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Tony Ross, Director, Life Sciences Practice
Pharmaceutical ePedigree is shaping up to be one of this year’s hottest topics for drug manufacturers, wholesalers and retailers, thanks in part to California. The nation’s most aggressive state in taking measures to protect the U.S. drug supply against counterfeits remains steadfast in its commitment to provide an electronic pedigree and unique serial number for all drugs sold in the state.
In 2004, the California Board of Pharmacy (CA BoP) sponsored legislation that, among other requirements, compels manufacturers to implement ePedigrees that track each prescription drug at the individual package level as it moves through the supply chain. In 2006, the board further strengthened and clarified some of its ePedigree requirements, and extended the deadline by two years, to give the industry more time to implement the necessary technologies and processes to meet the requirements.
On March 25, 2008, the CA BoP extended the proposed January 1, 2009 deadline by two years, turning what was an extremely challenging implementation timeline into an aggressively achievable one.
According to Tony Ross, director of Clarkston Consulting’s commercial compliance solution, pharmaceutical manufacturers need to get serious about their ePedigree and serialization solutions now, or risk missing key opportunities along the way.
“If your organization is not already defining a strategic approach and developing a roadmap that takes a 360 degree view of your business, then it should be,” says Ross, who has more than 20 years experience helping companies apply process and technology solutions to address major industry challenges including regulatory compliance.
In this Viewpoint, we talk with Ross about the role that California is playing, why manufacturers must get started now, the common pitfalls they need to avoid, and the best way to gain a competitive advantage from their investment.
“The California Board of Pharmacy’s vote to delay implementation until 2011 is an acknowledgement of the complex regulatory and technological challenges that still must be overcome."
– Ken Johnson, Senior Vice President, PhRMA
Despite the business case for greater security measures to keep the U.S. drug supply safe from potentially dangerous counterfeits, little progress has been made to put a system in place. Why so?
The regulating agencies have been their own worst enemies in this. The U.S. Food and Drug Administration (FDA) left it to the states to enact legislation based on their own interpretation of the federal guidelines. In turn, many states have left too much up to the industry when it comes to clearly defining and agreeing on guide- lines. That’s actually one of the issues right now in California. The CA BoP has continually said it wants the industry to do X, Y and Z, but has left it up to the manufacturers to figure out how to do it. That sounds great in theory. But in reality, they don’t necessarily work that well together.
Another challenging issue is that drug manufacturers have to be careful in terms how much they work together because of anti-trust laws. In fact, a representative from the California Attorney General’s office has been tasked with providing a recommendation to the board as to what level of industry collaboration is actually permissible.
What happens in 2011 if the California legislation goes into effect and manufacturers still aren’t ready?
Patients will be denied medications because companies will face steep fines if they distribute product in California without the ePedigree and serialization. There may be some gray areas in terms of ordering over the Internet. Or perhaps patients will drive across the state line to Arizona or Nevada. But right now the simple answer is that any impacted product not carrying an electronic pedigree and serial number will not be sold in California after January 1, 2011.
So what advice do you have for a pharmaceutical manufacturer that hasn’t made much progress implementing an ePedigree/serialization solution? Where should they start?
First, realize that the CA BoP extension is not a reprieve, it simply provides the critical time necessary to comply. And to approach it strategically and gain a return on your investment, you have to bring someone in to help oversee this multiple component project. A lot of folks are thinking of this simply as an ePedigree project. But electronic pedigree is only one part of it. Because of serialization, you have a tremendous amount of data—to collect, attach to a pedigree and transfer with that pedigree—as it moves through the supply chain. So this is actually a data migration project with several solution components—object event repository, electronic pedigree, edge software and production line serialization—with varying levels of complexity and specific requirements.
You also want to think holistically. Think about what other projects you have going on and how ePedigree fits in. For example, we recently worked with Mylan Pharmaceuticals and used its ERP implementation as an opportunity to integrate an ePedigree solution. This approach ensured minimal cost and disruption to the company’s operations.
Should manufacturers look to one of their ePedigree or serialization technology providers to help them manage the effort?
On the contrary, we strongly believe a company is better served with an independent party overseeing the project. With a complex, multi-component solution like this, your project management office (PMO) and systems integrator need to be unbiased. If you have one of the solution component providers overseeing the whole project, you may not gain the 360-degree view you need and fall victim to siloed, fragmented solutions that aren’t right for your business.
So you’re advocating a PMO approach?
Absolutely. As I mentioned, you’ll be dealing with your ERP system, your ePedigree solution, the edge software components, data collection, and the production line implementation. The key to getting all this done on time, within budget and in a way that will ultimately produce an ROI, is successfully over-seeing and managing these areas con-currently, while also keeping a keen focus on your long-term business goals. A PMO approach is the best way to accomplish this.
