Serialization: Background, Justification, Requirements, Timelines, and Readiness Across the Supply Chain

Dan Walles

December 13, 2017

19 Min Read

barcode-serial-number-vial-300x200.jpgDrug manufacturers are facing unprecedented serialization challenges. Serialization requires weighty consideration and focused strategy for successful commercialization, even for those companies that have yet to bring a product to market.

The World Health Organization estimates that 10% of medicines worldwide and up to 50% of drugs consumed in developing nations are counterfeit. In response to increasing drug integrity concerns, more than 40 countries have introduced laws mandating serialization and tracing of pharmaceutical products as they pass through the supply chain. Currently, over 80% of the world’s prescription medicines are expected to be protected by serialization and track-and-trace regulations by the end of 2020.

Starting in November 2017, all pharmaceutical companies selling prescription drug products in the United States are required to serialize each individual, salable drug unit to aid tracking from manufacturer to pharmacy or doctor’s office, according to the 2013 Drug Supply Chain Security Act (DSCSA). By February, 2019, drug manufacturers conducting business in the European Union (EU) market must implement serialization according to the mandates of the EU Falsified Medicines Directive (EU FMD). Failing to meet serialization requirements and deadlines puts drug manufacturers at risk for noncompliance, which can lead to huge penalties ranging from paying fines for every occurrence to being barred from product launch. If companies don’t serialize, no wholesalers in the United States will purchase their products.

Biopharmaceutical companies need to understand supply chain compliance and know how to meet serialization regulations on the horizon. Here I discuss the fundamentals of DSCSA and EU FMD, compliance hurdles companies are facing, and how drug manufacturers can minimize risk and maintain their hard-earned momentum after FDA approval.

DSCSA and EU FMD Across the Supply Chain
In the span of just five years between 2011 and 2016, the world’s two largest pharmaceutical regulatory agencies enacted regulations on serialization that will have profound effects on pharmaceutical supply chain operations in their respective markets and the companies that operate within them. Both US and EU regulations mandating the serialization of pharmaceuticals were enacted to help combat the increase of counterfeit prescription drugs. Although the purpose of DSCSA and EU FMD is the same, their requirements and implementation roll-out timelines differ.

DSCSA has established an eight-year timetable between 2015 and 2023 for step-by-step implementation. It ultimately will allow for instant, electronic tracking of prescription drug products through every layer of the US supply chain. Regulators, manufacturers, repackagers, wholesale distributors, and pharmacy dispensers have taken the first step on this mandated eight-year journey toward a national traceability solution. By now, all supply-chain businesses should have achieved lot-based traceability, which involves a system to produce lot-level product tracing data and transaction reporting with every sale exchange. With the 2015 DSCSA lot-level traceability deadline behind us, pharmaceutical companies have turned their attention to the next step: serialized, item-level traceability.

The next critical juncture for DSCSA was in November 2017, when manufacturers had to mark packages with a national drug code (NDC), a serial number, lot number, and expiration date. Manufacturers and other trading partners have expressed concern over industrywide readiness of those product identifier requirements. So in June 2017, the US FDA announced that it would exercise “enforcement discretion” until 2018 regarding the federal requirements for product identifiers. But that announcement did not delay the law, which went into effect on 27 November 2017. Subsequent serialization deadlines for repackagers, wholesalers, and dispensers arrive in 2018, 2019, and 2020. And by 27 November 2023, all trading partners must begin operating under new requirements. Products in clinical trials are not subject to DSCSA requirements. But as of November 2017, manufacturers must comply with serialization, verification, data exchange, and storage guidelines as soon as their products are launched in the US market.

EU FMD will be rolled out in its entirety on 9 February 2019. Afterward, drug manufacturers must apply unique identifiers to all unit-level packages. On that date, dispensers in 25 of 28 EU member states must begin authenticating all drugs that have unique identifiers and must do so before those drugs are dispensed or administered to patients. (Belgium, Italy, and Greece are given an extra six years to begin following the FMD/DR because these countries have existing pharmaceutical supply-chain security programs.)

Achieving Compliance
For drug manufacturers intensely focused on product launch, supply-chain management usually factors as a top priority, but serialization less so. Although serialization and compliance add to an already heavy load of responsibilities, they cannot be ignored. After all, no manufacturer with a new drug application filed wants to be caught unaware and noncompliant when the associated product launch date arrives.

The core concept behind DSCSA is to develop and maintain a tracking system from a manufacturing floor through point-of-sale, capable of 100% accuracy. Specifically, organizations shipping regulated products will be required to serialize, verify, and manage data.

Serialize at the package level using a two-dimensional (2D) datamatrix barcode and at the sealed homogenous case level using a 2D datamatrix or linear barcode. Set up data to be machine and human readable, and include an NDC, serial number, lot number, and expiration date.

