Serialization Shake Out

The European pharmaceutical sector and its packaging suppliers could be destined for a shake-out because of the inability of small companies to comply with new rules on packaging safety features aimed at combating counterfeiting. The European Commission, the European Union’s executive, published its last draft (1) of the rules in August 2015, and they are likely to become EU law by the end of 2015 or in early 2016. Pharmaceutical producers and their packaging contractors will then have three years to comply with the new regulation or be forced to take their products off the EU market.

Packaging experts believe that three years may not give many companies enough time to complete the process of re-engineering their packaging lines to meet the new obligations required by the EU’s Falsified Medicines Directive (FMD) (2). At the core of the rules is a requirement for the serialization or unique identification of each medicine pack, which will necessitate major changes to most packaging lines.

“Companies, especially the smaller packaging companies specializing in pharmaceuticals, could disappear or be bought up by larger companies,” says Bart Vansteenkiste, EU life sciences sector manager, at Domino Printing Sciences plc, Cambridge, England, in an interview with Pharmaceutical Technology. “A lot of companies have left compliance with the new regulations very late. Already suppliers of packaging hardware and software are reporting full order books and longer lead times.”

3C Integrity Consulting, a UK-based specialist in FMD packaging requirements, has compared the threat to the industry to the extinction of the dinosaurs. A big difference will be that the big creatures, namely the large multinational pharmaceutical players, will survive because they have prepared themselves well in advance for the impending changes. Instead, it will be the smaller and usually more versatile ones that will become extinct.

Upgrading packaging lines
“For any remaining pharma companies that have doubts about whether or not they should progress their FMD readiness program, any suggestion that they should further delay [the preparation] would certainly be considered a courageous decision,” the consultancy said in a bulletin issued after the publication of the final draft of the rules in what is called a *Delegated Act (3). 3C Integrity advises companies yet to start preparing for the new regulations, to find out immediately what needs to be done to ensure compliance, both in-house and along their supply chain. “Simply-get started,” 3C Integrity said in the bulletin. “ If you are not in that position, then things may be getting uncomfortable soon.”

In a survey (4) by Domino in June 2015 of small to large research-based pharmaceutical manufacturers, medicine-device makers, generic-drug producers, and packaging contractors, 65% had started a program of upgrading their packaging lines. “Most of these companies have installed a pilot line to determine what changes they need to make to their existing packaging lines,” explains Vansteenkiste. “The remaining 35% have either just started looking into what they need to do or are doing nothing.”

What has been stopping companies even budgeting for a re-engineering of their packaging lines has been a lack of detail about certain aspects of the FMD serialization system, even though the main features of it have been clear since the approval of the directive in 2011. Knowledge of the basic requirements has enabled the pharmaceutical majors to press ahead with their own re-engineering schemes so that many of their packaging lines have been producing packaging with unique identification of individual packs for several years. “[There is] nothing in this [final] draft Delegated Act that we have not had visibility of before,” says 3C Integrity. “The key features have indeed been set in stone since the publication of the directive itself in 2011.”

The cost of compliance
However, among SMEs in particular, there are concerns about the expense of FMD compliance. “The Delegated Act is really only about how and precisely when [the directive should be implemented],” says Warwick Smith, director general of the British Generic Manufacturers Association (BGMA). “None of our members has raised concerns about the necessary changes, though everyone has noted that it will be a very costly exercise.”

The European Generic and Biosimilar Medicines Association (EGA) informed Pharmaceutical Technology that it has estimated that upgrading packaging lines for FMD compliance could cost generic-drug manufacturers a total of approximately €1 billion ($1.1 billion). The EGA is alerting generic-drug companies to the dangers of delaying preparations for the compliance deadline but also warning that the squeeze on margins due to the extra cost could lead to products being taken off the market.

“We are encouraging members to start with the implementation since the number of suppliers of this type of equipment for the packaging lines is limited,” says Maarten Van Baelen, EGA’s market access director. “We are very concerned about the number of medicinal products that will be withdrawn from the market because they will no longer be profitable.”

Domino calculates that the average upgrading cost per packaging line is approximately €125,000. But with the addition of aggregation or the essential matching of serialization codes with data on batch-carrying pallets and shipped cases, this cost increases to €250,000, according to Vansteenkiste. With the compliance deadline getting nearer, companies are, nonetheless, faced with a Catch-22 dilemma of equipment and software prices going up as delayed purchasing decision leads to demand outstripping supply.

