Dr. Reddy Gottipolu is SVP Healthcare at One Network Enterprises, provider of an AI-enabled business network platform that enables all trading partners to manage, optimize and automate complex business processes in real time.

Dr. Reddy Gottipolu

Across nearly every industry, the inability to resolve product problems as they arise can cause a lack of trust with consumers that’s hard to rebuild. But none more so than in pharmaceuticals where patients’ lives are at risk, companies’ reputations and futures hang in the balance, and care providers can be negatively impacted.

American Journal of Tropical Medicine and Hygiene

 reported that, “Falsified and substandard medicines are associated with tens of thousands of deaths, mainly in young children in poor countries. Poor-quality drugs exact an annual economic toll of up to $200 billion and contribute to the increasing peril of antimicrobial resistance. Some estimates say up to 10% of pharmaceuticals are fake” (1).

The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) emphasizes the widespread threat counterfeit drugs pose as well, stating, “Falsified medicines are a growing public health threat for every country, every medicine, and every person” (2).

Former FDA Commissioner, Scott Gottlieb, confirmed the threat in a speech in 2018 (3), when he said, “We see a world where the risk from counterfeit drugs is increasing rapidly. Where the means to produce counterfeits and distribute them through sophisticated, illegal networks is increasing. And the volume is also rising sharply. We have numbers that speak to these risks. We have enforcement work underway that’ll—unfortunately—illustrate that these concerns are real. If we tolerate a single weak link in the system, they’ll find it. And they’ll develop new ways to exploit it. The nature of global supply and distribution chains means that illegitimate products can cascade throughout the supply chain and reach patients if they’re not caught quickly.”

Deliberate falsification is not the only threat, as innocent errors can be just as harmful. In the United States, FDA reports that in 2020 alone, 46 drugs have been recalled for various reasons that include contamination, incorrect dosage, and mislabeling (4).

In an effort to enhance the safety of drugs and the security of the pharmaceutical supply chain, countries are implementing regulations to identify and track drugs throughout their journey to the patient. For example, FDA’s Drug Supply Chain Security Act (DSCSA) aims to enhance drug supply chain security by 2023 and mandates product tracing for manufacturers, repackagers, wholesale distributors, and dispensers (5). While the DSCSA mandated product tracking at the lot level back in 2015, it will soon require package level tracing as well. The European Union’s Falsified Medicines Directive implements similar tracking requirements too (6).

End-to-end traceability … it’s not just about safety

The International Institute of Research Against Counterfeit Medicines (IRACM) describes end-to-end traceability well; “The traceability of a product refers to the ability to locate it throughout the complete lifecycle of the production and distribution processes. … traceability plays a major role in the fight against health product counterfeiting” (7).

The obvious benefits are maintaining the effectiveness of drugs, improving patient lives, and minimizing the costs to the industry imposed by counterfeits, substandard drugs, and recalls. But full traceability across a digital supply network can help in other ways too, including:

Improving efficiency and minimizing waste

Enhancing collaboration in the supply chain to resolve inter-enterprise problems better and faster

Enhancing resilience and agility to help predict shortages and secure the supply during a crisis.

Enhancing resilience and agility is particularly critical, as the issue of resilience in the pharmaceutical supply chain has ‘elbowed’ its way into the boardroom in the wake of COVID‑19 (8). Executives can no longer ignore the threat posed by the often-tenuous threads of supply, both inbound and outbound, that compromise their end-to-end supply chains. Full traceability extends the view beyond the lab and corporate walls, to provide insight into the flow of ingredients, drugs, and equipment from their source all the way to clinic, hospital, and pharmacy shelves. Supply chain planners and managers are better equipped to identify potential problems and act early, protecting supply lines and ensuring products flow smoothly to patients and care providers.

Achieving traceability across the pharmaceutical supply chain

So, how is it possible to realize end‑to‑end traceability? Before value can be gained from full, end-to-end traceability, it is necessary to authenticate the product itself. There is no purpose in tracking a product through the supply chain if the drug itself is substandard or counterfeit. The keys to effective traceability include the following.

