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    Features

    Serialization and the Rest of Us

    Small and mid-size manufacturers achieving post-deadline DSCSA compliance.

    Serialization and the Rest of Us
    Serialization and the Rest of Us
    Compliance with DSCSA rules includes labeling requirements with 2D barcodes on every saleable unit. (courtesy WDPrx)
    Serialization and the Rest of Us
    Logistics services providers with packaging and labeling support manufacturers with serialization programs. (courtesy WDPrx)
    Serialization and the Rest of Us
    Upgrades to equipment require significant financial investment to achieve DSCSA compliance. (courtesy WDPrx)
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    Angela Holley, Business Development Director, WDPrx - Woodfield Pharmaceutical, LLC06.13.19
    Nearly half of pharmaceutical manufacturers responding to a 2018 survey conducted by the Healthcare Distribution Alliance, an industry trade group, stated their products would not be serialized before the November 2018 deadline for DSCSA compliance. The fact is, a large number of small to mid-size manufacturers continue to search for compliance solutions.
    For this segment, confusion about DSCSA requirements and lack of financial resources to manage the transformation are exposing them to serious implications for their businesses. 

    Unlike large CMOs working with well-established and well-funded pharmaceutical companies, reputable smaller market serialization-ready CMO and CDMO firms often take on an advisory role with small and mid-size manufacturers to help them navigate their products into DSCSA compliance. From Serialization 101 to aggregation and Level 4 connectivity, specialized CMOs are taking on this new role to ensure continuing business for themselves and also for their customers’ operations.

    Moving the goalposts
    The Drug Supply Chain Security Act mandates that manufacturers and repackagers place a unique product identifier on each package of human prescription drug product intended to be introduced into commerce. 

    The U.S. Food and Drug Administration (FDA), charged with enforcement of DSCSA requirements, originally set a November 28, 2017 deadline for rule compliance. It became clear that the installation of necessary equipment and systems for manufacturers and repackagers to make the necessary changes would not be completed by the original deadline date. Based on industry feedback, the FDA delayed rule enforcement until November 28, 2018.

    Additional obstacles to achieving compliance affected many smaller and even some larger manufacturers beyond the second deadline date in November 2018.

    Multiple options cause confusion
    An entire industry of serialization solutions providers sprang up beginning in 2013 after passage of the Drug Quality Security Act to address serialization of prescription pharmaceutical drug products. Multiple players advocated software strategies to manufacturers. Over time, consolidation and attrition among these companies compelled some manufacturers to change their vendor relationships or begin the selection process again.

    Software vendor uncertainty was compounded by manufacturers underestimating internal resources required for successful transition to serialized operations. Smaller manufacturers with limited resources often selected a single employee to become their company’s point person for serialization adding these duties over and above their existing responsibilities. 

    In one example, a manufacturer initially considered serialization to be a packaging issue and therefore selected someone from the packaging team as the company’s DSCSA project leader. When management became aware that, although serialization affected labeling, the transition was actually best suited to someone on the information technology team, more time was lost by making this switch, transferring knowledge gained to date from the prior contact, then changing priorities or strategies to reflect the new reality.

    Establishing a point person for DSCSA compliance was problematic for newly commercialized manufacturers focused on gaining regulatory approval for their product with little to no understanding of the commercialization process.

    Mixed messages and cost surprises
    In cases where these individuals or small teams were established and investigated the DSCSA requirements, another obstacle quickly became apparent: the significant amount of capital expenditure required to achieve serialization compliance.

    For many businesses, serialization costs were prohibitive for hardware and software installations and upgrades progressing from Level 1 equipment through Level 4 serial number repositories. Manufacturers with a few production lines producing limited quantities of prescription medications that fall under DSCSA regulations were faced with a seemingly unsolvable equation of becoming compliant and being weighed down by debt or remaining non-compliant with the risk of business-crippling fines and penalties.

    When first made aware of DSCSA requirements, the full scope of compliance was not immediately clear to many manufacturers regardless of revenue.  The instructions appeared relatively simple. Manufacturers and repackagers were required to place a unique product identifier on each package of human prescription drug product intended to be introduced into commerce beginning on November 27, 2018. This seemingly simple requirement belied program complexity.

    Considerable confusion about compliance in the early days was reflected in the multiple industry trade events that came into being that attempted to clarify the issue. Multiple trade associations crafted letters that were sent to the FDA requesting further information about issues that were not addressed in the legislation. Small manufacturers, focused on maintaining margins for their own businesses, became lost in the mountain of FDA FInal Rules, Draft Guidances, Final Guidances and other official correspondence.

