Whether you’re developing an in-house solution or outsourcing to a managed service provider, this guide will help manage your company’s IT infrastructure to meet changing ePedigree requirements.

By Robert Pease, Hubspan

Since 2000, reports of drug tampering and counterfeiting increased substantially, alarming the nearly $200 billion pharmaceutical industry. According to the U.S. Chamber of Commerce, the pharmaceutical industry loses approximately $32 billion annually to counterfeiting, shrinkage and diversion. Beyond that, tracking the pharmaceutical lifecycle safeguards against dangerous product tampering and contamination.

To find a solution, the FDA recently proposed ePedigree regulations to document chain of custody throughout the pharmaceutical’s entire lifecycle. While the key provision of the law incorporated in the Authorized Distributor of Record (ADR) provision relieves distributors from the obligation to track individual shipments through their systems as long as they can provide documentation that they are receiving product directly from manufacturers and distributing it directly to a dispensing pharmacy or other retailer, a small but significant segment of the supply chain, drop ship manufacturers, will need to verify and track non-ADR custodial assignments

The supply chain from factory to pharmacy is lengthy and allows for numerous opportunities for a shipment of drugs to be tampered with or counterfeited. While this can occur with any drug, anti-depressants and prescription painkillers represent the most sought-after targets. In order to ensure paperless compliance throughout the pharmaceutical supply chain, manufacturers and distributors need a better way to improve business processes and maintain end-to-end visibility, enable product authentication and ensure data integrity across all transactions.
New Regulations: The ePedigree Solution

In order to stop drug counterfeiting and the subsequent problems it creates, the FDA and some state governments have begun implementing ePedigree regulations. While ePedigree requirements remain in flux from state to state, California and Florida have emerged with the most stringent requirements.

Florida was the first state to enact ePedigree laws, and in 2006, the state government put in place requirements for paper-based pharmaceutical pedigrees managed by a system of electronic verification. This year, California also took action to solve the problem of counterfeit pharmaceuticals by instating requirements that all drug companies, wholesalers and hospitals implement electronic traceability of pharmaceuticals by 2009. These laws require that manufacturers track the chain of custody of pharmaceuticals through their entire lifecycle.

The risks and challenges due to ePedigree compliance loom on the horizon for pharmaceutical companies of all sizes. While important, such ePedigree regulations are difficult, timely and expensive to manage without proper systems in place. A rigorous product custody tracking solution is key to meeting government mandates as non-compliance can result in heavy fines and even criminal prosecution. Unfortunately, making an additional investment in e-commerce infrastructure often means costs and resource drain as a result of having of building an in-house solution or burdening existing systems for your company and trading partners. Companies face the need to share data and increase visibility within the supply chain but are reluctant to increase their investment in technology.

To successfully reduce operational costs and increase efficiency, manufacturers and companies within the pharmaceutical distribution chain need a secure, interoperable platform that scales on demand and provides deeper connections for end-to-end visibility. By working to automate business processes between an organization and its trading partners, you can ensure an immediate and cost-effective response to these mandates, and the new business processes they imply, while meeting future ePedigree requirements developed by other states and the FDA.
Build or Buy?

In an environment where product demand is strong and rapid fulfillment critical, early adopters of effective solutions can leverage a product custody tracking solution to enjoy a distinct advantage over slower-moving enterprises. Whether they decide to build an in-house solution or outsource the technology, companies that rush to fully comply with ePedigree legislation in a short time find themselves having to change business relationships, discontinue and/or restrict distribution, or assume additional risks.

Alternatively, companies may continue existing supply chain relationships while adding manual processes that increase costs and delay delivery. Those that opt to implement complex, expensive hardware and software solutions that require dedicated IT resources and may not scale are forced with longer than expected roll-outs and internal backlash to spiraling costs. Does any of this sound familiar? No one wants to be in the position of recommending a solution that disrupts business processes, introduces delivery delays, increases operating expenses or potentially reduces revenue. At this point, companies must decide whether to develop an in-house solution or turn to a service provider. Developing an internal integration infrastructure is difficult and expensive. At the same time, companies often have a hard time trusting critical integration projects to outsourced vendors.

