Contract Pharma: Assuring Quality in the Global Supply Chain-Measuring Risk in Sourcing

In the September 2009 issue of Contract Pharma magazine, Helena Champion the Principal Consultant with Drug Quality Assurance LLC, writes a must read article for senior to mid level pharmaceutical executives about dealing with the risk of quality assurance of pharmaceuticals in this era of globalization of the pharmaceutical supply chain.

As posted on previous stories and blogs at Secure Pharma Chain Blog, the issue of the globalization of the pharmaceutical supply chain has led to a worldwide epidemic that affects the quality of medications and a proliferation of counterfeit drugs.

XStream Systems endorses the concept that both private industry and government regulatory agencies use technology such as XStream’s XT250 to screen, authenticate and verify the contents of products within the supply chain from the point of production to the consumer. The use of a material screening process, which verifies the material inside its unit-of-sale container, enables the entire supply chain to mitigate its liability and ensures the consumer that the product is safe and efficacious.

In the article titled Assuring Quality in the Global Supply Chain-Measuring Risk in Sourcing, Ms. Champion outlines a compelling history and case for quality assurance measures along with a Supplier Risk Scoring Tool for use by a Material Supplier/Provider Combination. Ms. Champion states in the introduction that, “this article explores the risks of depending, without reliable verification, on remote suppliers to maintain the quality and safety of their supply chain and the materials we buy from them.” Although Ms. Champion primarily focuses on manufacturing, much of her article is relevant and could be applied and used by members of any supply chain-from production to dispenser.

Here are some of interesting portions pulled from Ms. Champion’s article:

• Heparin Tragedy-In early 2008 there were numerous adverse events, some fatal associated with Baxter International’s heparin parenteral products and they voluntarily recalled nearly all their heparin products in the United States…at least 80 people in the United States died from contaminated heparin products.


• Experiences in Other Industries-Experiences in other industries moving production and supply to low-cost suppliers have not been very different from the heparin experience. The Economist recently reviewed a book by Paul Midler, Poorly Made in China: An Inside Account of the Tactics Behind China’s production Game. Mr. Midler is fluent in Chinese and has consulted in China since 2001 for Western companies replacing factories in Europe and America with sub-contracting relationships in China. His Western clients were delighted with how Chinese factories could do things so well, so fast and so cheaply, but were puzzled as to how this was possible. There was reason to question the low prices-he soon found that “quality fade” was common, as Chinese factories transformed what were, in fact profitless contracts into lucrative relationships.


• Even if test are made more specific, third party testing is certainly not enough to assure the quality of pharmaceuticals and especially biologics and biopharmaceuticals.


• The tryptophan dietary supplement disaster over 20 years ago provides an example of the risks of changing a process without extensive testing to validate the new process-a manufacturer made a change to the process and did not anticipate that a very toxic impurity would result, which killed at least 37 people and permanently disabled more than 1,500 people in the United States.


• The existence of a United States affiliate or a United States Agent does not guarantee real knowledge of the supply chain or its integrity.


• Economic fraud is not new and nor is it confined to any one country or industry…In the 1990’s Flavine International, a NJ-based broker of bulk drugs, bought bulk gentamicin sulfate at low prices from unapproved sources in China. Flavine repackaged the bulk drug to resemble gentamicin sulfate manufactured by Long March Pharmaceutical...there were a number of adverse events linked to drug product made with the counterfeit gentamicin…Flavine, its owner and its vice president were fined and the owner got a two-year prison sentence.


• You are Responsible For Your Supply Chain-It has become obvious that companies in general need to know much more about their supply chains than in the past and that there are hazards in taking supplier information at face value.


• Five Steps To Achieve and Maintain Comprehensive Supplier Qualification:

Step One-Quality in Depth, A company needs to perform a comprehensive, in-depth evaluation of a supplier for a particular material. API and component manufacturers often do not allow a customer to audit their operations in detail, to protect proprietary knowledge and confidentiality, but a superficial audit is no long a viable approach.

