Drug Serialization Trends and Developments

By Edward J. Buthusiem

The sale and use of counterfeit medicines pose a real and potent threat to global health and commerce. Over the past decade, the threat of counterfeit medicines has increased, with incidents of counterfeiting reported in 123 nations. One watchdog group documented 2,193 incidents of pharmaceutical crime in 2013 alone, representing almost a 9 percent increase from 2012. This rise can be attributed largely to the growing online pharmaceutical marketplace that enables counterfeit drugs to permeate households. Counterfeit pharmaceuticals often lack active ingredients, depriving the patient of the medication they need. Even worse, counterfeit drugs have been found to contain poisons such as arsenic, shoe polish, nickel, and leaded road paint. While many counterfeits reach patients through online markets, these falsified medications have also penetrated legal supply chains.

National and international organizations, governments, and trade associations have engaged in an ongoing dialogue to prevent the dissemination of counterfeit drugs and prosecute individuals found to have knowingly engaged in the manufacture and sale of counterfeit products. While it will be difficult for any one solution to prevent counterfeiting, a system involving product serialization and verification can be an effective tool. The flow of counterfeit drugs into legal supply chains can be detected and prevented by implementing a well-regulated supply chain and appropriate penalties for noncompliance.

Further, many organizations recommend an initiative based on international and harmonized standards to minimize fragmentation and increase efficiency. The GS1[1] 2D barcode, for example, is currently the most viable option for an international system because it allows manufacturers to standardize the process by which supply chain partners identify and serialize products. The system would also facilitate product verification by ensuring that a single barcode can be used by several countries. Although no commonly recognized serialization system currently exists, serialization initiatives have been launched.

The United States has led the charge against counterfeit pharmaceuticals. Enacted in November 2013, the Drug Supply Chain Security Act (DSCSA) mandates by 2017 the application of serial numbers to the cases and packages of pharmaceuticals marketed in the United States. The DSCSA created new federal track and trace requirements for the pharmaceutical supply chain and preempted state and federal serialization and pedigree laws. A 2015 white paper addressed the various stages of the GS1 EPCIS (Electronic Product Code Information Services)[2] Standards and Implementation Plan rollout. The report also provided a detailed outlook on the product tracing requirements that need to occur between now and deadlines in 2017, when serial numbers are required, and 2023, when all companies in the supply chain must be able to trace by the individual package serial number.

Until then, for pharmaceutical products sold in the United States, companies must trace drugs based only on their lot numbers. In other words, the transition must occur between 2017 and 2023. The lot-based tracing of drugs means that parties in the supply chain keep track of three important types of data: the transaction information, its history, and a statement about the accuracy of that information and history. The current technology that monitors this, EDI (Electronic Data Interchange) ASNs (Advance Ship Notices),[3] does not work well in certain scenarios, such as drop-shipments or shipping exceptions. Thus, the shift from the use of ASNs to the use of EPCIS will result in more efficiency and safety.

The lot-number tracking requirement went into effect on January 1, 2015, but the FDA announced that it will not enforce that provision of the DSCSA until May 1, 2015. The package-level serial number requirement will go into effect on November 27, 2023. At that time, the DSCSA will require mandatory electronic serial number–based tracing of drugs through the supply chain, entitled “Enhanced Drug Distribution Security” (EDDS). Further, new systems and processes must be put in place to promptly gather past transaction history in the case of an investigation. At this point, information about the technical details of the EDDS is not yet known. However, most people in the industry believe that such systems will be based on the GS1 EPCIS standard.

The EPCIS standard defines how individual supply chain event documentation should be formatted. It provides “open, standardized interfaces that allow for seamless integration of well-defined services in intercompany environments as well as within companies.” Because the solutions for many DSCSA requirements are available based on the EPCIS standard, some predict that large numbers of manufacturers will utilize EPCIS-based systems leading up to their serialization deadline in November 2017. Further, manufacturers who capture aggregation data are also more likely to utilize EPCIS events as their method for documenting that data. As a result, some companies will transition to using solutions based on the EPCIS standard before it is required in 2023 because they will have already used the system for managing product serial numbers under the 2017 requirements.

