inspection processes on pharma packaging lines, a business it has focused on for over a decade. In fact, the company traces its roots back to the late 1980s, when company president Louis Roy graduated from engineering school, with a goal of applying automation technology to solve manufacturing problems. Fast forward to 2017, and the company is now going beyond the pharma traceability topic that has been its bread and butter. It is now positioning itself to developing “intelligent supply chains” for all parts of healthcare (pharma, medical device and health systems) as well as agro-food businesses and other consumer goods. An acquisition was made last year for an enterprise-level traceability software platform (Verify Brand) and, in February, a geomatics company (GeoTraceability) that specializes in traceability tied to geolocation. Once brought together, Optel Group will have the potential to provide traceability from raw materials (food, APIs, medical components) through the manufacturing processes, and on to the consumer.

That goal might be getting ahead of Optel’s industry clients, but according to Roy, that’s just fine. “We are on a mission,” he says, “to solve society’s problems.” These problems include: the patient risks of counterfeit medicines; the waste in pharma and medical device supply chains; and the overall goal of sustainable economic activity in the face of climate change. To these ends, Optel has gone through the evaluation process of becoming a “certified B corporation.” (B Lab, which runs a certification process, is a global nonprofit founded in 2006, with the trademark ed slogan of “people using business as a force for good.” Nearly 1,000 companies had passed the fairly rigorous certification process in 2014, according to B Lab data on its website.) Roy says that Optel’s commitment is to its customers, its employees, and to future generations.

An indirect validation of this comprehensive approach can be seen from Optel’s leadership in the Canadian government’s Innovation SuperCluster Initiative, under which public and private funding will support the AI-Powered Supply Chain Consortium, in which Optel joins with 120 other Canadian companies to support R&D in this area.

 sat down with Mr Roy recently; here’s what he had to say.

How did Optel start, and what was it doing in its early days

I founded the company in 1989 at the end of my engineering education, after I had had a great introduction to computers, industrial automation and artificial intelligence. I had a goal at that time of using the technology I had learned to make a difference in our society. In our early days, we went from one manufacturer to another, asking “What can we do for you?” We were involved in a number of interesting projects over the next ten or so years, and then in the mid-2000s decided to focus on the pharma supply chain. This is around 2007-8, when the US pharma industry was dealing with the California e-pedigree legislation.

With our focus on automation and vision systems, we saw that we were the most high-tech components on a pharmaceutical packaging line, and so we felt it was our natural place to develop the traceability technology that is now being installed around the world. “Traceability” means, being able to generate and gather data, and then using mathematics to do something useful with it. The near-term goal is compliance with the laws we have now—the Drug Supply Chain Security Act or the Falsified Medicines Directive in Europe, or the other regulations around the world—but the goal should be to go beyond compliance to connecting with the consumer.

In the mid-2000s, with some decidedly energetic pushing from FDA, the US pharma supply chain was looking closely at the adoption of RFID technology, which complements or even supersedes barcode technology. Did Optel engage with this technology? Are you looking at it now as some pharma applications of it still exist?

I was a skeptic at that time, and I still am about the usefulness of RFID. We did a pilot with the technology around then, and it was very easy in the case of plastic bottles with RFID tags on them. The pilot even included aggregation (gathering item data into packaging cases, and then the case data into pallets.) But the presence of water or metal interferes with RFID signals, and between the price of the tags, and the physical difficulties of penetrating fluids or metals to read a tag in the middle of a pallet, RFID is not there yet, and unless there’s some new physics, it will not be there later.

For the traceability implementations going on now, Optel puts an emphasis on its own engineering teams to install and start up a system. Why do you think this makes a difference in the market?

When we started developing manufacturing automation systems, we did things like making our own printed-circuit boards. But we quickly learned that it made more sense to acquire components like cameras, computers and printers from companies that specialize in those technologies, and to specialize ourselves in integrating the systems into manufacturing.

For many years now we have been building and implementing our own systems. It has been important for us to spend a lot of time on the factory floor with customers, to learn what their inventory management problems are and to advance our technology. Serialization and traceability technology has matured in recent years; now the value is in the network that can be created across a supply chain. As a result, we are more open to partnering with systems integrators and other technology partners.

Recently, Optel has extended its scope into Level 4 traceability with the acquisition of Verify Brand. Does the “one-stop shop” aspect of this decision make a difference to customers, some of whom prefer a “best of breed” approach to assembling their overall solution?

There is the marketing position of being a “one-stop shop” to solve a client’s problems, and I understand that position. Verify Brand stands out as a serialization platform that reaches all the way to the consumer.

