Serialization in the Pharmaceutical Industry

February 22, 2017 - 5 minutes read
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Pharmaceuticals are one of the most regulated industries in the world but it all started with eleven physicians near Washington DC in 1820. These physicians created the U.S. Pharmacopeia, the first compendium of standard drugs and became the first document to outline strict definitions. Since then regulations surrounding food and drugs have grown in number and stringency most recently from regulators such as the FDA, EMA, and PMDA. The most recent set of regulation requires companies working with pharmaceuticals to implement a serialization program to track units from the manufacturer to the point of sale.

The Drug Supply Chain Security Act (DSCSA) began in 2015 with the final deadlines for implementation in 2023. The act requires that all manufacturers mark packages with a product identifier, serial number, lot number, and expiration day by November of 2017. Over the following 3 years, repackagers (2018), distributors (2019), and pharmacies (2020) will have to roll out a lot serialization program. By 2023 these programs will have to provide traceability to the unit level. While an important initiative, the breadth and complexity poses a significant challenge to affected companies.

DSCSA-Timeline-2016-product-security-report

Due to the recency of the legislation there have been few implementations successfully completed to put a definitive price tag on the transition. Initial estimates from vendors and sites estimate the cost for manufacturers to be $1.4 million for each production line, $1 million for the site, and $12 million on an enterprise level. For wholesalers and distributors this cost is estimated at $80k initial and $30k per year for each outlet or location. In practice individual differences will have a significant impact on the final cost of rolling out this program.

In addition to the costs there are other significant challenges posed with a serialization initiative. Research shows that due to the complexity, designing, implementing, and allocating ongoing costs is the single greatest set of issues with rolling out the program. Runners up are integration with existing systems, defining system architecture, and finding available qualified employees. With even the most initial steps posing great challenges, management needs to begin developing a plan or risk being out of compliance.
Despite a hefty price tag, serializationan produce benefits in addition to compliance. Rolling out a serialization program can have a lot of positive externalities including improved supply chain visibility, reduced costs related to recalls, returns, and chargebacks, improved material management, and improved procurement and invoice automation. These benefits might not initially fully offset the cost of implementing the serialization program but provide important benefits to look for during implementation.

While the act of serializing units is straightforward and soon to be mandatory it is important to keep in mind the data that this initiative will provide. The volume of information being collected provides many opportunities to improve operations. Not only will unit serialization help with tracking defects to their source, it will also help manufacturers and distributors understand the supply chain. This information can be used to develop strategies supported with actionable data.

Ahead is a challenging time for all those involved in pharmaceuticals. However, in the midst of this tumult is an opportunity to improve the fundamental aspects of an organization. As serialization is implemented into the production lines or distribution centers, we should take the opportunity to reexamine fundamental processes and improve in all operational and strategic aspects. Often regulations such as the DSCSA can be seen as a bitter pill to swallow but in fact can be a source of unprecedented opportunity.

If you are looking to implement a serialization program to comply with DSCSA and are looking for more information about the regulations and the opportunities it can bring, please reach out to Ilya Makovoz at imakovoz@tefen.com.

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