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US FDA’s Drug Supply Chain Security Act (DSCSA) Enforcement Delay: 10 Reasons to Continue

by Barry Brown & Evren Ozkaya

In response to the recent FDA announcement to delay enforcement of the Serialization Compliance Deadline for one year from November 27, 2017, to November 27, 2018, Supply Chain Wizard offers the following guidance:

Decision clarification: The compliance deadline has technically not been extended. According to the FDA’s Draft Guidance on Product Identifier the compliance date remains November 27, 2017. However, the FDA will not act on non-compliant manufacturers, who fails to meet the official regulation deadline for 1 year.

The attached extract, FDA’s Draft Guidance, on Product identifiers under the Drug Supply Chain Security Act (DSCSA) says this:

Pg. 6 paragraph 3: Under this compliance policy, FDA does not intend to take action against manufacturers who do not affix or imprint a product identifier to their packages and homogenous cases of product that are intended to be introduced in a transaction into commerce between November 27, 2017, and November 26, 2018.

Since a significant number of companies were not expected to be compliant by the 2017 deadline, this is welcome news. However, this should not be signal that your serialization project can be slow tracked or put on hold. On the contrary, all efforts should be made to keep the project on track.

10 Reasons for continuing your serialization project (if you have one) with a sense of urgency

For specific advice on 3 types of Manufacturers, please scroll down.

1. Increased costs with little to no ROI

A large amount of capital investment is necessary to complete a serialization project. A major time delay in completing the project will increase both direct and indirect variable cost. In fact, because of time delays, it is not uncommon for project cost to increase by as much as 50%.

2. Loss of competitive flexibility

WIP impacts your ability to quickly react to the changing business environment. It takes time to reallocate resources to different projects and to get those resources up to speed and focused. As timing is always a critical factor in business success, pulling resources to support other initiatives can jeopardize your companies mission-critical project.

3. “Student Syndrome and Parkinson's Law”

The latter addresses the issue whereby humans tend not to complete work ahead of schedule even if they are able to. The student syndrome applies when humans start tasks as late as possible and waste safety margins, thereby putting themselves under pressure and stress. Delaying your serialization project will most certainly show as you close on November 2018.

4. Cross-Team Impacts

Projects rarely unfold in a vacuum. Scheduling is important and delays with one team can impact another team’s ability to schedule and manage their own projects, resulting in negative impact to multiple teams / projects.

5. Project inefficiencies

Your project teams are assigned and performing but slow tracking can lead to a loss of internal and external resources, loss of valuable leadership momentum & interest and a steep learning curve will be needed for new team members.

6. Vendor capacity constraints

Equipment and software vendors are expected to receive new orders for those “late comers” just now starting up and you do not want to lose your spot in their queue.

7. Vendor resource constraints

Resources dedicated to your project could be reassigned and you could be at the end of the queue when you begin again.

8. Equipment repurposed

Equipment you’ve ordered but delayed accepting may be reassigned, and you may experience heavy delays in getting the equipment for your new project.

9. Resource planning

Completing your project now, you will then be able to dedicate your resource for other objectives without the stress of knowing you still have work to do to become compliant.

10. Falsified Medicines Directive (FMD) deadline

While enforcement of DSCSA will not occur until November 2018, by delaying your project, you will be competing for hardware and software solutions with European companies as they continue moving towards their own deadline of February 2019.

3 Types of US Manufacturers and Plans for DSCSA Compliance

1. On Track US-focused Manufacturers:

Among others, you have the most flexibility now. You have an option to delay or continue your project. However, the above ten reasons should be considered before deciding to place your project on hold. An informal survey of current on track manufacturers are glad to hear that their ANDA holders or CMO/CPO partners are continuing to meet the Nov 2017 deadline.

