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2019 Supplier Spotlight

A couple years ago, all the chatter about meeting the requirements of the Drug Supply Chain Security Act (DSCSA) in the US, and the Falsified Medicines Directive in the EU, was getting manufacturers onboard with putting serial codes on their products. Solution provider were hard at work building out packaging lines with the necessary technology. With the industry having more or less met the November 2018 deadline in the US, and the February 2019 deadline in Europe, one might expect a pause—a sense of letting the new machines run for a while, and getting settled into the new mode of operation.

Instead, solution providers—usually with enthusiastic customers onboard—are pursuing new technologies, and broadening the application areas to which the technology can be applied. Part of the reason for this is the arduous timetable written into DSCSA—there’s a new deadline coming up, in November of this year, for handling saleable returns at wholesalers and other supply chain participants (manufacturers might think that they’re not on the hook for this task, but in reality they will be facing not-insignificant inventory losses, and friction with their distributors, if their data-management systems are not able to quickly verify the integrity of returned products). We’ve written in the past that DSCSA is a highly unusual piece of legislation, in that it not only is very specific about capabilities for the pharma supply chain to develop, but it also has a 10-year timeline, from 2013 to 2023, to implement. Few federal regulatory programs take so long to play out.

The best example of new technology, however, is the growth of interest in applying blockchain (aka distributed ledger technology) As detailed in the overview 

, multiple vendors or consortia of vendors are piloting blockchain solutions under the FDA pilot program. Results will be reported late this year and early next year.

Other instances of broadened application areas are bringing traceability to warehouses and distribution centers; combining serial data with product master data; and linking final product identities with the sources of ingredients that went into those products a true “end to end” supply chain. Understanding how serial tracking data will be useful in health systems is a near-term goal yet to be realized.

All this is not to minimize current work. As pointed out in the 

, some very basic coding practices have much room for improvement. Too much effort goes into creating interfaces for one program to speak to another. Given time, this will surely improve.

All this points to a lively, vibrant technology and applications community forging ahead in securing the global pharmaceutical supply chain. Let’s keep it going!

Fresh technology enlivens the pharma traceability scene

Excellis Health, now a global consultancy and managed-services company, was founded in 2010 to address the growing industry needs around supply chain management, traceability and compliance.

It now has operations in the US, Europe and India, and recently announced a partnership with a Russian firm for that country’s traceability initiative.

Along the way, it developed expertise to perform strategic consulting, install serialization systems, and provide managed services for IT system validation and maintenance. Earlier this year, Excellis announced a partnership with Systech International; each company will support the other’s efforts.

e sat down with Greg Cathcart, Excellis cofounder and CEO; here’s what he had to say.

1. Greg, you’ve got a long history in the pharma supply chain / traceability arena; let’s review, and describe your thinking when you started Excellis.

GC: Prior to forming Excellis, my management team had generally worked together for the prior 20+ years in differing companies, including biopharmas like J&J and Genentech. We believed our industry knowledge would be helpful to the Life Sciences Industry in the areas of supply chain, manufacturing, quality and IT. So we formed Excellis Health in 2010, just as the market was crashing and the world was coming to an end….

2. The current status of Excellis services ranges from packaging line implementations to corporate strategy for overall supply chain management. Give us some sense of how Excellis differentiates itself from other providers in this space.

Our methodology is “Strategy to Sustainability.” Basically working with our customers to strategize on what they need to accomplish, and once implemented how they need to maintain or sustain the solutions deployed to managed their IT infrastructure.

Since inception we have focused on hiring some of the brightest industry minds to join our company, as we believe knowledge is key to success.

3. What’s the likely series of events leading up to 2023 for the pharma industry? For retail pharmacy, or health systems? Will all of these trading partners be onboard and ready by then?

Our industry surveying tells us that perhaps 99% of pharma products in the US are now serialized—but the key is, getting to that step represents only about 20% of what DSCSA is about. The saleable returns task is now in front of us, and that will need policies and procedures. From Excellis’ perspective, there are five more critical goals to be met between now and 2023:

Warehouse data and operational management

Distribution center (as distinct from mfr warehouses) management

Downstream onboarding of pharmacies and health systems

In our opinion there is still a LOT of work & education that needs to take place to bring the Retail/Hospital Dispensers into a Serialized world. Many of the folks in this side of the Supply Chain still are not even thinking about their plans to support DSCSA, and that scares us when we look at the timelines to compliance. We believe that many of the executives in this space do not believe the FDA will interfere in the flow of Pharma Commerce at the expense of Product Shortages in the Supply Chain—so they believe they have no timing pressure on the compliance dates.

