HDA pilot study identifies possible solutions to DSCSA compliance for returned product

There are two reasons for the Healthcare Distribution Alliance (HDA) to spend most of the past year on testing how returned product that is saleable will be handled in a future, fully tracked system of serialized products: after getting ready to accept and verify serialized product, it is the next scheduled requirement that wholesalers (whom HDA represents) will need to meet, in 2019; and it represents a good way to test the protocols and business practices that will be necessary to meet full DSCSA compliance in 2023. Think of it as, in the US space program of the 1960s, the Project Mercury as a first step to Project Apollo that put a man on the moon.

A third reason—not to be overlooked—is the real economic factor: these days, 2-3% of pharma products shipped out by full-line wholesalers gets returned, and 94% of them are re-saleable and usually get put immediately back into circulation. HDA statistics show that this amounts to 59 million individual returns per year, worth several billion dollars at retail prices. That volume of returns indicates that it would be next to impossible to verify the transaction history of a returned product by manual means (a key problem is when a returned product comes to a wholesaler who didn’t ship it out initially—who has the transaction history?). And, while this returned-products issue affect the business of wholesaling almost exclusively (since the products have already been purchased from the manufacturer by the wholesaler), the cost of returned product that couldn’t be resold would ultimately be absorbed by the entire healthcare ecosystem.

For all these reasons, an HDA workgroup set up and ran smallscale pilots of returned product data processing. The results of the study, presented at last week’s HDA Traceability Seminar (Washington, DC; Nov. 9-11) identified two best-case scenarios for DSCSA compliance:

• A manufacturer sends aggregated product identifier information only for the products purchased to each individual distributor; when the distributor processes a saleable return, the distributor references an internal database to verify the product identifier information from the manufacturer.
• The second option employs a verification router service. In this scenario, the manufacturer stores all of its product identifier information locally, which is connected to a third-party routing service. Upon receiving a saleable return, the distributor captures the product data and sends the data to this third-party router service, which then routes the query to the appropriate manufacturer’s database.

The first option represents some constraints on what products distributors will accept back from pharmacies and other customers; the second calls for a centralized routing service which has the risk of being a single point of failure for the entire process. “One important lesson learned through the pilot is that manufacturers and distributors must work together, collaboratively, to cross the finish line for this DSCSA milestone,” said Perry Fri, EVP of Industry Relations at HDA. Both systems face the problem of not being a mandated requirement of DSCSA; legislators left it to the industry to figure out how to make this work. Also, real-world tests (which involved seven manufacturers, six distributors and a handful of retail pharmacies) showed that there are problems to be resolved in reading barcodes, forwarding queries in a standardized format, and fitting the checking process into customary practices at wholesaler distribution centers. An HDA survey conducted in recent months (see related item) indicated that some manufacturers expect never to aggregate their package-to-pallet data (which is not a legislated requirement, but whose absence will represent a significant challenge to distributors).

Ernst & Young Advisory Services provided overall guidance for the pilot program. HDA is now setting up a work group open to manufacturers, distributors, dispensers and solution providers (both members and non-members of the organization) to further the verification router service. Those interested in participating may contact Justine Freisleben, Senior Director, Industry Relations, HDA, at [email protected]. Additionally, a full report on the pilots will be published by HDA and EY in December.