Securing the pharmaceutical supply chain
Track and Trace in the Pharmaceutical Supply Chain
Edmund W. Schuster
Visiting Operations Researcher
Massachusetts Institute of Technology
husetts institute of technology, 400 technology sq, building ne46, 6th floor, cambridge, ma 02139-4307, usa
The complexity of the United States health care system is increasing rapidly.
Demographic changes, along with a host of new drugs, are causing greater
volumes of raw materials and finished products to move through the
pharmaceutical supply chain. Because drugs are expensive, there is always the
possibility of counterfeit. Several recent cases of counterfeit medicines have
raised American awareness of the problem. Information is an effective tool to
combat counterfeit, however, new supply chain structures and relationships will
need to emerge to organize and exchange information
The complexity of the United States health care system is increasing
rapidly. Demographic changes along with a host of new drugs are causing
greater volumes of raw materials and finished products to move through the
pharmaceutical supply chain. In many ways, the pharmaceutical supply chain is
beginning to resemble the distribution of consumer goods. However, several
important differences remain.
The fundamental goal of the medical industry is patient care and safety.
To achieve these goals for the public good, the Food and Drug Administration
(FDA) and individual States regulate the industry through laws and administrative
orders designed to protect the integrity of drugs throughout the pharmaceutical
supply chain. These laws and regulations require millions of pages of
information to document the flow of drugs from manufacture to consumption.
Implicit in the documentation process is the administrative requirement to
do track and trace. Tracking
involves knowing the physical location of a
particular drug within the supply chain at all times. Tracing
is the ability to know
the historical locations, the time spent at each location, record of ownership,
packaging configurations and environmental storage conditions for a particular
Track and trace forms the foundation for improved patient safety by giving
manufacturers, distributors and pharmacies a systemic method to detect and
control counterfeiting, drug diversions and mishandling. These are important
aspects of supply chain security. Unfortunately, the current system for the
documentation and organization of data is cumbersome because of a reliance on
manual procedures and storage of information on paper. As a practical result,
track and trace takes place only in an emergency such as a drug recall.
Supply chain wide track and trace provides a difficult problem for APICS
practitioners to consider. The next section examines the emerging issue of
counterfeit and the legal underpinnings for improved trace and trace capabilities
within the pharmaceutical supply chain.
AN INTERNATIONAL PROBLEM OF SIGNIFICANT MAGNITUDE
According to the World Health Organization (WHO) definition, what makes
a medicine counterfeit is the deliberate or intentional (criminal) nature of the
mislabeling or adulteration of a drug. This type of illegal behavior leads to 1)
compromises of patient safety, 2) economic loss to established drug
manufacturers, and 3) a threat to the national security of sovereign countries.
The WHO estimates that between five and eight percent
worldwide trade in pharmaceuticals is counterfeit. Many industry experts believe
this to be a conservative estimate. For example, the Lancet reports
"Approximately 192,000 people died in China in 2001 due to the effects of
counterfeit drugs. As much as 40% of drugs in China are counterfeit."
The problem of counterfeit drugs has reached grass roots America.
During the past ten years, drugs such as Procrit, Epogen, Serostim, Zyprexa,
Diflucan, Combivir, and Retrovir have been counterfeited. Even Lipitor, the
widely prescribed drug to control cholesterol levels, was recalled recently
because of a counterfeiting incident. In this particular case, the FDA could not
determine how many bottles were in each of three counterfeit lots. As well, the
current destination of the counterfeit lots could not be determined. While most
counterfeit drugs contain harmless ingredients such as water or glucose, the
counterfeiting of Lipitor "posed a potentially significant health hazard" according
Even though the overwhelming majority of drugs sold in the United States
are safe, the $192 billion per year pharmaceutical market is an attractive target
for counterfeiters. With the complete mapping of the Human Genome, there will
be a number of new, high priced drugs appearing on the market during the
next few years. This will increase the opportunity for counterfeit.
THE CHANGING REGULATORY ENVIRONMENT
With greater awareness of counterfeit drugs, the FDA and States are
moving forward with new legislation to combat the problem. On May 7, Florida
gained national attention by passing a legislative bill to establish a "pedigree" for
each drug sold in the state. The intention of the bill is to verify authenticity and
reduce the chance of counterfeit. It introduces a number of important issues for
the pharmaceutical industry to consider. Specifically, the bill calls for the
following information to accompany each drug through all steps of the supply
3. Container size
4. Number of containers
5. Drugs Lot or Control numbers
6. Business Name and Address of ALL parties to each prior transaction, starting
7. The date of each previous transaction
These requirements add a great deal of complexity for manufacturers and
distributors. As an example, the typical drug distributor carries up to 40,000
stock keeping units. Maintaining pedigrees given this volume of drugs is
overwhelming with current identification and information technology.