4. What are the operational expectations of the Systech partnership? Will Excellis be implementing Systech solutions?

Systech is the leading software solution with their Unisecure solution to assist brand management & brand security teams to support their initiatives. Excellis’ role is to be the strategic consulting partner to the client as well as the Systech solutions they might acquire. It’s worth emphasizing, though, that Excellis is a reseller of several competing Level 4 systems, and that we approach each client engagement agnostically.

5. You’ve been fairly outspoken on the present focus of pharma manufacturers on only meeting compliance requirements, and not looking for downstream business value. Is that still the case in 2019? What, in your opinion, is the “mood” of the industry in taking advantage of serialization capabilities?

I believe the mood is turning in some areas, but not broadly. Some leading companies are recognizing value now. Here’s an example: a leading oncology provider has a product with multiple indications. It formed a relationship with a health system so that the health system reports back, on an item-level basis, what indication that drug was used for, which is extremely valuable information, not otherwise obtainable, for the product brand managers. You can foresee that this approach will be able to tie products at the item level with patient outcomes, eventually.

6. What’s your personal stake in Excellis’ work, other than creating a firm that has value in the life sciences industry?

In 2008 I went to work as SVP for a company focused on supporting the pharma industry as they prepared for the CA Pedigree regulations. My first day on the job, I flew to the Boston HQ to meet my team; at the same time my wife was taking my 11 year-old son to the doctor, as he was having some dehydration issues. At, 11 am that morning, in my first meeting I received a call from my wife—she and my son were being rushed to CHOP (Children’s Hospital of Philadelphia), as the doctor suspected he had Type 1 Diabetes and needed to get to the hospital for treatment immediately. After seven very scary days, we were able to take him home, but with a lot of fear on how to support him in his treatment. As I returned to my work, and dug into the industry issues, I realized I could make a difference to ensure that his drug treatment was safe for his needs. Hence my personal connection to track-and-trace in the pharma world.

A Conversation with Greg Cathcart, Excellis Health Solutions

Systech, founded in 1985, greeted the new century with an item-level tracking solution in 2000. That was followed by Systech Guardian in 2005, providing Level 4 serialization and data management.

All along the way the company has been enhancing the performance of life sciences packaging lines with machine visions systems, equipment effectiveness systems and, most recently, the UniSecure technology to provide item-level authentication via physical package analysis.

Ara Ohanian, CEO, took the reins of the company in 2017, coming from a background in enterprise software at Infor and CertPoint Systems.

1. Ara, you’re relatively new to the pharma traceability scene; what’s your impression of the industry opportunity here?

When you look at the traceability requirements the industry faces, it is really no different than the enterprise data integrations I’ve dealt with in the past. Pharmaceutical traceability is so interesting because it brings together all elements of the supply chain. There is so much data being exchanged, but little rigor around building value-added analytics around that data.

I see Systech as a leading innovator of providing great value to the overall industry by leveraging this data and operationalizing it. We’ve made strides already with our Systech360 product, which has begun to give customers insight into their operations by leveraging significant sets of previously unused data. We will excel in the industry because of what we can do with the data that is there today, but is not being leveraged.

2. Systech is somewhat unusual among its competitors for having both hardware and software expertise in meeting requirements like DSCSA or FMD. How does this combination benefit its clients, who might prefer a “best of breed” solution for one or the other?

Our big differentiation is the fact that we deliver configurable software, not custom code, to our customers. Being a packaged offering affords our customers seamless and trusted integration between the involved hardware and software systems. Systech projects then are accelerated with our comprehensive portfolio of hundreds of documented implementation modules, which pretty much cover every packaging line scenario we might see. We are as turnkey a serialization solution as you can get in the industry.

3. In recent years, Systech has made a substantial investment in authentication technology, which goes beyond serialization. How has this been received by the pharma industry? Why isn’t serialization enough?

Our authentication solution digitizes and derives a unique e-Fingerprint from the serialized barcode. Though the serialized barcode contains a unique serial number, it is just a printed mark, subject to copy and illicit fabrication. Our digital e-Fingerprint ensures that the authenticated item is truly the original. This has proven to be very powerful with pharmas who have issues with product diversion. Supply chain diversion occurs when there are significant price point differentials between geographies, with product being intentionally moved from lower cost geos into higher cost geos.

Our solution helps several pharmas fight diversion by enabling their field personnel to immediately authenticate items in the field, and with our advanced data capabilities, they can see all the pertinent information for that individual drug package, including its intended destination, and supply chain participants. They will know right then where their supply chain has a break, and know exactly where to go to fix it.

