Magazine Article | June 1, 2012

The Business Case For Pharmaceutical Serialization

Source: Life Science Leader

By Gail Dutton, Contributing Writer
Follow Me On Twitter @GailLdutton

The obvious benefit of serialization, aside from regulatory compliance, is as an adjunct to companies’ anti-counterfeiting efforts. There are many other potential applications, largely focused around supply chain assurance and integrity, but their return on investment often is less quantifiable. Although those additional benefits may filter through the supply chain, pharmaceutical companies currently are focused on serialization’s initial implementation and upon ensuring data system interoperability.

Consequently, developing strategies to mine, store, and analyze data, and then to put that data into context in ways that build broader usability, is a secondary concern. Many executives are just realizing that ePedigree data could be a corporate asset, but even the savviest are still trying to identify ways to leverage that data to support the business units and the supply chain.

Bristol-Myers Squibb (BMS) was among the first to understand the multiple benefits of serialization. It is putting systems in place now to enable serialization data to be used to improve patient safety, enhance its corporate social responsibility efforts, protect the corporate reputation, and provide a competitive advantage. “This is a new capability that puts us in a better place,” says Natalie Lotier, VP of strategic supply chain operations and planning.

In implementing serialization, BMS is aligning its supply chain processes more closely to the business processes and to the BMS global integrity council. With the improved supply chain visibility provided through track-and-trace technology, “We’ll see the pathway a product follows from our distribution center all the way to the customer. That visibility will enable us to better understand the product flow and thereby improve logistics and transportation efficiency, including reverse logistics, and make quicker and better decisions,” Lotier says.

Fighting Counterfeiting
Aside from regulatory compliance, pharmaceutical companies say the main benefit of serialization will be its support of anticounterfeiting and diversion efforts, which translates to patient safety. Counterfeited or gray-market products enter at the supply chain’s weakest points, usually as products flow through multiple countries. In February and April, 2012, for example, counterfeit Avastin was shipped from Turkey through Europe to the United States. In 2008, counterfeit Heparin was reported in a dozen industrialized nations, causing approximately 150 deaths, according to the World Health Organization. Pfizer says its Viagra is the most counterfeited Pfizer drug in the world.

“The counterfeit market is a significant industry threat,” stresses Reid Graves, manager, global master data management, Pfizer Global Logistics and Supply. “We feel the need to act now to protect our patients, our products, and our company reputation. Patient safety is our primary focus.”

As Mac Hashemian, president and CEO of Xyntek, Inc. elaborates, “Global counterfeiting is a multibillion dollar problem in the life sciences industry. The counterfeiters have technology so advanced that sometimes their labeling is better than the manufacturer’s.”

The track-and-trace technology that is integral to serialization won’t prevent counterfeiting, but it will provide a heightened level of assurance that at least the serial numbers on the product packages match those issued by the manufacturer and are linked to specific shipments. Any discrepancy makes a shipment suspect. “Serialization is not only a way to protect patients, but also to protect the brand,” emphasizes Hashemian.

Smoother Refunds, Recalls
“Serialization will be important when it comes to reimbursing buyers for returned products and for rebates,” Hashemian predicts. The current refund system has a significant potential for error, so duplicate payments are made, he points out. “Without serialization, all drugs (of a given type) look the same. There’s no unique identifier. But, with serialization, drug wholesalers and manufacturers can ensure that refunds are paid only once for the specific drugs that were returned. Serialization also helps distinguish genuine products from the counterfeit products that sometimes are returned.

Serialization also may reduce the size of recalls. Because drugs can be identified by lots, manufacturing date, plants, production lines, shipping locations, and redistribution points, they can be tracked all the way to the pharmacy or patient. Consequently, recalls can be quite specific, targeting individual pharmacies or regions rather than the large, blind, national recalls that often have occurred. Tightly targeted recalls increase recall efficiency and effectiveness, and also improve patient service by leaving greater quantities of viable product available to patients.

Other Benefits Of Serialization
The additional value of serialization lies in the data that will be returned to manufacturers from their supply chain partners. Individual companies remain in the early stages of determining what data they would like to receive from their supply chain serialization efforts.

Improved supply chain visibility is a huge benefit of serialization. As Terry Young, director of enterprise data operations at BMS, says, “With that additional data, analytics become available to us with less manual effort, to enable totally new capabilities we can’t imagine today.”