Unique identifier
The Delegated Act lays down rules on the harmonized structure and content of the unique identifier. It also requires each pack to have an anti-tampering device, but its specification is left to the manufacturer. It stipulates details of an “end-to-end” system for the verification of the authenticity of each pack’s safety features. This system will operate through a centralized data base or repositories network, into which the unique identifier data of each medicine pack will be fed from the packaging unit and then verified by the pharmacist at the dispensing point. The network is to be managed by industry stakeholders under the supervision of the relevant authorities of each of the EU’s 28 member states.

The unique identifier will consist of a product code, serial number, national reimbursement number (if necessary), batch number, and expiry date. It must be encoded in a GS1 Data Matrix ECC200 2D barcode. In addition to being machine readable, all the data, except the batch number and expiry date, must also be human readable.

The serial number must comprise “a numeric or alphanumeric sequence of a maximum of 20 characters, generated by a deterministic or a non-deterministic randomization algorithm.” The randomization requirement is outside GS1 specifications for barcodes used in the supply chains of multiple sectors.

An important stipulation in the Delegated Act is that the only 2D barcode allowed on the packs is the one “carrying the unique identifier for the purpose of their identification and verification of their authenticity.” This limitation may necessitate that companies redesign their packaging to remove other barcodes, such as those related to inventory and price.

The Delegated Act also lists medicines exempted from the serialization requirement. These medicines include homeopathic products, advanced therapy medicines containing tissues or cells, intravenous solution additives, allergic diseases tests, and allergen extracts.

Coding, printing, and verification
For compliance, pharmaceutical companies will need higher-performing code-printing equipment. With inkjet printing, which currently accounts for approximately 70% of printed codes on medicine packs, more durable and light-resistant ink will have to be used to meet a requirement of machine readability for up to five years, according to Vansteenkiste.

Another challenge is aligning the printing process with an adjacent machine-vision system with technologies for optical character recognition (OCR) to check the content of the text and for optical character verification (OCV) to assess quality. As indicated in the Delegated Act, these should ensure that the barcodes meet the joint standards on printed security information of the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).

The Domino survey (4) found that with nearly half of respondents, the biggest worry was the task of integrating the serialization hardware into current systems. “There are unlikely to be any shortages of coding and vision equipment because it is not difficult to increase their manufacture,” says Vansteenkiste. “But integrating all the new hardware and software into each packaging line could pose big problems. With software, the main issue is manpower. As the deadline approaches, there could be shortages of the right expertise.”

Companies are also looking beyond FMD to compliance with other possible legislative initiatives in the future both inside and outside Europe. They are willing to pay extra for a packaging operation that is able to respond positively to future developments in serialization and the management of all the data that comes from it. They can, at least, expect that as serialization become more widespread across the world, the cost of the hardware and software needed for its up-to-date application will be much less expensive than it is today.

*The concept of the Delegated Act (DA) was introduced by the EU’s 2007 Lisbon Treaty to enable the European Commission to draw up regulations on non-essential, mainly technical, matters relating to new legislation. The European Parliament and the Council of Ministers-the EU’s two legislative arms-would lay down the objectives, scope, and duration of the DA. Once the DA has been finalized by the Commission, usually after lengthy consultations, it becomes law as long as the Parliament and Council raise no objections to its content.

References
1. EC Delegated Regulation supplementing Directive 2201/83/EC, Detailed rules for the safety features appearing on the packaging of medicinal products (Brussels, August 2015).
2. EC Directive 2011/62/EU amending Directive 2001/83/EC, The prevention of the entry into the legal supply chain of falsified medicinal products (Brussels, June 2011).
3. 3C Integrity Consulting, “EU-FMD: Draft Delegated Act publicly released by ED for comments,” accessed 11 Sept. 2015.
4. Domino Printing Sciences, “Domino survey uncovers marked differences in serialization readiness,” accessed 11 Sept. 2015. 

Article DetailsPharmaceutical Technology
Vol. 39, No. 10
Pages: 20-22

Citation: When referring to this article, please cite it as S. Milmo, “Serialization Shake Out,” Pharmaceutical Technology, 39 (10) 20-22 (2015).