Serialization, Aggregation, Coding Formats – Global Challenges for the Pharma Industry

According to the OECD, counterfeit medicines are responsible for more than 700,000 deaths annually. Up to 30% of all medicines are estimated to be fake in emerging and developing countries, says the World Health Organization (WHO). While fake drugs are potentially lethal, parallel markets and counterfeit drugs cost the pharmaceutical industry, the tax payer and the state dearly.

In Europe alone, the pharma industry loses approximately €10 billion of revenue annually due to the presence of counterfeit medicines on the market. This represents 4.4% of the sector’s sales, says the latest EUIPO report on « The economic cost of IPR infringement in the pharmaceutical industry ». If the collateral effects on other industries and on government revenue are added, counterfeiting in this sector causes approximately €17 billion of lost sales to the EU economy, which in turns leads to employment losses of about 91,000 jobs and a loss of €1.7 billion in government revenues.

To fight this global scourge, over 40 countries are today working on track and trace laws to help regulate pharmaceutical products as they pass through the supply chain.

The global regulatory landscape today can seem like a maze to pharma companies: between active laws, draft laws, deadlines and suspended legislations.  Pharmaceutical companies, laboratories, CMOs, and the like need to be prepared and proactive.

Turkey, for instance, was one of the first countries in the world to require serializing and tracking of all transport packages such as pallets, parcels, boxes or bundles. In South Korea, all pharmaceutical products must be serialized beginning in January 2016 per the Pharmaceutical Affairs Act, while aggregation is optional but encouraged by regulators and supply chain partners. Antibiotics and anti-malaria drugs are serialized in Nigeria. Serialization as per Saudi Drug Code is reqired since March 2017 in Saudi Arabia.

The People’s Republic of China’s legislation was rea-activated and tightened in January 2017. The most important new provision says that from now on, without an operational Track&Trace system in place, companies will see their GSP (Good Supply Practice) licence removed. This means they will no longer be able to sell product on the Chinese market.

In Australia, serialization aree required for Hemophilia products since January 2017, but regulations are likely to be extended to most medicines based on the European model and GS1 standards.  Canada will likely base further legislation on the US model and FDA guidelines. In Brazil, secondary packaging serialization will be mandatory as per Law 13.410 published in December 2016.  A pilot phase of one year started in early 2017.

In the Middle East, Jordan will make serialization mandatory beginning July 2018. In Saudi Arabia, serialization requirements are active since March 2017. Other countries in the Gulf region (especially members of the Cooperation Council for the Arab States of the Gulf) are likely to follow Saudi Arabia’s example, adapting requirements where needed.

In the United States, serialization requirements today are limited to marking the unit of sale with a unique data carrier. Serialization will be mandatory from November 2017 as per Drug Supply Chain Security Act (DSCSA) (although penalties for non-compliance will probably only be applied from November 2018).  The DSCSA further requires that, by 2023, a pharmaceutical product is traceable through its entire journey.  Aggregation will probably be necessary 2019 to manage product returns, and mandatory beginning in November, 2023. Tamper-evident packaging has been mandatory since the early 80’s for OTC drugs, but the choice of tamper-evident packaging is up to the manufacturer. The good news is that more and more companies are starting to see the value beyond serialization compliance and intend to turn obligations into opportunities for their businesses.

In the European Union, medicines will have to be serialized beginning in February 2019. However, serialization is already mandatory in countries like Belgium, Greece and Italy. And what will happen in Great Britain after Brexit? Aggregation is not legally required but necessary for practical and business reasons.  Concerned by Directive 2011/62/EU are all prescription drugs (OTCs excluded) unless included in the FMD list. Additionally, prescription drugs must have safety labels that enable verification checks along the entire supply chain.

In Russia, drugs are classified into three levels and phased implementation of serialization requirements is planned from 2017. However, the current law is not considered detailed enough to be coherently implemented says the pharma industry. A pilot is currently being tested.

Japan is currently considering a draft law while a memorandum has suspended an active law in the Philippines. A revision will likely extend to all products regulated by the US Federal Food and Drug Administration.

The legal landscape for drug serialization is always changing which means long-term compliance is a two-fold challenge. Not only will you have to follow changes in the markets you currently cater for., but you will also have to be prepared to adhere to new legislations that are likely to come into place in markets not yet regulated. And what if you want to export to markets not covered by your serialization solution? How can you ensure compliance in the long term? How can you future-proof your serialization solution? Make sure you use a scalable serialization solution that can keep up with a changing environment. This will enable you to be more reactive when faced with new legislation or when expanding into new markets.

* this article was written in July 2017. For an up-to-date overview of global serialization requirements, please refer to our Global Serialization Map