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Electronic pedigree is the future of supply chain security. Those still waiting and seeing might what to stop waiting and start tracking
The debate over the desirability of electronic pedigrees is largely over. With less than a year until the kickoff of California's e-pedigree law, companies are moving toward implementation. The new conventional wisdom: Electronic pedigrees not only improve patient safety and product security but also enable business value.
Industry experts have concluded that e-pedigrees are the most effective way to prevent counterfeit drugs from entering the drug supply chain. The rich, precise, and secure product information and transaction detail within the e-pedigree provides a chain of custody as a drug moves through trading networks. The result is a new level of threat detection and investigative capability for all companies in the pharmaceutical supply chain.
These security investments can be turned into business value: Sharing the electronically captured information with trade relations, sales, supply chain management, and manufacturing operations groups can improve supply chain operations and related business processes.
As the January 1 deadline to meet California's mandate approaches, companies need an e-pedigree road map to expedite their path to regulatory compliance and product security and to position themselves to capitalize on their e-pedigree investment by gaining greater control of their supply chain.
The e-pedigree movement reached an important milestone in 2007 with the ratification of the EPCglobal Drug Pedigree Messaging Standard (DPMS). The standard provides a data format that complies with all state and federal government regulations and allows trading partners to send and receive data in a secure, interoperable manner, using existing data-transfer technologies.
The standard's security mechanisms ensure that data cannot be forged without easy detection, while interoperability provisions ensure pedigrees are understandable by all trading partners, regardless of e-pedigree vendor.
The standard is the key to enabling pedigree compliance in California—and the rest of the country. More than 100 companies across the industry are implementing electronic pedigrees based on DPMS. They are establishing an interoperable information network to support secure trading-partner collaborations and communications.
E-pedigree's security and business potential are apparent from its contents. E-pedigrees contain data on a product's physical movement and financial flows with a granularity and timeliness not previously available. Product information includes the drug name, National Drug Code (NDC), unique pedigree serial number, lot numbers, expiration dates, quantity and strength, and product serial number (if product is serialized at the item level). Transaction information consists of transaction dates; trading-partner identification (name, address, license number); date received; related financial transaction information (such as purchase order or invoice number); company representative receiving the product; and each transaction's validation.
You must understand state and federal regulations and how your company will be affected by these complex and varying requirements. With that analysis in hand, you can develop your specific regulatory requirements and map your pedigree initiatives to your company's product-security and business requirements. As part of the plan, you will identify how e-pedigree will affect operations, which IT systems are affected, and the scope of required resources.
It is important to plan nationally. While initial deployment may focus on a single state, you should build the foundation for a national rollout, since most pharma products are sold in all states.
To develop an e-pedigree road map that aligns your business goals with an e-pedigree technology solution, consider these main components:
Vendor/product selection The first step is the selection of an e-pedigree software vendor. Look specifically at exception-processing support, integration points, deployment requirements, hardware and software prerequisites, costs, and how much operational support a vendor's product provides.
Product functionality The software should provide all the capabilities you require. Otherwise, you'll incur higher operational costs or require custom development to supply the functionality.
Software delivery Will the software be delivered as a packaged solution or as a toolkit? If you go with a toolkit approach, you will need to plan for custom code development. If you select a packaged solution vendor, make sure the vendor is committed to future-proofing its solution as regulatory standards, operational factors, and technologies evolve.
Scale of deployment Most companies start with a limited deployment, so the e-pedigree system won't really be put to the test. Ensure that the software will perform at the level you require when fully rolled out and will do so without dramatically increasing costs.
Cost The cost to implement an electronic pedigree system will vary depending upon the size and complexity of a company's operations. The outsourced, software-hosted model is the most common way to deploy an e-pedigree system. Costs for a hosted e-pedigree solution that can provide complete pedigree security for all of a company's prescription drug products typically range from the low thousands up to tens of thousands of dollars per month.
Experience Nothing beats experience, so be sure the vendor has experience with other companies like yours, as well as experience with your trading partners.
Another road map step is developing an integration strategy. E-pedigree is a business process tightly connected with other existing processes. The introduction of e-pedigree presents an opportunity to improve and streamline both compliance and business processes.
You will need to know how and where the pedigree system will be integrated with processes such as shipping, receiving, and picking. The information required to populate the e-pedigree probably already exists in other systems within your IT infrastructure, and you'll need to map out what information is needed from which system, and how you will access it.
ERP and warehouse management systems will be prime integration points, but you will want to maximize the value of pedigree data collected by making it available to other business applications as well. Finally, you'll need to determine the right technical approach for integrating these systems.
The crucial last step is to work out how you will collaborate with your trading partners. Because e-pedigree is a supply chain process, interaction with your partners is necessary if the project is to succeed. What kind of information do your trading partners require in order to facilitate the implementation of e-pedigree? How will e-pedigrees be exchanged? How will exceptions be addressed? Testing with upstream and downstream partners will ensure that your pedigreed products will be in the channel in time to meet regulatory deadlines.
The immediate benefits from e-pedigrees are improved patient safety and the protection of product-revenue streams from diversion and counterfeiting. With e-pedigrees implemented throughout the drug supply chain, the means by which counterfeiters can introduce illegitimate products are virtually eliminated. Plugging the holes in the drug distribution network helps manufacturers stem the loss of revenues, profits, and brand reputations.
The next wave of e-pedigree benefits comes from efficiency improvements in manufacturing, distribution, and procurement. Paper pedigree overhead is eliminated and new levels of inventory control are gained.
The availability of lot, quantity, product shipment, and serialization information (if available) allows companies to track a specific drug product through the supply chain, enabling more targeted and expedited recalls, lowering the risk to patients, and reducing recall execution costs.
Each year, companies lose millions of dollars due to their inability to verify the validity of returns, chargebacks, and other financial reimbursement claims. By tapping into the secure and accurate product identification and channel-movement-transaction information within e-pedigrees and correlating this information with related trade financial documents, companies can improve the accuracy and efficiency of financial claims and curtail revenue leakage from inaccurate, duplicate, or inappropriate claims.
E-pedigrees trace the physical product flow through the supply chain for greater channel visibility, which improves product availability and lowers costs. With direct visibility into expiration dates and lot information contained within the e-pedigree, companies can better manage shelf life and expired products, improve supply chain visibility and product availability, and enhance trade financial management.
Peter Spellman is senior vice president of products and SaaS at SupplyScape. He can be reached at email@example.com