Step Two-Use Experienced, Technically Expert Auditors to Perform On-Site in Depth Audits-They Can Change the Game

Step Three- Need to Identify and Audit the Upstream Supply Chain for Critical Materials - Audits conducted by You or Your Agent

Step Four-Trust But Verify Regularly, After initially qualifying the supplier of an API or components and demonstrating that the supplier can consistently provide material that meets specifications, drug product and device manufacturers still need to regularly check supplier compliance through reliable means.

Step Five-Management Responsibility to Understand and Mitigate Supplier Risk, Senior management should be informed and updated regularly as to the security and integrity of critical supply chains.

• The best suppliers will accept the new reality of increased transparency, and brokers and distributors who can establish and guarantee the level of quality assurance associated with more rigorous auditing and supply chain verification will be invaluable.

Written for and from the standpoint of quality assurance at the point of manufacture, this very detailed article gives a solid roadmap for executives and managers to gauge and or build a process that protects their supply chains and begin to understand the potential for catastrophic consequences economically and to the general health of a population if they do not take the issue seriously.

Not mentioned by Ms. Champion in this article is the role that technology can be deployed and used to screen and protect manufacturers, packagers, distributors, dispensers and ultimately the consumers in authenticating at each step of the supply chain the veracity of their products. By using the processes described in the article with a suite of technology it is possible for the supply chain to protect itself from the various nefarious sources that threaten it.

To read Ms. Champion’s article in full in the September 2009 issue of Contract Pharma, visit their website at: www.contractpharma.com.

To learn more about XStream Systems and its revolutionary technology that allows the pharmaceutical supply chain to verify and authenticate materials inside their sealed unit-of-sale container, visit their website at: www.xstreamsystems.net.

FDA: Supplier Audits, Qualification Needed to Protect Supply Chain

At the Parenteral Drug Association-FDA 2009 Joint Regulatory Conference the FDA was on record stating that manufacturers should secure their supply chains through testing and anticipate risks to head off issues like the recent contamination of imported ingredients.

Steven Wolfgang, FDA Consumer Safety Officer is quoted as saying, “ the FDA is looking more closely at quality management systems as a first step toward that goal.”

This reinforces XStream’s position that material screening should be done throughout the supply chain to verify and authenticate materials from raw materials, to production, through distribution and to the point of dispense. Material screening is the most effect way to make certain that the product is protected and maintains it effectiveness to the consumer.

XStream’s XT250 solution allows the entire supply chain to quickly screen products, within the supply chain, inside it unit-of-sale container without degradation or the destruction of the material.

To view more about the FDA statement, follow this link: http://www.fdanews.com/newsletter/article?articleId=120738&issueId=13038

To learn more about XStream’s XT250 system, visit: www.xstreamsystems.net.

The Limitations of Track and Trace Technologies in Fighting Counterfeit Drugs

Alan Clock, Senior Vice President, XStream Systems, Inc.

To date, nearly all of the solutions for the global epidemic of counterfeit and adulterated drugs has emphasized technologies that are known as Track and Trace methods (e.g. barcodes, holograms, RFID, pedigree, taggants, and serialization).

Track and Trace methods were developed and are based on technology designed for inventory control/security and are common within most sophisticated supply chains. These solutions are very effective in tracking product, especially in direct or short supply chains, where the additional cost can be justified in their inventory control capabilities because the members of the supply chain use common systems and tools for tracking, distribution and sales.

That being said, Track and Trace solutions have their limitations:

• They generally require some sort of an addition to the outside of the box or package and a common technology to be read and documented.


• These processes and technologies add additional cost to the product and are difficult to maintain across large global supply chains.


• Because of its external placement of these methods on the material’s packaging, the Track and Trace item may be easily replicated, and, at the very least, does not verify that the material inside the package is safe and efficacious.

