Fig. 1. The timetable for implementation of the European Falsified Medicines Directive (EU-FMD);
‘delegated acts’ are technical decisions made by the EU for member states. Source: EFPIA
The overall product security picture for the pharma industry in 2013 is: almost-but-not-quite federal legislation; slow but steady progress in Europe and other parts of the world; and heightened focus on supply chain issues here and abroad, as pharmaceuticals and other life sciences products remain the target of counterfeiters, diverters and thieves. Add to this the troubling regulatory gaps (in the US) for compounded pharmaceuticals—which were more or less safety delivered, but turned out to be contaminated with life-threatening microbes—and it all adds up to more work and worry for pharma supply chain managers.
On the bright side, corporate pursestrings have finally begun opening up for serialization projects—Step 1 in a drug-tracking system—but inside and outside the US. Dozens of packaging-line serialization projects have begun, partly because forward-looking US manufacturers are aware of the January 2015 deadline of the California Board of Pharmacy for that state’s e-pedigree rules. Progress at that level has been abetted, in part, by the positive reception of barcoding standards for healthcare products announced by the GS1 Healthcare US group, last March (Pharmaceutical Commerce, May/June, p. 12). In Europe, the European Stakeholder Model (ESM) has been codified, with the participation of European trade associations and the European Union, as the basic framework for moving forward with their approach to pharma product verification. The ESM, in turn, structures what is called the European Medicines Verification System (EMVS)—the data-sharing component that will allow pharmaceutical authenticity to be verified at the point of dispensing. Various European countries are moving forward with national implementations (Fig. 1).
But it’s not as if the clouds have broken up and it’s clear skies from here on out. In the first half of this year, there was an expectation that national pedigree legislation would already have been law by the end of July; as of this writing, the talk is that the law could be passed by the end of the year. Meanwhile, although FDA, Interpol and other national and international organizations conducted another successful “Pangea” operation—Pangea VI—involving the shutdown of thousands of websites involved in diverted, illegal or improperly imported pharmaceuticals—the practice shows little sign of abating.
In May and June, as the Senate sped forward on the Pharmaceutical Quality, Security and Accountability Act (S.959), there was talk of having a bill ready for White House signing before the August recess, which began Aug. 2. The House passed a comparable bill, HR 1919 (the Senate bill is still in committee). But a major difference between the two—whether to include legislation pertaining to compounded pharmaceuticals—now appears to be a major stumbling block. In the Senate, the track-and-trace legislation got bolted together with a compounding pharmaceutical bill. The House version did not, and two pharmacy bills in the House Energy and Commerce committee showed some signs of being hung up over a generally Republican stance of leaving authority mostly in state hands, versus a Democratic stance of expanding FDA authority.
Manufacturers and wholesalers, who came together (with others) in 2012 to form the Pharmaceutical Distribution Security Alliance, very much want federal legislation in place—sooner rather than later—to forestall the implementation of the California e-pedigree law, which is set to go into force beginning in January 2015. A manufacturer who has done nothing to add serial numbers to pharmaceutical packages, and set up an IT system to track where those packages have gone into the supply chain, now has 17 months to get ready for that requirement—unless a federal law pre-empts the California mandate (which, ironically, California’s own law allows the federal law to do). Wholesalers have an additional year to get their systems in place—and most of them have been clear that a) they don’t want to be distributing “California-only” packages and b) they will not want excessive amounts of pre-mandate, untrackable inventory in their distribution centers come January 2016.
In mid-July, a House E&C subcommittee held a hearing on drug compounding, in the context of the VALID Compounding Act (HR 2186), the Senate bill, and a draft bill from Rep. Mason Griffith (R-VA), called the Compounding Clarity Act. While testimony from FDA, the Am. Soc. of Health-System Pharmacists (ASHP) and the National Assn. of State Boards of Pharmacy (NABP) was strongly for expanded federal oversight, testimony from the National Community Pharmacists Assn. (NCPA) and the International Academy of Compounding Pharmacists (IACP) was just as strongly for state-level control. All participants, meanwhile, struggled with how to define a difference between “traditional compounding” (a pharmacist making a single dose for an identified patient and used more or less as soon as supplied) and “nontraditional compounding”—making dosages in bulk, not for named patients: the kind of production that has been implicated in the NECC meningitis scandal of the past year, resulting in at least 63 deaths.
