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Key Challenges for Pedigree Authentication and Serialization
Key Challenges for Pedigree Authentication and Serialization—
Business Drivers, US Food and Drug Administration Mandates, and Regulations
a report by
Andy Dé
1
and Mandar Paralkar
2
1. Senior Director, Industry Solutions Marketing; 2. Solutions Manager, Industry Solutions Management, SAP for Life Sciences, Healthcare Sector
The life sciences supply network is steadily growing in complexity, and it total drugs sold from such sites.
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It is impossible to accurately determine
is not unusual for pharmaceutical products to pass through least four to the extent of the counterfeit problem. High-end estimates include the
six intermediaries before reaching the patient. In addition, life sciences oft-quoted prediction from the US-based Center for Medicine in the
companies, especially pharmaceutical and biotechnology firms, face an Public Interest, which predicts that worldwide counterfeit drug sales will
ever-increasing incidence of counterfeit drugs and diversions as their reach $75 billion in 2010—an increase of more than 90% over 2005
product passes along the supply chain from the manufacturer to the figures.
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Whatever the true figure, given that the rate of counterfeits is
patient. Counterfeiting and diversions have life-threatening implications, estimated to be growing at 6–8% annually, this is a big problem for
and can also jeopardize a company’s reputation, brand equity, growth, manufacturers both in the US and worldwide.
and profitability; it is thus imperative for manufacturers to address
these issues. A number of European countries have adopted serialization initiatives for
pharmaceuticals, and there is a drive to establish a common standard
Counterfeit drugs are those not made by the manufacturer or its across Europe. In December 2008, the European Commission tabled a
licensee, and may be contaminated, contain inaccurate amounts of package consisting of pathways to various initiatives, including proposals
active ingredient(s), or indeed contain no active ingredients at all. to tackle the growing issues of counterfeiting and illegal distribution of
Diversions are genuine drugs that have been intercepted on their way to medicines, enable citizens to have access to high-quality information on
prescription-only medicines, and improve patient protection by
strengthening the European system of pharmacovigilance.
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In the US,
current and nascent laws and regulations, both at the state level and
Within the pharmaceutical industry,
across the whole of the country from the US Food and Drug
Administration (FDA), demand that stakeholders capture and document
the top issues will be ensuring the
the entire chain of custody of each drug product from the point of
highest levels of both patient safety
manufacture to the point of dispensing, thereby ensuring a safe and
secure drug supply that can be authenticated if needed. Impending
and brand protection.
legislation from the state of California, now scheduled to be enacted in
January 2015,
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requires biopharmaceutical manufacturers to label
prescription drugs with unique serial numbers (electronic product codes
the intended market and sold into new—often unauthorized—markets, [EPCs]) and transmit pedigrees with products as they move through the
taking advantage of differential pricing in different territories (price supply network from manufacturers to wholesale distributors and,
arbitrage) and/or drug shortages. Often, diversions will be repackaged to eventually, to dispensing pharmacies and hospitals.
better align with the new territory’s language and typical product
appearance. As diversions use complicated channels with many These laws and regulations also stipulate that each product’s pedigree
middlemen, they are hard to track. This invites additional substitutions documents must refer to its unique serial number, which can therefore
and insertions of products made by spurious manufacturers that are
clandestinely substituted for real products in the supply chain. Again, if
Andy Dé is Senior Director of Industry Solutions Marketing for
these make their way to the patient’s bedside, there can be a debilitating
Life Sciences and Healthcare at SAP, and is based in Dallas,
impact on health. Texas. In this role, he is globally responsible for the go-to-
market strategy, thought leadership, messaging and positioning,
and evangelism for SAP’s offerings for the life sciences industry
The Scale of the Problem
and healthcare providers. Mr Dé has a passion for healthcare
The problems of diversions and counterfeits are acute in the and life sciences and authors a thought leadership blog on
pharmaceuticals industry. It is estimated that 7–8% of drugs worldwide
healthcare and life sciences strategy at andyde.blogspot.com.
He holds a master’s degree in materials science and engineering
are counterfeit. In developed countries the figure is roughly 1% of sales,
from the University of Florida and an MBA in business strategy
while in some less stringently regulated countries this figure can exceed and marketing from the Richard Ivey School of Business at the
30%.
1
Furthermore, the proportion of counterfeits sold from Internet
University of Western Ontario in Canada.
sites that do not disclose their physical address can reach 50% of the
© TOUCH BRIEFINGS 2009
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