Verify the unique product identifier of suspect products at the unit-of-sale level, and verify the unique product identifier of returned products intended for resale. Respond to verification requests from authorized wholesalers, repackagers, and/or dispensers within 24 hours.

Exchange and Store Data: Provide transaction data (TD) to trading partners in electronic format only. The TD set includes transaction information (TI), transaction history (TH), and transaction statement (TS) — collectively referred to as T3. Store serialization data in an active, readily available location for six years past the transaction date.

EU regulation also requires drug manufacturers to apply a unique product identifier on every drug package at the smallest unit distributed to pharmacies. Under the European Union’s regulation, the unique identifier must consist of specific data elements that must appear on product packaging both in human-readable form and encoded into a datamatrix barcode. Such elements include a product code, unique serial number, national drug registration number (in member states that require one), lot number, and expiration date.

Verification under EU FMD is performed by checking the integrity of a required antitampering device and comparing the unique identifier with legitimate unique identifiers that the manufacturer (or repackager) stores in a system of repositories, or EU central authority (hub), known as the European Medicines Verification Organisation (EMVO).

No data will be exchanged directly between trading partners under EU FMD, but data will still move. Manufacturers must pass data to the EU hub where that information can be used to verify the authenticity of a drug at the point of dispense and elsewhere. Those data include all fields of the full unique identifier and the list of regions where a manufacturer intends its drug product to be marketed. The “active” status of drugs established in the central hub by a commissioning event will be changed when any party in the supply-chain uploads a decommissioning event. Moreover, data also are exchanged with the EU hub whenever a verification event is performed. Uploading verified and compliant data to the EU hub also means communicating with all national hubs.

Consequently, achieving compliance in the United States and European Union requires taking into account two distinct regulatory frameworks and recognizing that serialization does and will affect a number of operations both in manufacturing and down the supply chain.

Fast-Tracking Compliance, Minimizing Risk
When it comes to planning for serialization, delay is no longer an option. Whether or not companies have product in their pipelines to launch between now and the DSCSA and EU FMD serialization deadlines, the time to establish a strategy and start taking necessary steps toward compliance was yesterday, because the associated hurdles are daunting and comprehensive.

Getting ready for both commercialization and serialization at the same time requires a significant investment in staff, infrastructure, and support. The sooner manufacturers recognize that, the better. Staying mindful of the four considerations below can help pave the way for a successful product launch.

Identify Partners and Open Lines of Communication: The 2017 DSCSA requirements for serialization with end-to-end tracing mean that manufacturers (followed by the rest of the supply chain in subsequent years) must track the movement of billions of items with dozens to hundreds of partners. Many clinical-trial–stage companies are contracting external parties to manufacture, package, and ship their products. Contract manufacturers (CMOs), packagers, and third-party logistics (3PL) providers all play a role in commercializing products. Now with DSCSA, those players are required to exchange information —no longer in paper or simple digital form, but in a real-time, standardized digital form.

On a packaging level, it may be clear how to do that. But when data exchange and data ownership come into the picture, that’s when companies become perplexed. Even a company that works with only one CMO (e.g., for scaling and packaging drug products) and one 3PL provider (for shipping serialized product out to customers) will need to consider thoroughly how information will be passed between parties.

Compounding the complexity of data exchange is the challenge of lining up with a CMO at this late date. Pharmaceutical companies and CMOs simply have been slow to react to the serialization deadlines, and the industry has seen a “hockey stick effect” on resource demand across the supplier market. A number of organizations that have petitioned the FDA for an enforcement delay have brought attention to the fact that they have limited resources to call upon for this scale of an initiative. The body of equipment providers, integrators, information technology (IT), operational consultants, and CMOs is stretched thin, and many are running substantially behind schedule.

A product-development company should not wait to open the dialog with its CMOs and other supplychain partners or otherwise risk its entire product launch. And a misfire on that launch could cost tens of millions of dollars in revenue.

Understand How Serialization Will Affect Operations: Pharmaceutical serialization and management of serialized product information are difficult, and manufacturers often underestimate the time and effort needed to implement solutions as well as the broad impact on their business operations. In particular, some midsize and small companies that use CMOs are just realizing the complexities of the task at hand — a fact borne out by several surveys from TraceLink and other sources. Those surveys highlighted that a lack of readiness in the external supply ecosystem with CMOs is a key reason why some pharmaceutical manufacturers were not prepared for the 2017 DSCSA deadline.

For some manufacturers, serialization will require a significant redesign of labels to allow space for new 2D barcodes. Consequently, changes in labeling also may necessitate alterations or redesign of packaging structures or graphic elements.

