Q&A | August 28, 2012

Beating The Serialization Deadline: Tips From The Experts

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By Lori Clapper, Editor

California’s ePedigree law goes into effect in 2015, requiring pharmaceutical manufacturers and packagers to serialize drugs down to a unit level in order to sell in the state. The law, the first of its kind in the United States, is more stringent than comparable global initiatives — and the state recently announced that there will be no further extensions of its deadline. That said, it’s still up to the federal government to determine whether California’s standard will become the nation’s standard. However, the U.S. House and Senate were unable to agree on the issue and recently passed the Prescription Drug User Fee Act (PDUFA) of 2012, minus a serialization amendment. Without national regulations in place — and industry perception that the U.S. government will keep stalling — many pharma companies continue to play the waiting game.

The truth is, it’s inevitable that the United States will establish national track and trace regulations at some point, and the time for pharma companies to prepare is now, because it can take anywhere from six months to two or three years to take the necessary steps. In this roundtable discussion, five industry experts — Mark Feher, Michael Stewart, John DiPalo, Mark Shaffer, and Jack Tarkoff— clarify some common misconceptions with  serialization regulations, offer advice and resources to help you plan, and explain the broader benefits of having a serialization program in place.



How prepared do you think the U.S. pharma industry is for the impending serialization deadline? 

Mark Feher, Mettler-Toledo: Preparing and being prepared are two very different things. Many companies are preparing for the impending legislation, but how many of them will actually be prepared, with qualified and validated systems in place, robust IT infrastructure, and a complete supply chain solution when the time comes? Rolling out, commissioning, and then managing these solutions across a diverse organization — with both direct and contract manufacturing spread out across many countries — makes the task even more difficult.

Michael Stewart, PharmTech: The U.S. pharmaceutical industry is at varied levels of preparation for the forthcoming serialization mandates. While you have some major pharmaceutical and biopharmaceutical companies that have used this six-year “stay” to serialize some lines, pilot with trading partners, and develop strategy, most have not. In fact, many of the companies that are ahead of the curve did so for brand protection, with compliance as an ancillary benefit. Most large and mid-sized pharma companies are 30 months away from the California effective date and are just now drafting RFPs and developing strategy, which is only the first phase. With a typical timeline of 24 to 36 months for strategy development, implementation, piloting, and trading partner connection, it will be close for most to comply.


What are some common misconceptions about the track and trace regulations?

Feher: I believe that the biggest misconception is that the implementation of California’s ePedigree law, scheduled to become effective January 1, 2015, will be pushed out again. The current legislation has been stable for several years. Further, in August 2010, the FDA provided its guidance on SNIs  (standardized numerical identifiers), the structure and content of the serial number and supporting GS1-compliant 2-D bar codes required for unit level packaging. More, the U.S. House and Senate conference committee recently failed to come to an agreement on a track and trace addendum, which many had anticipated would become part of PDUFA. This makes it unlikely that federal law will supersede the California ePedigree legislation prior to the law’s effective date.

By some accounts, the presence of counterfeit drugs in the supply chain is growing at a faster annual rate than the legitimate prescription drug industry. Further delays in implementation of the law may put increasingly larger numbers of patients at risk. So, in my opinion, it seems highly unlikely that legislatures will permit any further slip of the implement date for California ePedigree.

Stewart: The number-one misconception is “we can just slap a number on it.” There is much more involved than the serialization component to comply with track and trace/ePedigree. We discuss serialization strategy and implementation with traditional manufacturers, virtual manufacturers, and CMOs on the impact to their systems (IT, manufacturing, and packaging), their processes, and their value chain. Serialization is just one small part of the overall traceability system.

Jack Tarkoff, rfXcel: I think the most common misconception about track and trace is that there is no value to the investment beyond regulatory compliance. We are working with several manufacturers who are actively using track and trace on several product lines, not for compliance reasons, but because it is driving additional sales and improving market share for their products.


Aside from regulatory compliance, what benefits does serialization provide pharmaceutical manufacturers?

John DiPalo, Acsis: Instead of implementing serialization as yet another siloed function, manufacturers can utilize serialization to track data and improve processes across the shop floor — from receiving to production, quality management, warehouse management, shipping and distribution, and third-party processing. It also allows key information about important metrics, such as lot and expiration date, key ingredients, and notification regarding hazardous materials, to be tracked by serial number as it moves through the process.

During the distribution process, additional data can be added, such as destination customer, carrier, expected transit time, and other key supply chain data — so alerts for special handling instructions (for example, storage temperature) will ensure product quality and compliance.

Feher: While there is a cost of compliance to pharmaceutical manufacturers for serialization, there are also tremendous benefits to both the patient and the manufacturer from a compliant, secure, and traceable supply chain. Obviously the first responsibility is to the patient. Patient safety is always the primary concern, and serialization will help ensure patients will receive the exact drug and dose that have been prescribed by their physician. 

The Center for Medicines in the Public Interest estimated counterfeit drug sales were $75 billon in 2010 and the number has grown since then. A lot of revenue can be recovered by drug manufacturers through a secure supply chain where every unit manufactured can be accounted for and traced through the supply chain. While serialization will not put an end to counterfeiting, it does make it increasingly difficult — and therefore less profitable for those who choose fast profits over the safety and well-being of the patient. 

Stewart: The industry should be looking at how to get business value and a competitive advantage, and how to leverage the new serialized data and systems to improve operations internally and externally. Take a look at other industries and see the countless ways the retail, electronic, ink, and software industries have used serialization and traceability to make their businesses more profitable by addressing inventory control, counterfeit identification, product distribution and recalls/returns. The profits lie in leveraging this information for future gain, not in fighting to defend the past paradigm.


