Serialization and epedigree: New Opportunities for Life Sciences Manufacturers

Serialization and epedigree: New Opportunities for Life Sciences Manufacturers

Table of Contents Serialization and epedigree: Current Direction... 3 Why Invest in Serialization?... 3 What Tasks do Life Sciences Companies Face?... 4 What are the Implementation Deadlines?... 5 Appendix 1 epedigree Definition... 8 Implications at the Federal Level... 9 EU Serialization Requirements... 9 Appendix 2 Serialization Standard... 11

Serialization and epedigree: Current Direction The healthcare industry, including pharmaceutical manufacturers, pharmaceutical wholesalers, distributors, and retailers, will be required by the State of California to comply with the state s Pharmacy Pedigree law by 2015. Implementation of California s epedigree Law is expected to influence future state and federal epedigree mandates in the United States. The California law has two major components: 1. Serialization mass serialization on the smallest saleable unit level for all prescription products. Wholesalers and distributors have asked manufacturers to serialize on every level of packaging (unit, packer, case, pallet, and shipper). 2. Pedigree - an electronic record on transactions among business partners throughout all stages of distribution. To date, pedigree is only required by U.S. regulators. However, serialization is being mandated by global regulators and government agencies. The Federal Drug Administration (FDA) issued its serialization standard in January 2009. The European Union s (EU) serialization had an aggressive time line, with Turkey leading the way imposing its implementation on July 1, 2009. European Federation of Pharmaceutical Industries and Associations (EFPIA) issued a position paper on identification and coding in July 2008. China s State Food and Drug Administration (SFDA) announced a drug serialization initiative in April 2008 mandating all registered drugs and devices to be serialized by 2009. Why Invest in Serialization? Complying with serialization mandates is also an opportunity for Life Sciences manufacturers to leverage serialization as a business driver. The industry concurs there is more to gain using serialization as a market differentiator and niche than for compliance alone. Many biotech and name brand pharmaceuticals have already recognized these business values and are moving aggressively to serialize their key products. They see clear long-term and short-term benefits, including: 1. Reducing Counterfeit & Protecting Revenue It is estimated that 10% of drugs in the global supply chain are counterfeit. It s a paramount task for regulatory bodies worldwide to protect patients from these dangerous counterfeit drugs. It s also a universal mission for every Life Sciences company to provide authentic quality products that save lives. Serialized products are better protected against counterfeit and easier to detect if counterfeits surface. Serialization generates brand power and consumer royalty because it provides tractability and accountability in the global supply chain.

2. Mitigating Risk Leading Life Sciences companies thrive and excel on compliance and quality. Life Sciences executives agree any adverse event, is one too many. However, should an adverse event occur, nothing is more effective in containing damage and costs than a serialized tracked product. Imagine a recall of a lot of 10,000 units downsized to a recall of only 1000 serial numbers. As Life Sciences companies grow over the next decade of producing more products and serving more customers, serialization will become an increasingly powerful tool to isolate quality issues, contain risks, and reduce the magnitude of adverse events. 3. Creating Competitive Advantage Serialization helps increase consumer s confidence and security in knowing that the product they ve purchased is authentic, traceable, and accountable. Additionally, serialization creates a vehicle for manufacturers to collect valuable consumer, doctor, and customer preference data. A serialization database such as EPCIS can be used as a customer portal for customer feedback following serial number authentication. This new communication promotes continuous product improvement, feeds new product development, and builds customer loyalty effortlessly. What Tasks do Life Sciences Companies Face? Life Sciences companies who are in the value chain of making, distributing, or dispensing drugs (including devices pre-filled with drugs) are impacted by one or more the following regulations or guidelines: 1. California epedigree Law 2. U.S. FDA serialization guidelines 3. Turkey s serialization requirements 4. China s SFDA serialization requirements 5. GS1 healthcare serialization standards Here is a summarization of the main components of the aforementioned requirements: Components Serialization on Every Level (unit, packer, case, pallet, shipper) RxASN Description Serialization can be achieved via preserialized cartons or by installing serialization equipment on the packaging line. Similar to ASN. RxASN captures aggregated containerization and aggregated serialization.

