Keeping Manufacturers in the Loop

A closed-loop protection plan pilot shows the potential for tracking complete supply-chain data.

By Anastasia Thrift

NanoInk’s (Skokie, IL) brand-protection division, NanoGuardian, is partnering with SDI, a pharmaceutical and healthcare industry analysis company, to deliver its Closed-Loop Protection market-monitoring program. The program combines the on-dose authentication and tracing benefits of NanoGuardian’s NanoEncryption technology with a pharmacy-auditing program to identify counterfeit or illegally diverted pharmaceuticals entering the global supply chain.

Pills are encrypted at the overt, covert, and forensic level by NanoInk's NanoGuardian division.

Closed-Loop Protection gives manufacturers an early warning system to detect counterfeit and diverted product. Random audits will be conducted at retail pharmacies to proactively detect counterfeit and diverted product, which will provide manufacturers with early detection of problems and mitigating risk to brands, companies, and patients.

SDI’s experience and expertise in conducting extensive postmarketing services led NanoGuardian to select them as a partner in the program. The group has the physician resources that will allow a secret shopper program.

NanoGuardian’s NanoEncryption technology provides on-dose security features at the overt, covert, and forensic level. It can be applied directly to tablets, capsules, and vial caps. The overt and covert security features enable authentication at any point along the supply chain, while the forensic-level NanoCodes provide comprehensive tracing information on each dose. The codes can be associated with an unlimited amount of data, such as the strength and expiration date of products; location, date, batch, and lot number during the manufacturing process; and distributor and wholesaler identification.

The trial process works as follows: SDI asks physicians on its panel to write prescriptions, which security professionals will fill by purchasing them in cash from predetermined, randomized retail pharmacies. Cash is used so as not to adversely impact any payor systems such as managed care or insurance companies. Security professionals are used by NanoGuardian in the
process to maintain a chain of custody of the audited product to support future prosecution of detected counterfeiters and diverters.

The audited product will be express mailed to a NanoGuardian Product Integrity Center, the first of which will be in Skokie, IL. Within 24 hours of purchase, NanoGuardian will evaluate the audited product for authenticity and decrypt the NanoCodes for tracing information. All information from the Closed-Loop Protection process is immediately available to the manufacturer via a secure software package, which also immediately alerts appropriate individuals within the manufacturer’s organization via e-mail alerts when suspected counterfeited and diverted product is detected.

The company uses binomial distribution modeling to determine the number of samples that need to be taken. The two key assumptions within the model are the assumed counterfeit or diversion rate (called the Intrusion Rate by NanoGuardian) of the product and the degree of confidence that the manufacturer wants to have in detecting at least one compromised dose. 

“The World Health Organization [WHO] says in developed countries, counterfeiting could be as high as 1%,” says Dean Hart, executive vice president for NanoGuardian. “Some industry experts think that 1% counterfeiting may be too high an assumption but often agree that when including diversion in the equation, 1% of product compromised [the Intrusion Rate] is certainly possible.” 

“Assuming a 1% Intrusion Rate and a 99.5% confidence level for manufacturers of detecting at least one counterfeit or diverted dose, the statistical model says we have to do 527 over the course of a year,” Hart says. “We’ll do about 45 audits a month.”
The key for the statistics to be valid, says Hart, is that “we randomize our audit by randomizing the pharmacies where the audit takes place. To do so, each of the approximately 55,000 retail pharmacies is assigned an identifying number. Using a randomizing program, we ask for 527 randomly selected numbers. The pharmacies corresponding to the 527 randomly selected numbers is where we do the secret purchases.”

The company is in varying stages of development with pharma manufacturers. Two companies are in the final decision-making phase with NanoGuardian’s technology and the Closed-Loop Protection Program, the first expected to be live by 2010. Hart expects five more after that.

The first two trials will focus on the U.S. market, but Hart says it can be extrapolated throughout the globe. The program can even be concentrated in areas of increased counterfeiting.

“When you start to find a region with a particularly high amount of counterfeits, if the manufacturer wants, we can run another closed-loop test on a particular region of the country or the world,” Hart says. “This statistical model works regardless of the geography given an assumed Intrusion Rate and the desired confidence or

The first trial company’s product will be launched within the next six to nine months. The second company has a product already in the marketplace, which necessitates a period of waiting to deplete the non-NanoEncrypted product.

“With a new product, you could start right away,” Hart says. “With a newly launched product, if a tablet is found that doesn’t have NanoEncryption, you know you have a potential counterfeit because every dose produced has been NanoEncrypted. The majority of our clients are looking at our technology for new products. They’re asking how they can do this from day one.”

Hart has received positive feedback from customers. “We met with a potential client last week and the particular individual said she had looked at many different systems. She said, ‘For the first time, I can see how a technology would actually work in the market to fight counterfeiting and diversion.’ ”

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