But the reality of serialization goes far beyond printing and labeling a few more attributes. The new labeling requirements will affect multiple packaging processes. Adhering labels and scanning bundles, cases, and pallets can slow down a packaging line. Manufacturers may need to increase staff or implement automation to maintain current levels of production. In addition to physical packaging changes, data management needs will grow rapidly. Of primary importance is an IT architecture that can generate, store, capture, and transmit millions of serial numbers for different supply chains. Finally, assembling a crossfunctional team dedicated to serialization will ensure a smooth implementation.

Preparing for serialization and managing continuous compliance affects every functional area across a company, including manufacturing, IT, quality assurance, supply planning, and regulatory operations. It’s safe to say that all pharmaceutical companies will have to operate differently in a serialized world.

Know That the Right Serialization Solution Is Critical to Success: Serialization affects many different operations in a manufacturing plant and introduces unprecedented challenges in data exchange and storage. So one of the most critical decisions a company will make is its serialization infrastructure solution.

Simply put, the best solution is one that minimizes risk. What does that model look like? For starters, it has a proven approach to compliance. It leverages industry standards such as electronic product code information services (EPCIS) but is flexible enough to accommodate nonstandard requirements without costly customizations. The best solution also enables connectivity with a company’s chosen CMO, 3PL provider, and wholesaler (which might have an entirely unique set of requirements and standards to be met). That will facilitate interoperability and pave the way for serialization to be an efficient and effective component of product delivery and enable long-term success. Finally, the solution should enable manufacturers to meet a diverse set of international requirements.

One of the most significant challenges facing pharmaceutical companies is a lack of global standards for serialization. Manufacturers have difficulty simultaneously meeting compliance regulations in multiple countries. Serialization solution providers must support manufacturers in each market in which it does business. With local language support, technology support, and services in a given region, the likelihood of success is increased.

Accept That Serialization Will Take Longer Than Expected and Will Be Enforced: If a product isn’t serialized when FDA approval is granted, days can turn into weeks and weeks into months before its manufacturer has the green light to launch. The way around that is to be on your way toward serialization readiness — by opening discussions with contract partner prospects and focusing on serialization infrastructure solutions.

With the FDA postponing serialization enforcement rather than delaying its official compliance deadline, the agency is sending a deliberate and clear signal that the law is not going away or expected to undergo further delays. After all, the law is intended to make our drug supply chain safer and ultimately protect patients from counterfeit medicines. Most likely, this suspension of enforcement for 12 months will entail a complete zero-tolerance approach in 2018 because companies that are not in compliance technically would have been in violation of the law for an entire year.

Many manufacturers that didn’t have a product ready to launch in November 2017 prepared fully for serialization. According to results of a poll from a May 2017 TraceLink webinar, “DSCSA Journey: A Day in the Life of a Serial Number,” nine out of 10 companies that were in the clinical-trial stage at that time were researching, designing, or actively implementing their serialization programs. They understand that once FDA approval comes, they don’t have a day to spare to market their products.

The Value of Investing in Serialization
Aside from meeting regulatory requirements, investing in serialization and track and trace will bring tremendous value. Without the regulations in place, it is likely that few companies would have considered leveraging the vast amount of related data that can be used for efficiencies. But thanks to this push to combat the proliferation of counterfeit drugs by securing supply chains, manufacturers are improving inventory visibility; tracking of control substances; and ensuring accuracy in product rebates, chargebacks, and recalls. And some companies also are leveraging their investments for clinical trial supply management.

DSCSA, EU FMD, and the growing number of regulatory requirements worldwide have stimulated concerted efforts to secure supply chains and broaden new markets in track-and-trace technology. And companies that fail to come into compliance can face large business and financial implications. Even for those manufacturers that have yet to bring their products to market, it’s not too soon to start paving the way for serialization.

Dan Walles is vice president of global solutions at TraceLink, 400 Riverpark Drive, Suite 200, North Reading, MA 01864; [email protected].

Serialization Timeline: Ensuring a Robust Solution by Carlos Machado

Serialization has dominated some conversations in the biopharmaceutical industry for some time. Yet the enormity of the task means that much more remains to be discussed. Concerns about time pressures, costs, and getting left behind have been raised repeatedly.

Serialization is a daunting but necessary process that is essential to securing the pharmaceutical supply chain. For this reason, it should be seen as an investment rather than an expense. A clear roadmap should be followed to ensure a robust solution. Here I discuss an approach to implementing a strong, timely, efficient, and suitable solution.

TimelineSome researchers report that implementing serialization solutions can take up to 18 months (1). With the approaching deadlines of November 2018 in the United States and February 2019 in Europe, this time scale appears difficult to attain. However, experts in the industry have devised a more manageable time scale that can be condensed into four key phases: designing, building, deploying, and supporting your lines. Although the approach is not a one-size-fits-all solution, this is a useful guide to follow.On average, the approach is estimated to take seven weeks to install the first line, including two weeks of downtime, and then another three weeks, including one week of downtime, for each subsequent line (2). This is a full-steam-ahead approach that requires input from the highest levels of your business, professional project management, and assistance of the right third-party suppliers (3).