The costs for a global supply chain to implement Track and Trace solutions are staggering. According to an EU Commission Consultant, the initial cost for deploying a Mass Serialization pharmaceutical program in the European Union would include:

• An industry wide one-time cost of €11.5 billion to set up the proper systems within all members of the pharmaceutical supply chain in Europe.


• Annual “running costs” for serialization with European pharmaceutical companies to be €185.5 million for non-OTC companies.


• EU pharmacies would incur costs of installing the right IT and reading devices to support serialization estimated to be approximately €157 million, with no estimates on the annual costs of running the system.

Although Track and Trace solutions are useful to a point, they are significantly limited in their effectiveness. When additional costs to all members of the supply chain are added, they include significant changes to the manufacturing, packaging and distribution processes. Additionally, as we have seen lately, many of the incidents of substandard, fraudulent and counterfeit product all had perfect pedigrees and their packaging was either original or perfect facsimiles.

The best way to effectively purge the pharmaceutical supply chain of poor quality, fraudulent or counterfeit medications is to look inside the box to screen, verify and authenticate the product inside the package.

Ideally, a quality control and anti-counterfeit solution for the pharmaceutical supply chain would not require any alterations to the product or the package. The remedy would allow packaged drugs to remain intact and will be readily deployable. The placement of the testing unit could be at strategic points within the supply chain or deployed throughout without onerous costs or prohibitive timelines.
This new cure would provide a level of confidence that public safety is ensured by verifying the material inside the package.

We at XStream Systems are very excited about our technology which meets the needs as an effective quality control and anti-counterfeit technology solution for the pharmaceutical supply chain. The XT250 system allows the members of the pharmaceutical supply chain to screen and verify the contents of product inside its unit of sale container without opening it, changing its label, or destroying or degrading the material inside.

To learn more about XStream’s XT250 and its revolutionary technology, visit: http://www.xstreamsystems.net/.

XStream's XT250 System Verifies WHO Figure for Counterfeit Drugs in U.S.

Based on XStream Systems' usage data from end user XT250 systems, they can verify that the World Health Organization’s (WHO) estimate of 1% of the United States pharmaceutical supply chain being counterfeit, is accurate.

XStream System’s XT250 Materials Identification System verifies and authenticates materials within its sealed, unit of sale container. The standalone system is currently deployed in several pharmaceutical distribution companies that distribute pharmaceuticals throughout the United States.

“Based on our macro look at the data from the end user, we can confirm that the WHO estimates are reasonably accurate”, stated Alan Clock, Senior Vice President at XStream. “Our system is the only technology that can accurately authenticate pharmaceuticals within the supply chain without destroying the product or packaging so we have excellent visibility on what is going on literally inside the supply chain .”

“The XT250 is the only materials analysis technology that can keep up with the tremendous flow of drugs throughout the supply chain. We are seeing data that suggest between 0.67% and 1.4% of receivables and returns within these pharmaceutical distributor end users are likely counterfeit products or fraudulent medications,” explained Mr. Clock.

From the data, XStream is learning that authentication rejection/failure rates vary between pharmaceutical products, and even within a given pharmaceutical product the rejection rates can vary significantly over time. In some cases isolated bottles have been rejected, while in other cases entire lots have been rejected. “You can’t predict when the counterfeits will show up,” said Mr. Clock.

XStream’s data validates that the members of the pharmaceutical supply chain (manufacturers, distributors and dispensers) should be using authentication technology more and taking steps to screen as many pharmaceuticals as possible, as often as possible. Currently many regulatory officials have been advocating more frequent inspections at foreign manufacturing facilities as the primary solution to the problem of poor manufacturing and counterfeit medications in the supply chain. While inspections are needed, given the sheer quantity of places to inspect and global nature of these sites, inspectors have little chance of catching counterfeits. In addition, XStream’s data suggests that counterfeits are inserted at a multitude of sources all along the supply chain. The point of production is not the primary starting point for fake medications. Verification and authentication at each point along the supply chain is the most effective way to detect and interdict fraudulent and counterfeit pharmaceuticals.