What are the fundamental steps to implementing an ePedigree and serialization solution?
First and foremost, you must define your strategic approach and build your roadmap with input from all key stakeholders. As part of this initial phase, we highly recommend identifying one external pilot partner from each of your distribution channels. If you wait too long to identify those partners, you may find yourself without a date to the dance.
Once you have a solid roadmap, you then initiate your five concurrent streams of work—ERP/component integration, object event repository, electronic pedigree, edge software and production line serialization. Each stream will need to be tested independently, and then you’ll have to bring them all together to test the solution as a whole. You would then conduct an internal pilot followed, hopefully, by an external pilot. Finally, after you work out any kinks, you’re ready to go live.
What role does the roadmap play in this process?
Keep in mind that this is not just a manufacturing problem. It’s not just a distribution problem. It’s a business problem. Electronic pedigree and serialization affect everything from CRM, to demand planning, to purchasing and inventory management, to reverse logistics. You have to think about what happens in the various business scenarios of day-in, day-out business.You need to think about how you’re going to communicate with your partners downstream, both when things go as planned, as well as when there’s a problem. So developing a roadmap—getting that all-encompassing view of your company and making sure everybody understands the impact on their part of the business—is critical to keeping you moving forward at a fast pace.
Prior to the pilot, shouldn’t manufacturers use a risk-based approach that shows which products they should focus on first?
That’s an excellent point. Evaluating your manufacturing strategy is part of the roadmap process, both in terms of reducing your overall risks as well as reducing your overall costs to implement serialization. Perhaps you have multiple facilities where you are producing the same product in different packaging. In that case, you need to assess your serialization investment opportunities first. You would also need to look at sites where multiple lines are packaging the same product. This thought process could also lead to a broader discussion about whether you’re even producing the right product at the right location.
What common mistakes might companies make when implementing an ePedigree solution?
One thing to avoid is designing a “California only” solution when you’re in fact dealing with a national problem. Thirty-five states have either defined an electronic pedigree law or are in the process of doing so. Therefore, if you’re designing your architecture and hardware based on California volumes, you’re going about it in the wrong way. You can use California volumes as a starting point, but your scalability needs to go national. You don’t want to come back in two years asking your CIO for more money to upgrade because the electronic pedigree laws have expanded to more states. You need to have that in your plan going in.
What does the extension mean in terms of planning?
We are advocating that our clients get started now. They may not have to go at the pace a 2009 deadline would have required, but they’ll have a lot more opportunity in their strategic plan to do things they were otherwise just considering, whether that’s production line consolidation or re-appropriating product at certain facilities or whatever. So start now to put more thought and planning into your strategic approach.
Smaller pharmaceutical manufacturers with batch production and no end-to-end processes are at a significant disadvantage, as they can’t establish parent-child relationships? What insights do you have here?
The California board has said to these organizations, “Okay, we understand what you’re saying and we’ll take it into consideration.” But as of now, if those companies have saleable units, even if it’s one continuous batch, they still have to serialize at the saleable unit. So our recommendation is get started now and work toward the 2011 deadline.
Given that all manufacturers will have to comply with the same legislation, what competitive advantage, if any, exists for companies when designing their solution?
There are tremendous value opportunities available to those companies willing to collaborate with their trading partners beyond simply meeting the compliance standards. For example, you could agree to share certain data just between you and your trading partners that helps you optimize demand planning, production levels, inventory management, etc. This is really an area where having an independent PMO and system integrator that has extensive industry experience can pay off. The right partner can help you identify and leverage the opportunities that exist for your business.
Do you have a final piece of advice for pharmaceutical manufacturers?
Find a trusted advisor to help you through this process—and be sure they have extensive experience in the life sciences industry. There are many companies out there pushing their own particular piece of technology. But they’re just looking at the problem from one perspective. You need to work with a company that understands the intricacies of the pharmaceutical industry, from R&D all the way through to where the product is dispensed. You need someone who knows the right questions to ask. And you need someone who can help you see the big picture: that this is a technology, process and business problem that needs a technology, process and business solution.
We encourage you to seize the opportunity now. Collaborate with your trading partners, do additional diligence on serialization technologies, pilot pedigree with a serialized product and give your packaging engineers time to resolve the impact of serialization on their lines through additional testing and modeling. By the time the new deadline comes, strategic-minded companies will have identified value opportunities with their trading partners and have a serialization process that does not impact their current production line rates. Those who wait to see what guidance is provided will not only miss valuable opportunities for ROI and process improvements, they may very well be the ones in 2011 who are trying to explain to California Board of Pharmacy why they will not be ready in time.
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