Additionally, the DSCSA and FMD apply to the most secure drug supply chain markets. Our authentication solution is being looked at as a patient protection and anti-counterfeiting measure for geographies that do not have serialization.

With Excellis, we see authentication as a patient protection solution for markets where serialization is not required. Given the rampant counterfeiting in many of these markets, providing an affordable solution that leverages the drug’s existing package and a simple smartphone authentication app is a straightforward way for manufacturers to start protecting their products in these at-risk geographies.

4. Having been at the helm of Systech for a year now, what’s your take on the pharma industry’s approach to adopting technology, meeting compliance requirements, and driving business value? Is the industry an innovator, or a technology follower?

I think I was most surprised by realities of line validation required. You can’t just expect customers to jump when a vendor says “new release!” This has impacted how we deliver and support product significantly. Our customers have taken a very disciplined approach to implementing serialization, and ensuring compliance. Formal serialization cross-functional teams were formed, and a commitment to “repeatability” has been pretty consistently seen. In terms of technology adoption, I believe the industry navigates right down the middle, not an early adopter, but certainly not a laggard. I see the interest in our DSCSA compliance pilot initiatives leveraging blockchain as proof the industry is absolutely willing to embrace cutting edge technology – provided there is a real need, and the technology is proven to work.

 are in for a long haul just to get to 2023. Having said that, what’s your vision of how the traceability technology, broadly implemented, will change the industry?

As I said earlier in the interview, it will all be about the data. It isn’t about just tracking and tracing products nor compliance necessarily – it’s about comprehensive visibility based on completeness of a data “vision”. Yes, traceability is implemented, and compliance achieved, but it is truly about the possible analytics based upon that now integrated supply chain funneling data into traceability systems. They can be transformed into active repositories of information that can be mined to better and more comprehensively protect the overall supply chain. This is incredibly exciting stuff.

A Conversation with Ara Ohanian, Systech International

Interoperability. This is how the internet derives its usefulness. When you purchase a smartphone, tablet or computer you’re not worried about whether you’ll be able to connect to Google or Amazon, for example. You expect these connections to happen- and they do. As such, interoperability is a good thing. It’s such a good thing, in fact, that the word interoperable was written into the law which has driven serialization efforts here in the United States for the last six years.

The Drug Supply Chain Security Act (DSCSA; part of the Drug Quality and Security Act passed in 2013), is the law which contains the regulatory specifics around pharmaceutical serialization. Among other things, the DSCSA contains details with regards to who must serialize, what must be serialized and also specifics around how serialized goods are to be handled by authorized trading partners. The net intent of this law is to create an interoperable network of systems that can verify the authenticity of drugs as they travel through the supply chain and, ultimately, to the consumer.

Having said that, aside from some specifics around the barcode symbology to be used for serialization, the DSCSA is devoid of any details relative to the standards to be utilized during manufacturing, data-transmission and for overall interoperability among serialization systems. The government basically told industry: “you figure it out”… and this has led to some problems.

Before we dive into any interoperability being experienced today, let’s briefly revisit how we got to where we are in order to provide some context for what will follow: Before the federal serialization mandates and the California “e-Pedigree” act, there was the Wal-Mart Radio Frequency ID (RFID) mandate. Odd as it may seem, the Wal-Mart RFID mandate was the genesis of many of the standards that we use in pharmaceutical serialization today. In 2003 Wal-Mart issued a mandate to its top 100 suppliers to affix a passive ultra-high frequency RFID tag to each case and pallet for all products shipped. The effect that the mandate had on the tag suppliers, reader manufacturers, RFID software vendors and the consulting space was massive and during the early phases of the mandate it quickly became evident that prior RFID standards such as PML, originally developed by MIT’s Auto-ID Labs, were going to be inadequate. There needed to be an industry-led standards body to align all players.

As a result, the EPCglobal group was formed with GS1 to develop and maintain a group of interoperability standards for an RFID-based ecosystem. Out of this emerged the first version of the Electronic Product Code Information Services standard (EPCIS) along with some other lesser known standards. The Wal-Mart mandate was later cancelled leaving behind the formation of EPCglobal and the development of EPCIS as artifacts.