    The problem comes into focus
    The original scope of the project changed as manufacturers realized that compliance with the labeling requirement was a necessary but not sufficient solution for serialization. The individual 2D barcodes on each smallest saleable unit were to be generated from a central repository of serial numbers that would then be required to share data within a yet-to-be-defined system operable by 2023 and able to track individual units from manufacturer to final dispenser and beyond.

    Much of the industry confusion was focused on the concept of aggregation. Not included in the requirements for DSCSA compliance, aggregation nevertheless is a business requirement mandated by the major wholesalers and other trading partners. Aggregation enables a single scan to capture the unique identifiers on each of the smallest salable units within a large shipment. The purpose of aggregation is to reduce scanning time, data storage and labor costs that would otherwise be devoted to individually capturing information from each unique primary package contained within cartons and pallets.

    Due to these and other factors, what began for many manufacturers as a mandate to redesign product labels to incorporate a new barcode (d)evolved into the complex environment that is the DSCSA today with interoperable systems, new technology, supplemental training, additional data protocols, digitization, cloud computing environments and fixed and variable costs in the short and long term.

    Tough decisions as deadline looms
    Changes in processes, people and products for smaller manufacturers to achieve DSCSA compliance varied depending on the solution providers selected to manage the program.
     
    At the time serialization planning began in late 2013, vendors offered partial solutions that, when integrated with other solutions from separate companies, provided a complete compliance environment including Level 1 through Level 4 compatibility from the facility floor to enterprise level communication. Final costs could only be estimated because of the problems associated with multiple solution providers working together, however initial equipment quotes from several hundred thousand dollars into the millions of dollars based on number of production lines and other factors were commonplace. Ongoing subscription and other fees were calculated separately.

    Faced with these difficult choices, manufacturers without sufficient financial resources or willingness to move forward with serialization efforts scoured the DSCSA legislation and found a temporary solution enabling them to continue operations.

    Under section 582(a)(5)(A) of the DSCSA, packages and homogenous cases of product that are already packaged by a manufacturer or repackaged by a repackager prior to November 27, 2018 are eligible for grandfathering and do not need a product identifier.

    A temporary fix
    Funds that manufacturers spent on researching or actually transitioning to serialization compliance were re-allocated to increasing manufacturing output in a race for additional supply prior to the FDA deadline. 

    This temporary work-around enabled manufacturers of limited financial means to investigate a longer-term solution. Ultimately the answer appeared in the shape of DSCSA-compliant contract manufacturers and contract packagers that saw the situation developing with many of their smaller clients and responded with cost-sensitive solutions for DSCSA compliance.
    Well-funded mid-size and large pharmaceutical manufacturers serialized their production lines and in some cases engaged competing vendors, providing security through program redundancy and enabling them to select from options that provided the best solution for their needs. These manufacturers also audited the compliance progress of their CMO partners and graded them based on their likelihood to complete transition to serialization by the November 28, 2018 deadline.

    Post-deadline serialization solutions
    The ability of large manufacturers to anticipate problems and adjust production for serialization ahead of schedule was different than the experience of small manufacturers working with their own limited production lines or with their own CMO partners.

    Contract manufacturers that completed DSCSA compliance developed a high-touch business strategy for assisting non-compliant small manufacturers through the serialization process. The strategy is still being utilized today, over six months after the FDA deadline date.

    Reputable serialization-ready CMO, CPO and also some 3PL partners with specialized ‘Serialization-As-A-Service’ programs often take on an advisory role with small and mid-size manufacturers to help them navigate their products into DSCSA compliance. From ‘Serialization 101’ education to discussions around aggregation and Level 4 connectivity, these outsourcing partners are taking on this role to help assure business for themselves and also for their customers.

    Keeping up with the times
    The manufacturers who find themselves on the opposite end of the DSCSA deadline fall into four general categories. 

    First, there are the manufacturers who produced their prescription medications on their own equipment and had to find alternative post-deadline production sources. For these companies, the manufacture of prescription medications does not constitute a large portion of their overall product volume and therefore did not merit the investment required to convert their own machinery for serialization compliance.

    Another group of manufacturers may have had an existing CMO that manufactured their prescription medications that for one reason or another, did not complete the transition to DSCSA compliance.

    A third group involves manufacturers of newly commercialized product that are unfamiliar with the entire concept of serialization and need assistance to assure timely commercialization.
    Virtual manufacturers often fall into the second or third categories listed above.

    These groups are not limited to small-scale manufacturers. It should be noted that manufacturers may have a limited quantity of prescription medications requiring serialization in their portfolios and that revenue from these products may be a small portion of their overall sales from their total product offering. Manufacturers seeking support for serialization may be highly successful companies with substantial sales revenue.

