Due to the growing number of pharmaceutical drugs, complex supply chains, and global demand, there has been an increase in the sale of counterfeit drugs to over $100B per annum globally. Today, Pfizer has taken bold stride to pilot a project to enhance security and comply with regulations to combat counterfeit drugs within its digital supply chain. In February 2012, Genentech, a peer of Pfizer’s, released a statement that the Food and Drug Administration (FDA) found a counterfeit version of its oncology drug Avastin® being circulated. In September 2012, the Center for Disease Control (CDC) and FDA launched an investigation into the New England Compounding Center (NECC) for causing a multistate outbreak of fungal meningitis, from illegal manufacturing of drugs, killing 64 people and infecting over 750.  This led to Drug Quality and Security Act (DQSA) which was signed into law November 27, 2013. Where, title’s I and II of DQSA were created to prevent another NECC and Genentech incident, respectively. DQSA has in effect required the creation of a digital supply chain and securing the information inside, and Pfizer is leading the way towards compliance.
Pfizer’s Digital Supply Chain
In 2015, Pfizer introduced its Highly Orchestrated Supply Network (HOSuN) creating an information rich digitally enabled supply chain, backed with data analytic tools to anticipate future supply and demand patterns.  The supply network or chain consists of raw material suppliers, Pfizer as a manufacturer, distributers, repackagers, pharmacies, and third-party logistics companies. HOSuN has made Pfizer more adaptive and responsive to its customers, thereby improving operational efficiencies and productivity throughout the supply chain. Pfizer uses Electronic Product Code Information Services as its standard for harmonizing enterprise resource planning (ERP) tools and ensures interoperability of new and legacy systems. Pfizer has what PWC identified as three key elements of a pharma digital supply chain, which are: virtual supply chain control tools, cloud-based information architecture, and digitally enabled physical supply chain. In the short-term Pfizer needs to adapt its digital supply chain to be DQSA compliant to track and trace drugs globally.
Title II of DQSA
The DQSA requires companies to build an electronic, interoperable system to identify and trace certain prescription drugs that are distributed in the US. The system is supposed to improve detection and removal of potentially dangerous counterfeit, stolen, contaminated, or otherwise harmful drugs from the drug supply chain to protect consumers. Effective November 27, 2017, all manufacturers are required to have unique serial numbers on all commercial units and homogeneous cases of their drug products sold in the United States. With subsequent rollouts to repackagers, wholesale distributors, and dispensers (pharmacies) in 2018, 2019, and 2020 respectively.  By 2023 there is a requirement to be able to electronically trace all transactions from the consumer to the manufacturer for products that may either be recalled or have been affected by counterfeiting. The information used to trace the product must be secured to protect confidential or proprietary information of all members of the supply chain.
To creatively meet the DQSA 2023 requirements, Pfizer has partnered with Linklab to apply the advanced digital ledger technology, or blockchain to secure drug pedigree data in digital supply chain transactions. Blockchain is the underlying technology used by Bitcoin, that uses a group of distributed computer systems to securely compute the authenticity of a transaction in a decentralized manner, and does so with a digital ledger showing who had what, when, and where without the need for a central authority. A big opportunity for Pfizer is to capitalize on a digital supply chain enhanced with blockchain to improve operations and deliver on its customer promise securely. Because blockchain offers radical transparency and enhanced security it will offer greater confidence in Pfizer’s growing ecommerce channels like Express Scripts and Alibaba. Therefore, if all goes according to plan Pfizer could be well positioned to go B2C with other drugs beyond Viagra, one of the most counterfeited drugs globally.
Will it work?
Today most of the cost for DQSA compliance is bore by Pfizer for the implementation of a digital supply chain and blockchain, should the cost be shared equally by repackagers, distributors, dispensaries and third-party logistics companies? If Pfizer, achieves successful implementation of a DQSA compliant digital supply chain with block chain, what should it do when it identifies a suspect or illegitimate product may have entered the supply chain? Who in the supply chain should ultimately be held responsible? (746 words)
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