Being primarily created to handle RFID data, EPCIS does not mirror the real-world for barcoding in the same fashion in which it does for RFID. For example, to meet DSCSA compliance, man-ufacturers are required to label their goods exclusively using GS1 barcode symbologies and encodings - yet the EPCIS protocol uses an abstract Uniform Resource Name (URN) format along with Instance Lot Master Data (ILMD) to express what data is present within a given serialized barcode. To arrive at a well-formed EPCIS URN, certain barcode values are dropped, reshuffled and repositioned such that the end result is unrecognizable relative to what is actually on the barcode. Why is this? Due to their origins in RFID, the URN formats we use today were largely developed because RFID readers reported tag data as long hexadecimal numeric values- making any GS1 data, such as a GTIN or SSCC, embedded on an RFID tag completely unrecognizable to the human eye and also ill-suited for certain types of machine logic.

In addition, the structure of the data physically encoded on an RFID tag and contextually represented in an EPC URN share a strong correlation. So, arriving at a human readable format such as the EPC URN in the context of an RFID protocol makes perfect sense. In barcoding however, there is a loss of fidelity with regards to what is ultimately on a given barcode relative to that barcode’s URN representation. Over the years, this has led to confusion and difficulty when debugging problems with systems, labels and when working with various types of barcode scanners out in the field.

Since its initial release, EPCIS has been revised twice and additional, supplementary standards were also developed to enhance the expression of supply-chain business context within EPCIS messages. For example, shortly after EPCIS 1.1 was released the GS1 US Healthcare (USHC) standard was developed. For EPCIS version 1.2, the GS1 Core Business Vocabulary (CBV) along with the core EPCIS standard was expanded to supplant and replace much of the USHC standard. In general, these were both needed developments and overall noteworthy efforts; however, these two supplementary standards, in their own way, ended up introducing unforeseen problems into the interoperability equation. While the EPCIS protocol was designed to be backwards compatible with future versions (and it is), the USHC standard was implemented inside of its own namespace (which is a way of allowing one protocol to exist within another) so, technically, USHC was never officially part of EPCIS.

In a similar fashion, the CBV changes that accompanied the release of EPCIS 1.2 also fell within their own namespace and had significant overlap with the USHC in terms of expressing certain types of business context. Fast forward to today and you have a situation where systems have two perfectly good standards that can be used to express identical business conditions - some use both protocols, some use one. Some implement them both wrong, some implement them correctly but within different versions of EPCIS, some skip them altogether and implement custom namespaces in order to solve the same problems. In order to handle all of these variances in the “standard”, serialization systems now need to be able to understand multiple flavors (not to be confused with versions) of EPCIS to accomplish what is often the same business objective.

demonstrating the need for interfacing among VRS systems." alignment="left"/>

Due to the above, it is currently more the rule than the excpetion for serialization platforms to have multiple “connectors” that handle all of the permutations of these standards, malformed expressions of the standards and even to handle vendor-specific “standards”. The net effect being that every time a vendor developed a connector to get around an EPCIS, USHC, CBV or platform-specific issue, the ecosystem in which serialization systems must interoperate did not self-correct, improve or become more efficient. In fact, the opposite has occurred. Today we are no closer to having true standards-based interoperability between systems than we were five years ago.

While EPCIS is utilized relative to supply chain events such as manufacturing, shipping, repackaging, etc., number range distribution, the process by which systems share serial numbers for use during printing and manufacturing, has been widely implemented across industry using no official standard. For the most part, the lack of standards around number range distribution has been solved using the connector approach coupled with what one might call the “do it for me” approach. The connector approach is identical to the approach systems vendors have used to get around EPCIS message abnormalities. The “do it for me” approach is where number range information isn’t shared at all.

The “do-it-for-me” approach has been adopted where parties have either thrown their hands up in frustration, found the integration effort to be too overwhelming right off the bat or where there were exclusive business relationships that made the probability of a product being manufactured elsewhere remote. In conjunction with many software vendors and industry sponsors, OPEN-SCS, part of the OPC Foundation, did develop a series of protocols that attempted to address the number range issue; however, due to the overwhelmingly slow progress of the protocol’s development and looming FDA deadlines, industry forged ahead without OPEN-SCS.

Many believe the lack of reference-implementations or open-source protocol stacks that are typical within most industry-specific landscapes may have contributed to the lack of system interoperability we see today. For example, before the internet went mainstream, the US Department of Defense had already put its full weight behind the uniform adoption of the open TCP/IP protocol. Similarly, the industrial control space was reshaped when Allen-Bradley opened up and shared DeviceNet (an industrial control protocol) with industry. In 1991, the first version of the Linux kernel, an open operating system, was released and is today’s de facto platform for IoT, cloud computing, machine learning and robotics. In each of these cases, there were both open-standards and real-world systems available to serve as reference implementations.