“The good news is that the United States is one of the last of the developed countries to see an increase in counterfeit medications. The United Kingdom has already seen an increase in the last three years and it stands to reason it will not be long till we see significant increases domestically as well. Because of this impending proliferation, the XT250 is essential for the protection of the consumer since it is one of the only tools available which can act as a roadblock to counterfeiters.”, said Mr. Clock.

Ranbaxy Probed Over Counterfeit Medicine

In an article that appeared in the Washington Times, the Justice Department is investigating whether Ranbaxy Laboratories Ltd., which supplies generic drugs to the U.S. market and to President Bush's global AIDS initiative, has falsified data, followed sub-par manufacturing practices and distributed counterfeit medicine.

The filing stated that "allegations from reliable sources indicate a pattern of systematic fraudulent conduct" by the company. The allegations include that in its application process, the company submitted fabricated data to the Food and Drug Administration for generic drugs to be distributed in the U.S. and anti-retroviral drugs to be distributed in other countries as part of the President's Emergency Plan for AIDS Relief.

This is yet another example of potentially counterfeit product distributed widely in the global pharmaceutical supply chain that would have passed all Track and Trace methods of interdiction. These products have been distributed and consumed because pedigree or tracing processes do not authenticate the medication inside the container.

XStream Systems XT250 would have been able to discover the fraudulent and counterfeit material before they were distributed and dispensed because the technology verifies the molecular structure of the medication inside the sealed container.

To learn more about the XT250, visit our website at www.xstreamsystems.net.

To read more of the Washington Times article click here.

The Challenges of Product Safety in a Global Market Place

Andrew C. von Eschenbach, M.D., Commissioner of Food and Drugs Administration recently spoke at the Import Safety Summit and posted his view of import safety in his newsletter Andy’s Take:

“You are aware that an increasing number of products – especially those affecting your health, like food and medical products – are being imported from beyond our borders. This has raised great concern recently about FDA’s ability to ensure the safety of those products. This week, I attended a summit with hundreds of industry leaders to collectively address the challenges of product safety in a global market place.

My take is that the challenge of imported product safety will increase because as American consumers, we have come to expect - and even demand – year round variety in the food we eat. And because the production of many of the drugs and medical devices we use is now a global enterprise. So if we are going to want safety in all these products, it will require a collective effort, through collaboration with industry and international regulatory counterparts. This is to build safety in to the production of food and medical products as well as to create systems that assure their safety through distribution and consumption.

That’s why the FDA is accelerating initiatives like our participation in a groundbreaking program with partners in the European Union and Australia. Through a new pilot program we will jointly plan, allocate, and conduct certain inspections of facilities in developing countries that manufacture the starting materials for many of the drugs you take. If this program is successful, it could be expanded to include other types of drug manufacturing facilities. By leveraging the resources of each agency and sharing vital information, the number of foreign facilities in our inspection data base expands while allowing FDA to target its resources on products that we believe present the highest risk to US consumers.”

We at XStream System agree with Commissioner vonEschenbach on the importance of safety throughout the distribution chain and believe that the molecular pharmaceutical authentication possible with the XT250™ Material Identification System will further the industry’s ability to ensure safety to the consumer.

What the True Pharmaceutical Security Focus Should Be: Authentication

As many of those who have spent many years within the Pharmaceutical Supply Chain, I watch the major players within the pharmaceutical industry jockey and debate the current initiatives that are intended to secure the safety and efficacy of the medications that we in the United States take daily.

In this era of globalization we in the United States find ourselves increasingly consuming medications that use foreign produced raw materials, outsourced manufacturing and are packaged overseas. Although most of these efforts are managed and regulated according to tight corporate and FDA scrutiny, serious issues have arisen recently which demonstrate nefarious intent to circumvent the safety and security of these globally produced products.

