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Pharmaceutical Manufacturing and Packing Sourcer

Living in the Real World

David Bang at LifeConEx discusses whether real-time location and temperature monitoring have real-life business implications

We all remember the internet hype and crash in the late 1990s and early 2000s. What about those numerous conferences and seminars promising that radio frequency identification (RFID) technologies would change every part of our lives? Eventually, those bubbles were burst, the cores were revealed and the bright minds sought to land on real business cases with real returns on the investment. How about the real-time location and temperature monitoring of medicinal materials moving around the world? This has been in the minds of those who have keen interests in reducing preventable risks in the temperature-sensitive supply chain for the life sciences industry. But, is there any ‘real’ business implication? Everybody seems to be running towards this pinnacle of cold chain management, amid many soft and hardware companies promising revolution, but lacking ‘real’ cases.

Many innovative logistics players such as UPS, FedEx, Lufthansa Cargo and DHL have been experimenting with a variety of wireless technologies for real-time tracking, optimising delivery routing and capturing condition-related information such as temperature, humidity, light and shock. UPS Healthcare Logistics is focusing on ePedigree (a certified record that contains information about each distribution stage of a prescription drug) applications and serialisation, while DHL and FedEx are planning to unveil real-time monitoring solutions this summer that track temperature, location, light exposure and other data. Late last year, Lufthansa Cargo, acting first among the airlines, announced that they would be applying similar technology to their pallets used to load luggage or freight, and sensitive cargo management.

The fundamental question from the day-to-day user’s perspective is, “when can we actually log on to a website and find the real-time location of a shipment on a map with a little thermostat icon indicating the real-time temperature condition hovering over the map?” Of course, we should not underestimate the troubleshooting and human intervention mechanisms that would need to occur if the system did show a highly valuable vaccine unexpectedly experiencing a constant temperature rise at 0200 hours local time. Additionally, to make it more useful this should work for all modes of transportation (air, ocean, rail and road) in any geographical area (domestic and international) and time zone. Of course this is, in reality, difficult to implement. The reason why we do not see many real business applications around this topic (except for some pilots in limited scope) is because there are major breakthroughs that need to take place first across four major areas of the temperature-sensitive pharmaceutical products supply chain:

  • Standards
  • Security and safety
  • Application
  • Commercial viability

STANDARDS

In addition to different RFID frequencies, mobile phone networks and regulations concerning active RFID and GPS devices, it seems that each industry and even each company is trying to deploy its own set of technologies that may or may not be compatible with each other. “Sorry, your shipment’s location and temperature data are not available because it is being transported by an airline that does not support that particular device yet” or “this device works only when you book the shipments with us” could become common messages. What if your biggest customer says that they require a different type of technology standard for their downstream supply chain than what you have just implemented with hefty investment? What if, for commercial reasons, you want to change your logistics provider but the RFID/GPS tracking device you deployed across your supply chain is exclusively tied to the logistics company? The potential problems are huge. This is probably one of the real reasons why many decision-makers in the life sciences and logistics industry are skeptical or cautious when implementing new technology across their supply chain. EPCglobal develops the industry-driven standards for the Electronic Product Code to support the use of RFID. Any actively transmitting device (despite automatic shut-off mechanisms) needs to be reviewed and approved by the Federal Aviation Administration (FAA) and European Aviation Safety Agency (EASA). Receiving approval from the FAA does not automatically guarantee EASA approval. Furthermore, each airline has its own internal process for approving certain devices.