Currently, the QU4RTET open-source project stands relatively alone as a widely-available reference implementation of some of the more recent revisions of the EPCIS and related standards. “Standards are pointless if they are not adopted and utilized. Open source brings together people on the premise of collaboration, transparency, standards and a belief that shared problems are solved faster. In addition, supported open source provides a means for the enterprise to consume rapid innovations in a supported manner. RedHat Enterprise Linux is an example of such where RedHat contributes to the upstream innovations and makes it available in an open, verified, tested, documented and supported way to be backward compatible,” said Atif Chaughtai, Chief Technologist of Healthcare for RedHat (one of the world’s largest open-source software companies).

There are some recent industry-let efforts underway to address all of these interoperability concerns. The Pharmaceutical Distribution Security Alliance (PDSA), a group of more than 30 companies and trade associations, has proposed, an industry-run governance body to help standardize future interoperability efforts. (See: 

https://pdsaonline.org/white-paper-download/

Such a group would be a great start in getting industry aligned and unified on solving the interoperability problems we face today and would help push the pace of interoperability along with innovation. Having said that, until such a body is established and its principals adhered to, any new technology vendor that wishes to innovate in serialization by grabbing the current standards documentation and having a go at it will be in for a rude awakening.

Rob Magee is a graduate of Temple University and has been building and developing serialization systems and businesses for over 15 years. He is one of the founders and primary contributors of the SerialLab open source initiative and currently runs the IT and Security practice for Vantage Solutions. He was the founder and president of Apostrophe Systems, which became part of Systech International in 2012, and has worked in the past with Optel Vision, Acsis, Systech and VeriSign as a serialization con-sultant and software systems architect.

Your serialization systems aren’t as interoperable as you might think

The Interoperability Illusion

The Haitian proverb, Dèyè mòn, gen mòn (Beyond mountains, more mountains) comes to mind when surveying the current scene in pharma traceability. The industry has been on a long slog to get appropriately barcoded labels on each saleable unit of products—the base-level requirement of the 2013 Drug Supply Chain Security Act (DSCSA). Now, each year through 2023 will have a milestone or deadline for bringing a digital, end-to-end traceable system for products to life.

The current target is “saleable returns”—the products, still suitable for consumption, that are returned to wholesalers or manufacturers from pharmacies and other downstream trading partners, amounting to 2-3% of overall US commercial distribution. Under DSCSA, by November 2019 wholesalers are obligated to verify the authenticity of returned products before sending them back into distribution, and this obligates manufacturers to have a resource to respond to wholesaler queries. That obligation, in turn, has spawned the current scramble for verification router services (VRSs) offered by numerous traceability vendors.

Soon, pharmacies and hospitals will need to document the identify and products they receive, and after that, to confirm their authenticity. By 2023, systems that track product movements electronically will need to be up and running. Along the way, a national database of state-licensed distributors will need to be realized, and repackagers, secondary wholesalers and other supply chain participants will need to have their systems in place.

“The pharma industry might think that it’s done, now that nearly all products are being labeled with the required serial codes,” notes 

Greg Cathcart, CEO of consulting firm Excellis Health Solutions

. “But that represents about 20% of what will ultimately be necessary for full DSCSA compliance. Warehouse management, trading partner communication and overall supply chain interoperability will still need to be tackled.”

To be sure, there are numerous refinements or upgrades going on with the packaging and labeling technology that has been installed to date. A particular area of activity is aggregation—the step to precisely identify which barcoded items are in a (barcoded) case, after the initial serialization.

Many manufacturers, noting that aggregation was not a DSCSA requirement, skipped or postponed aggregation implementation; now the reality that wholesalers by and large will not accept un-aggregated cases has set in. “We’re got a lot of people approaching us who weren’t expecting to aggregate,” says Andrew Pietrangelo, president of Antares Vision North America. The company has developed three levels of aggregation—manual, semi-automatic and fully automatic—to align with the volume or pace of packaging going on at a facility. Pietrangelo, while noting that Antares now offers both hardware and software for DSCSA compliance, says that the company has expended considerable effort to make its hardware integrate well with other vendors’ traceability technology.

Aggregation and—of equal importance—disaggregation are vital elements of managing pharma warehouses, and the distribution centers of wholesaler/distributors. There is growing activity among the traceability vendors to provide either warehouse management systems that incorporate the aggregation of serial data, or so-called “edge solutions” that speed the collection and validation of serial data during pick-and-place operations. A couple years ago, TraceLink, a leading traceability vendor, acquired Roc-IT Systems for this purpose; there are competing offerings from DMLogic; Antares, Optel Vision, Acsis and others.