Additionally we find international and domestic criminal organizations, realizing the potential of high profits and low risk, using sophisticated operations to adulteration, dilute or counterfeit medications that make their way into our drug stores and healthcare providers.

The threats to our safety as a nation are real. The danger that contaminated, adulterated, diluted or counterfeit medications that our population currently faces is increasing every day.

Unfortunately we find that there are few deterrents or regulatory processes in place to adequately protect our population from these sophisticated threats to our collective health.

Currently the Congress, Federal and State regulatory agencies are grappling with the most effective way to deal with this clear and present danger. To date most if not all of their efforts have been focused on track and trace technologies and protocols. Track and trace encompass RFID, advance bar codes; hologram labels technology and pedigree protocols.

Although these efforts are part of the solution, they fall short of truly and efficiently solving the problem. The obstacles to quickly adapting them as an effective solution are many. They are costly, time consuming to adopt, have numerous technical challenges, are not standardized and most importantly require each member of the supply chain to be synchronized and monitored for them to be an effective deterrent.

However the biggest drawback is that the only thing that track and trace technologies and protocols adequately track and trace is the packaging that the medication is packaged. Despite all of the cost, technical challenges and time consuming efforts that they entail, these efforts do not authenticate or verify the actual contents which may have been adulterated, counterfeited, diluted or contaminated at one of various points within the supply chain.

Currently XStream Systems, XT250 technology has the ability to quickly, efficiently and effectively authenticate and verify the contents of the medication within the sealed container. This process can happen in a very cost effective manner anywhere within the Pharmaceutical Supply Chain with little or no change in processes or protocols. It can complement existing Track and Trace initiatives by actually providing authentication documentation or operate as a standalone system.

The cost of implementing and operating authentication technology such as the XT250 is a fraction of the initial start up costs of an RFID system and it could be operational in a fraction of the time that it would take for one segment of the Pharmaceutical Supply Chain to implement universally.

Maybe it is just too obvious but I hope that those in a position to make a difference take time to look at filling in the gaps in the current mindset and direction of protecting our Pharmaceutical Supply Chain. Hopefully they discover that the ultimate solution is to authenticate and verify what is in the bottle.

Alan Clock, Senior Vice President, Sales and Marketing, XStream Systems, Inc.

The Secret of CSI: Miami’s Lab

CSI:Miami draws its viewers to the edge of their seats by spinning out scenarios which catch a criminal and all involved during a day’s work. But how do they do it week after week?

First - you start with a crime lab that would make most real-life crime scene investigators green with envy. The lab boasts modern day tools like mass spectrometry and DNA analysis. The equipment portrayed on the series is very real, but at a cost prohibitive price for most crime labs’ budgets.

Add to the superior equipment, the almost super hero ability to complete tests before the end of day and sometimes within hours. One of these super technicians is Eva LaRue, who plays DNA expert Natalia Boa Vista on the show. She can even extract a single drop of perspiration from a leaf and tell you who was at the crime scene.


Please click the Play button

The reality is lab tests are not completed instantaneously. Once a sample is submitted, it could take weeks for the results to be returned. It is for this reason, screening tests are helpful. These are generally less expensive than outsourcing to an analytical lab and less time consuming.

One industry looking for more efficient screening methods is the pharmaceutical industry. Guarding itself against counterfeits and adulterated medicine is an ever increasing task. They use a variety of security measures currently, but most are focused on the packaging rather than the material itself; such as holograms or special inks.

A viable material screening solution is the XT250 System, which can identify the crystalline structure of a substance by matching it against its standard. By rapidly testing products such as pharmaceuticals in their sealed packages, wholesalers can quickly determine what “passes” and what “fails” industry standards.

CSI: Miami may have the best equipment on T.V., but in real life, the XT250 System is as close as we get to rapid drug authentication.