For most companies, “ship it on a CD and load it on a server” is over for enterprise software. The software-as-a-service (SaaS) delivery model is on the rise as many organizations move away from costly and resource-intensive software implementations to more cost effective, utility-based solutions. SaaS is becoming a valid delivery model for business processes integration where robust integration platforms and speed-to-market are paramount for long-term solutions such as complying with regulatory requirements. For organizations to respond swiftly to ePedigree requirements, true business process integration and deep connections with trading partners become a competitive advantage. Integration difficulties and setbacks hurt sales opportunities and leave revenue stuck in the pipeline. Companies need better control, clearer process visibility, data validation and tighter governance over all interactions within the pharmaceutical supply chain.

To ensure the integrity of data, organizations need real-time or near real-time communication and translations to ensure secure and rapid access to drug pedigree information. Organizations’ legacy systems, such as electronic data interchange (EDI) and flat file transfer, are no longer enough. Low-level connections that only transfer batch files between applications and trading partners are giving way to smart networks that incorporate diverse integration functionality, offering seamless integration with business processes and ERP systems.

Pharmaceutical distributors must think about present and future consequences for their suppliers when deciding on a strategy to achieve paperless compliance. By embracing an on-demand integration solution, distributors can enable their suppliers to further enable processes, drive down costs and increase supply chain integrity while meeting regulatory compliance requirements.

For example, a hosted, managed service allows suppliers to send and receive documents electronically without having to make an additional investment in e-commerce infrastructure or upgrading existing systems. It also offers the distributor’s repackaging suppliers a cost-effective and scalable patch for present and further ePedigree compliance in Florida, California and other states.

Companies should consider an on-demand integration solution that meshes the activities of manufacturers, distributors and retailers to enable trading partners to seamlessly communicate with one another. By ensuring product custody data is transmitted “straight through” to their respective back-end systems, this solution can be delivered as a portal or fully integrated service to translate and validate data to make it readily usable by in-house systems. To maintain data integrity throughout the distribution chain, the offering should provide a central repository to ensure the safety of data so that the products’ custody information can be tracked across the supply chain, without impacting trading partners’ IT infrastructures and business processes.
Steps to Committing to Paperless Compliance

In order to meet regulatory compliance requirements, companies within the pharmaceutical supply chain need to enable their suppliers to further automate processes, drive down costs and increase supply chain integrity. To eliminate costs and resource drain associated with deploying traditional cross-enterprise integration software or developing an in-house solution, it should work seamlessly with trading partners’ ecommerce systems.

The following outlines the five steps to identify an ideal on-demand model for your organization to realize the true potential of integration with suppliers and partners:

1. Make rapid deployment a priority – Rather than spending months attempting to deploy or develop a solution, all companies within the supply chain can be up and running in weeks with a best practice- based approach to cross-enterprise integration.

2. Ensure end-to-end visibility and accessibility – All participants should be able to communicate via a single connection, enabling the secure and efficient delivery of drug custody tracking information across the entire supply chain.

3. Offer flexibility and scalability – Select a platform that leverages current B2B, EAI, or ERP systems and can provide a secure portal to initiate the drug custody tracking transaction. Your custody tracking solution should grow as your company grows to offer a long-term, sustainable solution.

4. Provide full process automation – Integrate a solution that generates e-mail notifications in the case of incomplete or incorrect transactions. Transactions can either be re-submitted or corrected manually via the secure portal.

5. Deliver future-proofing extensibility – A solution that scales as the burden of compliance grows, custody solutions become more complex, and supply chains expand. To ensure ongoing adaptability with future changes in requirements, the system maintains an audit trail and a searchable archive of critical data.

Whether companies decide to deploy or develop an in-house solution, it is time to commit to improving existing operations as exceptions, errors and manual workarounds slow the ability to process orders, get status updates, realize new revenue, or run the risk of government fines. By better aligning business processes and systems through better integration with suppliers and customers to ensure end-to-end visibility, companies can create true connections to unlock the real potential of data integration within the pharmaceutical supply chain.

For manufacturers and companies within the supply chain to comply immediately with current and future ePedigree requirements, it is critical to select a chain of custody and product tracking solution that ensures seamless connections with trading partners. By ensuring suppliers send and receive documents electronically without making an additional investment in e-commerce infrastructure or burdening their existing systems, modern on-demand integration solutions offer a cost-effective and scalable path for present and future ePedigree compliance across each state.
About the author: Robert Pease is vice president of marketing at Hubspan, a leading provider of B2B integration services. Hubspan simplifies B2B integration, delivering true connections as a service. Fore more information, visit