Barcoding itself is still a concern: recent surveys by GS1 and HDA have shown that a small but noticeable percentage of serialized product either have incorrect coding, or have legibility problems. Tim Kearns, sales manager at Videojet (a provider of multiple types of marking technology), says that “To date, the pattern has been that serialization project managers have tended to treat the marking technology as an afterthought. Substrates, line speeds and other factors can scramble the marking process.” Often, the fix is simple—choosing the appropriate ink, or ensuring the cleanliness of the packaging line environment.

Kearns adds that there’s attention currently being paid to how cases are marked (which, in fact, can be part of the aggregation process). The company has developed a label printer applicator, such that a case’s label is being printed as it is being applied to the case. The advantage is that the information on the label (which is tied to the serial codes actually in the case) can be verified as the label is applied; if a package is not included in the case as it gets filled, that change can be noted as the case label is printed. Overall, the technology allows for higher accuracy and faster case-packing speed.

Much of the discussion going on in DSCSA circles this year involves the Verification Router Service, which was defined, more or less, by a pilot project of the Healthcare Distribution Alliance in 2017; now the distributors are racing to prepare for the nominal November 2019 deadline for having a functioning process for verifying saleable returns prior to re-introducing them into distribution (as DSCSA requires). There is a good chance that implementation will be delayed, given that a fully functioning system will require millisecond response from the IT system of a wholesaler, through the routing service, to the manufacturer, and back.

An HDA task force devoted to VRS implementation developed specifications for how verification messages could be quickly transmitted from requestors to responders (generally, a manufacturer); these specifications were shifted over to the GS1 organization and formalized as the GS1 Light Messaging Standard (LMS), approved in January.*

Nearly every traceability vendor has now developed a VRS, often as a module to be attached to their Level 4 traceability-management system. Some of them are offered as a free extension of their system; others add a charge. TraceLink, which worked with HDA and GS1 to develop open standards for LMS, says that it is deploying its Product Information Manager as its VRS solution, according to Brian Daleiden, VP, industry marketing and community. Adents, another vendor with a Level 4 system (Prodigi), announced a partnership in May with VAI, a provider of ERP systems for managing pharma warehouses (among other industries).

A functioning, industry-wide saleable-returns process will require each VRS to interoperate with each other one; there has been testing among the traceability vendors to ensure that their systems work together, but there is also dissension over how well this is working. “There is a lot of confusion in the market, with vendors trying to lock down their customers over how to implement the VRS,” says Julien Faury, VP of operations at Adents.

VRS wasn’t conceived as a mini-version of a complete, end-to-end supply chain network for the pharma industry, but in fact, that is how it is playing out currently. “VRS has become much bigger than people realized initially,” notes Perry Fri, HDA’s EVP for industry relations, membership and education.

Confirming this importance, VRS is the subject of several of the pilot projects accepted by FDA in April, the result of an FDA request for proposals earlier in the year (see table). The list of projects demonstrates a desire by FDA to bring in a broad range of pharma supply-chain participants, from manufacturers to distributors to health system pharmacies, large and small companies, and vendors along with their clients. Nominally, the projects are supposed to run through the rest of this year, with FDA collecting reports and publishing results early next year.

Some of the projects represent a mini-network of their own: the Optimal Solution project will involve not only Systech, a longtime serialization and traceability vendor, but also RxTransparent, FarmaTrust, T-Systems, Cryptowerk and CalQLogic, and will encompass blockchain technology as well as Systech’s e-Fingerprint authentication technology. “We believe we are creating a unique comprehensive solution with an unmatched combination of partners,” stated 

Another interesting collaboration is IBM/KPMG/Walmart, also showcasing blockchain technology. IBM has been working with Walmart on a blockchain-based food-sourcing network for several years; the company also has an ongoing relationship with KPMG to develop business applications based on IBM Watson, its “cognitive” technology for managing data. (Old-timers can remember IBM’s earlier involvement in pharma traceability, a project that was eventually sold off to a company that was subsequently acquired by rfXcel.)

The FDA pilot list is notable for the number of blockchain-based projects; a year ago, the combination of blockchain and DSCSA compliance was looked on with considerable skepticism; now, it could be argued that it is the future direction of DSCSA compliance.