What are the Implementation Deadlines? Turkey s serialization deadline was January 2009. California epedigree Law requires manufacturers to have 50 % of their products serialized by 2015, and to achieve100% compliance by 2016. Distributors and wholesalers must meet epedigree requirements by 2016. Wholesalers/distributors normally set their due date six months prior to a state deadline to allow inventory turns. Manufacturers also need six months to turn the inventory. The actual deadline for manufacturers to implement is 50 % by 2014 and 100 % by 2015. 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EU Turkey EU Current Federal Law (1988 PDMA) Pedigree (non-serialized) only on non-adr transactions (<5%) (Implementing regulations enjoined by U.S. District court) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Buyer-Matheson Manufacturer Serialized Non Legislation (HR Pedigrees (non-serialized) High Risk 5839) on 100% of products Manufacturer Serialized High Risk Dist. T&T High Risk RPH. T&T High Risk T&T Non-High Risk T&T Non-High Risk California SB1307 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Federal PDMA Standard (Pedigree (on serialized) only on non-adr transactions (<5%)) Manufacturer serialize 50% Rx & Pedigree Manufacturer serialize 100% Rx products Distributor T&T Pharmacies T&T

QAD Serialization Solution QAD Serialization is an integrated ERP solution enabling companies to manage inventory and distribution operations to comply with California e-pedigree, U.S. FDA, Turkey drug serialization, China drug serialization, and EFPIA EU Identification and Coding requirements. With QAD. Life Sciences companies can boast the following competitive advantages: Centralized serial number management Generated and issued serial numbers to multiple packaging lines Managed serialized inventory Pick, pack & ship serialized products Aggregated packaging and label printing Real-time event based messaging and reporting Return and recall management on serialized products With the efficiency and capacity to manufacture serialized products, Life Sciences companies create a distinct advantage of becoming a market leader with stronger branding. Choosing the right technology partner is critical to the path of effective serialization. QADs Serialization provides the full spectrum of business solutions needed to become serial enabled, including: Components Physical Serialization on Product at Every Level (unit, packer, case, pallet, shipper) Serialization (ERP & SCM) RxASN Returns and Recalls Description A unit can be serialized by purchasing serialized cartons or by real-time serialization on the packaging line with proper equipment. The consequent packaging, such as packer, shipper, case, and pallet, are also serialized. Customers require their ERP system to have both lot management and serialization simultaneously and efficiently. Lotand serial numbers are issued, stored, and tracked through supply chain operations (plan, source, make, distribute, and return). Similar to ASN, RxASN captures containerization and serialization. Regulated by the FDA and CA epedigree Law; Returns and Recalls are to be tracked by lot and serial number.

High-level Architecture of the QAD Serialization Solution

Appendix 1: epedigree Definition Pedigree means a record, in electronic form, containing information regarding each transaction resulting in a change of ownership of a given dangerous drug, from sale by a Manufacturer -- through acquisition and sale by one or more wholesalers, manufacturers, repackagers, or pharmacies -- until final sale to a pharmacy or other person furnishing, administering, or dispensing the dangerous drug. The pedigree shall be created and maintained in an interoperable electronic system, ensuring compatibility throughout all stages of distribution. (SB 1307 4034 (a)) The requirement is being driven in an attempt to prevent counterfeit medicine from entering the legitimate supply chain in California. In 2004, the California state legislature passed anticounterfeiting and anti-diversion legislation (SB 1307), including provisions pertaining to the licensure and qualifications of wholesalers, restrictions on furnishing, and the requirement of an electronic pedigree to accompany/validate drug distributions. In addition to California, others states have either implemented or plan to implement epedigree mandates. Florida implemented a similar safeguard drug distribution law in 2006 that required a pedigree (not epedigree) document for every prescription product shipment. Florida Pedigree law has data requirements, but not format or transmission requirements. Therefore, a common shipping document (packing slip) with proper contents often qualifies as a Pedigree document. Other than California and Florida, 24 other states have pedigree laws in place. However, 24 states are not specific and only focus on non-adr (Authorized Distributors of Records) transactions. In laymen s term, drugs traded outside of normal distribution networks must be accompanied by pedigree records.

