When the Drug Supply Chain Security Act was passed in 2013, many of its details were hammed out in close collaboration with actors in the pharma supply chain—manufacturers, wholesalers, retail pharmacy and others. Given that the law’s implementation has an extraordinary 10-year implementation schedule, it could be argued that FDA and Congress were giving the industry an under-ambitious, conveniently slow timetable. Now, however, with a couple of the initial milestones already passed, a picture is emerging that the 10 years will be quite full of difficult, expensive work—and that the outcome is uncertain for the assumed 2023 completion.
This is the overall picture that arises from a just-completed survey by TraceLink, one of the leading IT providers in this field. Although vendor-sponsored surveys can always be looked on with some skepticism, this one appears to be a broad-based, objective one—at least to the extent that there’s any objectivity in categorizing the entirety of the US pharma supply chain at all. TraceLink’s survey details responses from 331 manufacturers, wholesalers, pharmacies and health systems with US operations (it’s worth noting that the key element of DSCSA—serializing individual pharma packages and then tracking or authenticating them through distribution channels—is a feature of most of the systems being implemented in the rest of the world). A key survey factor is that these 331 (101 manufacturers, 47 wholesale distributors, 146 hospitals and 37 retail pharmacies) represent, proportionately, the “actual” pharma supply chain, at least as TraceLink defines it; the company worked with a market-research firm, Actionable Research, which says that the results represent actual pharma distribution within ±5%.
Survey responses, collected this past summer, were keyed to respondent status as of Jan. 1 2016—a time when manufacturers and wholesalers had already begun exchanging lot-level data, and some pharmacies were receiving and recording lot-level data. Among the notable results:
- 26% of pharma companies have more than 10,000 customers, and 29% of pharma sales were made directly to hospitals and pharmacies
- 43% of pharma sales went to wholesalers other than the Big 3
- 42% of hospitals and 19% of retail pharmacies resell to other pharmacies and hospitals
- 16% of pharma companies sell more than 1 billion “eaches” (individual packages, which must be uniquely serialized by November 2017).
Looking at performance (as of January) on exchanging lot-level data, TraceLink finds:
- 19% of wholesalers “have yet to address compliance” (in fact, this could be because some of them already deliver lot-level data independent of DSCSA requirements); an identical percentage reported an increase in rejected product exceptions (i.e., data on the shipment was not delivered with the physical shipment, or was otherwise unusable)—and 38% reported an increase in exceptions that then needed rework
- 27% of pharmacies, and 5% of hospitals, reported instances of drop shipments lacking documentation.
And, looking ahead to item-level serialization and its data demands:
- 51% of pharma companies expect to aggregate their data (matching serial data of eaches with the cases and pallets they ship—and 8% do not plan on aggregating at all
- 83% of wholesalers are considering changing their stocking fee schedule for manufacturers who do not aggregate (and 6% have already decided to do so)
- 54% of pharma companies agree that they are “well prepared” for serialization requirements; the reminder disagree or are not sure
- 51% of manufacturers, and 62% of wholesalers, expect to use the EPCIS data format for exchanging shipment information; the remainder are roughly split between the “serialized ASN” format (which essentially conveys the data but requires changes to existing ASN standards), and “other” (not defined).
TraceLink’s characterization of the pharma supply chain differs markedly from what has usually been described as the “normal” chain: manufacturer to wholesaler to pharmacy, with the latter two consolidated mostly around the Big 3 wholesalers and the leading chain pharmacies. With multiple wholesalers (including secondary wholesalers), hospitals and health systems in the picture, a much more complex supply chain is being described. “The normal supply chain is nothing more than a myth,” says Shabbir Dahod, CEO of TraceLink. And in fact, some health systems’ aggressive moves into in-house pharmacy operations (particularly for specialty pharmaceuticals), combined with the back-and-forth movement of products between hospitals, or between pharmacies, does add complexity. (TraceLink is paying much closer attention to hospital systems in its characterization of the pharma supply chain than most observers of the DSCSA scene do—but it’s getting the customers there to justify its attention.)
This more-complex picture stands in contrast to what the Healthcare Distribution Alliance reports in its annual Factbook—that 94% of pharma shipments go directly to the 34 HDA member wholesalers. That is undoubtedly true, but products go from them to a complicated interplay of other wholesalers, distributors and healthcare providers—with bidirectional flows among them.
And while the majority of manufacturers seem to heading toward aggregating product, and reporting trade data with the EPCIS format, the alternative approaches will be a tough process to corral into a fully compliant DSCSA system, even with that deadline not occurring until 2023. The full TraceLink webinar is available here.