Saleable returns are causing wholesaler drug distributors increased anxiety. Here’s why:
- The deadline is almost here. The FDA’s DSCSA requirement on saleable returns becomes effective in 2019, just two years from now.
- No data, no verification. Distributors don’t generate the data needed to verify returns—they rely on manufacturers’ data. How do they fix that? Either start collecting the data or gain access to it from the manufacturers.
- Negative financial impact. Distributors already operate on razor-thin profit margins. Not restocking the 2 percent saleable returns puts added strain on their bottom lines.
Industry Heavyweights Weigh In
Earlier in 2016, McKesson, Cardinal, and AmerisourceBergen each issued communications to manufacturers and suppliers, stating, “Serialized DSCSA information will be exchanged by industry trading partners using the GS1 EPCIS format for transactions when sending data.” This makes sense because when manufacturers aggregate, that data can be used by distributors to verify saleable returns.
Aggregation solves the problem—but only if the manufacturers are able to send aggregated shipment data and the distributors are able to receive the same data. In reality, 33 percent of manufacturers, according to the HDA’s Manufacturer’s Readiness Survey, don’t plan to aggregate, and 53.4 percent of manufacturers don’t think they will send aggregated shipment data starting November 2017.
With the intention of finding a viable solution, the Health Distribution Alliance (HDA) designed and executed a saleable returns pilot program in 2016. The program evaluated nine verification scenarios, illustrated in the chart below.
Scenario 1: “A manufacturer sends aggregated product identifier information only for the products purchased to each individual distributor; when the distributor processes a saleable return, the distributor references an internal database to verify the product identifier information from the manufacturer.”Four scenarios—numbers 1, 3, 7, and 9—were selected to run live pilots involving both manufacturers and distributors. The live pilots were completed in September and results were announced in November at the HDA Traceability Seminar. Among the four, two scenarios were most viable and cost effective for wholesalers. HDA explains:
Scenario 9: “Verification router service. The manufacturer stores all of its product identifier information locally, which is connected to a third-party routing service. Upon receiving a saleable return, the distributor captures the product data and sends the data to this third-party router service, which then routes the query to the appropriate manufacturer’s database.”
Looking Deeper at the Router Service Solution
HDA hosted a workshop in Washington DC on January 10, 2017, to discuss in detail the potential technical requirements for router services. A broader set of industry stakeholders, including technology and other service providers, were invited to attend. I was there representing LSPediA. We reviewed the router service pilot program and were split into groups to discuss data exchange, data governance, and data security.
During the workshop, the pilot participants—McKesson, AmerisourceBergen, Merck, and GSK—shared the three major challenges and lessons they learned from the pilot program:
- Communicating and collaborating face big obstacles in a multi-organizational environment
- System connection, downtime, and outages all have a significant negative impact on pilot testing
- There are many label issues around encoding, formatting, and scanning
But there was positive news, too.
“The router service must perform at sub-second speed,” said Matthew Sample, Senior Director of Secure Supply Chain at AmerisourceBergen.
The pilot achieved the desired sub-second response time, starting from when the distributor sends a verification request to the router service and ends when the distributor receives the verification response back from the manufacturer. The best time was clocked at 0.7 seconds.
Sub-second response time is the speed distributors must have to sustain their current returns operations. Today, the returns operators scan the UPC code and stock the returns. Starting 2019, the returns operators need to scan the 2D matrix code, then send the verification request to an internal data repository or router service. Longer response times or negative response will slow or stop the return transaction all together, highlighting the need for sub-second response time.
The LSPediA Router Service Solution
For the router services to work, everyone in the supply chain will have to collaborate. From what we learned implementing the 2015 product trace requirement utilizing EDI, we need extraordinary lead time to accomplish a collaborative project such as router services. Service providers like LSPediA will play a critical role in helping distributors, manufacturers, and returns logistics providers. Our solution, RxChain, offers the needed native verification services.
RxChain is an interoperable Track-n-Trace supply chain solution that is fully compliant with the U.S. DSCSA requirements for serialization and interoperable data exchange. The solution features verification with the internal data repository as a native function. When a product cannot be verified with the internal data repository, RxChain has the capability to verify with external data repositories.
How RxChain Benefits Your Organization
It’s crucial to invest in a comprehensive solution that is scalable, configurable, and interoperable with trading partners. RxChain meets those needs and provides additional benefits, helping you:
- Lower overall serialization spending
- Eliminate data errors from aggregation and data exchange
- Enable verification with supply chain partners
- Implement smarter and faster onboarding
To get your business on the road to DSCSA compliance, contact LSPediA. We can ensure you understand and successfully implement a DSCSA strategy using our industry-tested serialization toolkits and our new, innovative traceability solution, Rx Chain.
About LSPediA – Life Sciences Solutions
LSPediA is a leading provider of enterprise software and services designed for pharmaceutical manufacturers, wholesale distributors, and dispensers. With help from LSPediA, customers can better implement serialization and aggregation processes to meet global regulations, DSCSA requirements, and future track-and-trace mandates.
We value long-term relationships and work with our clients’ internal teams to properly define roadmaps, create architectures, and implement systems that align to vital business goals, ultimately helping them derive maximum value from their investments, both now and well into the future.
For additional information, contact: Julianne Jahn [email protected]