Companies that manufacture pharmaceuticals for the U.S. market and their trading partners are planning to comply with a series of deadlines for serializing and tracing their products through the distribution chain that were set in motion Nov. 27 when President Obama signed the Drug Quality and Security Act.

Most public attention has focused on the 31-page Title I of the law, which establishes a new class of FDA-regulated industrial scale compounding outsourcing facilities ([A#14131118004]).

Requirements will arrive in three phases:

January 2015: Lot-level tracing
November 2017: Serialization
November 2023: Unit-level tracing

But for commercial pharmaceutical manufacturers, the most important section is the legislation’s 117-page Title II, which establishes a nationwide process for identifying and removing any counterfeit drugs that criminals might have introduced into the supply chain.

By signing the bill into law, Obama immediately preempted states from imposing any tracing requirements of their own that would be “inconsistent with, more stringent than, or in addition to” federal requirements.

This put an end to the nightmare scenario of manufacturers having to comply with different requirements for every state.

There was some urgency, with manufacturers already preparing for California ePedigree requirements scheduled to take effect in 2015, and eying laws in Florida and 28 other states.

There remains the question of whether the U.S. approach will dovetail with those of other countries and regions, as a coherent global approach is considered the most efficient and effective way for multinationals to rid their distribution chains of counterfeit drugs.

The European Union’s Falsified Medicines Directive takes a different approach in which verification occurs routinely, but only at the point of dispensing, but there are important similarities. For example, both will rely on two dimensional barcodes. Randomized serial numbers are required in Europe, and according to supply chain consultant Dirk Rodgers could become necessary in the U.S. as well.

But as in Europe, there are many specifics that the U.S law leaves open, and that will be defined over a period of years by government and industry Also see "U.S. and EU Regulators and Industry Grappling with Track-and-trace Standards to Combat Drug Counterfeiting" - Pink Sheet, 28 June, 2012..

Three implementation phases

In an interview with “The Gold Sheet,” Pfizer’s Peggy Staver recently described three implementation phases for the U.S. law.

Speaking on behalf of Rx-360, an international pharmaceutical supply chain consortium, Staver broke the implementation process down into three time frames:

The first challenge is preparing for lot-level product tracing data exchange requirement that take effect Jan. 1, 2015.
The second challenge is serializing all products and being prepared to verify their serial numbers by November 2017.
The third challenge is putting in place an interoperable electronic tracing system at the salable unit level across the entire supply chain by November 2023.

The legislation will take a lot of work to implement, but Staver emphasized that industry is not complaining about it. “We’ve been working very diligently for the last several years to get this bill passed, so this is something that we see as positive. It’s just going to take a lot of very concerted effort here to get all of this in place.”

First phase

In the first phase, manufacturers will have to provide buyers electronic or paper transaction information, transaction history and transaction statements for each product they sell, beginning Jan. 1, 2015.

“That’s a huge impact and a very near-term requirement for us to get this in place basically in 13 months from now,” Staver said.

Wholesalers have the same deadline; dispensers have until July 1, 2015.

Manufacturers also will have to authorize their trading partners by the deadline. They must be ready to respond within 24 hours to government requests for the transaction information, history and statements, and must within 24 hours remove any products found to be illegitimate from their supply chains.

FDA is required to provide industry guidance by November 2014 on how to exchange the transaction information, leaving just a month to comply if the agency issues the guidance on schedule.

Staver noted, however, that FDA and industry have long been preparing for this eventuality. “I think FDA’s already been thinking about what that guidance document might look like. Industry has also been thinking about how we might be able to exchange this information in a very short time frame, leveraging some existing technologies that are already there today.”

Supply chain consultant Dirk Rodgers told “The Gold Sheet” that given the compressed schedule, “the odds are it’s not going to be something new, it will be something that’s being done today, things like EDI [electronic data interchange] and just packing list information in paper form.”

Rodgers predicted “that we’ll see EDI being enhanced slightly with new information in order to meet the requirements that are in the law.”

EDI is very common between manufacturers and wholesalers, and between wholesalers and large retail pharmacies, but it’ still rare with small pharmacies and small pharmacy chains.

Staver said one possibility is that many companies will build on the advance shipment notice, or ASN, that they already exchange with trading partners.

Given that ASNs already include the name of the drug, the quantity, the lot number and the date of the transaction, “if we can add the representations that are required by the transaction statement and any other data elements that might be missing in the ASN today ... we might be able to accomplish this requirement through the use of ASNs,” Staver said.

Some companies have been testing the use of GS1 Electronic Product Code Information Services (EPCIS) standards for compliance with the California ePedigree law, and they may consider using EPCIS events for exchanging transaction information under the federal law, she said.

Others might use the drug pedigree messaging standard or, if they lack electronic capabilities, they might simply use packing slips or invoices.

“I think, at least for the first several years, we’re going to see, potentially, many different ways that this information is exchanged,” Staver said, “unless the FDA, in the guidance document, standardizes how we should be exchanging that information.”

Second phase

Serialization requirements take effect in the second phase. Manufacturers will have to apply unique identifiers to each unit of product, beginning in November 2017.

They will have to put a two dimensional data matrix on the smallest salable unit that gives a standard numerical identifier (the NDC number), plus a serial number, the lot number and the expiration date, and they also must provide the same information in human readable form.

They must put the same information on homogeneous cases of drug products, which contain units of drugs that have the same lot and NDC numbers.

Rodgers noted that this is a relaxed schedule for serialization compared to what California had been requiring. California only wanted the unique identifier, but it wanted it in place for half the products by January 2015 and the rest by January 2016.

Fortunately, many manufacturers preparing for the California deadlines included lot and expiration dates, even though the state didn’t require them.

The federal legislation gives manufacturers four years from the date of enactment to serialize their products, and another six years to add the serial numbers to the transaction information they share with their trading partners.

“That’s a big difference from the California regulation, which would have required the serial number to be included in the pedigrees that were passed starting in 2015,” Rodgers said.

Third phase

Ten years after enactment in November 2013, manufacturers will need to have an interoperable electronic tracing system at the salable unit level in place across the entire supply chain.

The law doesn’t say much about the interoperable system, Rodgers said. “We won’t probably know a lot of those details for quite a while,” he added, noting that FDA must hold at least five public hearings by then, and likely would use information gathered from those meetings to develop system requirements.

Rodgers called attention to a major difference between the first and third phases. In the first phase, the lot-level information that manufactures are required to share must include the entire history of transactions. But in the third phase, when they must begin tracing interactions at the salable unit level, they only need to keep track of two transactions: who they bought it from and who they sold it to.

It is likely that the interactive system for this data sharing will simply consist of interoperable standards rather than a software platform.

“In 10 years, you no longer have to provide the history of where it came from, but, because now it’s based on serial numbers, you’ve got some of the complexity,” Rodgers said.

“Yes, some of the previous complexity falls away. It never quite gets to what California was trying to get to, where the entire history would have to be provided to the buyer. But that’s the compromise. That’s what the industry wanted, and that’s what they got.”

Drug Manufacturers Get the Anti-Counterfeiting Law They Wanted: Now They Must Meet Deadlines

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