Taking a look behind the scenes of Serialisation

pharmafile | February 12, 2018 | Feature | Business Services, Manufacturing and Production, Medical Communications, Research and Development, Sales and Marketing |  Serialization, biotech, drugs, pharma, pharmaceutical, serialisation 

The reaction from the pharmaceutical industry has been mixed since the announcement of serialisation requirements. Ben Hargreaves discovers the challenges and pitfalls that have plagued implementation.

When the FDA announced that there would be a delay to the enforcement of the Drug Supply Chain Security Act (DSCSA) from November 2017 to the same time the following year, there is no doubt that some companies would have breathed a sigh of relief. The unified effort of both US and EU authorities to secure the supply chain through the inclusion of more data and, importantly, the addition of a unique serial number of each different package or case will undoubtedly make taking medicines safer, but also served to make the industry a little hot under the collar.

Implementing serialisation across a company is a challenge and one that many did not particularly welcome. Being told what to do is one thing, but the expense that has already been incurred, and will continue to mount, across the industry is one that will not have been a palatable prospect to many.

The delay to the US’s enforcement means that companies across the Atlantic are facing a similar deadline for when they will have to be compliant, with the US implementation beginning on 28 November 2018 and the EU False Medicines Directive (FMD) coming into action on 9 February 2019. It is highly unlikely that the EU will chose to make a similar step to the FDA by delaying the enforcement so these timelines are now fixed in place, giving companies involved a fixed deadline to work towards.

Why is it necessary?

The immediate question that will have been asked within companies would have been why it was necessary to bring in the updated requirements on track and trace, especially given the huge cost and time drain the changes would cause. The simple answer is to secure the supply chain.

Though the discovery of fake medicines within the legitimate supply chain are exceptionally rare, when billions of dollars’ worth of medicines are being shipped and traded every year, exceptions are bound to happen. It’s not simply the concern of pharmaceutical companies losing out on legitimate sales by the counterfeit products entering the supply chain – there are far more ramifications than are first apparent.

Safety is obviously the paramount issue; fake medicines that have entered the supply chain cannot be of verifiable quality and so pose a significant public health risk when they reach the patient.

One of the most notorious examples of counterfeit medicines entering the legitimate supply chain occurred in 2012, as counterfeit batches of Roche’s Avastin managed to enter the US. The dangers this posed are obvious: Avastin is used to treat a number of different cancers and patients treated with the counterfeit treatment could have been receiving whatever concoction those behind the fake batches chose.

Studies of the batches revealed that some of the treatments were formulated from corn starch and had no active pharmaceutical ingredients. The true extent of the damage done by the fake medicine cannot be known, as it was initially assumed that patients not responding to the treatment were simply dying from their aggressive cancer.

How did the scandal come about? Well, it’s primarily down to the convoluted manner in which the fake treatment entered the US market. Its path was traced officially from Turkey, to Switzerland, to Denmark, to the UK before ending up in the US. Where it originated before Turkey has not been discovered, only further highlighting how difficult it can be, under current methods, to track pharmaceuticals through the supply chain.

Building a secure system

It’s clear that to prevent this, serialisation offers one part of the solution. Both the EU and US systems will offer greater traceability through the supply chain, potentially averting the aforementioned example of the counterfeit Avastin’s journey to the physician.

The implementation in the US will differ from the EU system in numerous ways, the most significant of which is how often the products will need to be authenticated. Under the US ‘pedigree model’, the product will need to be checked with every change of custody. This means there will be more numerous checks performed through the US supply chain compared with the European ‘authentication model’. 

The EU will check the products at the point of entry into the supply chain and then at the point of dispense, with the serial number checked against a centralised database to ensure it’s a genuine product. If the product cannot be found on the database, it will trigger an alert to the pharmacist that something is amiss. On top of this requirement, products in the EU will also need to feature an anti-tampering seal, which will ensure that any interference with the contents of the product will be immediately obvious.

To explain how these changes will be implemented at the ultimate end of the supply chain with the dispenser, Pharmafocus contacted Secretary General of the Pharmaceutical Group of the European Union (PGEU), Jūratė Svarcaite. She explained what the legislation meant for pharmacists: “According to the legislation, the requirements we will be facing will be that we have to verify and check the serial numbers through the national databases before handing out the product to the patient, and at the same time we will have to check the anti-tampering measures placed on the packaging”.

