Traceability and the healthcare supply chain in 2018

by | Sep 26, 2017 | Suppliers

Traceability is the new watchword in the pharmaceutical industry, thanks to the opioid crisis and the new laws and regulations that were created in response. Now, health care providers and healthcare industry providers are required to increase the traceability of all pharmaceuticals and ingredients throughout the pharmaceutical and healthcare supply chain, thanks to the Drug Supply Chain Security Act.

The law details “requirements for manufacturers, repackagers, wholesale distributors, dispensers, and third-party logistics providers (trading partners).”

New healthcare supply chain regulations

In June 2014, the FDA released guidance to help healthcare supply chain trading partners “more readily identify, quarantine and investigate suspect and illegitimate products.” And several key requirements, like a system for product tracing, are supposed to be phased in between 2015 and 2023. This product tracing is where 3PLs and EDI providers like SPS Commerce have a part to play.

For one thing, traceability helps reduce the chance of expired drugs being distributed to patients. Inventory software, inventory visibility and supply chain visibility systems notify warehouse workers as well as distributors when they have products nearing their expiration dates on their shelves. Product bar codes and scanners can ensure that the right batches of drugs are removed from the shelves at the right times, and full inventory counts can be completed in hours, not days.

Traceability can play an important role in helping drugs maintain their efficacy. A recent report from Berlinger, Beyond the Cold Chain, showed that poor handling during shipping could cause a drug to lose potency and even become toxic as a result of degradation triggers in the drug’s formula. According to an article on, “many cold chain logistics providers are expanding their offerings to promise real-time visibility, alerts in temperature changes, and other such tools that may help spot a compromised drug or shipment before it reaches a provider.”

Advanced ship notice for healthcare supplies

It can also help a supplier notify a buyer about pending problems, which can help them avoid a drug shortage through early notification, as well as providing a second shipment of product. Even the use of Advanced Shipping Notifications (ASN), which has already been a boon to retailers and grocery stores, is becoming a part of the traceability requirement, as ASNs can alert pharmaceutical manufacturers that critical ingredients are on the way to the factory, and when they will arrive. Additionally, ASNs can communicate a wealth of information that could prove important should contamination arise – manufacture dates and locations, lot numbers, expiration dates and more key data that can help to identify the chain of custody.

Traceability is also critical in reducing drug shortages, which the industry is already dealing with. According to a 2017 joint study by the Pew Charitable Trust and the International Society for Pharmaceutical Engineers. They found that “both hospitals and treatment centers spend approximately $230 million on drug substitutions, despite their potentially reduced in effectiveness.”

Ultimately, traceability in the pharmaceutical industry is the law, but it is going to have a great benefit for suppliers, buyers, and patients. It can reduce the chance for errors, loss of effectiveness, and even the chance for toxicity.

SPS cloud-based products can help companies in the pharmaceutical and healthcare supply chain with ASN, EDI, inventory visibility, and inventory management. For more information, please visit the SPS website or contact one of our representatives.

Connect to your partners and streamline your supply chain.

Connect to your partners and streamline your supply chain.

Automate your process through the retail industry’s largest network with EDI.

Contact SPS
Scott Bolduc