Product authentication and serialization. Product authentication technology is an essential part of a secure drug supply chain, and there are numerous ways to achieve this. Spectrometer analyzers can verify the actual ingredients and dosage of product, but other methods include specially designed coatings, chemical and molecular markers, and micro tags. The latter options can be applied at any and all levels—from the ingredients themselves all the way to the finished drugs and even the packaging. Serialization involves adding a unique identifier to sellable units of the product, so that it can be identified and traced throughout the supply chain. At the package-level, FDA recommends the Serialized National Drug Code (sNDC) as the standard numerical identifiers for prescription drug packages (9). Drugs that do not have an NDC (e.g., biologics) may use a different standard. Given these foundational elements, the big challenge is to track the product across all supply chain partners.

 Any drug supply chain is vulnerable to product quality problems, and there is always a chance for variance due to ingredient issues, substitution, contamination, formulation, or just plain human error. Many companies have tried to leverage electronic data interchange (EDI) across the network to address some of these issues. However, as a technology, EDI is woefully inadequate in addressing today’s supply network requirements. Remember, EDI was originally developed during the time of batch business processing and, even with the benefit of some of the newer extensible markup language business-to-business formats, it is still not possible to process much of the product quality related data being consumed through the various Internet of things sensors deployed throughout the network. So, while EDI itself will still remain in the picture for years to come, a supply network platform is needed that will enable continuous digital business processes to provide full traceability and the assurance of product quality and safety.

Identify the root cause of quality issues.

 When an issue does arise, an effective traceability capability should allow for a root cause analysis at the process level to be performed, which means network level master data management is needed that is extensible across multiple data types and geographic regions. Just like a Single Version of the Truth (SVOT) from a demand signal perspective across the network is needed, so too is a SVOT at the process level from a product quality and safety perspective. In this way, traceability becomes another foundational element of quality culture. Over time, a network platform will become the backbone for the digital twin, including a multi-party ledger (i.e., a blockchain at the network level), which also provides permission-based security between trading partners. Such an architecture also opens up the potential to add artificial intelligence (AI) into the mix. A multi-party intelligent agent can operate across the network targeted at improving key metrics such as achieving on-time in-full order fulfillment.

Traceability: The basis for effective execution.

 When there is a problem with a drug, any missteps in handling the crisis are costly in a social media-driven world where brand damage can happen quickly. In times of crisis, pharmaceutical companies need to respond quickly by:

Acting immediately with great transparency

Rapidly identifying the scope of the problem

lots, and impacted locations and customers

Initiating the recall and executing the recall logistics

Identifying the source of the problem and fixing it

Instilling confidence in their marketplace and with consumers.

To do all this effectively, more control over the supply network is required. Leveraging network-based technology that tracks the full chain-of-custody for every item from start to finish provides visibility into supply chains with a way to effectively track products, intermediates, and raw materials in real time, from their source, across trading partners, all the way to the clinics, hospitals, and pharmacies who need them.

By rapidly extracting only the affected product in a recall, and at the precise locations in the supply chain that are affected, companies can minimize the impact on consumers and healthcare providers, protect their reputation, and minimize costs. Another critical factor is knowing exactly what and how much product needs to be replaced to quickly resupply to locations with minimum business impact.

Brand quality: More than just product quality

Over time, traceability data will enable process improvement and product-quality initiatives. Plus, with AI in the mix, it is also possible to relate changes in process variables to potential outcome, with probabilities measured against acceptable thresholds. But what’s interesting is that today, brand quality extends well beyond product quality.

Understanding and verifying sources and origins.

 Today, it is more important than ever to know the specific ingredients of each drug and if they are authentic, where they originated, and who made and handled the product. In fact, more and more pharmaceutical manufacturers are being asked to provide and prove the answers to those questions. Using a chain-of-custody solution, raw ingredients, drugs, shipments, and origins can be completely tracked, so that all approved sources of raw materials, intermediates, and finished drugs, as well as their paths through the supply chain network, are 100% verifiable and auditable. This takes on life-saving significance, especially where counterfeit pharmaceuticals are a concern such as in some regions in Africa. Or, where medical products, like biologics, must be maintained at certain temperatures to prevent spoilage or degradation during their journey through the supply network.

Business network platforms exist to support traceability and chain-of-custody.

 Given the implications traceability has in relation to product quality, safety, and compliance with current and imminent regulations, there really is no choice but to move forward with a technology investment to enable this capability.