Much of the discussions on the changes that the FMD will bring have focused on the pharmaceutical industry at the beginning of the supply chain, instead of the pharmacies at the end. Svarcaite detailed why this is: “There is a simple explanation for that – it is explicitly mentioned in the delegated regulation, which is supplementing the directive, that industry has to pay for the databases. That’s why the focus is on the industry. That doesn’t mean we don’t have costs on our end of the supply chain, but it is just less apparent and that’s why much of the discussion focuses on the expense to the industry”. 

Getting prepared for change

Pharmafocus spoke to Maarten Van Baelen, Market Access Director at Medicines for Europe (the organisation representing the European generic and biosimilar and value added medicines industry), to provide more details on the exact requirements, and challenges, for those companies at the start of the implementation of the Falsified Medicines Directive impacting  the supply chain in Europe.

He explained: “When the FMD comes in to force in 2019, companies need to apply safety features to their packaging. They need to serialise individual medicinal packs by printing a new, appropriate data matrix on each pack, which includes a product code, batch number, expiry date and serial number. They also need to apply a tamper verification feature. However, that’s only the technical part, they will also have a lot of regulatory requirements to fulfil. For each marketing authorisation, they need to notify these changes to the competent authorities as well, so that will be a huge part of the work.

“And then, from the other side, manufacturers and marketing authorisation holders are also responsible for setting up a verification system governed by the European Medication Verification Organisation (EMVO). That’s where Medicines for Europe plays an important role, as we were one of the founding members of EMVO.”

The EMVO is a non-profit organisation that represents those involved in securing the supply chain. They are the driver in the establishment of an inter-operable medicines verification system in Europe providing information on its website to help stakeholders to implement the requirements of the FMD.

When asked about what the reaction of its members had been to the requirement implementation, Van Baelen commented: “Our members are working hard to meet the deadline and are confident they will be able to do so, because we provide  the necessary information to our members. We have been working on this legislation from 2008, so 10 years by this point. Our members are therefore aware of what is coming and they are preparing everything to be ready. We are concerned about companies that are not members of Medicines for Europe or any of our national associations who do not have such support about what they need to do.”

To gain an understanding from a company within the pharma industry, Pharmafocus enquired as to how Merck KGaA had managed the process and Andreas Pies, Head of Global Engineering and Technology for the Biopharma business of Merck, was able to provide an answer: “We analysed the market requirements, identified commonalities and patterns, and back in 2012 we decided for a centralised global approach where all requirements were managed through a global team and all production sites and lines had to follow the global standards.

“Today, six years after this decision, we still follow the same approach with a global platform and a unique partner for our hardware installations on the lines as we continue the roll-out across our production lines. We also connect with our partners in the supply chain through a single system and partner.

“In parallel we also looked at possible ways to leverage the data that is generated by the process and are one of very few companies that is already using the Track and Trace backbone to give information to our patients to always better serve them. For example, our patients in the US and in Colombia have access to our free Check My Meds app for smartphones, allowing them to scan the serial number on the box of their Merck medicines and quickly help to verify their authenticity.”

Ensuring there are no missing links

The legislation has brought together all players in the supply chain and, because of the demands, has encouraged them to work cooperatively to ensure the process is a success. This is a major test of the regulation and recalls the old adage about weak links in a chain, as it would only take one player to be lagging behind to cause significant issues.

Svarcaite discussed the level of interworking required to make the FMD work within the EU: “It was decided very early on, when this process just began to see daylight – adopting of directives in the EU takes many years, the FMD legislation was adopted back in 2011 – to work with the industry. We realised, one way or another, that we would be impacted and so we wanted to take proactive steps in designing the system, which was then confirmed by the delegated regulation, to be a stakeholder-led system – along with supply chain partners, manufacturers, wholesalers and ourselves.”

She continued: “We are also a founding member of the European Medicines Verification Organisation (EMVO), which is the body to go to for the implementation of the FMD directive. A similar concept is being mirrored at the national level to set up these repositories and so, at the same time, our members are having to work in countries, alongside supply chain partners, to set up these legal entities that are going to be put together, implementing and managing these repositories, as well as the whole verification and serialisation processes at the national level.”

All change, please

The whole process, once implemented across the board, should make the process of spotting a potentially counterfeit medicine entering the supply chain much simpler and efficient. However, the process of implementing the required changes is anything but simple for the companies involved. To such an extent that it’s now an often-made joke within the area that companies have looked at a number of ways of getting around the process.

