Dexteyra Consulting Group Inc.

E-Pedigree to control counterfeit drug trade in North America


Charanpreet Kaur*


May 31, 2010




The states of Florida and California have moved legislations that would require the drugs to be sold within the borders of these states to comply with a pedigree law. California State initiated rules through a Senate Bill in 2004 presented by California Board of Pharmacy that initially included a deadline by January 1, 2007. But after getting feedback from manufacturers, retailers, and pharmacists it got extended to 2009, and then to January 1, 2011.


Florida’s Pedigree Law was taken into account in July of 2006. According to Florida Department of Health, the pedigree law governs the distribution of prescription drugs in which wholesalers are responsible to maintain pedigree documents for drugs from purchase to sale and must provide a pedigree to the member of an affiliated group who is responsible for the manufacture and distribution of prescription drugs to the warehouses and to the retail pharmacies. Florida’s pedigree requirement is document-based where-in the participants need to manually record data about pharmaceutical shipments.


E- Pedigree


An e-Pedigree is an electronic record for tracking the movement of prescription drugs through the supply chain to combat counterfeit or adulterated prescription drugs. It is validated and updated electronically at item level within the supply chain process of prescription drugs. Trading partners must use common electronic standards to exchange e-Pedigrees.  GS1 provides the standards for manufacturers, distributors, wholesalers and retailers for e-Pedigree information. It is an electronic record containing complete and accurate information about each transaction during transfer of ownership. The information contained in the e-Pedigree is the batch/serial number, dosage, and expiration date of the drugs as well as company details like name, address, and license number.




Serialization is functionality that allows to identify an object with a unique serial number that can be exchanged universally. Serialization in the pharmaceutical industry is applied to each item, case, and pallet of a drug to track the flow of product within the supply chains of manufacturers, distributors and wholesalers. E-Pedigree solution providers are now looking at ways to implement serialization using 2D barcode and RFID technology to transfer product information between trading partners to gain compliance. Efficient enterprise resource planning (ERP) software’s such as SAP and Oracle have inbuilt capabilities to create e-Pedigrees that are being utilized by pharmaceutical manufacturers and distributors to meet the new legislative requirements.


The background


In 2006, the US Food and Drug Administration’s (USFDA’s) Office of Criminal Investigations (OCI) conducted 341 arrests, 279 convictions; and charged $1,007,234,745 in fines and $88,377,731 in restitution. Knowingly and intentionally selling mislabeled drugs is not a new phenomenon; counterfeited drugs are imported in North America (NA) since early 80’s. But now, the issue is on the verge as WHO estimates that up to 1% of medicines available in the developed countries are supposed to be counterfeit. Whereas, one-third of the medicines are counterfeited in developing countries. That means that 10% of global pharmaceutical commerce involves counterfeit drugs i.e. more than $20 billion in revenues. Each Year more than 3 billion prescriptions are written by doctors in NA. Whereas California State that constitutes about 9% of the US prescription drug market, illustrated an alarming sale of more than 3 million counterfeit medicines in the same year. South Asian Countries are a threat as WHO revealed that about 48.7% of drugs counterfeited were originated in developing countries as shown below:


Despite of the alarming facts revealed by the USFDA, counterfeit drugs entering in the United States and Canada remain undetected as they don’t cause obvious harm to the patients. So in order to protect the supply chain of counterfeit drug in California, State Legislature passed anti counterfeiting and anti diversion legislation (SB1307) in 2004 including pertaining to the licensure and qualifications of wholesalers, restrictions on furnishing, and the requirement of an electronic pedigree to accompany and validate drug distributions. As under the current law, no wholesaler and pharmacy may sell, trade, or transfer a prescription drug without providing an electronic pedigree while at the same time, no wholesaler or pharmacy may acquire any prescription drug without receiving the pedigree.


Impact of track and trace tasks


To ensure patient safety and to optimize the operational performances, and to minimize risks, pharmaceutical manufacturers and distributors are advised to implement e-Pedigrees through automate supply chains. Manual pedigree may be labor intensive and time consuming and would inherit the risk of human error during data processing. The 2D barcodes and RFID tags can describe product information such as National Drug Code (NDC) numbers, dosage, batch/serial numbers, manufacturing and expiration dates. These electronic tags can be interfaced through an ERP with a sensor based technology to be identified by the commercial purchasers to authenticate release of approved product to distributors and packaging contractors in the extended supply chain.   


The benefits of automated supply chain powered by an ERP can increase sales volume by improving product forecasting. Operating costs can be reduced as automated supply chains improve accuracy and management, streamline pick/pack operations, and alert logistics about the serialized expiration dates. ERP systems deliver robust and extensive platform by processing the protocols into actions such as analytical alerts, notifications, product movement information, and so on to help the companies to boost their progress. Thus prioritizing patient’s safety and increasing market share by decreasing product division which in turn improve the consumers’ confidence.

ERP’s also help to prevent charge-backs, counterfeiting, recalls, parallel trade and grey market. The graph below illustrates safety incidents that were highlighted by Organization of Economic Co-operation and development, WHO.




Counterfeit medicines are increasing with unnerving frequency in the legitimate supply chains across North America.  This raises a threat to public safety. The retailers, manufacturers, regulators, and other healthcare stakeholders need to improve supply chain security and corporate accountability. E-Pedigree has been identified as a potential solution by the states of California and Florida and is being considered by USFDA. It is believed that rest of the states will also follow on the legislature very soon. ERP software’s such as SAP inherit inbuilt features that can be activated to implement a true e-Pedigree solution. This information can be traded across extended supply chains to safeguard the interest of public health. It is advised that the pharmaceutical manufacturers and distributors should look beyond the states of California and Florida to implement the e-Pedigree solution in a phased manner across their global supply chains.



*Ms. Charanpreet Kaur works as an intern and a consultant with Dexteyra Consulting Group Inc. She has interest in financial supply chain management (FSCM), banking, and insurance functionalities of SAP. She holds a Masters Degree in Electrical Engineering from University of Windsor in Canada and a Bachelors Degree, also in Electrical Engineering from Punjab Technical University in India. Ms. Charanpreet has interest in writing on varied topics such as business and economics.



Please contact to reproduce this article or to add your comments.

Share with: