Pharmaceutical Supply Chain Integrity and Security (2016)

Pharmaceutical Supply Chain Integrity and Security
Pharma supply chain regulations in the U.S., Europe, Japan, India and China; enforcement, globalization and
pharmaceutical supply chain security and integrity.
COURSE SYLLABUS
Course Title: Pharmaceutical Supply Chain Integrity and Security
Instructor: Arete-Zoe
Delivery method: Indirect (Internet)
Length: 6 hours and 40 minutes of video content
Estimated study time: 1 month
CPE credits: n/a
Catalog Description:
The course material serves many interests by facilitating understanding of environment, dynamics, and
influences affecting regulatory policies and corporate decision-making that ultimately determine access,
availability, and safety of pharmaceutical products. In the first four chapters, we will introduce and
describe the regulatory environment in the United States, European Union, in major Asian economies
such as Japan, India and China, regulatory policies in Russia, and international standards. Holistic
understanding of regulatory environment in global context is essential for understanding of the
challenges in pharmaceutical supply chain in the current globalized, inter-connected and inter-
dependent economy. In chapter “Enforcement”, we will introduce national enforcement systems in the
context of globally operating pharmaceutical industry, and present major initiatives and events. Industry
trends such as consolidation, outsourcing of key operations, and shift of manufacturing to Asia
determine operational environment. Limited sourcing options, and increasing complexity and distance,
affect vulnerability to disruption. Track and trace requirements introduced new vulnerabilities especially
in the information management domain.
Instructor comments:
Each chapter contains a Study Guide with assigned readings (mandatory) and suggested readings
(recommended) and a list relevant databases and registries. Understanding the terminology is essential
to appreciate the differences in concepts that shape national and supra-national regulatory policies.
Students are encouraged to explore and review provided suggested readings to appreciate complexity
and extent of the topic in question. All selected materials are available in public domain free of charge.
For Interactive case studies, students are asked to conduct own research into examples of
pharmaceutical supply chain disruptions and vulnerable shipping routes. Quiz is included in each chapter
to facilitate understanding and knowledge retention.
Published: September 2016 ARETE-ZOE, LLC
Registered address: Phoenix, AZ, USA. Correspondence address: Lakewood, WA, USA
https://www.aretezoe.com/
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Arete-Zoe, LLC Address: 1334 E Chandler Blvd 5A-19 Phoenix 85048 AZ, USA | T: +1-480-409-0778 | http://aretezoe.com
BROAD COMPETENCIES AND TERMINAL OBJECTIVES:
 Explain driving forces and influences that shape regulatory environment and policy in regions most
relevant to global pharmaceutical supply chain.
 Describe operational environment in pharmaceutical industry as defined by national and supra-
national standards in the U.S., EU, Japan, India, and China.
 Compare operational environment in major pharma manufacturing countries and regulated markets
with that in Russia, Middle East, Latin America and sub-Saharan Africa.
 Describe main changes and principles introduced by new legislation in the U.S. and in Europe relating
to traceability and authentication of medicinal products throughout the whole supply chain.
 Define how pharmaceutical industry fits into national critical infrastructure in the U.S., EU, India and
China, and what these nations do to gain/maintain self-sufficiency/competitive advantage
 Interpret main issues in pharmaceutical product counterfeiting and intellectual property
infringements.
 Appreciate the disparity between national enforcement systems and global nature of pharmaceutical
industry, as well as FDA enforcement efforts at home and abroad
 Become familiar with information available in databases and registries.
 Explain structural change and consolidation of pharmaceutical industry since the 1990s
 Discuss geographical realities of current operational environment of pharmaceutical manufacturing,
shipping and consumption
 Analyze trends in maritime piracy, describe methods used and explain financial consequences
 Discuss characteristics of Chinese market and manufacturing, barriers to entry, enforcement
challenges and recent efforts to improve the country’s product safety record
 Explain the nature of pharmaceutical supply chain vulnerabilities, namely sole source supply chain,
lean operations, internal and external interdependencies, and increase in complexity
 Understand the nature of threats such as compliance failures, accidents, incompetence, corruption,
business competition, criminal interest, severe weather and civil disruption
 Discuss drug shortages and diversion, their causes and measures taken to tackle them
 Discuss the role of leadership in awareness of vulnerabilities and threats and the importance of
clearly defined priorities such as PIR, KPI, R&R and relationships
 Discuss pharmaceutical cargo thefts, high-risk areas, methods and countermeasures, monitoring and
reporting, direct and indirect losses, and public health implications of resale of stolen drugs
 Describe U.S. and international programs implemented to protect cargo shipped by air
 Summarize measures taken in the U.S. to tackle drug shortages as defined in the EO 13588 of 2011
and Title VII and X of FDASIA and discuss current shortages and related price gauging
 Explain how drug supply chain information management systems bridge disparate systems
 Discuss how data breaches affect pharmaceutical supply chain
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Course Material List:
Required: None, all necessary materials are linked to each chapter. References and
informational extracts and factsheets derive from non-commercial publications,
information available from regulatory agencies, news coverage, and publicly
accessible databases. Assigned readings are required for completion of the
course.
