Pharmaceutical Supply Chain Security
According to the World Health Organization, around 10% of medicines worldwide and up to 50% of drugs consumed in developing countries are counterfeit. And the situation is getting worse. Brazil, the world's second largest manufacturer of drugs, reportedly experienced a fourfold increase in the circulation of counterfeit drugs since the outbreak of COVID-19. Moreover, with pharmaceutical companies increasingly outsourcing production and moving manufacturing operations to other parts of the world, the points of vulnerability in the pharmaceutical supply chain are growing.
Each and every step along the drug supply chain presents the potential for threat, an opportunity for tampering or theft. This is why nations across the globe are working to improve pharmaceutical supply chain security through the use of pharma serialization, track and trace systems, and product authentication compliance requirements. Organizations across the healthcare sector are working with regulators—and leveraging powerful new technology—to improve visibility into their supply chains, drive compliance, and safeguard the global medical supply chain and the patients who depend on it.
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Pharmaceutical supply chain security risks
The two major risks to the security of the pharmaceutical supply chain are theft and counterfeit medicines, both of which seriously endanger public health and safety. If pharmaceutical supply chain security is weak, stolen drugs that may have been improperly handled, exposed to contaminants, or intentionally adulterated can be diverted and misused—or reintroduced into legitimate distribution networks—possibly resulting in serious harm, injury, or death. Counterfeit or falsified medicines pose a significant risk to public health that can be addressed in part through stringent pharmaceutical quality control practices and robust pharmaceutical quality systems.
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Mitigating pharmaceutical supply chain security risks
In 2013, the U.S. Congress passed the Drug Supply Chain Security Act (DSCSA) to enhance pharmaceutical supply chain security by facilitating the serialization and traceability of prescription drugs. DSCSA mandates product serialization and requires that pharmaceutical companies and other stakeholders in the pharma value chain work together with the U.S. Food and Drug Administration (FDA) to create a track and trace system that can be used to verify the authenticity of drug products as they move through legitimate distribution channels. More than 40 countries around the world have introduced or are planning to introduce legislation mandating serialization, track and trace, and product authentication frameworks to improve the security of their pharmaceutical supply chains.
How the DSCSA works to improve pharmaceutical supply chain security
The DSCSA helps protect consumers from compromised medicines by making it easier for participants in the pharmaceutical industry supply chain to identify and quarantine illegitimate or suspect prescription medications before they reach the patient. It requires that drug manufacturers and repackagers affix a unique product identifier on each lot, and eventually each individual unit (to be implemented by 2023), and that all players in the pharma supply chain—manufacturers, repackagers, wholesale distributors, and dispensers—put in place systems and processes to verify the authenticity of drug products.
In order to strengthen pharmaceutical supply chain security, it mandates that all trading partners in the pharma supply chain work only with duly registered or licensed entities and have systems in place to properly quarantine, investigate, and report on suspect or illegitimate prescription drug products. They must also work to develop electronic and interoperable systems that facilitate the exchange of drug transaction information, or serialization data, which can be used to combat the threat of counterfeit, contaminated, or stolen medicines and facilitate more efficient recall of drug products.
Benefits of serialization beyond pharmaceutical supply chain security
While the benefits of the DSCSA and other pharma serialization and track and trace compliance regulations are clear—increased pharmaceutical supply chain security and improved public health and safety—the other benefits of compliance for pharmaceutical companies may not be as obvious. With the right technology in place, drug manufacturers and other players in the healthcare sector can leverage serialization data to streamline supply chain operations and logistics, improve inventory visibility and pharmaceutical cold chain management, and inform sales and marketing initiatives. The end-to-end supply chain visibility and actionable insights that can be gained by aggregating and analyzing serialization data can be used to optimize supply chain management and maximize demand forecast accuracy, one of the most important supply chain metrics in healthcare.
The best solution for pharmaceutical supply chain security and resilience
While effective serialization programs are a great first step in improving pharmaceutical supply chain security, in order to truly protect patient health, all stakeholders in the healthcare sector must strive to protect the quality and safety of products moving through legitimate supply channels. The best way to do that is to regularly communicate, share information, and work together to ensure the integrity of the healthcare supply chain. Through the digital supply network, trading partners can share real-time data and actionable insights from their serialization data across the supply chain. They can use their serialization data to more quickly identify, more fully understand, and better resolve disruption and compliance issues, strengthen supplier partnerships, and take a collaborative and proactive approach to strengthening supply chain security in the pharmaceutical industry.
Pharmaceutical Supply Chain Security FAQs
What is the DSCSA?
The Drug Supply Chain Security Act was passed by the U.S. Congress as part of the Drug Quality and Security Act of 2013. Its purpose is to protect the public from counterfeit, contaminated, or harmful prescription medications. It requires that drug manufacturers, wholesale distributors, repackagers, and dispensers work in cooperation with the U.S. FDA to establish a system for tracking and tracing drug products as they move through the supply chain. It is intended to help participants in the pharmaceutical supply chain detect and remove illegitimate or suspect products and facilitate more efficient processing of drug recalls.
How do serialization and track and trace systems help improve pharmaceutical supply chain security?
They help enhance supply chain security by encouraging players in the pharmaceutical supply chain to verify the path taken and authenticity of drug products and making it easier for them to identify counterfeit or illegitimate drug products.
How can the blockchain be used to improve pharmaceutical supply chain security?
An exceptionally reliable record-keeping technology, the blockchain is well suited for verifying the authenticity of products because it enables the permanent and chronological documentation of transactions, or a product's chain of ownership. It can be used to record transaction information for and track and trace products moving through the pharmaceutical supply chain.