However, there is a much bigger goal that we are after. Even today, pharma supply chains are insecure, prone to creating waste, and highly inefficient. It’s ridiculous, in my opinion, to see what the industry goes through for a product recall, because they cannot track their products all the way through the supply chain. People die from counterfeit drugs because the supply chain security is weak. The last-mile problem in today’s supply chains is a nightmare, destroying much of the value of all the work being done on traceability on the manufacturing side.

For the past two years, I took a step back to look at our business, which is currently about establishing compliance with the national laws around the world. That’s important, but it is only a part of the solution. Even in Europe with the FMD regulations, it’s just an aspect of the supply chain; it doesn’t extend to the patient. Overall, in the context of how Optel can create positive impact on society, we have a vision that we need to connect to people. In the next 10 years, we will see a convergence of supply chains, running from raw materials, through manufacturing and production, and on to the consumer.

Our goal is to optimize the supply chain, and with a connection direct to the consumer. No one on the market is doing that now; everyone is focused on compliance and brand protection. We have a clear vision to create added value for our clients. You can’t really do supply chain optimization if your network is only part of the supply chain, and we think serialization is the key to allow optimization of all process both inside and outside of manufacturing. We’re the only vendor doing that.

oes the same logic apply to the acquisition of Geotraceability, which tracks raw materials like food and natural resources from their source?

Geotraceability currently operates in agriculture and food, and so for us this represents a new market opportunity. I have structured Optel internally so that there are dedicated pharma teams and food teams, so the pharma industry doesn’t have to worry about divided attention from us. But it’s interesting to realize that supply chains in these two industries have many similarities. Food starts with agriculture and minerals, and pharma APIs start with many of the same suppliers. On the consumer side, there are many of the same customers—Walmart, for example, sells food and sells pharmaceuticals. The only divergence is in the middle with manufacturing and processing. Optel’s goal is a data-driven, optimized, intelligent supply chain, and that is only possible when the supply chain network is fully integrated.

Finally, Optel has made a substantial effort in the direction of sustainability and social responsibility. Optel is one of the few companies in the pharma traceability arena that is a designated “B” corporation. Why is this important to Optel, and—more importantly—what does it mean for Optel customers?

As I’ve said, our focus on social good has been there since the beginning. Today, there’s a trend: we’ve started noticing that competitors are using the same language as we do to talk about social responsibility. We’re hearing about companies treating their employees with respect, and about respect for the environment. I like that! A lot of this is based simply on trust: building trust is something no one can be against.

Our approach carries over to other actions where we have taken a leadership role. Optel was instrumental in starting the Open SCS Consortium, which is something that will benefit everyone involved in pharma supply chain traceability [Ed. note: Open SCS is an effort of leading vendors to agree on standards for various types of traceability communications and connectivity, thus reducing the amount of customization that traceability implementations require.]

Socially responsible business practices are critical to our future.

Traceability will lead to better pharma supply chains and ultimately, a better social environment

A Conversation with Louis Roy, Optel Group

The modernization of the US drug supply chain is now halfway through the timeline set by the Drug Supply Chain Security Act (DSCSA): it’s been five years since the law was passed, and in five years (if all goes according to plan) it will be (mostly) fully functional in 2023.

A ten-year implementation plan for a federal program is an unusually long gestation; the Prescription Drug User Act (PDUFA), the program that organizes the payments industry makes to FDA for drug review, is a law with a roughly comparable impact on industry practices; it has a five-year span and gets Congressional reauthorization at the end of each period.

Ever since DSCSA was passed in 2013, there has been offline jawboning that the law might be delayed indefinitely into the future, or done away with as part of a Trump Administration “deregulation” action. So, there’s large reassurance in FDA Administrator Scott Gottlieb’s opening address, at an FDA public hearing in February:

FDA and stakeholders have been working collaboratively toward full implementation of the Drug Supply Chain Security Act in 2023. Reaching that milestone, on time, is a high priority for us … I know that reaching true interoperability for systems and processes that can produce full information for each transaction going back to the manufacturer – down to the individual package level, in near real time – is challenging.

… Seamless state-of-the-art security throughout the supply chain must be our shared goal.

He even looked ahead to the post-2023 scenario:

A fully digitized supply chain can also help develop predictive analytics to reduce health care fraud, waste, and abuse. It can allow regulated industry and regulators to more easily manage or avoid costly or dangerous supply disruptions. It can help support innovative manufacturing and distribution technologies at a time when the drugs being developed are becoming increasingly tailored to specific patient populations.