Phase 1— Assess and Design: This phase involves a large amount of preparationi, data collection, and strategic planning. As you embark on your serialization journey, the more you know up front, the more prepared you’ll be. Having a clear plan will minimize the difficulties and disruptions to your operations and workforce.

First, ensure that you have full clarity over the requirements of the markets you serve. Conducting a full impact assessment (including determining the number of lines, sites, and products that will be affected) should bring the full scope of the task to the surface so that technical or operational challenges can be identified early. Also, consider opportunities for improving standard operating procedures (SOPs) and processes. Identifying the wider business improvements that can be gained will help you to justify the investment and see how your serialization program can and will deliver a positive return.

Next is vendor selection. Deciding on the right vendors to supply and support your serialization program is one of the most pivotal points in the process. Poor vendor selection can be the difference between success and failure. It will be timeconsuming, but previous research should help you establish the type of vendors that fit your program and serialization requirements. External implementation support is beneficial particularly if you delayed your preparations and thus are facing a short timeline. Remember that your choice will count not only in the initial stages of implementation, but also in later phases such as in deployment and support of your solution.

During this time, design your program. It should include different areas such as project governance; quality; validation and testing; artwork; and change, release, and incident management. Follow a best-practice architecture using your chosen vendors and supply chain team to map out the current system requirements and situation and what you would like the future process to be. While making all changes for serialization, consider what else you can improve during the overhaul process. Document your ideas by creating different templates of how to implement your solution. Having a rough guide sketched out also can help you recognize (or even iron out) some possible issues before you start.

Once some decisions have been made, you may realize that you need to update or upgrade your packaging and printing equipment, or you may have other technical requirements. At this point, updating key stakeholders is important. Ensure that all leaders in the organization are fully aware of the upcoming process. Establish who will be leading each stage. If this communication falls through, it can affect the entire solution. So have everyone be aware of the impact of all processes on workflows and the business overall.

Phase 2 — Build: This phase will kick-start your project into action and could disrupt your current lines. Continue to gather information and refer to your initial research from phase one to determine how to manage disruptions and whether some solutions can be put in place. Different markets have different regulations, and it can be tricky to find a one-size-fits-all approach. That presents a difficulty in needing to be both agile and standardized in your serialization approach. Let industry standards guide you, but ensure that you set up a flexible solution that can be easily adapted to changing market and customer requirements.

Once your project is set in motion, broader training should begin. Frequent and (most important) early training will increase the likelihood of successful implementation. Serialization will affect all aspects of your pharmaceutical business, so make sure it’s done well. Determine whether your vendors or third parties provide training for your packaging, quality, and IT personnel. Remember to keep an eye on your budget plans and key performance indicators. While you are conducting training, do you need to focus on anything else? Keep serialization compliance at the forefront of your mind, but remember that it is an investment that can offer benefits too. Run a test line or a pilot during your training. The first run-through can be a good learning experience, and it takes the pressure off the next phase.

Phase 3 — Deploy: This is where success in the previous two phases will show their worth. Testing your first line will be a challenge, but a standardized approach will make it easier to implement across your other lines and sites and reduce downtime. Even as you’re working on a serialization project, there could be new changes to regulations or customer requirements. So ensure that your serialization platform is flexible and robust enough to adapt accordingly. That essentially means ensuring that you have the process of receiving, testing, and validating changes at all four levels of the serialization architecture to be as efficient as possible. Because serialization requirements evolve, multiple product release cycles are likely. So it’s essential to have a vendor that continuously implements product enhancements and is ready to listen and adapt to your needs.

Phase 4 — Support: Now that you have your first line running, the final stage focuses on managing the impact to your lines. Your initial training will help at this stage, but ensure you have accounted for additional supervisor and operator training at the packaging line and have readily available manuals and guides. Also ensure that you have an expert ready to assist with your new processes (or even machines) to help boost efficiency. The support stage can make or break a serialization solution, so take it into account early in the process. A comprehensive support system allows you to keep your relationship with your third-party providers strong, which will in turn help you with any future projects that may arise.

These phases should bring you to a natural completion of your serialization timeline, leaving a robust solution in place. Because of the complex nature of serialization, this guide may need to be altered to suit your specific needs. But ensuring that you check all boxes along the way will make for an easier and more successful journey toward regulatory compliance.

References1 Wieditz K, Peknik-Graham L. Six Myths About Serialization; Serialization for Late Starters. SeaVision: Pavia, Italy, 30 July 2107; the Practical Challenges of Pharmaceutical Serialization, Best Practice Deployment and Achieving Business Benefits. Zenith Technologies;

Carlos Machado is serialization director at SEA Vision US; [email protected];

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