Serialization Survey Shows Hesitant Adoption

Counterfeiting is continuing, so why are some drug makers still delaying?

In June, several products suspected of being counterfeit or unauthorized were seized or obtained by regulators. The Medicines and Healthcare products Regulatory Agency reported the seizure of counterfeit and unlicensed medicines such as painkillers, sedatives, and steroids in London. FDA reported it was able to purchase “generic Tamiflu” over the Internet, even though the agency has not yet approved a generic version of the drug.

Counterfeiters haven’t been discouraged by FDA’s online investigations or other regulator efforts. Nonetheless, some drug companies still are reluctant to invest today in anticounterfeiting technology, such as that needed to implement FDA’s recent guidance,  “Standards for Securing the Drug Supply Chain – Standardized Numerical Identification for Prescription Drug Packages: Final Guidance.”

According to a 2010 Packaging Survey by PMP News, only 14% of 587 respondents are currently serializing saleable drug units. The good news is that 26% plan some sort of investment within the next two years, but 18% are awaiting federal legislation before planning, and 10% are not planning any investments for two or more years. (Please see the figure below).

Despite having a clear picture of what a serial number looks like, some firms say they still need more clarity or more standardization from FDA on how the SNI should be used between trading partners. Other companies state that they need a mandate to be able to get started, and the only mandate they have is California’s electronic pedigree rule, which is well over four years away. One survey respondent wrote that his company is “waiting until latest possible moment to determine if federal legislation will occur.”

John Spink, PhD, notes that FDA’s guidance establishes neither a timeline for implementation nor a list of drugs to include and states that guidance documents “do not establish legally enforceable responsibilities.” (Spink is an assistant professor and associate director for the Anti-Counterfeit and Product Protection Program (A-CAPPP) in the School of Criminal Justice at Michigan State University.) He believes that the guidance “meets statutory timelines and also possibly buys time to coordinate with the Office of the Intellectual Property Enforcement Coordinator (IPEC), which released its 2010 Joint Strategy on June 23, 2010, including pharmaceuticals.”

In the meantime, economically motivated counterfeiting will continue so long as there is opportunity, even if the return isn’t significant. “It is not about luxury goods or just high-priced products. Any product can be counterfeited, and every company has a product that could be knocked off at any time,” Spink notes.

Pharmaceutical companies understand that counterfeiting is a problem, and they “want to do something,” adds Spink. “But it is difficult to get to the core of the problem. Is it worldwide, countrywide, or systemwide?”

Also, “implementation is a monumental challenge,” Spink says. He therefore advises companies to use the “scientific method” when developing an implementation strategy. “First, understand the problem. Next, identify what resources could help and implement one approach at a time. Then test that approach for effectiveness. You’ve got to implement and test to be able to fully consider a solution, and you may have to keep testing a number of approaches. Then, layer a variety of approaches to frustrate and deter counterfeiters.”

Results of a question posed to pharmaceutical and medical device packaging professionals during the 2010 PMP News Packaging Survey. Answers are based on the responses of 587 respondents, and respondents were allowed to select more than one answer, given the complexities of serialization initiatives. (The number of respondents selecting each answer is indicated in parentheses.) As indicated above, 19% of respondents indicated that the question does not apply to their organization; this could be because the organization manufactures medical devices or OTC drugs.

Given the amount of testing companies may need to do before they identify optimal solutions for implementation, delaying investment until FDA issues mandates or until just before California’s deadline may not be prudent. To date, FDA has left options open to product manufacturers, so there is much to evaluate.

Vendor capacity and availability could also change as the California deadline approaches. “As pharmaceutical companies begin to implement item-level serialization, for instance, demand could quickly outweigh supply, especially given the number of initial vendors that have since dismantled their teams after deadlines were pushed out,” notes Gregg Metcalf, industry market manager, strategic initiatives, Nosco Inc. (Gurnee, IL). “Smaller pharmaceutical companies in particular could be waiting in line behind bigger companies once pharma gets moving.”

If companies must postpone investment because they are waiting for future capital budgets to come available, they could begin investigating options by working with vendors as well as experts like Spink. Spink says after surveying the industry in 2007, 18 members of industry urged MSU to develop an executive curriculum on anticounterfeiting. MSU now offers education seminars on anticounterfeiting and product protection strategies, with seminars planned for September and October 2010.


“We know of several customers that are weighing the benefits of keeping the supply chain safe versus the incremental costs of adding anticounterfeiting features along with serialization to secure their most sensitive products,” concludes Metcalf. “This is a difficult decision based on the current mandates and global information available to drug manufacturers.” 

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