One of the interesting—and worrisome—revelations of the past few months of study of this problem is that hospitals now routinely depend on so-called “outsourced suppliers” for significant quantities of compounded products, especially anesthetics. An HHS OIG report from April found that 92% of surveyed hospitals used outsourced compounded sterile products (CSPs)—and while they reported few problems with them, it is likely that federal or state oversight of those suppliers is spotty.
Fig. 2. Omega Design’s LabelSync, a device to rapidly verify labels and serial numbers.
Back to track and trace
The NECC compounding scandal, arguably the worst quality breakdown since the heparin scandal of 2008, clearly needs to be addressed, but at this point threatens to derail the near-30-year-long effort for a federal track-and-trace system. It’s impossible to predict what will happen next. The compounding legislation could be severed from the track-and-trace legislation; the House could pass a compounding bill, and then the House and Senate conferees could try to reconcile their differing bills; or track-and-trace could be left on the side of the road (again). If the House and Senate can resolve their differing approaches to compounding pharmacies, they still have some heavy lifting to resolve the differences between the drug-tracking bills. The House version (which passed) includes a vastly stretched-out implementation schedule, with actual drug tracking through the supply chain still to be established, perhaps in the late 2020s. The Senate bill (still in committee) has a shorter implementation schedule, but one that still goes beyond the timeline for the California e-pedigree mandate.
Still, as John Gray, president of the Healthcare Distribution Management Assn., puts it, “The legislature does its work by setting the overall goals, and then the private sector will kick in with higher performance standards in a competitive marketplace.”
Packaging line progress
In terms of actual capital spending, much of the activity of the moment is focused on packaging line upgrades, in order to deliver serialized products. At Omega Design (Exton, PA) company CEO Glenn Siegele reports that projects are picking up both inside and outside the US for its labeling and sorting machines; its LabelSync technology (Fig. 2) enables individual bottles to be tracked through the case-building and packaging process, the better to address the nagging problem of aggregation of individual package codes with the cases or pallets they are packed into. Siegele says that the company has been broadening its equipment lines to combine manual and automated processes (especially for low-labor-cost countries outside the US); its Intelli-Pac unit allows for manual case building.
Cognex, a Natick, MA, vision systems supplier, announced an upgraded In-Sight Track & Trace system last spring that combines its machine-vision devices with software to identify and verify units on the packaging line. Machine-vision upgrades have also been the goal of companies like Optel Vision (Quebec), Systech (Cranbury, NJ), Seidenader (Clearwater, FL), Mettler-Toledo (Columbus, OH), Xyntek (Yardley, PA) and others.
Putting the serial codes on the packages (or, alternatively, obtaining precoded labels and applying those) has been well established by packaging-equipment vendors such as Domino-Amjet, Zebra Technologies, Videojet Technologies and others. For pharma track-and-trace, the key hurdle has been developing IT systems that can accurately collect the serial data, deliver it to an enterprise-level system, and from there make it available to trading partners or regulators on demand. Vendors in this area include Acsis (see companion story in this issue), Systech, Optel Vision, Axway (Phoenix), Oracle (Redwood Shores, CA) TraceLink (Wakefield, MA) Fastpoint Technologies (Lake Forest, CA) and rfXcel (San Ramon, CA), among others.
IDC Health Insights, a market research firm, recently ranked TraceLink and Axway as “leaders” in this category, based on a combination of technology, market acceptance and growth capabilities, although it apparently had a restricted list of vendors that it chose to study. “This is an emerging market that will undergo significant expansion in the next several months,” comments Todd Slocum, director of research at the firm.
And there are other players who, if not introducing new products, are repositioning themselves for the run-up to the California deadline and beyond. One is Frequentz (Los Altos, CA), which acquired the InfoSphere technology of IBM a year ago; that technology has been commercialized in food processing and distribution, among other areas, says Michael Lucas, CEO, who adds that although IBM divested this technology to his relatively small firm, the IBM Global Services business (one of the largest IT services firms in the world) stands behind the technology and will assist in implementations.
Another new force is JDA Software (Scottsdale, AZ), which acquired the supply-chain software firm RedPrairie last year. Both RedPrairie and JDA have experience in track-and-trace-related pharma projects, but neither was a major player in past packaging-line serialization efforts. Tom Kozenski, product marketing and industry strategist for warehouse management systems, notes that at least one of the company’s clients has been using JDA Software to comply with the established regulatory system in Turkey. The company has announced a broadbased integration plan for JDA and RedPrairie products, to be complete in early 2014, involving JDA’s supply-chain planning and transportation-management software with RedPrairie’s warehouse management software.
