Serialization is a topic that is receiving increasing attention, as the industry starts to look ahead to the looming regulatory changes in the U.S. and Europe. But are plans sufficiently underway in order to meet the deadlines? What should pharmaceutical companies be doing now to prepare for the legislation? And what are some of the biggest barriers to effective implementation?

The evolving counterfeit challenge
Counterfeited medicines, reimbursement fraud and theft throughout the supply chain are increasing problems for the pharmaceutical industry. Falsified medicines, which might contain ingredients, including active ingredients, of poor quality or in the wrong dose, are a major threat to public health, as well as the reputation of pharmaceutical brands. 

The World Health Organization (WHO) estimates that the problem of falsified medicines accounts for between seven and 15 percent of all medicines circulated in developed countries, while the challenge is on a larger scale in the developing world, accounting for 30 to 40 percent.

For example, 30 percent of drugs sold in Kenya during 2012 were believed to be counterfeit, presenting a huge challenge to patient safety. Just some examples of toxic or harmful ingredients found in falsified medicines include boric acid, arsenic, heavy metals and floor polish.

Global pharmaceutical companies selling products with a high risk of being counterfeited have for a number of years implemented a technique for a traceable, unique ID on each product pack—they have serialized. This helps in tracking the product from production, through the supply chain and on its route to the end consumer. Governments throughout the world are now seeing this as a way to combat medicine fraud.

As falsifications become more sophisticated, the risk that falsified medicines reach patients in the U.S. and the EU increases every year. This has led the EU to approach the concept of serialization with the introduction of the Falsified Medicines Directive (FMD) Safety Features Delegated Regulation. From early 2019, the serialization of licensed drug products will be a legal requirement for companies in the EU. Similarly, serialization will become compulsory in the U.S. from November 2017 in line with the U.S. Drug Supply Chain Security Act (DSCSA).

The impact of serialization and key considerations
The impact of the FMD and DSCSA will reach all corners of the industry, ranging from the manufacture of drug products to marketing and package design and dispensary. Many pharmaceutical companies already risk falling behind in their preparations, with each having a number of unique requirements and considerations.

For example, many manufacturers have a number of markets they need to address, ranging from the EU and U.S. to countries in South America and Asia. This brings with it a degree of legislative complexity that must be effectively managed.

Several countries including Turkey, Brazil, China and Korea already have their own regulations requiring different types of serialization solutions. Several others have pending requirements, including the EU, U.S., Saudi Arabia and Taiwan.

In all countries, the unique information required for a pack should be printed both in human readable format and in some form of data matrix or barcode. However, while most countries require a GS1 standard solution they can differ from country to country, such as is the case with the linear barcode required in China and the 2D matrix required in Turkey.

Some countries, including those in the EU, require randomized serial numbers, while others, such as China, need the government or local agency to issue strings of numbers for a batch to the product owner. Some countries have no requirements with regards to randomization or pre-decided numbers.

Adding further complexity, there are also specific requirements for printing techniques—laser print or ink—and for tamper evidence—security seals or labels, foil or glued cartons. For example, a serialized carton around a blister card would be of no use if it is possible to tamper with the carton and replace the original drug with a counterfeit one.

Pharmaceutical companies must begin to consider whether a standard solution including serialization features such as thermal inkjet printing, verification of 2D matrix code, human readable text, brand neutral tamper evident labeling and the creation of a standard file format for reporting and storing serial numbers is sufficient, or if they may need additional components such as aggregation, alternative printing techniques and non-standard data formats. Experienced CMOs with serialization capabilities can help guide this process. If using a CMO, the pharmaceutical company may also wish to consider whether they plan to generate serial numbers internally or using the CMO’s algorithm.

Potential barriers to serialization
The industry-wide serialization, aggregation and verification directive is expected to improve traceability of drugs, help in the fight against counterfeit products entering the supply chain and ultimately improve patient safety. However, the process of preparing for the new regulations could be time consuming and complex, particularly without the right tools and expertise.

As well as technical and legislative complexities, the implementation of serialization on all saleable drug items is set to require significant monetary investment from the pharmaceutical industry.

Companies must adapt their packs, implement tamper evidence capability and establish the systems, processes and data to comply with the regulations. Many pharmaceutical companies are concerned about the potential cost implications of introducing new technology and processes, which may lead to a reliance on outsourced services to remove the need for upfront financial investment. 

While larger manufacturers may have the resources to deal with the financial demands of serialization, smaller and medium-sized companies are faced with a greater challenge.

Meeting the tight timescales for implementation may also present a challenge. Companies supplying drug products in the U.S. must comply with serialization regulations from November 2017. While the EU 2019 deadline is three years away, the European Stakeholder Model (ESM) suggests that four to five years is a more realistic timeframe. This poses a major risk to the industry, as companies that fail to be ready for the changes will face major disruption to business operations, being no longer able to sell products within the U.S. and EU.

Of course, those companies that do manage to introduce new serialization technology in time for the deadlines may also risk disruption to their product supply if they experience technical issues and downtime as a result of the new process. While current attention focuses on putting the right infrastructure in place for serialization, less focus is being given to the potential impact of serialization on efficiency. Evidence from early adopters of serialization processes suggests that productivity, also known as overall equipment effectiveness (OEE), can go down by as much as 10 percent.

Overcoming the serialization challenge
Companies that decide to outsource their requirements to competent and experienced CMOs with serialization capabilities are well positioned to overcome these challenges, reducing the time and cost burden of serialization implementation and drawing on their existing knowledge of serialization complexities across the globe. The ability to access the right tools and technology without the upfront investment will enable compliance with the new regulations, while reducing financial challenges.

Organizations must look ahead to the impending regulations and face the challenge of serialization head on. Changes can take a long time to implement in a complex supply chain and those companies that ensure the right tools and expertise are in place will be able to remain compliant and competitive.

If underprepared, the new requirements have the potential to significantly impact product supply and efficiency. It is time to move this issue up the agenda for firms in Europe and the U.S. CP

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Staffan Widengren is director corporate projects at Recipharm is program manager for the Recipharm global serialization project and part of a global steering committee that is working closely with clients in Europe to ensure they plan and implement changes that comply with pending regulatory requirements for drug serialization. Recipharm has worked with clients in Asia on track and traceability, providing serialized products in markets including Turkey, Korea and China. The company is investing €40m over the next three years to enhance its serialization capabilities. For more information on Recipharm and its services, visit www.recipharm.com.