In fact, the general consensus is that more people will be using the system before the 2023 requirement. Released on March 23, 2015, the second annual RxTrace U.S. Pharma Traceability Survey polls pharmaceutical companies about their responsibilities under the DSCSA. According to the study, over 50 percent of respondents think there will be a movement toward the use of the EPCIS standard to pass serialized data before the 2023 requirement in both regular business and pilots. The survey also indicates that the uptake on implementing the DCCSA standards has been slow. While many manufacturers and suppliers are currently working on meeting DSCSA requirements, approximately one-third have not begun the implementation process. Given the amount of effort required to develop and implement a DSCSA process, delaying this process until the first or second half of 2016 is inadvisable.

The report also shows that the percentage of drugs in the U.S. supply chain that contains DSCSA compliant package-level serial numbers will likely rise over the next two years, but that rise may be slow and gradual, followed by a sharp increase in 2017. This is easily explained: 58 percent of those surveyed have some capability to put serial numbers on their drug packages, but they have chosen not to start doing that until the law requires it in 2017. This may be for a number of reasons, such as avoiding wear on the equipment, as well as the accelerated cost of implementation before the required due date. On the other hand, many companies have chosen to implement the DCCSA requirements prior to 2017, perhaps to acquire valuable experience with these systems before their use is legally mandated.

Despite some setbacks, the United States is still poised to lead the charge against fake drugs. Other nations have followed suit, making great strides in the fight against counterfeit pharmaceuticals. In fact, nations including Argentina, South Korea, France, and Turkey have implemented some type of serialization program in the past few years.

The European Union’s latest directive on the matter, for example, is very similar to that of the United States. Published in July 2011, the EU’s Falsified Medicines Directive sets a framework for a system of mandatory safety features for prescription-only medicines aimed at preventing the entry of counterfeit products into the legal distribution chain. The directive hopes to achieve this by 2018 by requiring verification of the authenticity and identification of an individual pack by a serial number or unique identifier, potentially through the GS1 software. Further, the European Commission is considering technical details in connection with a legal instrument that is expected to come in 2015 and will initiate the three-year countdown to implementation at EU member-state level. As with the DSCSA, some fear that many pharmaceutical companies will not be ready when the deadline comes. In fact, some predict that over 75 percent of the top pharmaceutical companies are already behind in their preparations for the 2018 deadline.

Brazil and India have also undertaken their own directives attempting to implement the GS1 software. The 2009 Brazilian Federal Law 11.903 and subsequent regulations of the National Agency for Sanitary Surveillance in Brazil (ANVISA) require that a 2D data matrix code be put on all secondary packaging. Under these provisions, manufacturers will be required to maintain a database of all transactions from manufacturing to dispensing, while distributors must report serialized transaction data to the manufacturer and keep a database of suppliers, medicine recipients, and packing companies. Similarly, India’s Directorate General of Foreign Trade (DGFT) mandated the use of unique numbers and barcodes on tertiary, secondary, and primary packaging for all exported pharmaceuticals. The law also required incorporation of 2D barcodes (GS1 data matrix) on certain medications by July 1, 2014.

Conversely, in 2008, China’s State Food and Drug Administration (CFDA) made serialization mandatory for over 275 therapeutic classes of individual saleable product units by December 2015. The CDFA does not follow an international standard. Manufacturers may only register their products and obtain their serial numbers by applying to the China Product Identification, Authentication and Tracking System (PIATS). They must also implement a quality control system with an electronic drug-monitoring system, a standardized documentation system, and bar codes to ensure pharmaceutical traceability. Finally, companies importing drugs into China must designate a local pharmaceutical company or wholesaler as their electronic monitoring agent in the country.

In addition to legislative reforms, China has increased enforcement efforts at the provincial and local levels. In 2013, the Chinese government coordinated joint special enforcement campaigns targeting counterfeit drugs. These campaigns resulted in raids of criminal manufacturing sites, arrests, seizures of counterfeits, and some prosecutions. In 2014, the CFDA launched a five-month campaign against illegal online drug sales by utilizing several agencies to monitor and shut down illegal pharmaceutical websites. The government now also requires major search engines to filter out advertisements for counterfeit drugs. Cooperation between the U.S. FDA and China CFDA has resulted in the successful shutdown of numerous sites that were exporting counterfeit drugs from China to the United States.