SCW’s Advice:

1. Continue with your compliance project without loss of momentum. In fact, speed-up where you can to get ahead in your readiness against the competitors.
2. Build “Serialized Operations” thinking, efficiency / OEE considerations into your project by initiating OEE pilots to assess the impact of serialization / aggregation and proactively mitigating these risks.

Check out Supply Chain Wizard’s Digital Factory solutions that increasing number of manufacturers are utilizing to counter the loss of efficiency caused by serialization mandates. A recent article on this could be found in Pharmaceutical Technology Magazine.

2. Multi-national Manufacturers

If you are a multi-national company serving both US and EU and you are actively working on your serialization program you should continue executing your current plans. In addition to the above reasons, you will still need to complete the same scope of work within the next 18 months, considering both US and EU. Slowing down the US implementation will put both US and EU compliance at risk. For example, the following was just announced:

Pakistan:

Pakistan compliance dates are:

15 JUL 2019: Serialization, aggregation
15 JUL 2020: Full Track and Trace

Egypt:

Egypt compliance date is,

01 JUN 2018: Serialization, aggregation

SCW’s Advice:

1. Complete US implementations first as planned and then continue focusing on EU, trying to minimize the overlap between two major market resource requirements.
2. If not already underway, initiate your “Operational Excellence” / “OEE” Programs to protect yourself from negative impacts of Serialization on the packaging & warehousing operations. Ensure this is a global / enterprise initiative, rather than site specific / isolated efforts to maximize the impact/value.
3. Start planning “Value beyond Compliance” initiatives within your packaging sites and across your supply chain network, establishing a foundation for the upcoming industry disruption with “digital transformation”.

A recent article in Pharmaceutical Manufacturing magazine on supply chain transformation can give you an idea of what’s coming after serialization compliance, and how to start preparing for it.

3. Late Starting US-focused Manufacturers:

For companies that have not yet started on the Serialization Compliance journey, (and not serving EU or any other major market with a serialization regulation such as Brazil), take advantage of the extended enforcement and get started now. This delay is for you to catch up as soon as possible, and not to delay your projects any further. There is a significant order backlog currently with key equipment and software providers. In addition to the necessary hardware and software - the resources to install and validate the equipment also need to be scheduled in advance.

Read this article sound advice on how to kick-start your program.

SCW’s Advice:

1. Start with a strategic assessment of where you are and what gaps you need to fill to be compliant. This typically is a 1 week to 4 weeks duration effort depending on the complexity of your operations and assumes that you have expert compliance knowledge. Reach out to experts if you don’t.
2. Evaluate your strategic scenarios. Realistic cost/timeline/resource scenarios: i.e.: fast - track / generic solutions vs longer time / custom solutions. Vendor offerings: This is one of the most strategic technology decisions for your company for years to come.
3. Communicate. Talk with your trading partners and let them know your plans. If you’ve not already started your compliance journey, you will most likely not be compliant by the November 27, 2017 deadline. Create a solid communication & risk management plan. This will allow you to pro-actively address potential pitfalls, while managing trade partner / customer expectations.

About Supply Chain Wizard

Supply Chain Wizard, LLC, is a leading full-service global consulting firm specializing in serialization and traceability, as well as supply chain strategy and operational transformation programs. Dedicated to optimizing operations for growth, service and efficiency, Supply Chain Wizard offers strategic innovations in products and services targeting serialization and supply chain transformation initiatives, along with a team of expert consultants providing comprehensive support toward cost-effective compliance with serialization mandates and post-go-live operational support.

Supply Chain Wizard organizes serialization roundtables, summits and training programs throughout North America, Europe and Asia Pacific, and runs frequent webinars to support clients with their regulatory and compliance challenges. Committed to helping clients maintain significant and sustainable performance improvements, Supply Chain Wizard guides customers to a more secure supply chain via the implementation of high return-on-investment initiatives. Supply Chain Wizard is headquartered in Princeton, NJ, with additional offices in Germany, Turkey, The Netherlands, the UK and India. For more information, please visit www.supplychainwizard.com.

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