Gottlieb is setting a high bar; there is evidence that industry is having a difficult time achieving it. A 2016 survey of 67 suppliers (i.e., pharma manufacturers) by the Healthcare Distribution Alliance found that about 51% of them expected to be ready for providing serialized product by November 2018 (this was at a time when the official deadline was November 2017)—which implies that 49% would not.

In Europe, operating under the EU’s Falsified Medicines Directive, the picture looks worse. A February 2019 deadline for providing serialized data won’t even see most EU members having a national system in place. “Connecting to national traceability systems has proven to be more complex than originally planned,” says Mark Davison, sr. operations director for Europe at rfXcel, one of the software vendors in the field. “And the problems we see now are only part of what we’ll see next February.” Some 40 other countries around the world, including China and India, major suppliers to the rest of the world, have implementation schedules falling in the next few years.

Under FMD, an “EU hub” has been set up, and companies distributing into EU member countries are supposed to file their product serial data with that hub, which in turn directs it to national hubs. Local pharmacies in each country are then supposed to verify product against this national hub. According to sources, six or seven EU countries have their national system in place as of late spring; and among manufacturers, repackagers, and some distributors (who have partial responsibilities to reporting data), readiness is spotty.

For the past three years, the bulk of spending on pharma traceability has been by manufacturers and contract packagers, installing machine vision systems, barcode printers and varying degrees of automation for case packing and palletizing. Packaging equipment vendors have responded with a growing variety of flexible machines, especially to handle both automated, semi-automated and manual case-packing. The argument over aggregation—the need for a shipper to provide 100% accurate linking of the serial codes within a case, to the serial code of the case itself—seems to be settling down, since most companies agree that it is more economical to include aggregation as part of a packaging line serialization project. (Aggregation is not a requirement of DSCSA; however, the leading US wholesalers make delivering aggregated cases a requirement, since otherwise they would have to open each case and visually inspect the contents, which could slow down product movement considerably.)

No machine-vision or barcode-printing vendor will admit to problems with barcode print quality (which could affect product acceptance by trading partners); however, industry surveys by HDA and others point to nagging inconsistencies in this area, including printing the wrong information or in the wrong location. These problems are expected to clear up quickly.

Contract packagers have an added burden in traceability: dealing with the variety of technology and business-practice policies of multiple clients. Robert Madden, Global Serialisation Operational Manager at Almac Group (which has operations in both the US and Europe), says that “Some clients have a defined serialization strategy, some want to send Almac serial numbers and then others want Almac to guide them on the best approach.” The company goes through a seven-step process (including carton artwork and labels) to arrive at a project plan, and then executes. Almac chose Optel Vision packaging line equipment and its Level 3 SiteMaster software, with the intention that SiteMaster would then report data back to the client’s Level 4 system.

A crucial component of a comprehensive traceability solution is the Level 4 software—the point at which serial data from multiple packaging lines within an organization is brought together, to report out to trading partners (in the US) or governments (in the EU and elsewhere). Here, there have been notable developments over the past 12 months:

Frequentz, a company whose software goes back to a major effort by IBM in the mid-2000s, was acquired by rfXcel; Mark Davison says that the company will continue to support the software among its users for the near term, while gradually migrating them over to rfXcel’s flagship platform, rfXcel Traceability. This spring, the company was honored by HDA in its annual Distribution Management Award. The company was also a merit finalist for an Environmental Monitoring module which, as part of a traceability system, tracked temperature and other conditions during drug shipments.

Optel Vision (now Optel Group), a leading vendor of machine vision systems for pharma traceability, acquired two software companies—Verify Brand, a Level 1-4 vendor, and Geotraceability, a “geomatics” vendor that tracks products in agriculture or natural resources from the field to the factory. The acquisitions are part of Optel’s vision for a true end-to-end traceability solution (i.e., from raw materials through to the consumer). (See Louis Roy profile, p. 10.) Verify Brand, which has a handful of existing customers in life sciences, is notable for handling a consumer-awards program for a major beverage and food retailer, thus demonstrating this consumer touchpoint.

Adents, a French firm with long experience in product serialization, has stepped up as the first (and so far, only) Level 4 vendor to have a certified data-exchange interface with Origin, the master-data repository created by HDA, for product data. The intent of Origin is to provide a common repository that will direct wholesalers and other trading partners to where pharma products entered the supply chain, which HDA member wholesalers are eager to establish in order to manage product returns come November 2019, when these returns need to be verified. Adents solution users will thus have a streamlined link to Origin. The action is all the more notable for its contrast to TraceLink, which sued HDA for assumed antitrust violations late last year, then promptly dropped the lawsuit in February. Also, while TraceLink is closely aligned with Amazon Web Services (and cloud computing tools available there), Adents is aligned with the Microsoft Azure cloud platform.