Despite these positive actions by authorities, counterfeiting continues to run rampant in China. In fact, Pharmaceutical Research and Manufacturers of America (PhRMA) requested that China be subject to Section 306 monitoring for the 2014 Special 301 Report. In other words, PhRMA has designated China as a nation that has “the most harmful acts, policies, and practices, which, in turn, have the greatest adverse impact on the US innovative biopharmaceutical industry.” This is due to several factors. Profit margins for counterfeiting drugs often run as high as a thousand times more than the profits for drug trafficking in China. In many cases, local chemical companies violate CFDA requirements by producing bulk chemicals without registration and selling them to counterfeiters. This is especially problematic, because under current regulations, chemical companies must only self-report if they are producing raw materials for pharmaceuticals. Finally, Chinese customs officials rarely exercise their authority to monitor and seize questionable biopharmaceutical exports.

Although the task is great, China appears committed to combating counterfeiting. By rewarding and promoting law enforcement efforts, the central government can enhance the integrity of their national supply chain at the local and provincial levels. By prosecuting counterfeiters and shutting down illegal Internet sites, China can send a clear message of deterrence. Finally, by working closely with each other, the United States and China can serve as an example of a best practice for other multinational efforts to reduce global counterfeiting.

Although each nation’s method may differ slightly, the movement towards more universal serialization and the use of the Internet to implement such a system is a step in the right direction. As the nations’ new initiatives are put into place, organizations will have the opportunity to tweak the systems to improve efficiency and reliability. As these initiatives progress, we may ultimately greatly reduce the presence of counterfeit pharmaceuticals in the legal supply chain.


Fiona Barry, “Think You’re on Track for 2018 EU Serialization? No You’re Not,” in-Pharma Technologist (February 4, 2015), available at http://www.in-pharmatechnologist.com/Regulatory-Safety/Think-you-re-on-track-for-2018-EU-serialisation-No-you-re-not

EFPIA et al., Serialization and Product Verification—Helping to Secure the Legal Supply Chain for Greater Patient Safety (2014).

EPC Information Services, EPCIS Version 1.1 Specification (2014).

Fact Sheet No. 275, “Medicines: SFFC Medicines,” World Health Organization (2012), available at http://www.who.int/mediacentre/factsheets/fs275/en/

Frequentz, RxTrace U.S. Pharma Traceability Survey (2015).

Infosys, Pharmaceutical Serialization Track & Trace: Easy Guide to Country-Wise Mandates (2014).

Gareth Jones, “The Falsified Medicines Directive: Time to Get It Right,” The Pharmaceutical Journal (October 16, 2014), available at http://www.pharmaceutical-journal.com/opinion/comment/the-falsified-medicines-directive-time-to-get-it-right/20066783.article

Catharine Paddock, “Fake Drugs Increasing on the Net and Finding their Way into Legitimate Supplies,” Medical News Today (February 22, 2012), available at http://www.medicalnewstoday.com/articles/242018.php

Pharmaceutical Research and Manufacturers of America (PhRMA), Special 301 Submission 46 (2014).

Dirk Rodgers, From Lot to Serialization Traceability (2015).

Susan Scutti, “Global Problem of Counterfeit Drugs Affects Even Legitimate Sources, Such as Hospitals and Pharmacies,” Medical Daily (April 20, 2015), available at http://www.medicaldaily.com/global-problem-counterfeit-drugs-affects-even-legitimate-sources-such-hospitals-and-329914

[1] Formed in 2005, GS1 facilitates industry initiatives and administers the GS1 System of standards. The GS1 Standards “provide unique identification of items and products that provide the link between the item and the information pertaining to it.” GS1 assigns unique identification numbers to products, logistic units, and assets in the supply chain, allowing information to be passed from the manufacturer to the consumer.

[2] EPCIS is a GS1 Standard used to share and capture information about the movement of goods through the supply chain. Companies choose the points in their operations at which they want to capture “EPCIS events” to record data as goods pass through those points. This information can then be shared with trading partners or used in internal business applications.

[3] Otherwise known as the EDI 856 transaction, the EDI ASN is utilized to electronically communicate the contents of a shipment to a trading partner. It is sent in advance of a shipment arriving at the partner’s trading facility, and it includes a variety of data, such as order information, carrier information, and pack level information.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.


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