Recommended: Suggested readings expand on the topic and provide context and depth of
understanding of the topic. These materials are not essential for completion of
the course.
Required software: No specialized software required.
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COURSE BREAKDOWN
Contents
COURSE SYLLABUS......................................................................................................................................... 1
BROAD COMPETENCIES AND TERMINAL OBJECTIVES: ................................................................................. 2
COURSE BREAKDOWN................................................................................................................................... 4
INTRODUCTION ............................................................................................................................................. 5
REGULATIONS IN THE U.S.............................................................................................................................. 6
REGULATIONS IN THE EU............................................................................................................................... 7
REGULATIONS IN MAJOR ASIAN ECONOMIES............................................................................................... 8
INTERNATIONAL STANDARDS ....................................................................................................................... 9
ENFORCEMENT............................................................................................................................................ 10
GLOBALIZATION........................................................................................................................................... 11
SUPPLY CHAIN INTEGRITY AND SECURITY................................................................................................... 12
CASE STUDIES .............................................................................................................................................. 13
SUMMARY ................................................................................................................................................... 14
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INTRODUCTION
Pharmaceutical supply chains are becoming more and more complex due to globalization, shift of
manufacturing and business operations to Asia, and due to complex relationships between vendors and
supply chain partners. Good distribution practices are an important part of the whole system of
appropriate supply chain management. Recently introduced legislation in the U.S. and in Europe brings
major changes in the management of pharmaceutical supply chains, increasing the level of control over
all parts of the process, eventually leading to the creation of repositories, complex identification and
authentication systems, and introduction of interoperable track-and-trace systems. Introductory chapter
outlines regulations and guidelines that govern the industry in the U.S., European Union, and in major
Asian economies such as Japan, India and China. Russia is included to explain its unique approach to
pharmaceutical supply chain security. Differences between major markets and jurisdictions include lack
of consensus on the definition of counterfeit, misbranded, adulterated or falsified drug, thresholds for
their detection, identification requirements, and track-and-trace methods and obligations.
Chapter Activities:
Brief video presentation outlines content of the course and summarizes main talking points for each
chapter in order to facilitate orientation throughout the course.
Reading Assignment: n/a
Further Readings: n/a
Evaluation: n/a
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REGULATIONS IN THE U.S.
The U.S. regulatory environment evolved into its current form due to accidents, political battles over
new laws and court decisions that often overturned the legislators’ intent. Brief historical excursions are
included to illustrate how the system came into existence. Overview of the U.S. regulatory system starts
with the Drug Importation Act of 1848 and continues with the early 20th
century battles over the 1906
and 1938 legislation, and changes forced by legal battles and major incidents. The introduction of major
changes, such as the Federal Anti-Tampering Act of 1982 and the Prescription Drug Marketing Act
(PDMA) of 1987 is presented in the context of situations these new laws were supposed to resolve.
Major changes in the U.S. system of control of pharmaceutical supply chain were introduced after the
9/11 terrorist attacks. Significant attention is devoted to Good Distribution Practice guideline USP 1083
and key piece of the current legislation, Title II of the Drug Quality and Security Act (DQSA) of 2013, the
Drug Supply Chain Security Act.
Chapter Objectives:
By the end of this chapter, students will be able to:
 Describe the first attempts to stop influx of adulterated and bogus drugs in the U.S.
 Compare public awareness and priorities of major stakeholders during drafting and arguing
legislative changes in in 1906 and 1938.
 Explain the impact of Elixir sulfanilamide disaster on introduction of the Federal Food Drug and
Cosmetics Act of 1938, and describe how and on what grounds the product was recalled
 Discuss the origin of the Federal Anti-Tampering act of 1983
 Elaborate on measures designed to discourage the sale of counterfeit pharmaceuticals as
introduced by the PDMA, and explain what situation this law was supposed to resolve
 Describe main principles of good distribution practice defined in the USP guideline <1083>
 Define risks to the integrity of products entering the supply chain
 Formulate key steps of a response to suspected presence of counterfeit products.
 Outline critical steps to build a system defined in the DSCSA
 Discuss anti-terrorism legislation and programs that affect pharmaceutical supply chain.