The business network not only enables chain-of-custody and traceability services but also provides a foundation for future growth and innovation. Scott Gottlieb recognized that digital networks play a remedial and protective role and are an active element in the future of healthcare innovation stating, “A fully digitized supply chain can also help develop predictive analytics to reduce health care fraud, waste, and abuse. It can allow regulated industry and regulators to more easily manage or avoid costly or dangerous supply disruptions. It can help support innovative manufacturing and distribution technologies at a time when the drugs being developed are becoming increasingly tailored to specific patient populations” (3).

The bottom line is that whether a product quality issue leads to recalls, warranty claims, or unit level medical device repairs, after the event the trust of the patient and healthcare provider will need to be regained. By having the ability to address and communicate a course of action proactively, the overall impact can be significantly limited. Business network technology enables companies to be proactive and more, as it tracks the full chain-of-custody for every item from start to finish, providing visibility across final products, intermediates, and raw ingredients in real time from their source, across trading partners and to the point of care, whether that be a hospital, clinic, or retailer.

Remarks on Enhancing Drug Distribution Security

, Speech by Scott Gottlieb, Feb. 28, 2018.

Recalls, Market Withdrawals, and Safety Alerts

Drug Supply Chain Security Act Resources for State Officials

The Technologies for the Detection of Fake Medicines

A New Platform for Hospitals and their Suppliers is Boosting Resiliency, Efficiency, and Collaboration Across the Supply Chain

Guidance for Industry: Standards for Securing the Drug Supply Chain—Standardized Numerical Identification for Prescription Drug Packages

Reddy Gottipolu is senior vice‑president Healthcare at One Network Enterprises.


Vol. 44, No. 10
October 2020
Pages: 66–70

When referring to this article, please cite it as R. Gottipolu, “Securing the Pharmaceutical Supply Chain with Full Traceability,” 

Articles

End-to-end traceability can provide more value than just securing drug product safety.

Securing the Pharmaceutical Supply Chain with Full Traceability

	The weaknesses in global healthcare supply chains, like diseases in the human body, may go undetected for years, even decades. They surface when a major disaster or pandemic happens. For healthcare supply chains, nothing in history has exposed those vulnerabilities as vividly as the COVID-19 pandemic. In the time of the pandemic, it has become apparent how stretched, fragile, and disconnected many supply chains are. The lessons learned from COVID-19 highlight the importance of stress testing the resiliency of the global healthcare supply chain so it will be better prepared in the event of major demand surges or supply shortages.

	The lack of preparedness for many countries has been exacerbated by brittle supply chains, lack of visibility to inventory, and an inability for hospitals and suppliers to collaborate effectively. Demand and supply for many products was out of sync, with supply chain technology unable to provide crucial information, or the means to address the critical imbalances. 

	The Center for Infectious Disease Research and Policy (CIDRAP) reports that 60 of the 156 drugs on its list of drugs used in acute care were already in short supply before the COVID-19 crisis (1). The pandemic has shifted demand and exacerbated the shortages, and amplified and focused shortages around COVID-19 treatment. According to CBS News, The University of Minnesota's Resilient Drug Supply Project indicates that 32 out of 40 drugs deemed critical for treatment of COVID-19 patients are in short supply (2). 

	Like most industries, pharmaceutical supply chains have seen a sharp increase in both globalization and specialization. Although both trends have delivered incredible benefits, they have also expanded supply chains to include many more intermediaries and partners, all of which introduced more touchpoints, blind spots, dependencies, and points of friction. 

	The focus on “lean” supply chains, imported from automotive supply chains, intensified the problem. It paired down inventory to essential, “just-in-time” inventory to remove waste from the system, but also left supply chains more vulnerable to unexpected spikes in demand. The result? Steep shortages of critical products. 

	In an unpublished survey, performed in conjunction with a major healthcare services company, of hospital and supplier executives and managers, nearly three out of four said their number one concern was supply shortages (74%). Respondents also overwhelmingly agreed that greater inventory, demand, and manufacturing capacity transparency would increase supply chain resilience. 

