Pharma Distributors: Are You Prepared?

When we ask Pharmaceutical Distributors if they’re prepared, there is often a pause and then a response of “what do you mean?”. Being a distributor in the Pharmaceutical Industry is unlike distributing in any other industry. Many of the same functions such as accounting, sales, purchasing, inventory management, reporting, etc. are required to help distribution companies in other industries. However, those same functions get complicated when distributing pharmaceuticals.

This article addresses the question “How can a Pharma Distributor Be Prepared When Managing Their Business?”

Timeline for Pharma Industry

Prior to November 2013 the pharmaceutical industry trading partners (manufacturers, wholesale distributors, re-packagers, and dispensers) were required to maintain “one-up” and “one-down” lot tracking records (suppliers they purchased products from and customers they sold products to). They were required to keep these records for a minimum number of years in case there was ever a need to trace the “pedigree” (movement of a lot across the supply chain) of a specific product from the manufacturer to the end-user.

The process of compiling the pedigree of a specific lot-controlled item was time-consuming at best as records were often maintained by looking at the purchase order receipts from suppliers, inventory still available in the warehouse, and sales to customers, to determine the movement of a specific product and its lot. As there are potentially thousands of product being produced within the same lot that is then often sold to many distributors/customers downstream, the ability to keep track of each lot was virtually impossible and makes it pretty easy to inject illegitimate quantities of product into the supply chain.

Drug Supply Chain Security Act

On November 27, 2013, the Drug Supply Chain Security Act (DSCSA) was signed into law which outlines the steps to build an electronic, interoperable system by November 27, 2023. The DSCSA’s purpose has always been to provide the ability for the pharmaceutical industry to trace prescription drugs as they are distributed through the supply chain. Over the past 8 plus years, the FDA, supply chain, service providers, and various organizations associated with the pharmaceutical industry have all been working diligently together to ensure there will be an interoperable system by November 2023.

Although the DSCSA has one ultimate goal “help protect U.S. consumers by improving detection and removal of potentially dangerous products from the pharmaceutical distribution supply chain”, there have been a number of milestones that have been implemented along the way.?

The Requirements

In 2015, trading partners have been required to provide the subsequent purchaser with product tracing information when engaging in transactions involving certain prescription drugs. Since that time, trading partners have been required to capture the product tracing information and maintain/store the information for a minimum of 6 years after the date of the transaction. This requirement was the beginning of traceability from the manufacturer to the end user.

Since 2013, there have been a few other significant industry specific requirements set by the DSCSA that have been put into place to help the ultimate goal of protecting U.S. consumers against potentially dangerous products. The other requirements include:

• Requirement that trading partners are “legitimate” (active license, no suspensions, etc.) at the time of purchasing products from them or selling to them
• Ability to identify and if necessary “quarantine” products if considered suspicious and notify of suspicious products
• Addition of serial numbers on the smallest saleable unit of a product to track each product to its smallest significant saleable unit
• Verification that a product is legitimate if it is being returned and then being resold

Latest Development

For the past 2 to 3 years (or maybe even longer), the push has been to take all the great work that has been developed in the past 8 years into a system that will comply with the interoperability requirement of the DSCSA. This requirement does not mean one system will be used by every company in the supply chain. It means that every company in the supply chain, large or small, must have a system in place that will communicate with all the other systems being used by the others in the supply chain. To put this into perspective, consider all the manufacturers, repackagers, distributors, and dispensers (large or small) currently buying and/or selling pharmaceutical products.

Each company must - by November 27, 2023 - be able to comply with this requirement and therefore each one of the systems must have the ability to communicate (receive and/or send) in the correct format, information that will allow the industry to know the status of any given serialized (smallest saleable unit) pharmaceutical product.

How Blue Link can Help

Since the enactment of the DSCSA, Blue Link has been contacted on many occasions by pharmaceutical distributors, small and large, established and start-ups, about the difficulties they’re having managing their businesses using manual processes, non-pharmaceutical software, or software that cannot be integrated with their other systems. Many are not providing the required Transaction Reporting (T3) to their downstream trading partners as they do not have the staff to manually create the required report. Many are still physically looking in a filing cabinet to ensure their trading partner’s license is still active and some are not reselling any returns as the manual process is too cumbersome for the number of returns, they receive.

Being ready for November 2023 is not a suggestion but needs to become a realization. If you want your pharmaceutical company to continue operations after the November 2023 deadline, there is little time left to determine your needs, search for the right solution, and get implemented. Implementation of any ERP Software is not like implementing basic accounting solutions. Deciding on the solution for your business and the ERP Implementation itself normally takes months. Pharmaceutical Software Providers such as Blue Link Pharmaceutical ERP have the functionality you need to comply with the DSCSA and many other functions you need as a Pharmaceutical Distributor.?

Although the most important aspect of being prepared should be to ensure all DSCSA requirements will be met, there are other functions that depending on your business should be seriously considered when being prepared.

• Short-Dated Lot Management – If you are a company that often finds yourself with short-dated lots, having the ability to manage them could be beneficial. All-in-One Pharmaceutical solutions such as Blue Link Pharmaceutical ERP allow you to indicate when you feel a product should be considered short dated and to place a special price on that short-dated lot to ensure it can be sold before it expires.
• Suspicious Order Monitoring (SOM) – Although not an FDA/DSCSA requirement, if you are selling products that require you to ensure your customer is not purchasing products outside their normal/acceptable patterns, SOM management should be seriously considered as a top priority when being prepared. Being able to monitor the purchasing habits of your customers and having an order automatically flagged as “suspicious” is a DEA requirement and if not properly managed could cause your company problems down the road.
• B2B Customer Online Order Portal – In todays fast-paced world customers want to be able to go to a portal, find a product and submit their order themselves. Although this is not a requirement it allows your customers to place orders at any time and with the ability to integrate into your ERP system, transactions automatically populate, further streamlining your processes.
• Controlled Substance Ordering System “CSOS” – not everyone is selling Schedule II products but if you are, having an integrated CSOS component to allow your customers to place electronic orders for Scheduled II products prevents the need to manually receive, verify and store DEA 222 forms. Again, this can be performed manually but having this ability is a huge benefit to your customers and aids in your efficiency.
• Other Non-Pharma Functions to Consider – Being prepared should not only take into consideration “pharmaceutical functionality’ but also the other “standard functions” that a company should ensure are provided when being prepared. As with all ERP software, functionality to manage your Accounting (AR, AP, GL, Bank Management), Inventory Management, Contact Management, Pricing, Purchasing, Sales and don’t forget Reporting should always be seriously considered.

On November 27, 2023, compliance to the DSCSA will be required to continue operating a pharmaceutical distribution business. If you are not prepared by November 27, 2023, to comply with the full requirements set out by the DSCSA, you should be prepared to shut down your operations until you can get prepared. The industry has not “just sprung” these requirements on the industry, they have been leading up to this day for the past 8+ years.

If you are interested in learning how Blue Link Pharmaceutical ERP can help your company be prepared for November 2023 download our guide: What to Look for In Pharmaceutical Distribution Software