What advice would you give to pharmaceutical manufacturers who have not yet started planning for the serialization mandate?

DiPalo:  Get started with a pilot program that is built from the enterprise layer down. In order to develop a serialization strategy that will provide both compliance and business benefit, it is important to have end-to-end strategy that takes into account all aspects of serialized product including receiving, manufacturing, packaging, distribution, and partner companies (including CMOs and third- party logistics providers).

Mark Shaffer, Domino North America: Conservatively plan your time. The message we are hearing time and time again is that implementation takes much longer than expected, sometimes by a factor of 2x.  If you think you can complete the task in 12 months, plan on two years. This is uncharted territory for many — so historical reference may not apply.

Tarkoff: First, I would recommend they work with either a consultant or solution vendor to develop a long-range plan for implementation and deployment, if they don’t have all of the expertise needed on staff. Second, once the plan is complete, budgets need to be allocated, and then resources and timelines can be applied. These steps could take a few weeks to many months, depending on the organization.


What resources can guide companies in planning for their serialization programs?

DiPalo: One of the best ways to gain insight is to talk with industry groups and peers at other companies that have done some pilot work. I have found that people are very open to sharing lessons learned when it comes to serialization projects.

Shaffer: Rely on your vendors, especially those with industry experience. This is no time to go it alone.  With so many companies having limited internal resources, why not rely on your vendors’ specific subject matter expertise? Those that have participated in serialization projects recognize the pitfalls, understand the resources required, and appreciate the time constraints and can help guide you.


Looking ahead, is it feasible that all pharma and biotech companies will be ready when 2015 rolls around?

DiPalo: Yes, I think that it is possible to meet the dates. Remember that companies get to phase product into a serialized world between 2015 and 2016. My feeling is that there are solutions out there that are more productized and will become even more so as more implementations are done. The key is to look for a scalable solution that will allow you to add functionality as your use of the serialized information increases.

Stewart: I believe that it is feasible for the industry as a whole to have taken the steps and developed their individual strategy and projects to be on the path toward complying with California’s 2015 deadline. My opinion is that what California and the FDA are looking for is an earnest effort and a defined plan with timelines on how the industry as a whole will move forward and achieve item-level traceability. If the next 24 months produces positive movement and genuine plans for attack, then the full-compliance dates may be extended to a more reasonable (for the industry) timeline.


About The Contributors:


Michael Stewart , VP Strategy Development, PharmTech Inc.

Michael Stewart brings a unique background to the Pharmaceutical industry, with more than 18 years in sales, investment banking, marketing, and project management. His role at PharmTech is consulting with clients to ensure that their compliance and brand initiatives produce quality deliverables. He views every project as an opportunity to generate ROI and capture additional business value.  Recent projects have included engagements with top 10 pharma, contract manufacturers and virtual manufacturers on initiatives related to serialization, e-pedigree, CMO gap analysis, requirements gathering, and leveraging 2D and serialized product data for business value and adherence. Michael is a member of the GS1 Secure Supply Chain Task Force and GS1 Traceability Adoption Group.


Mark Feher, Business Development Manager - Pharmaceutical Industry, Mettler Toledo Hi-Speed

Mark currently manages Mettler Toledo’s new marking and vision and serialization/aggregation technologies supporting track and trace in North America.  In addition, his other responsibilities include product management of Mettler Toledo Hi-Speed checkweigher control platforms and pharmaceutical specific product inspection systems.  He is a frequent contributor to packaging industry publications and a member of ISPE. He holds a BS degree in Business Management and Economics and an MBA in Business Administration.  He can be contacted by email:  mark.feher@mt.com.


John DiPalo, CTO, Acsis Incorporated

John has more than 25 years of process and systems analysis and design experience, during that time John has implemented many manufacturing and warehousing systems across multiple ERP, midrange and client server environments. While at Acsis John has served in a number of technology and customer facing positions. Most recently John served as Senior Vice President of Product Development and previously, Vice President of Solutions Engineering. John is a frequent speaker at industry events on the subjects of serialization, shop floor automation, RFID and Barcode Technology, and has authored multiple white papers on serialization and supply chain optimization.


Jack Tarkoff, VP, Cofounder, rfXcell

Mr. Tarkoff is an award-winning sales and marketing professional with over 25 years of enterprise software and hardware experience. Prior to joining rfXcel, Mr. Tarkoff was Regional Sales Manager for Velosel Corp. in the Western Area. Mr. Tarkoff was responsible for the largest sale in the company’s history and won the President’s Club award. Prior to Velosel, he was VP of Sales, Western region, for i2, where he built and managed a staff of sales representatives focused on two vertical markets - CPG and Pharmaceuticals. He also had successful experiences at JD Edwards, Abacus Data Systems, StorageTek, and HP.  He earned a BS in Finance from University of Illinois.


Mark Shaffer, Pharmaceutical Business Development Manger, Domino North America

Mark has been with Domino for over 10 years in various Account Management capacities.  In his current role he is responsible for directing Domino’s North American activity in the Pharmaceutical sector with a primary focus on Serialization and OEM development. Mark has spent the better part of his 25 years in Sales with a focus on the pharmaceutical sector. Prior to joining Domino in 2001, his career began in the printing industry, and transitioned into the packaging equipment industry in the mid 1990s. His experience in the packaging industry has created a broad understanding of the critical components required for successful implementation of packaging systems, from design to integration through validation.

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