At this point, there are two solid benefits for blockchain (or, in a broader business-software context, distributed-ledger technology), and one serious detriment. The benefits are that information is inherently preserved and protected by the blockchain; each member (“node”) of the chain is supposed to keep a record of all transactions passing along the network, and to synchronize this information in diverse locations, thus preventing an overwriting in one location corrupting all the other locations. The second benefit is that, with the right credentialing process, only approved or accepted participants can upload or download information (this is the “private” form of the chain). The one obstacle to blockchain implementation in this application is that it is slow, and becomes slower the more data traffic flows through the network; transactions will need to be recorded and executed rapidly, given the tens of thousands of potential participants.

MediLedger, a startup initiative now part of a company, Chronicled, has garnered the participation of three of the top US wholesalers, along with a number of pharma companies, to demonstrate its capability. Chronicled brings a technique called “zero knowledge cryptography” to blockchain communications that enables a high degree of secure privacy to transactions. The company is also notable for receiving $16 million in funding at the beginning of this year to build out its application.

Another blockchain pilot on the FDA list comes from TraceLink, which is something of a turnabout from how it looked on the technology in the recent past. TraceLink’s Daleiden says that the company has had internal teams evaluating blockchain technology for a couple years, and that “we’re not jumping in with both feet today; we’re looking at the pilot as a proof of concept.” TraceLink’s initiative is being called Trace Histories, and is designed to provide a way to preserve the information that is currently contained in a document defined by DSCSA called Transaction History; this document is supposed to sunset by 2023 when DSCSA is fully operational. Trace Histories is not yet a formal TraceLink product.

Blockchain also figures in the Systech (Optimal Solution) pilot; Systech has been working with a UK company called FarmaTrust previously. Adents has been working with Microsoft on its own blockchain implementation.

“One thing is for sure about blockchain,” says Daleiden, “there will not be one solution used by all participants; it will be a heterogeneous environment. So, whatever blockchain technology is employed, it will have to be interoperable.”

The FDA pilot list also includes something of an outlier: the Pharmaceutical Distribution Security Alliance (PDSA). The “pilot” here appears to be an ongoing effort, announced earlier this year, to develop an industry-wide consortium to develop a consensus over how DSCSA will eventually be operationalized. There are many issues around DSCSA that require a degree of collaboration among pharma supply-chain participants, even organizations that in some ways are on opposite sides of the negotiating table (for example, PBM-run pharmacies and manufacturers). PDSA was in operation in the early 2010s as negotiations intensified between the private sector and FDA as DSCSA itself came into being; it never shut down subsequently, according to an executive involved in its revival, but is now becoming a valued clearinghouse for cross-industry collaboration.

Current membership in the group includes nearly 20 pharma companies (including biotech, pharma and generic), and a host of trade associations, including PhRMA, HDA, NACDS, BIO and the Assn. for Accessible Medicines (the former Generic Pharmaceutical Mfrs. Assn.)

PDSA issued a pair of position statements in April (available on its website, pdsaonline.com, at 

). According to the executive source, a workshop was held in early May, and a proposal for how a board will be constituted, and how the alliance is to be funded, are being reviewed now. A decision will be announced in the fall for how the group will go forward.

Although beyond the scope of DSCSA, there seems to be growing interest in investing in overt and covert anti-counterfeiting technologies in pharma today. The topic has actually never gone away, but lost some momentum in the aftermath of the passage of DSCSA. Advocates of the technology point out that serialization is not a bulletproof defense against counterfeits, especially when ex-US markets are considered; it also provides a belt-and-suspenders approach to product integrity regardless of geography.

For several years now, Systech International has touted its e-Fingerprint technology, which depends on storing details of the physical attributes of a label (which are enough to provide a unique “fingerprint”); when the image of the label in the field is compared to a stored version, the authentication is confirmed. The company says that it is having success in non-pharma applications, while continuing to offer it to the healthcare industry.

This spring, Covectra, a traceability software provider, announced an alliance with VerifyMe, a provider of brand and identity protection technologies, including covert inks. “The recent mandate by the FDA for serialization, track and trace technology for the pharmaceutical industry is a ripe multi-billion-dollar opportunity for our partnership to address,” said Stephen Wood, Covectra CEO, when the partnership was announced. A couple years earlier, Covectra had introduced StellaGuard, a technology that combines random markings with 2D barcode information.

Meanwhile, the printing developer Videojet has an ongoing relationship with Applied DNA Sciences, which develops unique tags based on DNA strings; the tags are added into inks that Videojet provides with its machines. In a similar fashion, TruTag Technologies has been marketing a silica-based tag, based on spectral patterns, to uniquely identify packages and products. The inert silica is capable of being incorporated into pill or tablet formulations as well.