AN EXAMPLE OF PHARMACEUTICAL SUPPLY CHAIN COMPLEXITY
Figure 1 shows a general representation of a pharmaceutical supply
chain. The form of the physical goods can change during each step of the
pharmaceutical manufacturing and distribution process. Immediately after
completion of each step, the product becomes a finished good that continues as
an input to the next step in the supply chain. This makes track and trace difficult.
Referring to Figure 1, the finished product for the chemical plant is bulk
active ingredient packaged in drums with a specific name, composition, lot
number, and expiration date. In contrast, the transport carrier that moves the
drums of active ingredient from the chemical plant to the manufacturer sees only
a shipment of specific weight and volume. Other attributes are not important to
the carrier. There is no direct, continuous link to attributes of the shipment such
as lot number or expiration date.
To deal with this situation, pharmaceutical manufacturers have placed
select pieces of information directly onto the package by printing bar codes or lot
numbers. In this case, the package becomes the vehicle for carrying the
information needed for track and trace.
Though the information carrying capacity of this approach is limited, it
does guarantee universal access to all parties within the supply chain.
Unfortunately, this "self contained" approach of physically attaching information
to the secondary package can be, and often is counterfeited. In addition,
information contained on the secondary package is hard to access quickly on a
meaningful scale and it does not meet pedigree requirements.
The process of identity change continues throughout each step of the
supply chain making track and trace, difficult to accomplish even with the self-
contained approach for transmitting information. Historically, pharmaceutical
manufacturers and distributors have gathered the information needed for track
and trace, using detailed forms and secure databases as storage devices. In
even the best situations, this information is difficult to retrieve and seldom shared
with other parties outside of the firm. In the event of a recall, special teams
within firms are charged with the task of accessing data to make important
decisions about the extent of the problem. This is usually a labor-intensive
AGGREGATION AND INHERITANCE
Although the physical form of goods changes throughout manufacturing
and distribution, a link still exists for all raw materials and work in process used to
produce finished goods. This type of link demonstrates inheritance of specific
attributes. Each medicine used by the patient has a specific lot number and
expiration date printed on the container. The drug is shipped on a specific truck,
at a specific temperature for a specific duration. The effectiveness of the
medicine ultimately depends on the quality of the manufacturing process and the
environmental conditions of transport and storage. These are all inherited
Organizing the large number of informational links for drugs in the supply
chain requires adherence to two concepts:
is the logical equivalent of item aggregation or assembly. By
viewing data within a supply chain as a series of parent – child relationships,
track and trace becomes possible.
is the history of the parent data. To reconstruct the history of
an item, each change in form must transfer from parent to child.
Data aggregation reduces the number readings at critical points within the
supply chain, making capture of informational links needed for large-scale track
and trace feasible. Figure 2 shows a visualization of data aggregation for the
flow of information between a chemical plant and the manufacturer represented
in Figure 1. In this case, information flow is in parallel to physical product flow.
AN ANTI-COUNTERFEIT SYSTEM BASED ON INFORMATION
It is only through data aggregation and inheritance that robust track and
trace across the entire pharmaceutical supply chain will be possible. As an anti-
counterfeit measure, location information is extremely important because it
provides 1) the past position of the goods, 2) present position of the goods, and
3) the anticipated future position of the goods (assuming a scheduled shipment
exists). Time stamps at each location allow the calculation of residence time.
This capability provides true pedigree information about drugs, accessible
by supply chain partners. Effective track and trace will be required for accurate
drug pedigrees. Supply chain wide information presents a difficult barrier for
potential counterfeiters to overcome. However, with improved information and
identification technologies, track and trace will become a new weapon in dealing
with counterfeit drugs.
Track and trace also serves as the foundation for future applications of
importance to the health care industry. For example, the Human Genome
Project creates greater opportunities for engineering drugs to treat
small groups of individuals that suffer from specific illnesses. These "designer
drugs" will be manufactured in small lot sizes on a make to order basis. In this
environment, logistics and coordination takes a new form as thousands of
biotechnology drugs flood the pharmaceutical supply chain. Delivery of these
new drugs to the right group of people presents a challenge that the current
logistical system cannot handle effectively. Advanced track and trace systems,
currently being researched at the MIT Auto-ID Lab will lay the foundation for the
management of this not-to-distant complexity and provides the framework for a
safer and securer Supply Chain.
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