For smaller companies though, it is no laughing matter. The costs of implementing the changes required by the FMD are high – so much so that many SMEs have avoided adopting the measures in the hope that they would be able to persuade the European Commission (EC) to be less stringent on smaller businesses. However, it is highly unlikely this is the case, leaving the SMEs facing down the barrel of the February 2019 deadline with no updated process in place.

From the start of this legislative process, Medicines for Europe (at that time called EGA) had raised concerns about the high costs associated with this legislation. Van Baelen explains why: “We advocated heavily to have generic medicines exempted from this legislation At the time, a key element of the debate centred on whether it was a wise use of resources to include the generic industry in these requirements because of the low-risk of falsification due to the low prices of generic medicines. If you look at publications and articles around falsified or counterfeit medicines, it is much more interesting for a counterfeiter to falsify a medicine that is very expensive rather than to counterfeit 10,000 packets of generics medicine that cost €2.

“Eventually, the European Commission was not keen on exempting many more products, although on the other side they exempted all over-the-counter products (OTC). They were very keen to have all prescription medicines included and not OTC’s. Though in some way, that doesn’t make a lot of sense – why would you exclude OTC products, when they are at risk of being counterfeited as well?”

As well as generics and SMEs, even the biggest of companies have found the process to be a real challenge. Pies relates how Merck KGaA found the process of implementing the changes difficult on a country-wide level:

“Implementing serialisation security features is a long and challenging process with new countries adding new requirements while we progress…but our approach and standards still stand.”

In particular, he broke down the process by looking at the internal and external difficulties: “Internally, in order to install the new hardware on the production lines, we need to be able to stop the lines for a few weeks, which reduces the packaging capacity in our manufacturing plants. Also the new equipment on the lines increases the complexity of the packaging process, which requires highly educated operators who need to be trained in a timely manner to manage the new requirements.

“Externally, new countries came up with new requirements and very short deadlines. For example, in India the government issued the guideline during 2016 with a lead time of less than one year to comply. In Brazil the requirements and timelines are changing very quickly. Also, there’s the newly approved legislation in Russia. All of these new legislations require major flexibility from all teams involved in interpretation, preparation and implementation.

Paying the price

What are the consequences of the failure to comply with the serialisation effort on either sides of the Atlantic? In the EU, failure to comply with the FMD has one simple outcome: companies, whether pharmaceutical or contract manufacturing organisations (CMOs), will no longer be able sell their products or services.

In the US, it is clear that there will be fines or revocation of licenses should companies not adhere to the DSCSA. One particular list of potential punishments includes:

• Imprisonment for not more than one year and/or a fine of not more than $1,000
• Imprisonment of not more than three years and/or a fine of not more than $10,000 for subsequent or intentional violations
• Equitable remedies, such as restitution, disgorgement of profits, and product seizure
• The Federal Criminal Code also authorises a general fine of up to $250,000 for individuals and $500,000 for entities

The penalties in both the EU and the US are then unsupportable for business; there is a little choice but to be ready for serialisation or face probable collapse of the company.

Van Baelen summarises the importance for EU business quite clearly: “With the legislation, if you do not apply these safety features by February 2019, you will not be allowed anymore to put your products on the market.”

“A lot of companies, especially smaller companies, only found out in the late stages about this legislation and are trying to be exempted from this regulation by calling out to their national competent authorities. This is not an option – it would be an infringement of European law”.

Pies, of Merck KGaA, sympathised with the difficulties smaller businesses are having: “We are talking about a complex process that goes far beyond just looking at hardware installation on a production line. Merck’s Track and Trace programme consists of more than 250 sub-projects. We can imagine that for many smaller companies, that must represent a huge burden. 

“Some CMOs are using their preparedness as a selling point. On our side, in the process of this implementation, we had to discontinue a few contracts with CMOs that could not comply with the process.”

Facing the inevitable

It is no wonder that, when faced with such extreme measures, some companies have left the process of serialisation late or have not implemented it at all. Prompting the FDA’s decision to push back the deadline for the DSCSA was the published report that suggested 40% of companies consulted in a survey by IQPC that were required to be ready, would not be prepared for another 18-24 months when consulted at the end of 2016.