Module Activities:
The chapter material contains 12 short video presentations, glossary of essential terminology, and a
Study Guide. Assigned readings include full text of the relevant legislation, relevant summary articles,
and links to resources and databases and other relevant materials. Comprehension quiz is part of the
chapter.
Reading Assignment: See Study Guide
Further reading: See Study Guide
Evaluation: Comprehension quiz
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REGULATIONS IN THE EU
European system was designed to facilitate the establishment of European internal market without
internal frontiers. It also accommodates experiences from events that occurred in the individual member
states, in the United States and elsewhere. The first piece of legislation at EU level, Directive 92/25/EEC,
introduced the definition of wholesale distribution and public service obligation of wholesalers. Directive
2001/83/EC, amended by the Falsified Medicines Directive of 2011, is the core piece of pharmaceutical
legislation in the European Union. Obligations include the need to exercise control over the entire chain
of distribution, to limit distribution only to medicinal products authorized in the EU, and to ensure their
traceability. Regulation 726/2004 then adds provisions on parallel distribution. The current version of
Good Distribution Practice guidelines of 2013 is discussed in detail to provide thorough understanding of
the current requirements on the distribution of pharmaceuticals in the European Union. The long
awaited Delegated Act of 2015 describes safety features on pharmaceutical packaging and future means
of verification of authenticity of unique identifiers.
Chapter Objectives:
By end of this chapter, students will be able to:
 Explain how EU level legislation applies in individual Member States.
 Describe the most important drivers in implementation of new EU pharmaceutical legislation.
 Explain how incidents that occurred outside Europe such as the 1982 Tylenol murders or the
2008 Heparin incident triggered changes in European pharmaceutical legislation.
 Describe main principles of pharmaceutical distribution introduced by Directive 2001/83/EC as
amended by the Falsified Medicines Directive of 2011.
 Describe main principles defined in the Good Distribution Practice Guideline of 2013
 Describe what information is available in EudraGMDP, and define limitations of this database.
 Compare public service obligations of pharmaceutical wholesalers in the U.S. and in Europe.
 Compare availability of pharmaceutical products in online pharmacies in the U.S. and in Europe.
 Compare rules on pharmaceutical advertising in the U.S. and in Europe.
 Explain the principle of parallel imports of medicinal products within the EU.
 Explain changes introduced by the Delegated Act of 2015
Module Activities:
The chapter material contains 16 short video presentations, glossary of essential terminology, and a
Study Guide with links to assigned and further readings. Assigned readings include full text of the
relevant legislation, relevant summary articles, and links to resources and databases and other relevant
materials. Comprehension quiz is included.
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REGULATIONS IN MAJOR ASIAN ECONOMIES
Major Asian economies, such as China, India and Japan, have a unique role in the global pharmaceutical
supply chain. Japan is a party to the International Conference on Harmonization (ICH), and adopts its
standards as approved by the Tripartite. Five of the top 25 global brand manufacturers come from Japan.
India, as a major pharmaceutical manufacturer, adopted WHO guideline on good distribution practices
with minimum changes. Major share of Indian Pharma products is exported to highly regulated markets.
In January 2013, Chinese Ministry of Health published the revised Good Supply Practice for
Pharmaceutical Products. The guidelines are very detailed and follow the same principles as other
comparable standards. The FDA is very active in enforcing compliance of plants that import
pharmaceuticals to the U.S. Patent and copyright law and policies in India and China are a good example
of substantial differences in understanding of the definition of counterfeit, falsified, misbranded and
substandard products. Before the war in Ukraine, Russia was still one of the emerging markets. Russia
is a major market for counterfeit pharmaceuticals that are available through online pharmacies. New
Russian legislation criminalized pharmaceutical counterfeiting as well as the distribution of fake and
adulterated medicines.
Chapter Objectives:
 Describe the regulatory environment in Japan.
 Compare pharmaceutical manufacturing in Japan, India and China.
 Define share of total volume of pharmaceuticals produced in India and China in global context.
 Identify the main source countries of counterfeit pharmaceuticals
 Discuss legislation that governs distribution of pharmaceuticals in India
 Discuss legislation that governs distribution of pharmaceuticals in China
 Explain why India, China and Russia are included on the IPR Priority Watch List
 Compare Russian regulatory environment with that of other major markets.
 Explain how the FDA enforces quality standards of imported pharmaceuticals.
Module Activities:
The chapter material contains 7 short video presentations, glossary of essential terminology, and a Study
Guide. Assigned readings include relevant legislation, summary articles, and links to resources and
databases and other materials. Comprehension quiz is part of the chapter.