Antares Vision, another leading machine-vision vendor, has launched its own Level 4 solution, ATSFour, which Adriano Fusco, business development director, says was entirely home-grown, and is closely coupled to the software Antares has been providing for its machine-vision and packaging equipment. The software is available as an on-premises or single-tenant cloud application (more on this later), and the cloud-based version makes use of the latest “graph database” technology, an advance over traditional relational databases.

How about a free traceability solution? Vantage Consulting (New York), an IT systems-integration house, used its booth at this year’s Interphex meeting (New York; April 17-19) to announce collaboration with an open-source, volunteer effort to build a traceability system called Qu4rtet. The intent is to provide a modularized system, so that some components (such as random-number generation) can be attached in other traceability implementations. The developers share their work at a site called Serial-Lab.com, and the software itself is available at a related developers’ site, gitlab.com. Vantage—which does implementations and does not sell software, is collaborating in the effort, and has hopes of being hired to implement the software for clients, according to John Jordon, president.

TraceLink, generally regarded as the largest Level 4 software developer, is emphatically not giving its software away; the company says that revenue in 2017 was up 85% over 2016, with 775 customers globally (including more than 180 who themselves serialize product; the others are presumably trading partners managing serial number data), and some 265,000 other companies have signed on to have accounts within the TraceLink Cloud.

TraceLink pioneered the use of multi-tenant architecture in pharma traceability, and may be the only company still to use that form of cloud computing (many other vendors have single-tenant systems; the difference is that single-tenant systems require each client to have its own “instance” of the software, while TraceLink essentially runs one instance for the world). Surprisingly, although much of the corporate world (including IT systems for pharma R&D, managing sales and marketing activities and other functions) is using multi-tenant cloud systems, there is still resistance among manufacturing IT managers, and on-premises implementations are still being performed.

The advantage of a multi-tenant architecture is that the provider can do one upgrade that is propagated throughout the user base—which should translate into lower maintenance cost and less of an IT burden across the board. There was considerable buzz earlier this year when a scheduled TraceLink update caused systems to be temporarily knocked offline. “This year, we’ve gone to a very programmatic update schedule, with defined release dates that are very predictable,” says Brian Daleiden, VP at the firm. There were “unexpected things” in the problem update, which were corrected as quickly as possible. And while no customer data was lost, he says, “we took some heat from customers, as we should.” Going forward, the company recognizes its “mission critical” role in pharma production and distribution, and while TraceLink competitors heaped scorn on the company, no one is tracking production hitches at single-tenant or on-prem implementations.

To some degree, with the proliferation of Level 4 vendors (see the Supplier Directory on pp. 32-33), and the maturation of the technology, traceability software is becoming harder to differentiate. This also shows up in the fact that vendors are now openly competing on price. Gurpreet Singh, head of sales at Arvato Systems North America, notes that many traceability vendors have a usage charge, based on how many serial numbers are being managed, in addition to whatever subscription or site-license charge there might be—and then put another charge, based on transactions, on top of the first two. “Arvato only charges for serial number usage once,” he says. Arvato is the provider of the Corporate Serialization Database (CSDB); the system is a part of the SecurPharm hub, Germany’s national hub under FMD, and has multiple manufacturing or distribution clients as well.

As packaging lines are being geared up for DSCSA compliance, some industry attention is shifting to what happens in their own warehouses and at third-party logistics providers (3PLs), who might be the next physical step in the supply chain for product movement. It is now recognized by some manufacturers that aggregation can be better carried out in the warehouse, as orders are put together for shipment, than at the end of a packaging line, says Matt Deep, VP of technology at DMLogic, an “edge computing” vendor for traceability. Such edge systems manage serial data being collected (for example) by handheld scanners at the receiving dock, then track where in the warehouse those packages or cases have been positioned, and finally which serial numbers are going out with customer orders.

TraceLink, presumably recognizing this next step in traceability, acquired Roc-IT Solutions, another edge computing vendor, in the past year. Other players in the field, including TrackTraceRx, Antares Vision and Systech also provide this functionality.

“Most large pharma companies have full-fledged warehouse management systems, but those systems typically haven’t been tailored to the needs of pharma traceability,” says Deep, “and that’s where we come in.”