    Although these three groups of manufacturers understand the necessity for serialization, conversations around DSCSA add a layer of complexity to initial discussions with new CMO partners. These interactions are particularly sensitive due to the urgency on behalf of both parties to continue or resume regulatory compliant production as soon as possible.

    Pathways to DSCSA compliance
    Contract manufacturers skilled at managing this process relate a few common scenarios that represent how anxious clients transition from non-compliance to full compliance. Each of these cases is a post-deadline situation occurring after November 28, 2018 to a single contract manufacturing organization.

    One example involves a virtual manufacturer that was using a contract manufacturer for production of their prescription medication that required serialization. The product owner acquired a Level 4 solution on their own however the CMO was unable to complete their own equipment and software conversion. The owner contacted a second CMO that provided a solution involving technology transfer of the product to the new facility. Simultaneously, the new CMO engaged their project managers and information technology teams to establish a connection from their Level 4 with the product owner’s Level 4 system in order to fully comply with DSCSA requirements.

    Another case of post-deadline serialization occurred with the same serialization-ready CMO when a newly commercialized manufacturer received approval for their NDA of a nasal spray. The start-up was focused on obtaining regulatory approval. When the application was approved, the young company had no advance plan in place to set up for compliance. The selected CMO acted as project manager for the serialization project. 

    This situation required the CMO to take on an advisory role, guiding the product owner through the entire serialization journey. The benefit of tackling this project at the very beginning of the journey was the fact that the process could start without the burden apparent with other scenarios of having to undo poor decision-making or partially implemented processes from previous serialization attempts.

    In this case, the product ownership team did not have a serialization team leader and relied on the CMO project manager to explain each step of the process leading to commercialization. To help put the client at ease, the CMO approached the solution from the point of view of an educator as well as a technician, providing complete explanations about the origins of the DSCSA and the ultimate objectives behind the legislation to help assure patient safety.

    3PL and CPO tools for DSCSA compliance
    Reputable third-party logistics providers and contract packagers provide another point of entry to compliance for manufacturers with product requiring serialization. These organizations were required to follow similar timetables as wholesalers and manufacturers to comply with FDA deadlines in order to move serialized products within the supply chain.

    Manufacturers entrusting their products to 3PL firms or contract packagers have non-serialized product on hand that must be converted to meet DSCSA regulatory compliance. The route to compliance for these medications begins with the 3PL or CPO receiving non-serialized product, disassembling original packaging, then re-packaging and re-labeling onsite with serial numbers generated from a Level 4 repository.

    As an option, one 3PL in the country has a unique relationship with a global Level 4 provider that enables the 3PL to establish a Level 4 repository that is owned by the manufacturer and managed by the 3PL on behalf of the client. This unique arrangement provides compliant serial numbers and also manages the trading-partner data transfers that will be part of future DSCSA compliance requirements.

    The Level 4 repository created by the logistics services provider is owned by the client compared with most contract manufacturers and CPO partners that own their repository and contract serial numbers out to their accounts. Using this 3PL-based solution, product owners maintain complete transparency of ownership within the pharmaceutical supply chain and minimize any potential complications when tracing issues arise.

    Patience, not ignorance
    Pharmaceutical manufacturers delaying their serialization solution may not be due to lack of will. Several situations occurred simultaneously at the onset of the DSCSA legislation that increased compliance complexity for all manufacturers and especially small and medium-sized firms that decided not to make the required investment in capital and labor.

    Contract manufacturers that count these smaller companies among their client base developed innovative solutions to bring non-serialized products into compliance. These new programs create an a la carte system of options enabling these companies to utilize some or all available programs at reasonable cost to continue selling prescription pharmaceutical drugs. 

    Progressive contract manufacturers offer product owners a continuous pathway to serialization with higher efficiency, better quality control and greater scalability than competing options. Also included is valuable guidance from experienced CMO partners with extensive DSCSA expertise. Reputable 3PL and CPO firms offer additional options to suit specific purposes.

    November 28, 2018 was a milestone set by the FDA for DSCSA compliance. Although the date has long passed, pharmaceutical manufacturers continue to seek out the optimal serialization solution for continued growth. Customer-centric CMO partners continue to innovate in support of their clients along their journey. 


    Angela Holley is Director of Business Development at WDPrx – Woodfield Pharmaceutical, LLC, a contract development and manufacturing organization (CDMO) specializing in non-sterile liquids including gels and suspensions. Angela’s deep expertise includes working with every retail and manufacturing business model and product from standard cough and cold remedies to specialty pharmaceutical therapies and orphan drugs.
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