The two components of epedigree are: Components Serialization at Unit Level Pedigree Description Requires manufacturers to place serialization number on the smallest saleable unit of all prescription products. 2D Data Matrix and radio frequency identification (RFID) are the currently accepted industry serialization methods, with expectations to eventually use RFID in the long-term. The wholesalers and distributors also have asked manufacturers to serialize beyond unit level, including every level of packaging (unit, packer, case, pallet, and shipper). California requires the serialized shipment to be messaged forward and backward through the entire upstream and downstream supply chain. The shipment message is epedigree. At each change of ownership through the supply chain, a Pedigree record grows by tagging the new transaction. Implications at the Federal Level The pedigree law was initiated as a section of the federal PDMA (Prescription Drug Marketing Act). PDMA was enacted in 1988. However, the pedigree section was never implemented. The implementation was first delayed until 2006, and then it was under court injunction due to a lawsuit filed by RxUSA against the FDA, in September 2006. In efforts to tighten supply chain security and prevent criminals from trafficking counterfeit, adulterated, diverted or stolen prescription medicines, states took matters into their own hands. In 1999, Nevada issued state pedigree, followed by Florida in 2003 and California and others, in the following years. The FDA is committed to develop a standardized numerical identifier for Rx packages and pallets no later than March 2010. In October 2007, Congressman Buyer drafted the Buyer- Matheson Bill, HR5839 safeguarding America s Pharmaceuticals Act. This legislation proposed track & trace of high-risk drugs by 2013, and the rest by 2014. It will also preempt state pedigree laws, bringing unity to a patch work of pedigree initiatives. EU Serialization Requirements EFPIA (European Pharmaceutical Industry Association ) launched a pilot project in the area of mass serialization (2D barcoding system) at the end of 2008. Turkey has taken the lead as one of the first countries in the world to mandate transport package and saleable unit serialization, and dictate specific product identification and

labeling requirements. Turkish Ministry of Health's (MOH) serialization requirements went into effect on January 1, 2009. MOH's amended regulations require serializing and tracking using barcode technology for all transport packages -- such as pallets, parcels, boxes or bundles -- as well as all unit-level items that are reimbursed by MOH, including promotional samples, hospital packaged products, prescription drugs, and non-prescription drugs. Italy was one of the first European Union nations to implement a barcode based system. In 2005, Italy introduced the Bollini which is a label that features the Italian product license number and a sequential number. Belgium mandates that each reimbursable pack include a sequential code, constructed from four different elements including an APB product identification number that is significantly different in form from the Italian Bollini. Greece requires both a National Registration Number as well as a sequential number. Ireland serialization requirements focus on hemophilia products. Spain is just starting to define its specific approach to serialization.

Appendix 2: Serialization Standard The commonly accepted serial numbers are: 1. 2D Data Matrix AI(01) GTIN + AI(21) format or SSCC-18, GS1 code 128 2. RFID with SGTIN-96 format. 2D Data Matrix is the lowest denominator of accepted serialization methods by pharmaceutical distributors and wholesalers. It costs about 1 cent per unit while RFID costs 30 cents per unit. Many manufacturers selected 2D Data Matrix as their initial phase into compliance. Product serialization occurs during product packaging. Serialization equipment is fitted to the packaging line and moves at the same speed of packaging. Given the start and end serial number, this equipment embeds one serial number at a time with increment of one, for each unit. Units go through inspection before being grouped into a packer/case (for example, 12/34/48 units to a packer). Some units are rejected during inspection; therefore the packer may not have all unit serial numbers in sequential order.