3PL connectivity is an issue in Europe where, nominally, logistics providers are not part of the overall FMD reporting framework—but there are exceptions, and now some European 3PLs are scrambling to get ready. In the US, DSCSA brought 3PLs under FDA oversight for the first time, and the complication here is that FDA requests details on the state-level licensure of the 3PL—but only a few states have set up a licensing program for them. “Another complication is that a 3PL operating in one state without a licensing program might be required to obtain a license for shipping to another state that does have such a program,” notes Bob Glasgow, a principal at D2 Consulting, which provides services on pharma commercialization and licensing programs for manufacturers, pharmacies and others in the supply chain. This was recognized by FDA Administrator Gottlieb in his February presentation: “We plan to release new regulations that, when final, will apply to all state and federal licenses issued to wholesale distributors and 3PLs. We’re working to publish these regulations later this year.”

Wholesalers, at least in the US, have a nearer-term worry than pharmacies and other downstream supply-chain participants: in November 2019, DSCSA requires them to be able to verify product returns at their warehouses before re-entering them into commercial distribution.

HDA surveys have found that 94% of returns can be re-introduced; that returns are a multi-billion-dollar value to healthcare, and that processing them is a multi-million-dollar burden for each of the major wholesalers. The November 2019 deadline is part of what spurred HDA to take the lead in developing the Origin master-data repository, and this year, to push ahead with the so-called Verification Router Service (VRS), which is intended to be a many-to-one source of which manufacturers are responsible for which product identities (since, much of the time, wholesalers get returns from products that they themselves did not deliver to a pharmacy, and need to locate the product’s origin).

HDA hired ValueCentric to build and operate Origin; the company has long experience in managing supply chain data. Bill Henderson, EVP, says that signups for Origin by manufacturers had slowed down after the FDA regulatory delay last year, but are picking up now. ValueCentric currently has business with some manufacturers to track specialty drugs going to specialty pharmacies (which usually involves a distribution step known as “drop shipments,” where the physical destination of the drug is different from the location of the drug’s owner) – and this experience could benefit industry in the overall transition to DSCSA-compliant tracking.

Perry Fri, HDA’s EVP, industry relations, says that about 20 pharma and distribution companies have signed on for a series of VRS pilots to run this summer. Results will be discussed at the organization’s Traceability Seminar in October.

Much of the intent of traceability regulations is to prevent counterfeits entering regular supply chains, or to address diversion. But all along, cargo theft or diversion represents a comparable risk. HDA has addressed this in the past year in part by taking on management of the Pharmaceutical Cargo Security Coalition, which had been an all-volunteer effort since 2010 led by Chuck Forsaith, who is now a senior director at HDA. At its spring 2018 meeting (the first under HDA management), attendees heard data from, among others, Sensiguard (a service of Sensitech), that full-truckload pharmaceutical thefts dominate among the range of possible categories (including pilferage, facility theft and others); and from BSI, that the five top countries for pharma cargo hijackings were 1) Brazil, 2) Mexico, 3) the US, 4) Italy and 5) Argentina. (Ironically, just before the PCSC meeting got underway, a full-truckload theft was reported in Cornersville, TN, and valued at nearly $1 million, according to Forsaith.)

PCSC attendees also heard from Barry Conlon, former CEO of FreightWatch, and now founder of a new company, OverHaul, which he says represents the next generation in cargo monitoring. “There are usually four points of digital contact with a tractor-trailer on the road: the driver, the truck, the trailer and the cargo. We connect all four for continuous monitoring in real time, and use business-intelligence rules to prevent thefts rather than account for thefts that have already occurred.” Shippers (including pharma logistics managers themselves) can take advantage of the proliferation of digital devices, telematics and sensors now in use (plus the smartphone the driver usually has)—and to connect the trucker’s activities with other parts of the supply chain to create a tailored network. “It’s better and cheaper than existing monitoring services—and that’s a winning combination,” says Conlon.

It is known that some manufacturers employ anti-counterfeiting or product-authentication technologies on their packages, but confirming that is difficult simply because these techniques are mostly covert. Also, many manufacturers are figuring that their serialization investments will protect against all but a few counterfeiting efforts, further reducing the already-low figures for the US supply chain.

Nevertheless, some traceability vendors are extending their offerings to include product authentication. Notable efforts include Systech’s proprietary UniSecure technology, StellaGuard from Covectra, and Alpvision—each of these employs optical verification of the as-is label. TruTag has been promoting a taggant based on nanoporous silica, which can be used either on packaging or as an on-dose excipient; the material is now being used to mark dietary supplements. Another taggant-based technology, from Applied DNA Sciences, involves synthesized DNA strands; in the past year, Applied DNA has announced collaborations with Videojet (provider of barcode marking equipment) and with Colorcon, a leading provider of pill coatings.

A 2017 postponement makes 2018 the key year for serializing US products; authentication makes a comeback, and cargo security goes digital

Pharmaceutical Commerce - June 2018

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Pharma traceability lumbers along