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INTERNATIONAL STANDARDS
The global regulatory environment in good distribution practice and supply chain integrity and security is
very complex and continuously evolving. The provided overview of regulations and guidelines in the U.S.,
European Union, Japan, India, China and Russia, as well as international standards, illustrates complexity
of the international regulatory environment, and constant need to keep up with all the changes and
amendments. Every country has a set of national legally binding rules, which need to be translated into
corporate internal procedures without hindering the overall effectiveness of the system. Challenges
relating to trademark counterfeiting, traceability capabilities and consistency of regulatory response and
enforcement may be local, but the impact on supply chain integrity and security is always global.
Understanding of Intellectual property rights and patent law differs significantly around the globe.
Countries such as India and China are often associated with infringement of intellectual property rights
and trademark counterfeiting.
Chapter Objectives:
 Describe the main areas covered by the WHO good distribution practice guidelines
 Define the origin and purpose of taskforce IMPACT
 Explain the applicability of WHO guidelines at national level
 Explain the purpose and scope of the Medicrime Convention
Module Activities:
The chapter material contains 3 short video presentations, glossary of essential terminology, and a Study
Guide with links to assigned and further readings. Assigned readings include legislation, summary
articles, and links to resources and databases and other relevant materials. Comprehension quiz is part
of the chapter.
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ENFORCEMENT
Recently introduced legislation in the U.S. and in Europe brings major changes in the management of
pharmaceutical supply chains. These measures also introduce new vulnerabilities especially in the
information management domain. Profound changes in the pharma industry, such as consolidation,
globalization, and outsourcing, together with shift of business-critical operations to Asia create multiple
systemic vulnerabilities. Pharmaceutical products from India and China account for vast majority of
counterfeit products. Drug counterfeiting is highly profitable, with low penalties compared to trafficking
narcotics. The counterfeit drug problem has worsened over the last decade, due to larger, more complex
supply chains; more customers reachable through the Internet; international nature of these crimes; and
the expansion of counterfeiting from lifestyle drugs into therapeutic medicines.
Chapter Objectives:
 Appreciate the disparity between national enforcement systems and global nature of
pharmaceutical industry, as well as reliance of regulated markets on their partners in Asia
 Find information on FDA inspections at home and abroad and locate wholesaler registries
 Explain the origin and purpose of IWG on Import Safety and mention major operations
 Appreciate the difference in penalties for trafficking narcotics and selling counterfeit medicines
 Discuss 2005 and 2014 Congressional hearings on counterfeit drugs and illegal supply chains
 Explain the differences between perception of counterfeit drugs by the public and reality
 Discuss relevant findings from the 2014 EU Customs report on IPR enforcement
 Analyze information available in the EudraGMDP database, namely issued Wholesale
Distribution Authorizations, Good Distribution Practice Certificates, and non-compliance reports
 Explain what information can be found in EDQM databases and use EDQM Certification database
 Discuss incidents of counterfeit prescription drugs such as the Lipitor recall and Canada Drugs
 Explain the nature and purpose of operation Pangea
 Explain the difference between foreign-sourced and foreign-made drugs and discuss why
exclusive production of these drugs in India and China becomes a security concern
 Summarize most important steps taken by China to improve product safety and fight corruption
 Describe challenges experienced by poor countries on the example of Afghanistan
 Describe the role of DEA with regards to diversion of controlled substances
 List UN Drug Control Conventions and relevant international treaties
 Describe precautions prescribers should take to prevent diversion of Rx drugs for illicit purpose
Chapter Activities:
Watch 17 brief video presentations
Further Readings: See Study Guide
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GLOBALIZATION
Pharmaceutical industry is global in nature. Corporate operations typically span multiple jurisdictions and
several continents. Pharmaceutical supply chains are becoming more and more complex due shift of
manufacturing and business operations to Asia, and because of outsourcing. The distance between
manufacturing sites and markets, as well as complexity of the entire operation, creates numerous
vulnerabilities with potentially high impact for organizations and their customers. The current geography
of pharmaceutical manufacturing and markets is the result of long-term trends. Companies are growing
in size due to acquisitions and mergers. Corporations take advantage of lower prices in developing
countries and outsource their operations to low-cost countries to achieve better return on investment.
Location of manufacturing centers and major markets determines which shipping routes are used, and
which piracy hotspots are likely to become an issue.
