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How Wholesale Distributors Can Launch a Serialization Pilot that Drives Returns

As pharmaceutical manufacturers race to meet their impending timeline for serialization compliance, wholesale distributors should begin to recognize that the time to start on their serialization pilot for their track & trace journey is now.  On Nov 27, 2019 the Drug Supply Chain Security Act’s (DSCSA) regulation for traceability goes into effect for pharmaceutical wholesale distributors, which means that the clock is ticking to start acting on it.

Wholesale distributors must not only systemically accept tracing information from their upstream partner, but they must provide tracing information downstream at an individual unit package level.  At this time, the FDA is not requiring the ability to track at a package aggregation  level to be implemented but this is something wholesalers should consider as they ramp up a serialization compliance program.

Strategy and Planning

The primary challenge for wholesale distributors is the preparation required to undertake this daunting task of becoming serialization compliant.  The first step is defining the business strategy required to address regulations.  The implementation strategy  must align to the investment required to support the serialization effort during times of continued margin pressures and volatile drug prices.  To mitigate these concerns, best in class distributors often start with a pilot project, which implies a more manageable investment, providing cost contained learnings before launching into a much larger program.  As wholesalers account for the numerous aspects of a larger program and a smaller pilot, relying on an experienced partner proves to be invaluable.

Secondly, planning includes defining the structure of the endeavor.  A well-organized serialization program, including business guidance, governance, budget oversight, resource management and project coordination on a global and local level is vital to a successful launch of a serialization pilot and eventual larger deployment.  By beginning the process now through a pilot, wholesale distributors can develop a strong program and implementation strategy to support the serialization effort.  McKesson, AmerisourceBergen, and Cardinal Health, to name a few, are already significantly down the road of their serialization implementation; doing nothing is no longer an option.

Operationalizing Serialization

A primary concern of wholesale distributors regarding serialization is the need to align their approach to the manufacturers, who are significantly ahead in the serialization journey. As the upstream supply chain partners including pharmaceutical manufacturers, CMOs and other vendors planned to meet the DSCSA requirements, many used GS1 standards as their guiding principle which enabled much consistency across the industry.  But this does not mean that, as a wholesaler, every product you receive will look exactly the same.  In fact, wholesalers will likely be challenged by seeing many serialization variations across vendors, despite all being DSCSA compliant.  This may cause wholesalers to accommodate a variety of processes which could impact operational efficiencies, increase complexity and bring in additional unforeseen requirements and use cases.

Integration alone is a considerable challenge as discussed in Clarkston Consulting’s piece, The Serialization Challenge: Integrating with Business Partners.  Multiply this challenge by the number of customers you supply and the number of manufacturers you receive product from and you instantly have a complex situation which will require detailed oversight.

The organizational structure, supporting processes, and enabling technology must accommodate these complex requirements matrix to quarantine products, investigate suspect products, and have the ability to print clear and readable 2DMatrix barcodes for multiple distribution centers across a global footprint. The ability to track and trace at aggregated and de-aggregated packaging levels must be supported by implementing technology which can accept methods of communication which can include paper or electronic invoices, paper versions of packing slips, Electronic Data Interchange (EDI), and Electronic Product Code Information Services (EPCIS).

Start with a Serialization Pilot

Implementation of serialization will likely require significant organizational adjustments, changes of processes, introduction of new systems, integration with existing systems, and perhaps even new equipment. Wholesale distributors cannot risk their entire operation by implementing this large change across all distribution channels and all packaging lines at once. Doing nothing or wait and see, are also no longer an option.

The key to success is to begin early and begin small with a serialization pilot. Starting with a serialization pilot helps balance risk with investment.  It provides an opportunity to roll out the solution slowly with continuous improvement.  The approach becomes more agile as it moves across the organization.  Begin the serialization pilot with a single SKU, a single product line, or a single manufacturer to start. By starting small, the processes can be clearly defined, the data flows mapped, the equipment investigated and significant testing and quality standards can be applied.  Also, the required reporting can be detailed, produced, and validated. From there, you will be able to scale your project to meet the DSCSA regulatory requirements.

Additional contributions to this piece are from Megan Weldon and Sebastian Valencia.

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Tags: Serialization & Traceability