This Tuesday, the California State Board of Pharmacy decided to delay the implementation of electronic pedigree requirements for prescription drugs from the previous 2009 deadline to 2011. The state’s announcement carries some added significance at a national level; under direction from the FDA, other states like Florida and Utah have moved forward with similar pedigree rules as a means to thwart counterfeiting, but California’s e-pedigree legislation — and particularly the requirement to serialize all packaged items of prescription drugs sold within the state — is the most comprehensive and far-reaching to date. Companies at every stage in the pharmaceutical supply chain (e.g. manufacturers, distributors, and pharmacies) as well as other stakeholders (e.g. technology firms, standards organizations, other regulatory bodies, etc.) have been keeping tabs on California’s industry-leading legislation and enforcement timeline with keen interest.

Forrester sees the implementation delay as being inevitable. California’s serialization rule requires that each sellable unit of prescription drugs must have a unique identification number established at the point of manufacture. Then, as these items are distributed throughout the pharma supply chain, ePedigree requires information on the packaging hierarchy (i.e. which items are packed in each case) and master data context (i.e. original batch, lot, expiration, and NDC data), and change of ownership (i.e. shipping and receiving transactions) must be is captured electronically by each trading partner through an interoperable system. It’s by no means simple, and two fundamental questions have remained largely unresolved, and are thus standing in the way of pharma companies agreeing on a consensus technology approach:

Which tagging technology should be used?

Given the large volumes of unique identifiers required, the two tagging technologies that are the most widely available and valid options to meeting pharma serialization are RFID and 2-D bar codes. But while 2-D bar codes may spell lower costs for manufacturers, wholesalers prefer RFID in order to capture and record the high volumes of item-level transactions without scanning each bottle (assuming that inference would not be supported by California or other lawmakers).¹ Even if RFID were to be universally embraced, the debate would then shift to the relative merits of using UHF or HF frequencies, as both RFID types are viewed as viable options but vary greatly in terms of cost, performance, maturity, and the effects of the radio frequency on drug properties.

How much data would be shared between trading partners?

By definition, an electronic pedigree requires trading partners to make basic transactional information such as shipments and receipts available to one another. The big unknown is how much additional business context — such as aggregate demand data, visibility of inventory across the distribution network, or even downstream customer data — would trading partners be willing to share. And since many of the potential business benefits of ePedigree are built upon sharing this kind of sensitive business data, individual firms have become very skeptical about seeing returns from collaboration opportunities such as improved supply chain efficiency, better reconciliation of chargeback fees, and reduced product diversion.²

These two uncertainties have resulted in a resounding brake on ePedigree’s progress — unsurprising in an industry that is as historically risk-adverse as pharma. Ironically, it is precisely this conservatism — grounded in the need to protect patient safety — that can drive more consensus going forward towards the new 2011 deadline. Manufacturers, wholesalers, and pharmacies now have some additional time to co-develop ePedigree systems that not only address product integrity concerns in the short term but also offer a platform for future collaborative endeavors in the longer-term. If pharma companies can agree on collaborative business opportunities as they agree on patient safety, both goals are mutually and entirely obtainable.

Roy C. Wildeman, Senior Analyst
Business Process & Applications

¹ “Inference” would allow wholesalers to read the identifier of an intact case and infer that all the individual serialized items from the manufacturer are still contained within.

² When legitimate products are not purchased through legitimate channels, that drug is classified as “diverted.”