	Jim Tompkins, chairman of Tompkins International, a global supply chain consulting firm, summed it up best when he recently said, “There is so much uncertainty now that there is no synchronization of supply to demand, and thus, we have inventory overages of discretionary products and supply shortages of essential products. We have apparel stores full of inventory that are closed and open grocery stores with near-empty shelves” (3).

	To address this unfulfilled demand, counterfeits and substandard products began to encroach on the supply chain. For example, in March, Interpol’s “Operation Pangea” seized potentially dangerous pharmaceuticals valued at US $14 million (4). Substandard and defective equipment is also a major problem. The Wall Street Journal reported in March that the Netherlands recalled 600,000 defective N95 masks they bought from a Chinese supplier, and more than half a million substandard Chinese testing kits ordered by Spain had to be returned (5).  

	New trends in healthcare are forcing companies to re-evaluate their supply chains, with the focus on patients and outcomes driving the need for better visibility and data sharing across the extended supply chain, from point-of-care to raw material suppliers. There is the increasing complexity of products, such as biologics-drugs that are derived from or contain components of living organisms. Biologics include vaccines, blood, tissues, and proteins. Biologics are sensitive and can lose their efficacy or become unsafe if they are not carefully handled, packaged, stored, and delivered under the right conditions. Some may need to be stored at very low temperatures, and all must remain sealed, throughout their journey right through to the point of use. 

	Then there is the emergence of new manufacturing regions and new markets around the globe. As economies shrink and grow, and diseases emerge and migrate, healthcare needs and strategic sourcing priorities will continue to evolve. Healthcare and life-science companies need to become more agile to adapt to these shifting conditions. All these trends put strains on the supply chain and increase its vulnerability to disruption.   

	Leveraging the digital revolution in the healthcare supply chain

	What is clear is that disjointed supply chains, managed with multiple siloed systems, with point-to-point connections to select trading partners, and even hub-and-spoke portals, are just not working. The healthcare supply chain is one of the most vital and complicated supply chains, carrying life preserving and enhancing products, from complicated manufacturing processes, across tiers of suppliers, layers of distributors, and warehouses, to clinics, hospitals, and consumers. Yet, it is one of the least connected and coordinated industries, creating hurdles, cracks, and friction at every junction. Adding to the complexity, healthcare is one of the most highly regulated industries.

	For instance, spikes in demand are not communicated across the healthcare chain quickly. Instead they’re batch processed serially down the line, link-by-link over time, until it’s too late to do anything about them. Supply quickly becomes out of sync with demand, resulting in shortages of critical products at some locations and overstocking at other locations. Without this visibility and coordination, there’s no way to rectify the imbalance. Shortages occur, and patients and care providers pay the price. 

	To overcome this fundamental flaw, the first step is to connect all participants on a single network. Equipped with a multi-enterprise master data management system, the network helps normalize and harmonize the data across partners and systems and can auto-translate master data to enable the seamless communication of vital changes to all parties. The network maintains a real-time single version of the truth, synchronized across parties on the network and their systems. Visibility to information (inventories, orders, forecasts, and plans) and the ability to manage data and execute transactions is under the control of each organization, and only they have the power to grant a range of permissions to their relevant trading partners. 

	From discord to coordination and transparency  

	Implementing a single platform for all parties is revolutionary in healthcare. It transforms the serial, disconnected, and confused conglomerate of systems, into a single real-time ecosystem working in harmony to serve patients. Instead of passing data down the line manually or by batch processes, everyone sees consumption and changes in demand, supply levels, and constraints as they occur. They can even see the logistics links in between. So, when a problem arises anywhere in the network, the relevant parties can respond immediately. If a pharmaceutical plant goes down in Puerto Rico due to a hurricane, the downstream network is alerted immediately, and the affected parties can assess the impact and switch over to another location or find alternative sources. 

	In today’s environment of high uncertainty and variability, long-term planning must give way to more agile, responsive, and resilient supply chains. A real-time network helps by dampening all major sources of variability: 

Reducing information and physical lead times.

 In almost every other industry, a single, real-time network has emerged to remove information lags and provide visibility to actual demand, supply, and logistics to all participants. It enables them to identify and resolve problems faster, in concert and decisively. With real-time data driving decisions, there is no need to pad estimates and lead times and the same can be done in healthcare.

