DSCSA Deadlines Drive Greater Traceability Investments

by Shahroze Husain, on August 5, 2016

Screen_Shot_2016-04-20_at_9.30.54_AM.png(VDC Research guest blog post for Loftware)

US pharmaceutical companies today face a number of challenges emerging in the supply chain that are driving greater adoption of track-and-trace systems including the theft and diversion of drugs, counterfeiting, and unpredictable errors potentially leading to mass recalls.

2015 saw an increase in drug recalls by the FDA and pharmaceutical manufacturers, up from 1,572 in 2014 to 2,021 recalls. Often turning into major news stories, recalls work to remove defective or potentially harmful products from the market, and with increasing pressure from the FDA and other regulatory agencies, it is now more important than ever for pharmaceutical manufacturers to have track-and-trace systems in place to manage potential recalls minimizing risks to consumers as well as negative side effects for the company itself. If not addressed correctly, companies can expect to deal with increasing government oversight, consumer liability, and potential loss of market share, ultimately affecting profits, brand image, and consumer trust.

Pfizer, one of the largest pharmaceutical manufacturers in the world, recalled 150,000 bottles of their popular Lyrica nerve pain management drug in January 2016. After learning that a shipment of the product may have been damaged by “extreme heat” in transit, Pfizer quietly, yet voluntarily, recalled the affected product. Around the same time as Pfizer, Perrigo, an over-the-counter drug manufacturer carried out a major recall of its children’s cough syrup that was sold under generic brand names such as CVS, Rite-Aid, Kroger, and Goodsense. It was recalled due to an issue in the dosage measurement cup that could lead to potential overdose. Both of these latest recalls present situations in which track-and-trace systems are essential to locating affected products and ensuring safety of consumers.

Industries and governments from around the world are realizing the significance and value of implementing track-and-trace systems and thus are introducing regulations which mandate organizations to implement track-and-trace solutions. In November 2013, President Obama signed the Drug Quality & Security Act (DQSA) into law. Title II of the DQSA also known as the Drug Supply Chain Security Act (DSCSA) establishes guidelines for creating an interoperable electronic traceability system in the pharmaceutical industry by November 2023 to share information between manufacturers, suppliers, and distributers for accurate track-and-trace of products. In addition, the DQSA mandates that by November 2017, manufacturers must label products with a unique serial number via two-dimensional (2D) DataMatrix barcode symbologies with product identifier, serial number, lot number, and expiration date. In the event of a recall, the manufacturer must be able to quickly track products to its users and trace the issue back through its supply chain. This track-and-trace system will assist in minimizing harmful effects to the consumer as well as negative business side-effects to the manufacturer as disruptions are stopped in their tracks. According to pharmaceuticals manufacturers that participated in VDC’s latest survey, regulation compliance (89%), improving supply chain efficiencies (67%) and preventing the introduction of counterfeit or faulty/expired products (56%) are the biggest drivers for investing in traceability systems.

As a result of the mounting pressure to implement track-and-trace systems by federal regulations such as the DQSA/DSCSA, VDC expects investments in both (2D) barcode label printing and barcode imagers to increase in the pharmaceutical industry/supply chain. In addition to recalls and anti-counterfeiting, traceability system implementation is also driven by applications such as returns management, inventory management and repackaging processes within this industry. Enhancing these processes will add to the future investment in new technologies by pharmaceutical manufacturers.

For more information and insights about traceability initiatives in the food, pharmaceuticals, and automotive industries be sure to review our latest report – Connecting the Dots: What is Driving Traceability Solutions Investment? Please feel free to download the Executive Brief or contact us to learn how to gain access to the full report at info@vdcresearch.com.

(With Rachel Walker, Research Assistant)