As counterfeit drugs surge, will the DSCSA save lives?

March 13, 2019

When it comes to implementing all the requirements of the Drug Supply Chain Security Act, it’s easy to get lost in the details. There’s the cost of developing solutions, the myriad details of putting technology into place, the complex chain of work processes, notifications, alerts, and more.

So much red tape. So much technical data. So many things to keep in mind.

It can seem exhausting. But then I’ll see something that reminds me how important the work we’re doing can be.

The Dept. of Homeland Security’s new Global Trade Task Force seized more than $1 million in counterfeit goods in Metro Detroit Monday, including counterfeit Xanax pills and Botox. (Photo: Dept. of Homeland Security)

That happened Monday when I saw a shocking new journal study: More than 250,000 children a year are dying from counterfeit malaria and pneumonia drugs. Add the deaths caused by fake or low-quality prescriptions to treat hepatitis, meningitis and other diseases, and the death count goes even higher.

The authors of that report, “Falsified and Substandard Drugs: Stopping the Pandemic,” published in the American Journal of Tropical Medicine and Hygiene, were explicit: “Despite advances in drug quality surveillance and detection technology, more efforts are urgently required in research, policy, and field monitoring to halt the pandemic of bad drugs.”

In the United States, one of those advances is the DSCSA, especially the Track and Trace rules, which include the requirement to verify all returned drugs after November. As the study’s authors noted: “Throughout the supply chain, from manufacturer to bedside; a broad-based strategy is needed across nations, rich, and poor, to build capacity and extend collaboration. This may be emerging with the U.S. Drug Supply Chain Security Act aiming to establish a national track-and-trace system within a decade.”

DSCSA will be a big part of the answer

Besides the death toll, there’s a cost – and a big one. Citing industry sources, a 2017 PWC study found that phony pharmaceuticals constitute the biggest segment of the global counterfeit trade – a $200 billion chunk of the $1.8 trillion market in knock-off goods. The World Health Organization estimates that at least half of all prescription drugs sold online are dangerous fakes. Worse, sales of phony drugs are growing at twice the rate of legitimate medications.

Despite all that, PWC found little interest among pharma executives to invest in fighting counterfeiters. That’s despite an annual estimated $2.1 billion in lost sales, and the cost of efforts such as the teams of drug investigators Eli Lilly maintains across the globe, as well as dedicated authentication labs.

Now, thanks to the DSCSA, every company involved in the pharma supply chain will be on an equal footing when it comes to tracking, tracing and identifying counterfeit and other suspect drugs. And despite the cost and effort of complying, installing technology to secure the drug supply chain is expected to bring real, tangible business benefits.

A 2012 study from McKinsey estimated that adopting global standards that would reduce counterfeit drugs would directly cut manufacturer’s losses from counterfeiting and produce other savings. A $4-billion global manufacturer with 25 product lines would save $25 million to $35 million from counterfeiting costs, another $18 million to $27 million from reduced waste, recalls and inventory holding costs, and a one-time $90 million cash flow improvement from reducing inventory.

The silver lining in red tape

The expected increases in patient safety and profit margins take the sting out of the supply chain improvements demanded by the DSCSA. Beyond these obvious benefits, the potential to integrate all this new digital tracing data into the broader business operations of drug manufacturers, wholesale distributors, and dispensers offers additional savings, improved quality and other benefits. In fact, we’re building those types of capabilities into all our products at LSPediA, including our RxChain® serialization solution and our Verifier® VRS platform.

Although my team and I at LSPediA strive to make compliance trouble-free for our clients, we all know that meeting DSCSA rules takes time, effort and money, even if it produces significant benefits down the road. But the best benefit of all will be knowing that by stemming the surging tide of counterfeit drugs, we won’t only be saving the pharmaceutical industry money – we’ll also be saving lives.