Greg Cathcart, president of Excellis Healthcare (New Hope, PA), which provides consulting and systems-integration expertise for clients using SAP enterprise software (which is widely used throughout pharma manufacturing and distribution) says that SAP’s two data-management products, known as AII and OER, are already widely available where SAP is installed; there is a systems-integration project to undergo in using those products for enterprise-level data storage and transmission, but that the time necessary to do a combination of serializing a packaging line and performing the SAP integration is declining to four months or less for a first implementation, and less time for successive ones. (Manufacturers need to serialize line by line; some of them have multiple lines serialized already, while others are designating certain lines for serialization and waiting for further national or international regulatory activity.)
Systech, with an eye on approaching deadlines for serialization, has made some changes to how its software products are positioned so that an implementation can occur more quickly, says David DeJean, president. “Our Enterprise Serialization Solution is now prepackaged, and can be implemented relatively quickly for the specific goal of getting the serialized data from the packaging line into the software that runs your distribution center,” he says. That step is a critical one to enabling the serialized data to move with the physical distribution of product to trading partners. Other parts of the Systech IT “stack” are being developed for supply chain analytics, regulatory reporting and other functions.
Getting to the cloud
Systech acquired another company, Apostrophe Systems, over a year ago specifically to enable its serialization software to be provided on a SaaS (software as a service) basis, which has come to be broadly synonymous with “cloud computing.” Cloud computing offers certain efficiencies in code maintenance and implementation costs; it so happens that it is also evolving to be a vital part of broadbased data communications. That’s the logic pursued by TraceLink, founded by principals who have worked in pharmaceutical product tracking for many years. Their wholly-cloud-based offering, Life Sciences Cloud, has been used to provide communications between pharma brand owners and their contract manufacturing organizations (CMOs), among other applications. Amazon Web Services, the cloud service provider used by TraceLink, recently published a case study of how TraceLink is installed there, making use of AWS’ “Elastic Compute Cloud” to deliver data, and “Elastic Load Balancing” to provide “persistent instance storage and backup,” and “AWS Identity and Access Management” for data security. Technical concerns like these are significant for pharma track-and-trace, because the ability of cloud-based systems to receive and transmit needed data is still in a nascent form. The GS1 organization is updating its EPCIS standard for data sharing, but Bob Celeste, program manager there, notes that some aspects of that work will depend on how the federal legislation is written in Washington—which brings the question of a federal law back into the picture.
The global GS1 organization (which is somewhat distinct from the GS1 US Healthcare group) is holding an international meeting next month in San Francisco (Global GS1 Healthcare Conference, Oct. 1–3; www.gs1.org/healthcare/news_events/011013) to air out EPCIS issues as well as to bring other healthcare participants, such as medical devices and hospital materials management, together.
Cardinal Health, which over the years has both developed track-and-trace systems and piloted tests involving multiple trading partners, has been running a full-blown track-and-trace system at its Sacramento, CA, distribution center for several years (as have AmerisourceBergen and McKesson at facilities of theirs). Julie Kuhn, VP of operations, says “we’re facing some really hard work” to get ready for the California deadline. Part of the problem is that while more manaufacturers are serializing products, they’re not quite ready to conduct the data-sharing processes that will be necessary to meet the California mandate. “The volume of products we’ve handled to date barely reach 1% of our throughput,” she says. Current IT technology is “too rigid,” and exceptions processing (when a data record does not match up with the physical product being received) are an ever-present concern.
Cardinal is currently doing this work on a point-to-point basis—data from one pharma supplier coming into the DC, and then data about that supplier’s product going out to one customer. In Europe, plans are already moving forward for a national database; while in the US, there are still debates over whether there will be a central repository for these trading data, or a “federated” system of multiple databases, or simply a vast array of point-to-point communications.
Bill Fletcher, head of Pharma Logic Solutions (Yardley, PA) asserts that many problems like these are solvable with the latest technology generations, and that the pharma industry has a lot to learn from other industries where item-level tracking is an established fact. It is clear that a new implementation of the latest solutions would be an improvement over existing ones—but then the question is, in the face of continuing regulatory uncertainty, how willing are pharma manufacturers and distributors for tearing out one system and putting in new ones.