As track-and-trace solutions are deployed, however, the synchronization and interoperability of computing platforms and applications throughout the supply chain becomes a challenge. “Currently, Pfizer is focusing on how to capture and exchange data efficiently,” says Peggy Staver, director of product integrity for Pfizer. It — along with much of the pharmaceutical industry — is evaluating the relative merits of centralized, distributed, and hybrid data management models. One model, for example, pushes data to supply chain partners. But, because that approach moves high volumes of data, it increases the IT overhead.

Cloud computing, in contrast, uses SaaS and PaaS (platform as a service) technologies to allow trusted users to access a single database. That approach alleviates many of the IT challenges. “We’re seeing some IT infrastructure savings in moving to the cloud for data management, storage, and infrastructure solutions,” adds Elliot Abreu, senior VP of Xyntek, Inc.
BMS uses a single, globally integrated ERP (enterprise resource planning) application. As Young says, “That gives us a lot of flexibility to select numerous solutions to connect and understand the performance of our serialization efforts across the globe. We also operate a centralized master data management platform, which is a key component of our serialization efforts.”

The benefits of serialization are likely to trickle throughout the industry. For example, inventory may be positioned more effectively to reach patients and to control the costs of waste. “At BMS, we had more efficient transportation costs and reduced inventory (during a pilot serialization program) because it required fewer trucks and buildings. It wasn’t a major impact, though,” Lotier admits.

Additionally, a thorough track-and-trace program that includes expiration data may improve shelf-life management, demand forecasting, and production planning, and also may enable just-in-time logistics for some hospitals or pharmacies. “Near-term, distributors and pharmacies may realize the greatest value from serialization, through improved inventory and shelf-life management,” Staver says.

Having near real-time insight into the supply chain also may help companies target sales and marketing promotions to local conditions and optimize multichannel campaigns. Market intelligence firm IDC estimates the pharmaceutical industry may gain some $11 billion simply by optimizing these areas.

This technology also may be used to drive operational efficiency. As Hashemian explains, the database system used to track serialization data also can be used for other things. For example, he suggests not only applying a unique serial number, but adding additional content to the database. That may include the time it takes the product to go through manufacturing, filling, and packaging, for example. “Collecting data also allows recalls to be linked to specific lines, times of day, operators, and perhaps even the event that caused the need for the recall,” he says. Such detailed data can be analyzed to improve processes throughout the organization.

The potential business value that can be derived from serialization initially seems lengthy. When Pfizer first contemplated the business case for serialization, it created a long list of possible benefits. But, as the Pfizer team analyzed those possibilities, it realized that many of those benefits depended upon wide-scale deployment of serialization and track-and-trace across the supply chain, and upon decisions that were not yet made.

Don’t Overlook The Related Process Changes
The basic information to be encoded by the manufacturer is obvious. The pharmaceutical industry plans to capture and correlate serial numbers that are kept in the manufacturer’s database as they are sent to the packaging lines, applied to the product, and shipped. Additional information will be stored in the manufacturer’s database, but not encoded on the 2D bar code. At Pfizer, for example, a unique serial number, product identifier, expiration date, and lot number will be encoded in the bar code, but master data related to the product will remain in the database where it may be cross-referenced.

Clearly, serialization involves more than simply tracking serial numbers. It triggers changes in other business processes. Although serialization doesn’t necessarily change distribution strategies, it does change the process. Under serialization, Staver says, “Distribution sites must capture information. That involves scanning information as product arrives and as it leaves, and associating that information with a customer order.” Returns undergo a similar process.

Exceptions also must be resolved, with potential ramifications for supplies if resolution is not completed quickly. For example, Staver says, “If 48 products were shipped to a customer but 49 were received, the extra product must be identified and the necessary electronic data exchanged before the additional unit may be sold by the customer. Today, that extra unit is saleable. In a serialized, pedigreed environment, it would be quarantined until the exception is resolved.”

Despite the changes and challenges, serialization does offer business value for those innovative enough to find it. Serialization enables a different way of collecting and looking at data — one that can be a nuisance or one that can provide a competitive advantage. But, as Greg Cathcart, CEO, Execellis Health Solutions, predicts, “Before the item-level pharmaceutical serialization can bring much-needed visibility to the supply chain, it will cause significant disruption, escalate costs, and usurp opportunities.”