Chapter Objectives:
 Describe how trends in the shipping industry affect long-distance transport of pharmaceuticals
 Find sea routes used for shipping of APIs and drugs and locate relevant choke points and straits
 Discuss location of major markets and manufacturing centers
 Describe FDA enforcement efforts abroad
 Analyze available data on value and volume of pharmaceuticals including market segments
 Define major causes of supply chain disruptions
 Explain most important characteristics of European pharmaceutical market such development of
trade balance, insurance payments, registered foreign manufacturers and parallel trade
 Describe what makes Chinese market so attractive and what are the barriers to entry
 Explain structural change and consolidation of pharmaceutical industry since the 1990s
 Describe long-term and latest trends in pharmaceutical mergers and acquisitions
 Explain what makes pharmaceutical supply chains so vulnerable to disruptions
 Define most relevant drivers of outsourcing of key operations
 Discuss current drug shortages in the U.S. and in Europe
 Discuss the impact of big industrial accidents such as the one in Tianjin, China
 Discuss trends in the shipping industry such as vessel size, accident rate and manning
 Analyze trends in maritime piracy, describe methods used and explain financial consequences
 Describe the causes of main supply chain disruptions such as drug shortages and diversion
Chapter Activities:
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SUPPLY CHAIN INTEGRITY AND SECURITY
Risks of administrative, civil or criminal action resulting from non-compliance are not the only risks
enterprises involved in pharmaceutical supply chain face. Other vulnerabilities, such as internal and
external interdependencies, sole source supply chain, personnel turbulence, over-specialization and lean
operations also create an opportunity for exploitation by threat actors. Compliance failures are only one
category of such threat. Accidents, incompetence and corruption, business sector competitors, criminal
interest, civil disruption, severe weather and natural disasters, and war can all affect enterprises one way
or the other. Adverse consequences include loss of litigation, denial of market access, consumer
rejection, compromised intellectual property or data breach.
Chapter Objectives:
By end of this chapter, the student will be able to:
 Appreciate the nature of pharmaceutical supply chain vulnerabilities, namely sole source supply
chain, lean operations, internal and external interdependencies, and increase in complexity
 Understand the nature of threats such as compliance failures, accidents, incompetence,
corruption, business competition, criminal interest, severe weather and civil disruption
 Discuss the role of leadership in awareness of vulnerabilities and threats
 Discuss the importance of clearly defined priorities such as priority information requirements,
key performance indicators, relationships and roles and responsibilities
 Explain direct and indirect losses caused by theft of pharmaceutical cargo
 Discuss the causes and consequences of underreporting cargo thefts in Europe
 Pinpoint locations with the highest risk of cargo theft and discuss methods used in each area
 Describe U.S. and international programs implemented to protect cargo shipped by air
 Summarize measures taken in the U.S. to tackle drug shortages as defined in the EO 13588 of
2011 and Title VII and X of FDASIA
 Discuss current drug shortages in the U.S. and related price gauging
 Discuss WHO recommendations regarding global shortages of essential medicines
 Compare measures implemented to tackle drug shortages in the U.S. and in Europe
 Explain how drug supply chain information management systems bridge disparate systems and
standards adopted by different industries in multiple countries
 Analyze data from DHHS Data Breach Portal and comment on data breach trends
 Discuss observations described in important data breach reports published by Verizon,
Ponemon, Deloitte and Norton
Chapter Activities:
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CASE STUDIES
Interactive case studies are included to show variety of incidents that occurred in the industry and
resulted in adverse consequence. All use cases were widely publicized. Students are expected to
conduct their own research and answer questions as presented. Hints may point directly to the
source or refer to study guides, as appropriate.
Pharmaceutical Supply Chain Disruptions
Students will be asked to research and review the following incidents:
 Adulterated heparin
 1080 infant formula scare
 Toxic capsules manufactured in China
 Canada Drugs
 $80 million burglary
 Tianjin blast
 Fake Lipitor
 Cobalt 60 theft
Shipping routes
Students will be asked to research the following geographical areas:
 Gibraltar
 Eastern Mediterranean
 The Strait of Malacca and the Singapore Strait
 Horn of Africa
 Panama Canal
 South China Sea
 Strait of Hormuz
 Suez Canal
Chapter Activities:
Individual research into specific incidents of supply chain disruptions
Individual research into shipping routes
Evaluation: Interactive quiz
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SUMMARY
The main takeaway points can be found in downloadable pdf summaries.
 Regulations in the U.S.
 Regulations in the EU
 Regulations in major Asian economies
 International standards
 Enforcement
 Globalization
 Supply Chain Security & Integrity
 Bibliography
Chapter Activities:
Individual research into specific incidents of supply chain disruptions
Individual research into shipping routes
Further Readings: See Summaries
Evaluation: Interactive quiz
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Pharmaceutical Supply Chain Integrity and Security (2016)

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