Monday, September 26, 2022

Red Flag Notice: Is your serialization L4/L5 vendor ready for DSCSA 2023 compliance?

Understanding, planning and starting implementation for DSCSA 2023 is (and has been) the top priority for most pharma manufacturers.

We are just over 1 year out from the regulatory deadline (and nearly 10 years from the date DSCSA was passed) and some serialization L4/L5 vendors are indicating ‘new’ features/modules/portals will be required for DSCSA 2023 compliance. The vendors convey full ‘assurance’ to manufacturers that they will be compliant, but can’t provide any notable details, can’t provide timelines of when it will be ready and, most importantly, can’t commit to pricing for these ‘new’ components- that is a major red flag.

I worry many manufacturers are barreling down a path where they give their L4/L5 vendor full latitude to dictate their 2023 compliance approach, effort and, most importantly, costs but yet may not be given those details until 9/6/3 months before the deadline- likely after a point where the manufacturer can feasibly consider any other options.

What if your vendor comes back and says this ‘new’ component is going to cost a hefty implementation fee and an additional $30K+ per year?  Many manufacturers are currently in the midst of 2023 budget planning- how will you account for that?     In many ways this is the textbook definition of a mob shakedown- give your constituents (customers) assurance of safety (compliance), and then just before a known threat (compliance deadline) demand more money.

It is critical that manufacturers recognize there are other options for DSCSA 2023 compliance, and in most cases, these other options offer a lower TCO and lower risk profile then simply building point-to-point customer connections out of your L4/L5 system. (We summarize all options below)

But I’m also realistic that there are a large number of manufacturers who simply can’t comprehend considering options other than full reliance on their L4/L5 vendor (as unfortunate as this may be).  However even in that scenario- at an absolute bare minimum, and when I say ‘bare minimum’ I mean literally taking the time to send one email or have one phone call- manufacturers should be requiring their vendor lock in DSCSA compliance costs for 2023 and beyond TODAY.  Otherwise it’s your own fault if you get caught in the mob shakedown situation noted earlier.

For those that are willing to identify better approaches let’s summarize the key pros/cons:

Customer connectivity out of your serialization L4/L5 system

  • Regardless of who your L4/L5 vendor is and regardless of marketing that promotes a ‘network’ concept, every serialization L4/L5 vendor in the industry today relies on establishing point-to-point connections.  This is an extremely inefficient and archaic approach to enabling interoperability across a supply chain- yet admittedly this is the path that most manufacturers are following because they believe it to be the only option available

Again, this is beyond unfortunate. 

  • Pros:  L4/L5 vendors are experienced in establishing connections   Cons:  Costs will be higher than expected, promotes the point-to-point architecture which limits future scalability. For many manufacturers, this approach will add significant scope to their L4/L5 system which further limits flexibility and account control (account control essentially refers to the leverage a manufacturer has to dictate terms of engagement with a vendor)

Connectivity from your 3PL

  • An attractive option, especially for virtual manufacturers who have been relying on their 3PL for Lot Level T3 exchange.  While not every 3PL is offering DSCSA 2023 connectivity, this will be a popular approach for many small to medium manufacturers
  • Pros:  Often very attractive pricing, offloads responsibility of connectivity administration  Cons: Not the core competency of a 3PL, locks manufacturers in to that specific 3PL for DSCSA compliance, may limit visibility to data in manufacturer’s serialization system.

Leverage a DSCSA Connectivity Service

  • Finally after 10+ years, the industry has an option which reflects how supply chain interoperability should operate.  
  • A DSCSA connectivity service provides a true ‘connect once’ experience that also serves as the foundation for other value-add services which take advantage of a true network concept (e.g. recalls, verifications, tracing) (I can’t stress enough how different this option is compared to any current vendor marketing a ‘network’ concept. )
  • Doesn’t require manufacturers change their L4/L5 system, simply add one additional connection from the L4/L5 to the connectivity service and the connectivity service establishes connections with all downstream customers (EPCIS connects and portal)
  • Pros:  Based strictly on standards, commoditizes the exchange of data (as it should be), unrivaled long term TCO compared to L4/L5 vendor or 3PL options, provides greatest L4/L5 vendor account control to manufacturers   Cons:  A relatively new offering in the industry.

The options are there.  

The ability for manufacturers to solidify their DSCSA 2023 approach/effort/costs is in their control (for those willing to take the minimal effort). 

As always- it's on the industry to take the (smallest amount of) effort to become educated on all options and recognize the best approach is not always status quo.

Jennason is excited to be working with manufacturers taking a holistic approach to DSCSA 2023 and helping to further educate them on these options.

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