These and other technologies are finding applications in food, consumer goods and multiple other applications; and in a similar fashion, the serialization/traceability vendors that have been chasing business with the global pharma industry for years are now branching out into other markets. “As a group, these vendors have developed a lot of industry knowledge over the past five years,” says Antares’ Pietrangelo. “Now we can apply this proven knowledge downstream and elsewhere.”

FDA-accepted pilot projects hope to demonstrate how industry compliance could be realized by the 2023 deadline

Pharma traceability: Marching toward 2023 go-live

Pharma Logistics, a longtime reverse-logistics provider, has broken ground on a new 127,000-sq. ft. facility in Libertyville, IL, near the company’s corporate offices (and near where the company was founded in 1996). The company’s reverse pharmaceutical-distribution services include rapid credit, box and ship, onsite and drug take back programs. Pharma Logistics’ clients include hospital pharmacies, the Department of Defense and Veterans Health Administration, independent pharmacies, pharmacy chains and physicians’ offices.

New reverse-logistics capacity in Illinois

At this year’s BIO Convention, Syneos Health Consulting unveiled its annual Dealmakers’ Intentions Study, a forward-looking survey of industry expectations for the full year. While 2018 set a host of new records, it appears as if 2019 will continue to be a wide-open, anything-goes environment. IPOs and deal volume are expected to decline somewhat, but deal size (venture funding, acquisition, in-licensing and debt financing) is likely to be larger than last year’s. One of the conclusions of the study authors is that “One side effect of this healthy dealmaking environment may be the degree which the teams reviewing deals are being stretched; buyers wish their teams had greater bandwidth for getting more done.”

The Syneos study does something noteworthy—it looks at last year’s expectations as compared to the actual performance. Buyer’s expectations of deal types were actually exceeded by actual results for marketed and Phase III undertakings; and both buyers’ and sellers’ expectations were exceeded in the number of deals based on NDAs.

Another interesting comparison of 2018 and 2019 is that buyer’s interest in marketed products is higher than the asset availability; this is also true for pre-clinical products, a reversal of the 2018 sentiment. Phase I and II and III are generally lower demand (see Fig. 1).

In terms of product type, oncology, and immune-oncology in particular, remain the highest-demand products—but the availability of such products is the highest of any therapeutic category, indicating a likely competition for deal completions. By technology type, the areas of hottest interest are immune-oncology, CRISPR/Cas9 and CAR-T; note (in Fig. 2) the low interest in biosimilars. Orphan drugs, studied for the first time in this report, are of interest to 77% of dealmakers, with 16% of buyers labeling them “an integral cornerstone” of their strategy.

The Syneos authors conclude that “The year is shaping up to be one of the strongest for dealmaking in the last decade, with buyers optimistic that there will be an acceleration in dealmaking across all deal types.”

New science breakthroughs, and easy access to financing, propel this year’s M&A and licensing market

Biopharma dealmaking will set new records this year, says Syneos Health

As president and CEO of the Healthcare Distribution Alliance since 2004 (known as the Healthcare Distribution Management Assn. since 2016), John Gray oversaw the conversion of the association to a primary-distributor-only group in the mid-2000s, led industry involvement in the passage of the Drug Supply Chain Security Act (DSCSA) in 2013, and participated in changes at the federal and state levels on drug supply-chain processes.

“Over the past 15 years, John provided steady leadership in a sea of change," said Greg Drew, RPh, chairman of the HDA Board of Directors and president of Value Drug Co. "The HDA Executive Committee and Board of Directors congratulate him on his many accomplishments, and we wish John the best in his future endeavors.”

DSCSA remains the signal achievement of Gray’s tenure; the law is having significant effects now and for the foreseeable future on drug distribution. In 2013, before the law’s passage, Gray 

 that “When I came on board at HDMA and for the next few years, we held discussions with pharma CEOs on track and trace, and just couldn’t get their attention. Back then, manufacturers thought they had little to worry about regarding their supply chains.” The globalization of drug supply and delivery, and the processes for how drugs are purchased and paid for in the US, have changed that perspective.

HDA has also stepped up its educational activities, both for the industry and for college students, under Gray’s leadership, with the HDA Research Foundation expanding its publications and seminars. The association has just started a new public-awareness campaign, 

Gray’s retirement was announced at the association’s annual Business and Leadership Conference (Orlando, FL; June 2-5). An executive search will commence in the near future.

Pharmaceutical Commerce - June 2019