The Race for Track & Trace: Are 3PLs ready for serialization?

Few activities require a greater degree of blind faith than swallowing a pill. The tiny capsules can be lifesavers, but there are few outward signs that indicate whether they are legitimate. Imagine being prescribed Heparin, a proven blood thinner, only to find out after the onset of a blood clot that the drug was an illegal import. Between 2007 and 2008, at least 149 Americans died from a scandal involving fake Heparin.

For most people who have the luxury of having their prescriptions filled at a pharmacy, the drugs are, more likely than not, authentic. However, as the Heparin incident and numerous other cases involving counterfeit medications have shown, even in developed countries, fake drugs have been able to infiltrate the supply chain. What, then, can be done to ensure fake medications do not enter the pharmaceutical supply chain?

In a move to enhance supply-chain security, regulators around the globe have introduced legislation that pushes for more comprehensive track-and-trace requirements. In the United States, the FDA’s Drug Supply Chain Security Act (DSCSA), Title II of the Drug Quality and Security Act, which was enacted into law in 2013, calls on the pharma supply chain to build “an electronic, interoperable system to identify and trace certain specific drugs as they are distributed in the United States.” Compliance is required gradually, in three phases, which will ultimately require drug dispensers to receive, verify and store “T3” compliance data in three parts – the history, information and a statement for each transaction – at the serialized product level by 2023.

So how will this extra layer of security affect forwarders? Pure forwarding activities will continue to move sealed pallets containing serialized pharmaceuticals through the supply chain, much like they do today, because there is no requirement under DSCSA for shippers to exchange information with transport intermediaries. However, the same cannot be said of third-party logistics providers (3PLs). Given that 3PLs often receive, store and fulfill orders and deliveries on behalf of pharmaceutical manufacturers or a product’s brand owner, DSCSA requirements have many pharma-focused 3PLs scrambling to revamp their current practices. Any delivery to an authorized drug dispenser (hospital, pharmacy or healthcare provider) must be done in accordance with the DSCSA, and if done through a 3PL, requires collaboration with the manufacturer.

Harmonizing track-and-trace and data exchange verification capability between 3PLs and pharmaceutical manufacturers is anything but a simple task, and the clock is already ticking. Phase I of DSCSA compliance went into effect on May 15, 2015, requiring product tracing at the lot level and scanning technology upgrades to read 2D serialized barcodes at the warehouse level. This caused little more than a ripple because most warehouses were already equipped with the scanning technology. But Phase II, which goes into effect beginning in November 2017, requires item-level serialization and poses a real challenge for 3PLs.

Brian Daleiden, vice president of industry marketing at TraceLink, a cloud-based track-and-trace network, warned that many 3PLs are only starting to realize the potential issues and complications they face. “If you’re a pharmaceutical company supplying products covered under DSCSA, working with 3PLs, and you are not today having any active conversations about what your plans and expectations are, you are creating serious risk for your ability to supply products and meet the serialization deadlines,” he said. “Not to say compliance cannot be reached, but you should be having the conversation today.”