SECURITY & SAFETY

“Please turn your mobile phones off ” is a commonly uttered phrase heard before the plane gets pushed back for take-off. The same applies for almost every actively transmitting device that gets inserted into a shipment. While there are patented technologies available to make sure the devices do not transmit during flights, the US Transportation Security Administration’s 100 per cent cargo screening mandate in the US, effective from August this year, could make this issue more complicated than originally anticipated. Any transmittable device will most likely be detected and subjected to further screening, even if the device is legitimately certified by the FAA and airlines. Also, there is huge security concern around privacy and data protection. People are not generally comfortable with the idea that ‘Big Brother’ is watching them, when their buying habits and trends are recorded centrally for the benefits of consumer safety (for example recall management) and preventing unlawful supply chain diversions (such as counterfeiting). Of course, pharmaceutical organisations have some concerns about patient safety in relation to the effects of radio frequency emissions on medicines and medical equipment. As of 9th January 2010, the FDA stated on its website that it has received no reports of injuries resulting from RFID, but that preliminary FDA testing has shown that some RFID emitters could potentially slow the rate of pacemakers or cause implantable cardioverter defibrillators (ICDs) to deliver inappropriate shocks. Increasing numbers of governmental and academic studies are supporting the safety of RFID technology, but it could certainly delay the broader and faster adoption of the technology in every aspect of the life sciences supply chain.

APPLICATION

Knowing the exact location and the condition of a shipment in real-time is exciting, and may prevent some catastrophic situations (such as temperature-sensitive cargo being left on an airport tarmac for many hours in winter). However, what else is there? In other words, what are the other applications that can add tangible values to the overall supply chain? Just like the thousands of smartphone ‘apps’ becoming essential parts of these devices, the real-time data should be transformed into other various logistics applications. Many existing supply chain optimisation tools were built on the assumption that most of the data is historical and reactive, not real-time. Some are real-time, but not consistently throughout the whole complicated global supply chain. But one thing that is clear is that having the ability to track a shipment in real-time does not go far unless practical and value-generating applications come to the market as well. We call it ‘new economy’. This new economy should be big enough for many RFID device manufacturers, in the way that there are many different brands of mobile phones, multiple infrastructure and data carriers (such as the various network operators), and tons of applications and peripherals.

COMMERCIAL VIABILITY

What is the price tag for real-time location and temperature data of a highly sensitive (temperature, humidity, or even security) pharmaceutical shipment? If logistics providers start charging another surcharge or increasing prices for such services, will pharmaceutical companies pay for it? What about the financial burden of implementing a solution that may need to be replaced or upgraded in as little as two years due to the faster advancement of newer technologies? Cost pressure from healthcare reforms, generic competition and cash needed for acquisition and healthy pipelines are the exact reasons why top executives of life sciences companies do not easily jump into this costly technology. No matter how you look at it, there will be a cost for this real-time solution. That cost can either be offset by the ‘new economy’, or by efficiency gains that reduce costs elsewhere. The life sciences industry outputs about $850 billion sales per year. The sales from temperature-sensitive products are about $300 billion and are increasing every year. The product loss due to faulty temperature-controlled logistics is estimated to be anywhere between $5 and $10 billion, and recently the World Health Organization has reported that the global value of trade in counterfeit pharmaceuticals can be between $32 and $46 billion. Although real-time location and temperature monitoring is not the only way to mitigate this massive supply chain deficiency, it can surely generate attractive commercial business cases.

All of these may sound somewhat overwhelming or even pessimistic, but that is not the intent. From the lessons learnt from the internet bubble and early RFID hype, we now know that it is smart to be reasonably skeptical of any technology, and to rigorously find the right business fit that can be applied across the industry. The above breakthroughs should happen deliberately and collaboratively. There are many people who have devoted their professional lives to this. Now, maybe, it is time to take a few more steps forward with more hands and awareness. No hype, not another theoretical paper, but carefully and willfully-driven change. Who knows? ePedigree, real-time visibility and inventory data, and temperature information from inside and outside the cargo may be pulled together on a single platform with real business applications, proven ROI models and scalability. Now that would be something to pursue.


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David Bang is Chief Executive Officer at LifeConEx. Prior to his appointment, he had served as a founding member and Senior Vice President Business Development and Implementation of this supplier-neutral startup founded in 2005. David has been in the industry for over 12 years, holding increasingly responsible positions in global contract acquisition, implementation, sales, finance, IT and strategy. He is author of many articles published in relevant trade and technical magazines and is a frequent speaker at various logistics and life sciences conferences worldwide, advocating for reduction of risk, elevated ROI and ultimate patient safety.
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