Pharmaceutical Serialization: What Happens After Compliance?
These are exciting times for SAP Life Sciences. SAP will be releasing our “next generation” product that is specifically designed to enable compliance to global pharmaceutical serialization regulations that can scale to address the massive volumes that will be generated from unit level serialization, provide “out of the box” country reporting to global agencies and seamlessly integrate the contract manufacturers and packagers into the end to end process. In my previous blog “The Rapidly Changing World of Serialization in Life Sciences” I discussed how the evolving legislative landscape was creating a complex business environment to meet the global requirements. Because of the overwhelming positive customer feedback and validation on our new product release we are very excited. We believe the solution that we developed with our 14 co-innovation customers is very strong and will meet and exceed both the regulatory requirements but also our customer expectations as an outstanding solution for the industry.
Fast Forward to 2017 – Moving Beyond Compliance
With that in mind, let’s move the clock forward to 2017 when customers have deployed the SAP solution, I’m not able to use the product name until its official launch on September 15th, and the market now has serialized products located across the pharmaceutical value chain. Compliance is no longer a concern as the process is working smoothly and the industry now has near real time visibility into millions of serialized products moving across the value chain every day. Is your company aware that they have a new treasure of data they can leverage to create incremental value? And, if so, what will they do to leverage it?
For example, the pharmaceutical industry has one of the most complicated sales contract processes of any industry in the world. Manufacturers create complex agreements with group purchasing organizations and wholesalers that leverage chargebacks and rebates against a variety of performance metrics. As has been the case for years, wholesalers will continue to submit EDI documents listing millions of line item shipments that require a chargeback or rebate reimbursement.
In the new world of serialized inventory, all claims from the wholesaler to the manufacturer will reference the individual serial number in the electronic document that can be tracked and validated by the manufacturer. This is a critical change in the flow as now the manufacturers can validate a variety of criteria including:
- Is the serial number valid?
- Did the wholesaler actually buy the serialized product from the manufacturer?
- Has the wholesaler ever submitted the serial number previously on other chargeback or rebate documents?
- Was the serial number sent to another wholesaler in the same or other global market?
Putting the Finger on Product Counterfeits and Parallel Trade
As manufacturers begin to answer these questions, they will start to unlock tremendous opportunities to not only protect patients and their brand while generating tremendous value for the organization. Clearly, if the serial number is not valid they could have identified counterfeit product and they can respond quickly to minimize any impact on patient safety. If the wholesaler never purchased the serialized product from the manufacturer, they could have bought the product from the “grey” market, or they could have transacted with another wholesaler who is diverting product from one market to another in a parallel trade scenario. In the past, organizations would not have been able to react in near real time based on the validity of the serial number let alone take action to quickly to stop these activities before they become costly problems that could injure patients as well as the corporate brand.
Accelerating the Process with Wholesalers: A Win-Win
Further, the serial number becomes a validation point on any chargeback or rebate and the serial number can only be processed once. This is especially important as the EDI documents can have very large numbers of line items that could result in between 10% to 50% of annual revenue flowing back to the wholesaler in reimbursement. An organization’s ability to quickly and accurately validate the processing of that information and eliminate duplicate chargeback and/or rebate entries will result in significant savings for pharmaceutical manufacturers.
It is clear that as we begin to move across the finish line on serialization compliance we need to shift gears and start to think about how we can leverage this new information in ways that could provide tremendous value to the manufacturers, wholesalers, physicians and patients. Please feel free to comment on any use cases that your organizations are evaluating to leverage the serial number visibility and drive value for your organizations, and to discuss with us on SAP for Life Sciences on SAP Customer Network (SNC) or on Twitter at @SAP_Healthcare .
Nice Blog Joe!
The burden of Serialization can indeed be turned into a value.
An example of complex reimbursement or charge-back; there are some initiatives in The Netherlands, with regard to expensive cancer medicines, to see if it's possible to implement a system of 'no cure, no pay' and long-term intake rebate's.
A pilot balloon, but still those initiatives can be managed more easily with a global system, like Serialization, and the solutions SAP can offer.
Looking forward to the invite of the 15th of September 😉
Thanks a lot. Very interesting article, especially on the Parallel Trade.
Putting the serialization in place always refer to additional cost & complexity. Your article gives a very good positive point especially from a commercial point of view.
Can't wait for the 15th of sSeptember.