 With real-time information directly from hospitals, ambulatory surgery centers, clinics, and home care facilities, and with demand and order forecasts, all parties have a much more accurate view of demand and what’s coming. Manufacturers get early visibility to improve order forecasts, which can be adjusted in real-time as equipment and treatment needs change. Suppliers and manufacturers can also plan better to meet demand spikes in the event of an outbreak, and scale back down appropriately as demand drops off. 

 With appropriate permissions, hospitals, clinics, and distributors can see inventory and planned deliveries at all nodes and can even be granted visibility to production capacity at manufacturers and co-manufacturers. Suppliers can commit to meeting demand or alert their customers well in advance that they can’t fulfill, which allows customers to plan accordingly and develop alternatives. 

	Toward patient/clinician driven supply chains

	Transparency across the global network, with data driven decision-making and patient/clinician driven demand, also enables supply to be rebalanced to meet demand so supplies can be shared among nearby hospitals and sites, or more remote locations. A network approach significantly enhances resilience, because all parties get early warnings to projected stockouts and issues, and they have visibility to many more alternative sources of supply. 

	For example, clinics and hospitals can collaborate with adjacent facilities, distributors, and suppliers to execute their plans and source supply from the nearest and quickest available supply points. Inventory transfers can be authorized, committed, and tendered to carriers, tracked in transit, and confirmed on delivery. Finally, artificial intelligence and intelligent agents can be used to monitor supplies, inventory, and rates of consumption, shipment lead times, and so on to predict shortages and problems in advance. This provides network-wide, always-on, precision monitoring, and alerting at a scale that is difficult, if not impossible, to match with manual processes. These intelligent agents can also use machine learning to develop better arrival time estimates for shipments.

	Like Uber, which offers those in need of a ride many more options and quicker more efficient service, a network connects those in need of a product or service (buyers), with the providers of that product or service. Think of it not as “ride sharing” but as “supply sharing,” and you will start to see the power of the network for healthcare.  

	Maximizing resilience and securing the healthcare supply chain 

	Another advantage of using a network approach is that products can be tracked across all participants and their journey-from source to consumption. Companies can use serialization, product authentication, and chain of custody services, to provide a digital passport for products flowing through the network, documenting its journey from origin to destination. It also helps to protect the integrity of the supply chain, increase product safety, and secure patient care. This is especially important with sensitive products, such as biologics, which as mentioned earlier, require special packaging, handling, and conditions to maintain their efficacy. It also supports full traceability, which is particularly important in regions where counterfeit products are a problem. 

	Serialization and chain of custody services are also supported and are invaluable in the event of a problem or a recall. They enable hospitals, suppliers, and distributors to identify affected product and remove it from the supply chain quickly, eliminating the possibility of using recalled products on patents. 

	Digital networks drive more efficient and resilient healthcare supply chains 

	A network-based approach to the healthcare supply chain not only improves resilience and supply chain performance, it also provides better patient care and lowers costs. Many time-consuming and tedious chores that occupy healthcare providers today, such as trying to calculate orders, can be optimized and automated. This brings more precision to processes and frees up hospital staff and care providers to focus on their patients. All this is enabled through the strengthened collaboration and greater information sharing between hospitals and their suppliers. 

	Healthcare providers, drug manufacturers, and medical device manufacturers do an incredible job of saving, enriching, and extending our lives. It’s time they had the support of modern technology to streamline supply chains, make their lives easier, and help ensure that life-saving products reach patients quickly, efficiently, and in optimal condition. A real-time digital network enables that and more and may be the lifesaver needed especially when time is of the essence. 

Experts Say COVID-19 Will Likely Lead to US Drug Shortages

, Press Release, March 27, 2020.
	2. CBS News, “Pandemic Exposes Drug Supply Shortages Doctors Have Grappled with for ‘More than Two Decades’,” News Release, May 7, 2020.
	3. Tompkins International, “Impacts of COVID-19: Uncertainty and the Flow of Goods,” Blog Post, March 26, 2020.
	4. Interpol, “

Global Operation Sees a Rise in Fake Medical Products Related to COVID-19

, Press Release, March 19, 2020.
	5. The Wall Street Journal, “Commentary: Solving the Health-Care Equipment Supply Shortage,” 

A network-based supply chain approach has the potential to improve resilience and performance.