Van Baelen, when questioned on whether the EC would extend the deadline in a similar manner to the US, was adamant that this would not be the case: “I think at this stage it is not going to be possible. The approach of the US was to take a staged approach – starting with serialisation and implementing aggregation on a later stage. Eventually, they managed to grant an extension on the deadline for aggregation as this is extremely costly and complex. However, so far, companies are working very hard on serialisation for the EU and it would also not be fair on those who comply to the law; good students should not be punished for the behaviour of the bad students in the classroom.”

Implementation, however, is not a simple task and explains why Van Baelen suggested that companies needed the support of member organisations such as Medicines for Europe.

There are a number of concerns for those tasked with implementing the DSCSA and the FMD, closely linked to the complexity of the undertaking itself. The difficulties of implementing the changes, often across more than one facility, are self-evident. There is also the process of coordinating approaches between pharma companies and CMOs, and across different territories: there are a number of different companies offering to aid the implementation of serialisation, and the different approaches recommended by each is then a process of considerable necessary research. Potential disruption to current supply chain operations is also a concern, the requirements for handling the vast of amount of data involved are significant, and there is the worry about cost.

The last point is the major concern: 54% of those in the industry believe that cost is the largest barrier to FMD implementation, according to a report by SEA Vision. The process can cost millions of dollars or euros, a sum that is not a huge cause of concern for the big pharma companies, but for the smaller CMOs and pharma companies this can be an insurmountable obstacle. 

It is an extensive list of worries and challenges that companies have had to or still need to face, and helps explain why there was a certain degree of pushback from certain sectors of the industry when the requirements were announced.

To those that are struggling to meet the deadlines, Van Baelen’s suggestion is to get involved in as many conversations as possible, whether through conferences or through speaking to companies involved in managing the process: “This is why we’re organising our events with Supply Chain Wizard and other companies like Domino Printing – everyone can join these meetings. The Supply Chain workshops are even free of charge for participants and there you can gain a lot of information. In addition, what companies can also do is to reach out to the EMVO, when companies are ready to make a connection to the European Medicines Verification System, they will help you with on-boarding.”

Not all doom and gloom

From a business perspective, it can be easy to see the negatives amongst the requirements. However, there are reasons why implementing the changes can have a positive impact on businesses that go some way to mitigating the burden placed on them.

The obvious one is the reason the process has been implemented in the first place: to ensure the safety of those taking medicine at the end of the supply chain. There is no doubt that, despite all the difficulty of implementation, the supply chain will be made more secure by the process. In this regard, everyone is a winner – there are fewer counterfeit drug scandals, the consumer feels greater confidence in the end product and the pharmaceutical companies’ reputations are burnished.

It also means that, for the companies involved, there is a greater visibility through the supply chain. This means that if things do go wrong, it is far easier to trace where and how things have managed to go awry – for pharmaceutical companies, CMOs and the national authorities themselves.

This is a point that Van Baelen highlighted: “I think it can provide a lot of transparency in the supply chain, if you take, first of all, that the primary objective is to prevent falsified medicine in the supply chain. The second aspect is that national competent authorities will be able to access data in the verification system for the purposes of reimbursement, pharmacovigilance and pharmacoepidemiology. Authorities could therefore get greater transparency into the supply chain and will be able to tackle and solve a lot of problems such as medicine shortages.”

There is also the financial benefit that may be gained after implementation. A report by McKinsey estimated that a company with annual revenue of $4 billion and earnings before taxes of $470 million could make substantial savings in a number of areas:

• $90 million from reducing inventory assets
• $11 million per year from reducing inventory financing and holding cost
• $4 million per year in produce waste reduction due to obsolescence
• $3-12 million per year in reducing cost of recalls
• $25-35 million per year from reducing financial impacts of counterfeiting

For a larger business such as Merck KGaA, Pies noted what benefits he sees for the company: “Merck stands for quality and securing our medicines against counterfeiting is part of protecting our reputation as a supplier of quality products. Considering that it is estimated that 2% of worldwide trade is counterfeit products, this represents a certain volume of business.

“Most importantly, fighting the counterfeiting of our medicines is part of our Corporate Responsibility efforts as, according to the WHO, between 300,000 and one million people die every year because of counterfeit products. Every contribution Merck can do to reduce this number with our associated efforts is a highly valuable investment.”

It’s worth bearing these positives in mind, because for all companies involved in the process of meeting the requirements of the DSCSA and the FMD, it’s been, or still is, a gruelling journey to achieve the stipulations, and the tangible benefits of these changes may not be realised for a number of years. However, the process is one that will ensure that the most vulnerable element in the supply chain is protected: the patient.